Meyer v. State Bd. of Equalization

• Decision Date: 01 March 1954
• Citation: 42 Cal.2d 376,267 P.2d 257
• Court: California Supreme Court
• Parties: MEYER et al. v. STATE BOARD OF EQUALIZATION. Sac. 6273.

Page 257

267 P.2d 257

42 Cal.2d 376

MEYER et al. v. STATE BOARD OF EQUALIZATION.

Sac. 6273.

Supreme Court of California, In Bank.

March 1, 1954.

Rehearing Denied March 25, 1954.

Edmund G. Brown, Atty. Gen., James E. Sabine and Irving H. Perluss, Asst. Attys. Gen., and Norman B. Peek, Dep. Atty. Gen., for appellant.

Anthony J. Kennedy and Carl Kuchman, Sacramento, for respondents.

EDMONDS, Justice.

H. Meyer and B. Meyer, doing business as H. L. E. Meyer, Jr. & Co., paid retail sales taxes on shipments of coke from an Illinois manufacturer to various consumers in California. In computing the taxes, the Meyers omitted from their calculations of 'gross receipts' ¹ the costs of transporting the coke. Based upon such costs, an assessment for additional taxes was levied by the State Board of Equalization and paid by the Meyers under protest. After exhausting their administrative remedies, they sued for the amount of the protested payment, and the appeal is from a judgment in their favor.

The transportation charges were stated separately from the purchase price, the complaint charged, and the transportation occurred after the sale of be coke to the purchaser. The Meyers also asserted that the assessment of a sales tax upon transportation charges is an unconstitutional burden upon interstate commerce. In paragraph VIII of the complaint it was alleged that 'said sales were made by Pickands Mather & Co., Cleveland, Ohio, as agent for Interlake Iron Corporation, South Chicago, Illinois, and plaintiffs as broker to purchasers in California.' (Italics added.)

The Board's answer admitted or denied expressly some of the allegations of the complaint, but others, including those stated in paragraph VIII, were not mentioned.

By stipulation, the sole evidence presented at the trial consisted of the documents used in connection with a shipment of coke to General Metals Corporation, a California company. It was agreed that this shipment is representative of all of the purchases covered by the additional assessment. The documents show the following transaction:

Upon receiving from General Metals a purchase order for a quantity of coke, the Meyers executed with Pickands Mather & Co., agents for Interlake Iron Corporation, a coke sales contract naming Meyer & Co. as buyer, Pickands Mather, agents, as seller, and General Metals as consignee. The coke was shipped to General Metals under a uniform straight bill of lading, the original together with a weight certificate and Pickands Mather's invoice being sent to Meyer & Co. The invoice stated the quantity of the coke and the price, being $22.10 Per Ton F.O.B. Cars Oakland, California, Transportation Charges Collect & Allowed.'

The Meyers then sent to General Metals their own invoice, attached to which was the original bill of lading and original weight certificate. This invoice was addressed to General Metals and recited as 'Bought of H. L. E. Meyer Jr. & Co.' the same quantity of coke at '23.10 per 2000# fob car Oakland, Calif. Transportation charges collected & allowed.'

As conclusions of law from the stipulated facts, the trial court determined that in the transactions covered by the additional assessment, the Meyers acted as brokers and not as buyers or sellers, and there was no sale within the meaning of section 6006 of the Revenue and Taxation Code. ² It was further concluded that such an additional assessment would be an unconstitutional burden upon interstate commerce. As 'findings of fact' it was declared that the transportation occurred after the sale of the coke to the California consumers and that such charges were stated separately from the purchase price.

The Board contends that each of these conclusion is erroneous. It takes the position that the transaction was a sale of the coke to the Meyers and a resale by them to General Metals Corporation.

The 'finding of fact' that the transportation charges, separately stated, were incurred after the sale of the coke is also challenged by the Board. No conclusion of law was drawn from it as to whether such charges are to be excluded from 'gross receipts' ad defined by section 6012 of the Revenue and Taxation Code. However, for the purpose of this appeal, such finding may be treated as a conclusion of law. Cf. Lenchner v. Chase, 98 Cal.App.2d 794, 802, 220 P.2d 921.

The Meyers take the position that title passed to General Metals Corporation when the coke was delivered to the carrier. The Board asserts that title passed to the Meyers at the time the coke was delivered to the consignee, and did not pass to General Metals until such delivery or a later time. It points out that the sale to Meyer & Co. was f. o. b. destination point and a similar arrangement existed between the Meyers and General Metals.

The sole evidence being the written documents without qualifying testimony, their legal effect is a question of law, and the interpretation given to them by the trial court is not binding upon appeal. In the absence of extrinsic evidence, 'there is no issue of fact, and it is the duty of an appellate court to make the final determination in accordance with the applicable principles of law.' In re Estate of Platt, 21 Cal.2d 343, 352, 131 P.2d 825, 830; Moore v. Wood, 26 Cal.2d 621, 629-630, 160 P.2d 772; Western Coal & Mining Co. v. Jones, 27 Cal.2d 819, 826-827, 167 P.2d 719, 164 A.L.R. 685; In re Estate of Fleming, 31 Cal.2d 514, 523, 190 P.2d 611.

By the contract between them, Pickands Mather agreed to sell and Meyer & Co. agreed to buy the coke. Meyer & Co. was described as 'buyer' with Pickands Mather as 'seller'. Pickands Mather's invoice to the Meyers states charges for coke 'sold to' Meyer & Co. Similarly, the invoice sent to General Metals states charges for coke 'bought of H. L. E. Meyer Jr. & Co.' The bill of lading and weight certificate covering the shipment were sent to the Meyers, and there is a complete absence of any direct dealings between Pickands Mather and General Metals.

Rule 5 of section 1739 of the Civil Code provides: 'If the contract to sell requires the seller to deliver the goods to the buyer, or at a particular place * * * the property does not pass until the goods have been delivered to the buyer or reached the place agreed upon.' Here the sales contract provided for consignment of the coke to General Metals Corporation, 'Foot of 105th Avenue, Oakland, California.'

No contract between Meyer & Co. and General Metals Corporation was included in the stipulation of facts. However, the purchase order of General Metals and Meyer & Co.'s invoice both provide for f. o. b. delivery, Oakland being stated as the destination point. Under the principles discussed in connection with the sale between Pickands Mather and Meyer & Co., title did not pass to General Metals until after the delivery of the coke in Oakland. In Graybar Electric Co. v. Curry, 238 Ala. 116, 189 So. 186, the Supreme Court of Alabama in an almost identical transaction concluded that, in legal effect, it was a sale and resale. Affirmed 308 U.S. 513, 60 S.Ct. 139, 84 L.Ed. 437, rehearing denied 308 U.S. 638, 60 S.Ct. 259, 84 L.Ed. 530.

The fact that General Metals was the consignee of the coke does not exonerate the Meyers from liability for the sales tax.

A similar situation was shown in Standard Oil Co. v. Johnson, 24 Cal.2d 40, 147 P.2d 577, in which a sales tax was sought to be levied upon shipments of fuel oil to out-of-state destinations under standard bills of lading naming the buyer consignee, with freight charges prepaid by the shipper. The court held that there was no tax liability. 'Whether or not delivery to a carrier constitutes delivery to the buyer depends upon the intention of the parties as ascertained from the contract and the other circumstances of the case, and ordinarily, unless a contrary intent appears, where the seller contracts to deliver goods at a given destination and he delivers them to a carrier consigned to the buyer with freight charges paid by the seller (f. o. b. point of destination), the delivery to the carrier does not constitute delivery to the buyer and title does not pass until the goods have arrived at their destination.' 24 Cal.2d at pages 45-46, 147 P.2d at page 580.

The Meyers seek to distinguish the Standard Oil case on the ground that there the freight charges were paid by the seller and included in the costs of the sale. In the present case, it is argued, the freight charges were paid by General Metals and allowed by the Meyers in their invoice to General Metals, and by Pickands Mather in their invoice to Meyer & Co., as a deduction from the sales price. Such a distinction is immaterial. The present situation is expressly included within the scope of the retail sales tax under Sales and Use Tax Ruling No. 58 (Title 18, California Administrative Code, § 2028) which provides that in an f. o. b. destination contract, no deduction may be taken for freight whether paid by the shipper or paid to the carrier by the purchaser and deducted from the sales invoice as a 'fright allowance.' In principle, there should be little distinction between the two situations, particularly where, as here, the transaction is handled as a charge to the buyer's open account.

The trial court's conclusion that the levy of a sales tax upon the shipments included within the assessment would be an unconstitutional burden upon interstate commerce is based apparently upon the erroneous view as to the nature of the transactions which has been advanced by the respondents. However, it is not an interstate sale by Pickands Mather which is being taxed but an intrastate sale from Meyer & Co. to General Metals. Accordingly, the claim of unconstitutionality is without merit. Cf. Wiloil Corp. v. Pennsylvania, 294 U.S. 169, 175, 55 S.Ct. 358, 79 L.Ed. 838; Graybar Electric Co. v. Curry, supra, 189 So. at pages 189-190.

The appeal is presented on a partial clerk's transcript consisting of the judgment roll and the...