W. J. Lake & Co., Inc. v. King County

• Decision Date: 17 April 1940
• Docket Number: 27411.
• Citation: 3 Wn.2d 500,101 P.2d 357
• Court: Washington Supreme Court
• Parties: W. J. LAKE & CO., Inc., v. KING COUNTY et al. (two cases).

101 P.2d 357

3 Wn.2d 500

W. J. LAKE & CO., Inc., v. KING COUNTY et al. (two cases).

No. 27411.

Supreme Court of Washington

April 17, 1940

Department 2.

Actions consolidated for purpose of trial and appeal, by W. J. Lake &amp Company, Incorporated, against King County, a municipal corporation, and others, involving the validity of personal property taxes attempted to be levied by King County, in the years 1935 and 1936, upon stocks of liquor held in a storage warehouse in accordance with regulations of the Washington State Liquor Control Board, wherein Ralph S. Stacy, as Treasurer of King County, filed a petition for authority to intervene. From an adverse judgment, defendants appeal.

Affirmed.

BLAKE C.J., dissenting.

Appeal from Superior Court, King County; Roger J Meakim, judge.

B. Gray Warner and Lloyd W. Shorett, both of Seattle, for appellant King County. (Elias A. Wright and Sam A. Wright, both of Seattle, for appellant Ralph S. Stacy.

Edwin C. Ewing, of Seattle, for appellant Stacy, amicus curiae.

Stevenson & Gershon, of Seattle, for respondent.

Trefethen, Porterfield & Trefethen, of Seattle, amicus curiae.

GERAGHTY Justice.

These actions, consolidated for the purpose of trial and appeal, involve the validity of personal property taxes attempted to be levied by King county, in the years 1935 and 1936, upon stocks of liquor held in a storage warehouse, in accordance with regulations of the Washington state liquor control board. At the suit of the respondent, Ralph S. Stacy, as treasurer of King county, was permanently enjoined 'from levying and collecting' any personal property taxes upon these stocks of liquor. While the injunction ran only against the treasurer, King county and its assessor, Roy B. Misener, were named with the treasurer as defendants.

Before considering the appeal on the merits, it is necessary to dispose of two preliminary questions.

The right of the respondent to maintain the actions without first paying the challenged tax, in accordance with the provisions of chapter 62, Laws of 1931, p. 201 (Rem.Rev.Stat. § 11315-1 et seq.), was not raised below and is not raised here in the brief of the prosecuting attorney. The county treasurer, however, has raised the question in a brief filed by counsel appearing for him separately, in which he challenges the jurisdiction of the court below and of this court to entertain the action in absence of the compliance with chapter 62.

Without passing upon the timeliness of this attack, nor of the right of the treasurer to appear by separate counsel, we may say that the question raised is disposed of adversely to the treasurer's contention in the case of Petroleum Navigation Co. v. King County, Wash., 96 P.2d 467.

It is alleged in a petition filed by the treasurer, 'for authority to intervene, and objection to settlement and compromise,' and a supporting affidavit that, after judgment was entered below and appeal perfected, the county commissioners, by resolution, authorized a compromise of the controversy by payment to the county treasurer of a stated sum by the respondent in satisfaction of the county's claim for taxes. The treasurer challenged the regularity and legality of the compromise and, apparently, refused to accept payment from the respondent of the amount agreed on. The county and the respondent demurred to the petition and moved to have it stricken. The demurrers were overruled and the motions to strike denied, after hearing, by a department of this court.

It is urged by the respondent that the appeal should be dismissed, because, by reason of the action of the county commissioners, the question in controversy has been settled and is moot. We do not agree with this suggestion. The settlement is disputed, and, in any event, its terms have not been carried out.

The taxability of the liquor was dependent on whether, while held in storage for transshipment without the state, its movement in the flow of interstate commerce had ceased and it had become part of the general mass of property within the state. In resolving this question, consideration must be given to the provisions of the Washington state liquor control act, chapter 62, Laws of 1933, Ex.Sess., p. 173 (Rem.Rev.Stat.Supp. § 7306-1 et seq.), and the regulations adopted by the liquor control board under authority of the act, as well as to the manner in which liquor was handled as disclosed by the evidence.

By the terms of the liquor control act, the importation of liquor, and its sale in the state, was made a state monopoly. Provision, however, was made in § 49(2), p. 196 (Rem.Rev.Stat.Supp. § 7306-49(2), for transshipment of liquor in interstate and foreign commerce, as follows: 'Nothing in this act shall prevent the transshipment of liquor in interstate and foreign commerce; but no person shall import liquor into the state from any other state or country, except, as herein otherwise provided, for use or sale in the state, except the board.'

Subdivision 3 of § 67, p. 203 (Rem.Rev.Stat.Supp. § 7306-67(3), provides that nothing in the act shall be construed as preventing the board from accepting liquor on consignment.

The liquor board, under authority conferred upon it by the act, made the following regulation in respect of the importation of liquor:

'Pursuant to Section 49(2) of the Washington State Liquor Act, importations of liquor (except beer, alcoholic content of which does not exceed four per cent by weight, and sacramental wines consigned to any clergyman or religious organization) cannot be made to any point in the State of Washington, for use or sale therein, unless such importations be consigned to the Washington State Liquor Control Board. Acceptance by the carrier of liquor not so consigned should be refused, as delivery thereof will be denied by the Board.

'Shipments of liquor to be stored in the State of Washington, for transshipment to points beyond the state, must be consigned to the Washington State Liquor Control Board, for the account of the shipper, in care of such public warehouses as are authorized by and bonded to the Washington State Liquor Control Board.' 1935 Revised Rules and Regulations, p. 68.

These statutory and liquor board regulations were in effect during the years 1935 and 1936. The 1937 legislature, by chapter 217, p. 1062, § 1 (Rem.Rev.Stat.Supp. § 7306-23J), amended the liquor act by providing for the licensing of liquor importers, but we are not here concerned with this amendment.

The liquor in controversy had been consigned to the liquor control board and was stored in a warehouse licensed by it in the city of Seattle, for transshipment by respondent. Respondent was engaged in the business of importing and exporting liquor, having its place of business in Seattle. Its principal exporting business was done with Alaska, but it also supplied liquor to state monopolies in Oregon, Idaho, and Utah, in which states it maintained offices.

In the course of its business, respondent received orders for liquor from Alaska and the states mentioned and, also, from the Washington liquor board. To meet these orders, it, in turn sent orders to distilleries in California and certain eastern states. In buying from the manufacturers, it frequently ordered from ten to fifteen per cent more liquor than the orders on hand from its customers required; thus, it generally had orders for from eighty-five to ninety per cent of the shipments it received from the manufacturers. On arrival in Seattle, the liquor was stored in the warehouse. It might be reshipped at once, or remain for sometime in the warehouse Before reshipment. It never remained in the warehouse for a longer period than six weeks Before reshipment. For the convenience of the warehousemen in filling orders for shipment, liquor, on entering the warehouse, was stored in separate lots for each region to which it was to be shipped. The liquor held for the Washington liquor board was earmarked and stored separately from the liquor intended for...