State Board of Equalization v. Boteler, 10021.
| Decision Date | 10 November 1942 |
| Docket Number | No. 10021.,10021. |
| Parties | STATE BOARD OF EQUALIZATION OF STATE OF CALIFORNIA v. BOTELER. In re DAVIS STANDARD BREAD CO. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Earl Warren, Atty. Gen. of California, and Alberta Belford, Deputy Atty. Gen., for appellant.
Frank C. Weller, Thomas S. Tobin, and William E. Woodroof, all of Los Angeles, Cal., for appellee.
Before DENMAN, MATHEWS, and STEPHENS, Circuit Judges.
This is an appeal from the order of the District Court, affirming the action of the Referee in Bankruptcy in enjoining the State Board of Equalization of the State of California from attempting to compel the Trustee in Bankruptcy to take out a sales tax permit or to collect a three percent retail sales tax from purchasers of assets of the bankrupt estate upon sales made by the Trustee in liquidation of the bankrupt estate.
There is no issue of fact in the present case.
A wholesale and retail bakery corporation was adjudicated a bankrupt, a Trustee in Bankruptcy was appointed, and he immediately began to liquidate the corporate properties, which consisted of the furniture, fixtures, equipment, and other miscellaneous items of the business. The Trustee offered this property for sale at public sale in the Referee's court, but no satisfactory bid was received, and he, therefore, applied for, and was granted, authority by the court to sell the same at private sale by the piece or in bulk.
The California State Board of Equalization thereupon demanded that the Trustee take out a retail sales tax permit, and that he collect and remit the sales tax prescribed by the California Retail Sales Tax Act on sales.1
The Trustee filed with the Referee in Bankruptcy a petition for an order restraining the Board of Equalization from attempting to collect this tax.
The Referee granted the injunction, which was affirmed upon review by the District Court.
The Board's theory, as we understand it, is essentially as follows:
That the California Retail Sales Act imposes on "retailers" a tax of three percent of the gross receipts "for the privilege of selling tangible personal property at retail"; that a "sale at retail" is defined by the Act to mean "a sale to a consumer or to any person for any purpose other than for resale in the regular course of business in the form of tangible personal property"; that a "retailer" is defined as "every person engaged in the business of making sales at retail * * * of tangible personal property"; that under the case of Bigsby v. Johnson, 18 Cal.2d 860, 118 P.2d 289, 290, the California Supreme Court has interpreted the Act as applying to "casual and incidental sales", as well as to sales of the kind ordinarily made by the retailer; that it follows, therefore, that if the sales involved in the instant case had been made by a private individual, the sales would have been taxable.
From this premise, the argument proceeds: The United States Code Annotated, in Section 124a, Title 28, provides that "Any * * * trustee * * * appointed by any United States court who is authorized by said court to conduct any business, or who does conduct any business, shall * * * be subject to all State and local taxes applicable to such business the same as if such business were conducted by an individual or corporation"; that the United States Supreme Court in the case of Boteler v. Ingels, 308 U.S. 57, 60 S.Ct. 29, 84 L.Ed. 78, interpreting the above code section, held that the State has the right to impose upon trustees in bankruptcy the same obligations for the same privileges that it imposes upon private citizens, and that it follows that the Trustee in the instant case is subject to the terms of the California Retail Sales Act.
It cannot be doubted that if the authorities can be read so as to support the proposition that the Trustee in making the sales in question is "carrying on a business", the tax attempted to be imposed would be proper. We think they cannot be so read.
First, as to the case of Bigsby v. Johnson, supra, upon which the Board bases its premise that a private individual transacting the same business as that of the Trustee in the instant case would be subject to the tax. The facts of that case disclose that the plaintiff was engaged in the business of operating a printing establishment, and that the sales sought to be taxed were sales of some printing equipment that he had previously used in the operation of his printing plant business....
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...v. Goggin, 191 F.2d 726 (9th Cir. 1951), cert. denied, 342 U.S. 909, 72 S.Ct. 302, 96 L.Ed. 680 (1952); State Board of Equalization v. Boteler, 131 F.2d 386 (9th Cir. 1942). In State Board of Equalization v. Boteler, supra, the bankrupt was a wholesale and retail bakery. The trustee sought ......
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