Point Adams Packing Co. v. Daubenspeck
| Decision Date | 05 September 1978 |
| Docket Number | No. 5719-I,5719-I |
| Citation | 21 Wn.App. 250,584 P.2d 479 |
| Parties | POINT ADAMS PACKING CO., an Oregon Corporation, Respondent, v. H. A. DAUBENSPECK and Rita Daubenspeck, his wife, Appellants. |
| Court | Washington Court of Appeals |
Aiken, St. Louis & Siljeg, Douglas W. McQuaid, Seattle, for appellants.
Graham & Dunn, Edward W. Pettigrew, Seattle, for respondent.
Defendant, H. A. Daubenspeck, harvested crab from Alaskan waters. It was processed packaged, frozen and made ready for shipment by plaintiff, Point Adams Packing Co., pursuant to a written contract.
The ultimate question at issue is who must pay the Alaska "fishing resource . . . raw material" tax levied upon the crab which Point Adams processed. 1 Alaska Stat. § 43.75.060(2). The trial judge held that the burden of the tax must be borne by Daubenspeck. We agree.
In 1973, Point Adams was in the business of buying and processing raw seafood products in Alaska. Daubenspeck has been a major owner and operator of fishing vessels in Alaska for over 40 years. During 1973, Daubenspeck sold raw crab to Point Adams. Point Adams processed the crab for its own account using its vessel, the Northgate. At Daubenspeck's request, the parties agreed that Point Adams would withhold payment for the crab, worth several thousand dollars, until 1974.
In November 1973, Daubenspeck learned that Point Adams was in financial trouble and might shut down its Northgate operation. Point Adams was unable to secure operating capital because of an Internal Revenue Service lien against its parent company, Westgate, a California corporation. The continued operation of the Northgate was vital to Daubenspeck because it was the only available processing plant in the Adak, Alaska area.
To ensure the continued operation of the Northgate and protect the crab on board the vessel from a potential Internal Revenue Service lien, the parties entered into a custom packing and processing agreement in late November 1973. The agreement provided that commencing November 1, 1973, . . .
1. Point Adams will process and freeze all crab delivered by Daubenspeck to its processor "Northgate" at Adak.
2. As sole compensation for services performed by Point Adams Packing Co. through its "Northgate" facilities, Daubenspeck will pay $.97 (97 cents) per pound of finished meat produced from all raw crab delivered.
Exhibit 1.
The agreement extinguished Point Adams' obligation to pay for the crab previously delivered and ownership of the crab was returned to Daubenspeck by predating the agreement to October 14, 1973. Under this agreement, Daubenspeck paid for processing of 591,360 pounds of crab. The agreement contained no provision concerning the payment of the raw fish tax.
In April of 1974, the State of Alaska notified Point Adams of the $13,009.92 tax which had been levied against the raw crab processed for Daubenspeck. Point Adams paid the tax and brought this action seeking reimbursement from Daubenspeck.
The trial judge's decision in favor of Point Adams was in accordance with evidence from expert witnesses who testified that in the absence of an express agreement, it was the custom or usage of trade in the industry for the owner of fish products to reimburse the processor for the taxes levied by the State.
On appeal, Daubenspeck contends it was error to admit parol evidence to vary the terms of the agreement. He asserts that his contract with Point Adams is complete and unambiguous and that neither the common law nor the Uniform Commercial Code (RCW 62A) permits consideration of parol evidence to vary its terms.
Daubenspeck argues that the payment of the 4 percent tax was one of the contemplated "services (to be) performed by Point Adams." Exhibit 1. He likens the fishing resource raw material tax to other overhead expenses normally paid by a processor such as insurance premiums, payroll, employment and income taxes.
By unchallenged expert testimony, Point Adams established that although the Alaska statute expressly provides that "(t)he person, firm, or corporation" which "actually and physically processes . . . fishery resources shall be liable for and shall pay . . . the whole tax imposed . . . " (Alaska Stat. § 43.75.060(5)), it is the well-established trade custom and usage in Alaska that, although "(t)he processor (is) responsible for the payment of the tax, . . . he in turn is reimbursed by the owner of the product that has been processed."
The experts testified that this well-recognized custom resulted from the historical development of Alaska's taxing scheme. As explained by the witnesses, Alaska originally levied its tax based upon the value of the raw, unprocessed seafood against the owners. Experience demonstrated, however, that often those who harvested the products were transients who departed from the jurisdiction after having their product processed. Alaska protected itself by making the processor its "tax collector."
Daubenspeck testified that at the time of the agreement,...
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