Mexican Petroleum Corporation of Louisiana, Inc. v. Louisiana Tax Commission
| Decision Date | 03 November 1931 |
| Docket Number | 30980 |
| Citation | 173 La. 604,138 So. 117 |
| Court | Louisiana Supreme Court |
| Parties | MEXICAN PETROLEUM CORPORATION OF LOUISIANA, Inc., v. LOUISIANA TAX COMMISSION et al |
Appeal from Twenty-Fourth Judicial District Court, Parish of St Charles; L. Robert Rivarde, Judge.
Action by the Mexican Petroleum Corporation of Louisiana, Inc. against the Louisiana Tax Commission and others. From judgment for plaintiff, defendants appeal.
Affirmed.
Charles S. Lagarde, of Luling, for State Tax Collector.
Percy Saint, Atty. Gen., and Rene A. Viosca, Sp. Asst. to Atty Gen. (Frymire & Ramos, of New Orleans, of counsel), for appellants.
Cobb & Jones, of New Orleans, for appellee.
The purpose of this suit is to effect a reduction of plaintiff's general property assessment at Destrehan, La., for the year 1929, from $ 2,085,720 to $ 1,155,673.34, by eliminating from the assessment an item of $ 626,448.28, representing imported crude oil, an item of $ 1,705.13, representing imported rape seed oil, and an item of $ 301,895, alleged to be in excess of the actual cash value of the property subject to taxation, on January 1, 1929.
The crude oil was imported in bulk from Mexico and Venezuela, mostly from the latter country, and the rape seed oil was imported in barrels, in which it remained, from England.
The reason for seeking to eliminate the crude oil and the rape seed oil is that they are imports, and hence, under paragraph 2 of section 10 of article 1 of the Constitution of the United States, prohibiting a state, without the consent of Congress, from laying imposts or duties on imports or exports, except so far as necessary to execute its inspection laws, these oils, which it is urged still remain in their original condition, are exempt from state or local taxation.
The reason for seeking to eliminate the item of $ 301,895 is that the assessment, to that extent, is in excess of the actual cash value of the property, as of date January 1, 1929, the day to be used in making the assessment for the calendar year 1929.
There was judgment in the trial court, reducing the assessment by eliminating the items complained of, as prayed for by plaintiff.
Within the time prescribed by law defendant filed its sworn return with the assessor for assessment purposes. This return, inter alia, showed:
Merchandise
$ 940,711.42
Materials and supplies
214,961.92
Total
These items do not include the items of imported crude oil and imported rape seed oil, for the reason that they were thought to be exempt from taxation as imports, though they were shown in the return as exempt. The assessor accepted the return as correct, but not so with the Louisiana Tax Commission. The commission increased the assessment of the item of merchandise, shown in the return, by adding to it the sum of $ 930,048; the increase consisting of the items of imported crude and rape seed oil, aggregating $ 628,153.41, and the item of $ 301,895, representing an increase in the items of merchandise and materials and supplies, as shown in plaintiff's return.
In reaching the amount for which plaintiff should be assessed for the calendar year 1929, on merchandise and materials and supplies, the commission averaged the amount of these two items on hand on January 1, 1928, and the amount on hand on December 31, 1928. This method showed an increase of $ 301,895 over plaintiff's return on these items. The commission also included as taxable, at the valuation placed thereon by plaintiff in its return, the items of imported crude and rape seed oil, aggregating $ 628,153.41, which together with the increase on merchandise, material, and supplies, raised plaintiff's assessment to $ 2,085,724.74.
In assessing property, it is well established that it must be assessed on the basis of the condition of things as they existed on January 1, of the calendar year for which the property is to be assessed and taxed. Louisiana Oil Refining Company v. Louisiana Tax Commission, 167 La. 605, 120 So. 23; Gulf Public Service Company v. Louisiana Tax Commission, 167 La. 757, 120 So. 286. As to the manner of arriving at the value of the merchandise and the like on hand, the rule seems to be that, where the amount of such property may be reasonably ascertained as of date January the 1st of the year in which the assessment is to be made, which is the supposed date of listing, then that amount should be accepted as the basis for the assessment, but, when it is not practicable to arrive at the amount as of that date, then the assessing authorities are authorized to take as a basis for such purpose the average amount of stock on hand for the preceding year. Since property is to be assessed on the basis of the condition of things as of a specified date, it would seem that, where reasonably ascertainable, the condition of things on that date would lead to a more correct assessment than by striking an average of the amount of property on hand, namely, merchandise and the like, of the previous year.
In this instance, the amount of merchandise, materials, and supplies, as of date January 1, 1929, was reasonably ascertainable. In fact, the commission had, in its possession, the sworn return of plaintiff, showing the amount of this property on hand, on January 1, 1929. This return is supported by witnesses, testifying on the trial. While the findings of the commission are entitled to considerable weight, it appears to us that the return on these items should have been accepted as the correct amount for the assessment, as to them.
The only circumstance which tended to cast, at any time, suspicion on the correctness of the return of plaintiff, appears from a memorandum, sent the commission by plaintiff, from which there appears a discrepancy between the memorandum and the return of $ 64,019.37, against plaintiff's contention, but this suspicion is fully dissipated by the explanation and the proof that this amount represented products of plaintiff, which were shipped from Louisiana in November and December, 1928, and hence, were not in the state on January 1, 1929, and therefore were beyond the taxing powers of the state.
Our conclusion is that, not only was the amount of merchandise and the like reasonably ascertainable, as of date January 1, 1929, but the commission had the correct amount before it, and therefore was not justified in resorting to ascertaining an average of the amount on hand in the previous year as a basis for the assessment for the succeeding year.
The oil from Mexico and Venezuela was imported, in bulk, in tank ships, by plaintiff. When it reached Destrehan it was pumped through pipes into land tanks. As oil thickens in the tanks on the ships when it remains in them for two or three days, for the purpose of pumping it from the ships, it becomes necessary to make the oil more liquid by heating it, so that it will flow sufficiently. This is done by means of steam coils with which the ship is usually equipped. The Venezuela oil, known as Lago, and the Mexican oil, known as Ebano, are pumped into separate tanks, set aside for the purpose of receiving them. The Lago and the Ebano are of different grades, and are never mixed. It would be impracticable, and would result in loss, to mix them, due to the fact that different products are manufactured from them. Neither is ever mixed with domestic oils. However, when the oil is pumped into tanks, it is usually pumped into tanks containing about 1,000 barrels of imported oil of the same kind as that pumped into them. This is so because in the ordinary course of withdrawing oil from the tanks for the purpose of refining it into its various products, it seems to be impossible, or, at least, impracticable, to draw below the 1,000-barrel mark. After the oil reaches the tanks, it remains in them, until needed for refining purposes, in the same condition in which it was when delivered in the tanks.
Crude oil is imported only in bulk, because it would increase the cost to such an extent to import it in barrels or casks that its importation would not be practicable, but rather prohibitive. The rape seed oil, which is used in making greases and oils, was imported by plaintiff from England. It no longer plays a part in this case, for defendant concedes that, since it was in plaintiff's warehouses, in the unbroken packages in which it was imported, on January 1, 1929, as of which date the listing for taxation is required to be made, it is not subject to taxation for the year 1929.
[173 La. 611] Paragraph 2 of section 10 of article 1 of the Constitution of the United States...
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