Montgomery Ward & Co. v. State Bd. of Equalization
Citation | 272 Cal.App.2d 728,78 Cal.Rptr. 373 |
Court | California Court of Appeals |
Decision Date | 12 May 1969 |
Parties | MONTGOMERY WARD & CO., Incorporated, Plaintiff and Respondent, v. STATE BOARD OF EQUALIZATION of the State of California, Defendant and Appellant. Civ. 25220. |
Thomas C. Lynch, Atty. Gen., Ernest P. Goodman, E. Clement Shute, Jr., Deputy Attys. Gen., San Francisco, for appellant.
Valentine Brookes, Paul E. Anderson, Charles S. Franklin, San Francisco, for respondent, Kent, Brookes & Anderson, San Francisco, Irwin J. Shapiro, Regional Counsel, Montgomery Ward & Co., Inc., Oakland, of counsel.
The State Board of Equalization, which is charged with the administration of the California Sales and Use Tax Law ( ) has appealed from a judgment which awarded plaintiff retailer a refund of $21,251.61 with interest, representing payment made in satisfaction of an assessment for use taxes which it is claimed the retailer should have collected for the State of California during the period from April 1, 1957 to January 1, 1961 on sales of goods delivered on credit at its Klamath Falls, Oregon, and Reno, Nevada stores to customers who hold charge accounts bearing an address in California.
The parties stipulated to the facts concerning the sales, and the nature of the business activities conducted by plaintiff in California, in Klamath Falls, and in Reno, respectively. These facts are alluded to as they bear upon the various contentions of the parties.
In support of the judgment the retailer contends that the exaction levied, whether a tax or a debt (see Rev. & Tax.Code, §§ 6203 and 6204; 1 and Bank of America v State Bd. of Equal. (1962) 209 Cal.App.2d 780, 799--802, 26 Cal.Rptr. 348), violates the interstate commerce clause (art. I, § 8, cl. 3) and the guarantees of due process of law, and equal protection of the laws of the Fourteenth Amendment of the United States Constitution; and also was unauthorized under the California Constitution (art. I, § 11) and the California Sales and Use Tax Law. From the stipulated facts, the trial court made findings of ultimate fact and conclusions of law which support each of the retailer's theories. The board attacks all of the conclusions of the trial court, and contends that the levy is authorized and directed by the applicable statutory provisions, and is constitutionally permissible.
'Since the issues here involve the applicability of taxing statutes to uncontradicted facts, we are confronted purely with a question of law and are not bound by the findings of the trial court (footnotes and citations omitted).' It is determined from such a review that although the Use Tax Law purports to burden the retailer with the questioned exaction, in doing so it offends existing constitutional principles. The judgment awarding the refund must be affirmed.
The California use tax is an excise tax 'on the storage, use, or other consumption in this State of tangible personal property purchased from any retailer * * * for storage, use, or other consumption in this State * * *.' (§ 6201.) (§ 6202 (emphasis added), as amended Stats.1957, ch. 807, § 1, p. 2019; cf. Stats.1941, ch. 36, § 1, p. 538; and see § 6203, fn. 1, supra.)
Section 6203 (fn. 1, supra), which lies at the heart of this controversy, imposes on the retailer the duty to collect the tax; and section 6204 (fn. 1, supra) makes the tax required to be collected a debt due to the state. Failure to collect the tax is a misdemeanor (§ 6207). Retailers who sell tangible personal property for storage, use, or consumption within the state are required to register and give the board such information as it may require (§ 6226; and see §§ 6453, 7053, 7054 and 7055). '* * * (f)or purposes of the use tax a return shall be filed by every Retailer maintaining a place of business in the State and by every person purchasing tangible personal property, the store, use, storage, use or other consumption of which is subject to the use tax, who has not paid the use tax due to a retailer required to collect the tax. * * *' '* * * For purposes of the use tax, in case of a return filed by a retailer, the return shall show the total sales price of the property sold by him, the storage, use, or consumption of which property became subject to the use tax during the preceding reporting period; * * * (and) the amount of the taxes for the period. * * *' (§ 6453.) The retailer is required to 'deliver the return together with a remittance of the amount of the tax due to the office of the board.' (§ 6454.) Failure to make a return is a misdemeanor (§ 7151).
'There are exempted from the taxes imposed by this part the gross receipts from the sale of and the storage, use, or other consumption in this State of tangible personal property the gross receipts from the sale of which, or the storage, use, or other consumption of which, this State is prohibited from taxing under the Constitution or laws of the United States or under the Constitution of this State.' (§ 6352.) 'The storage, use, or other consumption in this State of property, the gross receipts from the sale of which are required to be included in the measure of the sales tax, is exempted from the use tax.' (§ 6401, prior to its amendment by Stats.1st Ex.Sess.1965, ch. 2, § 23, p. 5451 which concerns interests created by a lease.) During the years in question no provision was made for credit or apportionment with respect to retail sales taxes or use taxes paid to another state, political subdivision thereof or the District of Columbia. (Cf. § 6406, as added Stats.1966, ch. 2, § 4, p. 176, as amended.) There is no provision for compensating the retailer for his services in collecting the tax. (See § 7101.)
The Legislature has adopted presumptions to aid in the proper administration of the Sales and Use Tax Act and to prevent evasion. (See §§ 6091--6095, and 6241--6249.) Section 6241 provides: Section 6246 provides: 'It shall be further presumed that tangible personal property shipped or brought to this State by the purchaser was purchased from a retailer on or after July 1, 1935, for storage, use, or other consumption in this State.' Section 6247 provides: 'On and after the effective date of this section, it shall be further presumed that tangible personal property delivered outside this State to a purchaser known by the retailer to be a resident of this State was purchased from a retailer for storage, use or other consumption in this State and stored, used or otherwise consumed in this State.
The retailer is an Illinois corporation with its head office and principal place of business in Chicago, Illinois. It conducts a nationwide retail sales business, maintaining places of business in this State and many others, including the states of Oregon and Nevada. It sells its merchandise both by mail order and by direct sale from retail stores which it owns and manages in various towns and cities. For the years involved in this litigation, 1957 through 1960, the retailer had national sales in excess of one billion dollars per year.
It is qualified to conduct intrastate business within the State of California as a foreign corporation, under the authority of sections 6400--6408 of the California Corporations Code. During the period involved it increased its retail stores in California from 17 to 21. It maintained and maintains one of its four regional administrative offices at Oakland, California for a region which encompasses the stores in Reno and Klamath Falls. During the four years involved its sales in California...
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