Rexall Drug Co. v. Peterson
| Decision Date | 06 October 1952 |
| Citation | 113 Cal.App.2d 528,248 P.2d 433 |
| Court | California Court of Appeals Court of Appeals |
| Parties | REXALL DRUG CO. v. PETERSON et al. Civ. 18859. |
Adams, Duque, Davis & Hazeltine, Bryant R. Burton and James E. Wallace, Los Angeles, of counsel, for appellant.
Ray L. Chesebro, City Atty., Bourke Jones, Asst. City Atty., and Alan G. Campbell, Deputy City Atty., Los Angeles, for respondents.
Rexall Drug Company, a corporation, owns all of the stock of ten subsidiary corporations. These subsidiary corporations engage principally in the manufacture and sale of articles commonly sold by drug stores.
Rexall administeres the whole business enterprise, maintains a head office in Los Angeles, and furnishes accounting, financial, personnel, legal, executive managerial, and directive services to its subsidiaries. For these services Rexall charges each subsidiary its proportionate cost thereof. No profit is charged.
The City of Los Angeles claimed that these charges were subject to business license tax, as imposed by Section 21.190 of the Municipal Code. This section reads in part as follows:
'(a) Every person engaged in any trade, calling, occupation, vocation profession or other means of livelihood, as an independent contractor and not as an employee of another, and not specifically licensed by other provisions of this Article, shall pay a license fee in the sum of $12.00 per calendar year or fractional part thereof for the first $12,000 or less of gross receipts, and in addition thereto, the sum of $1.00 per year for each additional $1,000 or fractional part thereof, of gross receipts in excess of $12,000.'
Rexall denied the claim and brought this action in declaratory relief to settle the controversy.
The trial court found for the city, and adjudged that the transactions were subject to tax and that $10,011.24 unpaid taxes were due the city.
Rexall appeals from the judgment, and contends that in furnishing the administrative services on a nonprofit basis for its wholly owned subsidiaries it was not engaged in a business subject to license tax by the city.
In support of this contention Rexall argues, (a) that a business may not be taxed unless it is conducted for profit or for livelihood, (b) that Rexall was not an independent contractor, (c) that Rexall's administration of its subsidiaries was only incidental to its principal business, and (d) that in accounting between...
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