Sea-Land Service, Inc. v. County of Alameda

• Decision Date: 08 November 1974
• Docket Number: S.F. 23102,SEA-LAND
• Court: California Supreme Court
• Parties: , 528 P.2d 56 SERVICE, INC., Plaintiff and Appellant, v. COUNTY OF ALAMEDA et al., Defendants and Respondents. In Bank

Page 448

117 Cal.Rptr. 448

12 Cal.3d 772, 528 P.2d 56

SEA-LAND SERVICE, INC., Plaintiff and Appellant, v. COUNTY OF ALAMEDA et al., Defendants and Respondents.

S.F. 23102.

Supreme Court of California,

In Bank.

Nov. 8, 1974.

As Modified Nov. 13, 1974.

Graham & James, Francis L. Tetreault and Paul A. Dezurick, San Francisco, for plaintiff and appellant.

Richard J. Moore, County Counsel, and Joseph P. Bingaman, Deputy County Counsel, Oakland, for defendants and respondents.

John H. Larson, County Counsel and James Dexter Clark, Deputy County Counsel, (Los Angeles), as Amici Curiae on behalf of defendants and respondents.

MOSK, Justice.

Plaintiff Sea-Land Service, Inc. (hereinafter Sea-Land) appeals from a judgment denying relief in an action for the refund of ad valorem personal property taxes assessed and collected by defendant county on certain cargo shipping containers. ¹ Sea-Land contends the county is without statutory authority to tax this movable personal property and that the containers, as instrumentalities of foreign and interstate commerce, are exempt from local taxation under the commerce and import-export clauses of the United States Constitution. We conclude that these contentions are without merit and that the containers are subject to an apportioned local property tax.

Sea-Land is a shipping company incorporated under the laws of Delaware with its commercial domicile in New Jersey. The company operates vessels in interstate (i.e., intercoastal) and foreign trade. Its vessels are documented at Wilmington, Delaware, or at foreign ports, and none is registered in California. Sea-Land also owns and operates more than 37,000 cargo shipping containers, a certain number of which were present within the defendant county on the respective lien dates of the years 1967, 1968 and 1969. In these years the county, acting on its own behalf and on behalf of defendant City of Oakland, assessed property taxes on the empty shipping containers within the jurisdiction on the lien dates.

The essential facts are stipulated by the parties. The taxes assessed and the numbers of containers physically present on the lien dates in the city and the county were: 1967--$46,346 (833 containers); 1968--$110,272.63 (1,561 containers); and 1969--$144,518.68 (2,095 containers). Sea-Land paid these taxes under protest. The county assessment appeals board denied Sea-Land's appeals, and timely claims for refunds of the 1967 and 1968 taxes were denied by the county board of supervisors.

The containers in issue are used exclusively for transportation of cargo for hire in interstate and foreign commerce; none is used for intrastate transportation of cargo, and intrastate movements of empty containers are solely for the purpose of picking up cargo to be carried in interstate or foreign commerce. Eighty-five percent (65 percent in 1967) of the containers physically present within defendants' borders on the respective lien dates were loaded with cargo either inbound from or outbound to foreign ports; the remaining 15 percent (35 percent in 1967) were loaded with cargo bound to or from interstate ports. The interstate service is between California and the east coast, with stops in Panama and Puerto Rico; the foreign service is to Europe and the Orient.

No container has a usual place of return between voyages, but each is in constant transit save for time for repair and awaiting new cargo. The containers, after discharge from the vessel, are transported by truck or rail, either by Sea-Land's trucks within the terminal area or by independent common carriers, to the ultimate destination of the cargo. The inland destinations and origins of cargo include California and other states. The unloaded cargo container is then brought to the vessel by rail or truck after being loaded with outbound cargo. None of the containers present on the lien dates had been on hand for as much as 6 of the 12 months prior to that date. The average stay of any of the containers in California is less than three weeks, and no container is permanently stationed in California or scheduled, on departure from the terminal area, to return specifically to Oakland.

The number of containers physically present on each lien date was fairly representative of the number present on other days at that level of operations; an increase in operations and equipment during each year caused the increase in absolute numbers from year to year.

Sea-Land's vessels are designed to carry cargo exclusively in containers, and only Sea-Land's vessels and truck bodies are designed to accommodate the 35-foot length of these containers.

Sea-Land first contends that the county lacks statutory authority to tax its containers. The contention is without merit.

Article XIII, section 1, of the California Constitution provides '(a) All property is taxable and shall be assessed at the same percentage of fair market value. . . . ( ) (b) All property so assessed shall be taxed in proportion to its full value.' Cargo containers are personal property and, unless exempted, must be assessed and subjected to property tax. None of the specific statutory exemptions set forth in Revenue and Taxation Code sections 202 to 228 applies to cargo containers. ²

Sea-Land asserts, however, that pursuant to article XIII, section 14, of the Constitution, property can be assessed only in the locality in which it is 'situated.' ³ Its contention is that under the provisions of title 18, section 205, of the California administrative Code, movable property such as the containers here in issue becomes 'situated' for tax purposes in the county where located on the lien date only if the property 'has been in the county for more than 6 of the 12 months immediately preceding the lien date.' ⁴ Since it was stipulated that the average stay of the containers in California is less than 3 weeks and none of the containers present on the lien dates had been in Alameda County for as much as 6 of the preceding 12 months, Sea-Land argues that the containers did not acquire a taxable situs there. Rather, it contends that under section 205 the containers had to be taxed at its 'principal place of business,' the State of New Jersey.

Section 205 of title 18 sets forth a rule for establishing the taxable situs of specific property which moves from place to place within this state. The rule is predicated upon the theory that unless the property has been within the taxing jurisdiction for at least 6 of the 12 months immediately preceding the lien date, the property has failed to acquire sufficient 'contacts' with that jurisdiction to create a taxable situs.

However, the cited administrative code section is merely interpretative of existing law, and is neither a statutory mandate nor all-encompassing in its description. ⁵ It has no application to a determination of the situs of movable property consisting of the same or similar units having repeated contact with the local taxing authority. While no specific container may be in the county for a substantial period of time, Sea-Land's containers are physically present in the county on every day of the year. Such habitual presence of containers creates a taxable situs, even though the identical containers are not there every day and even though none of the containers is continuously within the county. (Braniff Airways v. Nebraska Board (1954) 347 U.S. 590, 600--601, 74 S.Ct. 757, 98 L.Ed. 967; Johnson Oil Co. v. Oklahoma (1933) 290 U.S. 158, 162, 54 S.Ct. 152, 78 L.Ed. 238; Pullman's Car Co. v. Pennsylvania (1891) 141 U.S. 18, 25--26, 11 S.Ct. 876, 35 L.Ed. 613; see also Zantop Air Transport, Inc. v. County of San Bernardino (1966) supra, 246 Cal.App.2d 433, 437, 54 Cal.Rptr. 813.)

In Braniff the United States Supreme Court approved an apportioned ad valorem property tax on the flight equipment of an interstate air carrier whose contact with the local taxing authority was established on the basis of 18 stops per day. As Justice Douglas observed in his concurring opinion, 'Property in transit may move so regularly and so continuously that part of it is always in the State. Then the fraction, but no more, may be taxed ad valorem.' (347 U.S. at p. 603, 74 S.Ct. at p. 765; see also Ott v. Mississippi Barge Line (1949) 336 U.S. 169, 69 S.Ct. 432, 93 L.Ed. 585.) The assessor here has not attempted to assess all Sea-Land's containers which pass through the county. He has levied a tax only on the value of that portion which represents the average number of containers located in the county on a daily basis. ⁶ Such a method of assessment is permissible under Braniff.

Sea-Land attempts to distinguish Braniff on the ground that the tax there was levied under a specific state statute providing for the taxation of instrumentalities of interstate commerce on an apportioned basis. (See Braniff Airways v. Nebraska Board (1954) supra, 347 U.S. at p. 593, fn. 4, 74 S.Ct. 757.) By contrast, it is said, California's lien-date structure of property taxation precludes taxation on an 'average presence' basis. ⁷ Thus Sea-Land asserts that express statutory authority is required before a local taxing authority may levy a tax on that portion of the containers which represents the average number physically present in the county on a daily basis.

We do not agree. The constitutional dictate of article XIII, section 1, that 'All property . . . shall be taxed in proportion to its full value' is direct and mandatory. (Cal.Const., art. I, § 28; Bauer-Schweitzer Malting Co. v. City and County of San Francisco (1973) 8 Cal.3d 942, 946, 106 Cal.Rptr. 643, 506 P.2d 1019; San Pedro etc. R.R. Co. v. Los Angeles (1919) 180 Cal. 18, 21, 179 P. 393; see also Ex-Cell-O Corp. v. County of Alameda (1973) 32 Cal.App.3d 135, 139, 107 Cal.Rptr. 839.) Thus no specific statutory authority is necessary to levy this tax, which is consistent with the constitutional requirement.

In any event, statutory authority for taxation on...