Washington Chocolate Co. v. King County

• Decision Date: 27 October 1944
• Docket Number: 29319.
• Citation: 152 P.2d 981,21 Wn.2d 630
• Parties: WASHINGTON CHOCOLATE CO. v. KING COUNTY et al.
• Court: Washington Supreme Court

152 P.2d 981

21 Wn.2d 630

WASHINGTON CHOCOLATE CO. v. KING COUNTY et al.

No. 29319.

Supreme Court of Washington, En Banc.

October 27, 1944

Action by Washington Chocolate Company against King County, a municipal corporation, and others, for a decree declaring to be void a levy and assessment of ad valorem taxes on imported cocoa beans stored in the original packages in plaintiff's warehouse, to enjoin assessment and collection of such taxes, and for other relief. Judgment for plaintiff, and defendants appeal.

Affirmed.

STEINERT BLAKE, ROBINSON, and MALLERY, JJ., dissenting.

Appeal from Superior Court, King County; Hugh Todd, Judge.

Falknor Emory & Howe, of Seattle, for appellants.

Lloyd Shorett and Edwin C. Ewing, both of Seattle, for respondent.

BEALS Justice.

Washington Chocolate Company, a corporation organized pursuant to the laws of this state, filed its complaint, naming as defendants, King county, Ralph S. Stacy, as county assessor and Carroll Carter, as county treasurer. In its complaint, after formal allegations, plaintiff alleged that it was engaged in the manufacture and sale at wholesale of chocolate and cocoa, which it manufactured from cocoa beans imported from the African Gold Coast, Brazil and other foreign nations; that plaintiff imported the cocoa beans into the United States through the port of New York and other domestic ports, the beans being transported by rail to Seattle at the import freight rate, which plaintiff paid; that upon reaching Seattle, the beans were stored by plaintiff either at its manufacturing plant in the city of Seattle or at a warehouse in that city, where the beans remain until used by plaintiff in the course of its manufacturing business; that the cocoa beans are imported into the United States and received by plaintiff in gunny sacks, each containing approximately one hundred forty pounds of merchandise; that upon receipt by plaintiff, the beans are not mingled with the common mass of property within the state of Washington, but remain in their original form or package in which they were imported, without being opened, and are so marked as to be identified as property imported from foreign nations.

Plaintiff further alleged that January 1, 1943, it was the owner of certain sacks of imported cocoa beans stored at its factory and in a warehouse, and that September 27, 1943, defendant Stacy, as assessor of King county, assessed the cocoa beans for the purpose of taxation for the year 1943 at a valuation of $34,380; that at the time of the assessment, plaintiff stated to the assessor that it claimed that the beans, as foreign imports, were exempt from taxation, but notwithstanding plaintiff's claim, the assessor extended upon his books a record of the cocoa beans as subject to assessment and taxation.

Plaintiff further alleged that the tax assessment referred to in its complaint was not made for the purpose of executing the inspection laws of the state of Washington, but was made solely for raising general revenue for the state of Washington and King county.

Plaintiff then alleged that the purported assessment is illegal and void, in that it violates article 1, § 8, paragraph 3, and article 1, § 10, paragraph 2, of the Constitution of the United States.

After alleging that it had no plain, speedy and adequate remedy at law, plaintiff prayed for a decree declaring the levy and assessment above referred to null and void, and that the defendants, Stacy as county assessor, and Carter as county treasurer, be restrained and enjoined, the assessor from delivering to the county treasurer for collection the assessment referred to, and the treasurer from proceeding to enforce any tax levied on the cocoa beans pursuant to the assessment. Plaintiff asked for such other and further relief as might be proper, and for judgment for its costs.

To the complaint, the defendants jointly demurred, first, upon the ground that the court had no jurisdiction of the person of the defendants or the subject matter of the action because of the failure of the plaintiff to comply with the requirements of chapter 62, Laws of Washington, 1931, Rem.Rev.Stat.§ 11315-1, et seq., as amended); and second, upon the ground that the complaint failed to state facts sufficient to constitute a cause of action, or to entitle the plaintiff to the relief sought thereby.

After argument, the court entered its order overruling the defendants' demurrer, holding that upon the allegations of the complaint, the truth of which was admitted by the demurrer, the property in question was exempt from state taxation, and the defendants having in open court announced their election to stand upon their demurrer, and having refused to answer or further plead, judgment was entered declaring the assessment against the cocoa beans null and void, and directing the defendant assessor to cancel and remove the assessment and levy from the personal property tax rolls of King county. Defendant assessor was also enjoined from certifying the assessment and levy to the defendant county treasurer for collection, and the treasurer was enjoined from proceeding to collect any personal property tax against the merchandise referred to, pursuant to the assessment and levy.

From the judgment the defendants have appealed, assigning error upon the ruling of the court that the merchandise referred to was exempt from taxation, and that §§ 2 and 7 of chapter 62, Laws of 1931, Rem.Rev.Stat.Supp. §§ 11315-2 and 11315-7, were not applicable to the situation presented by the complaint; and upon the order of the court overruling appellants' demurrer. Appellants also assign error upon the court's ruling that the merchandise sought to be taxed was not subject to local ad valorem property taxation, because the property was an import remaining in the original packages, and that the tax sought to be imposed was repugnant to the provisions of article 1,§§ 8 and 10, of the Constitution of the United States. Error is also assigned upon the entry of judgment holding the assessment void and enjoining collection of the tax.

Appellants contend that the trial court erred in holding that the allegations of respondent's complaint brought the proceeding without the terms of chapter 62, Laws of 1931, Rem.Rev.Stat. § 11315-1 et seq., as amended, and in ruling that respondent could maintain any action without first paying under protest the tax levied against the property, Rem.Rev.Stat.Supp. § 11315-2. Rem.Rev.Stat. § 11315-1, reads as follows:

'Injunctions and restraining orders shall not be issued or granted to restrain the collection of any tax or any part thereof, or the sale of any property for the non-payment of any tax or part thereof, except in the following cases:

'(1) Where the law under which the tax is imposed is void; and

'(2) Where the property upon which the tax is imposed is exempt from taxation.'

Rem.Rev.Stat.Supp., § 11315-7, reads as follows: 'Except as permitted by this act, no action shall ever be brought or defense interposed attacking the validity of any tax, or any portion of any tax: Provided, however, That this section shall not be construed as depriving the defendants in any tax foreclosure proceeding of any valid defense allowed by law to the tax sought to be foreclosed therein except defenses based upon alleged excessive valuations, levies or taxes.'

The act was held constitutional in Casco Co. v. Thurston County, 163 Wash. 666, 2 P.2d 677, 77 A.L.R. 622. The statute has been discussed in over a dozen later cases.

Article 1, § 8, of the Constitution of the United States, reads in part as follows:

'The Congress shall have Power * * *

'To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.'

The second paragraph of § 10 of the same article reads as follows: 'No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing it's inspection Laws: and the net Produce of all Duties and Imposts, laid by any State on Imports or Exports, shall be for the Use of the Treasury of the United States; and all such Laws shall be subject to the Revision and Controul of the Congress.'

Appellants rely upon the fact that there is no statute of the state of Washington granting exemption from state taxation to merchandise while moving in interstate or foreign commerce. Appellants admit that property so moving may be immune from taxation, and that any tax imposed thereon by a state in violation of the Federal Constitution or statute may be illegal or invalid, but contend that such property is not exempt from taxation within the meaning of our state statute above quoted.

The statute does not purport to limit its scope to state statutes, and if property is 'immune' from taxation because of provisions of the Federal Constitution, it is certainly 'exempt from taxation' within the meaning of our state statute.

If respondent's contention that so much of its property as is the subject matter of this action, while remaining in its present form, may not be subjected to the general taxing power of the state of Washington as exercised by the assessor and treasurer, respectively, of King county, is well founded, it follows that the levy made by appellant assessor is in fact void, and that no tax may be collected pursuant thereto. Appellants contend, however, that the question stated cannot be presented in such an action as this, and that the only manner in which respondent may secure any relief to which it may be entitled is by following the procedure outlined in Rem.Rev.Stat.Supp. § 11315-2, by paying the tax under protest, and suing to recover judgment for the amount so paid.

If in fact the cocoa beans,...