Yellow Cab Manufacturing Co. v. City of San Diego

Plaintiff brought this action to recover from defendant a tax in the sum of $558.60 paid by plaintiff under protest. The matter was tried upon the following agreed statement of facts.

“(1) That plaintiff, Yellow Cab Manufacturing Company is a corporation duly organized and existing under and by virtue of the laws of the State of Maine, with its principal place of business in the City of Chicago, State of Illinois, and is and at all times in the complaint mentioned was engaged in the City of Chicago, State of Illinois, in the business of manufacturing taxicabs and shipping the same in Interstate Commerce to points in the United States of America outside of the State of Illinois. (2) That defendant, City of San Diego, is a municipal corporation of the State of California, in the County of San Diego. (3) That during the month of December, 1920, the plaintiff, being then and there the manufacturer and owner of nineteen (19) taxicabs delivered the same to the Chicago, Milwaukee & St. Paul Railway Company in the City of Chicago, State of Illinois, for shipment via said C. M. & St. P. Railway Company, the Atchison, Topeka & Santa Fe Railway Company and the San Diego & Arizona Railway Company to San Diego, California, consigning the same to the order of the shipper at the City of San Diego, State of California, and that said taxicabs were consigned by six negotiable bills of lading to the order of said Yellow Cab Manufacturing Company at San Diego, California, said bills of lading being dated and covering taxicabs as follows, to-wit: December 10th, 1920, bill of lading No. 55 covering three taxicabs complete, motor numbers 121450, 122125 and 122167. December 10th, 1920, bill of lading No. 56, covering three taxicabs complete, motor numbers 122133, 121466 and 121451. December 11th, 1920, bill of lading No. 57, covering three taxicabs complete, motor numbers 123131, 122148 and 122130. December 11th, 1920, bill of lading No. 58, covering three taxicabs complete, motor numbers,

The plaintiff alleged as reasons why the tax was illegal that at all times while the taxicabs were in San Diego they were in transit and had never acquired an actual situs in that city rendering them subject to taxation. The trial court held that the automobiles were still in interstate commerce and not liable for the tax and gave judgment in favor of plaintiff, from which judgment defendant appeals.

Counsel for both parties agree that if, at the time of the assessment, the taxicabs were still in interstate commerce they are not subject to taxation by defendant. The precise question involved then is, viewed from the standpoint of taxation by the City of San Diego were or were

“Such a contract does not prevent the local taxing of the grain while in Chicago; but it does not take it out of interstate commerce in such a way as to deprive Congress of the power to regulate it, as is plainly intimated in the authority cited (p. 516), and expressly recognized in Stafford v. Wallace, 258 U. S. 495 , 525, 526 [ 23 A. L. R. 229 , 66 L. Ed. 735 , 745, 42 Sup. Ct. Rep. 397 ].”

The broad general principles which control the determination of the question before us are laid down in Champlain Realty Co. v. Brattleboro, 260 U. S. 366 [ 25 A. L. R. 1195 , 67 L. Ed. 309 , at 314, 43 Sup. Ct. Rep. 146 ], as follows:

“When it is shipped by a common carrier from one state to another, in the course of such an uninterrupted journey, it is clearly immune. The doubt arises when there are interruptions in the journey, and when the property, in its transportation, is under the complete control of the owner during the passage. If the interruptions are only to promote the safe or convenient transit, then the continuity of the interstate trip is not broken ... In other words, in such cases interstate continuity of transit is to be determined by a consideration of the various factors of the situation. Chief among these are the intention of the owner, the control he retains to change destination, the agency by which the transit is effected, the actual continuity of the transportation, and the occasion or purpose of the interruption during which the tax is sought to be levied.”

In 1894 the matter came before it in Pittsburgh & Southern Coal Co. v. Bates, 156 U. S. 577 [ 39 L. Ed. 538 , 15 Sup. Ct. Rep. 415 ]. There plaintiff in error, a Pennsylvania corporation, was engaged in the business of buying coal in that state, loading it on barges on the Ohio and Mississippi Rivers and carrying it down the river for sale in Tennessee, Arkansas, Mississippi and Louisiana. A statute of Louisiana provided a $50 penalty for the selling of any coal until it had first been inspected as provided for in the act. Plaintiff having sold one boatload of coal in New Orleans without the required inspection, action was begun against it to recover the penalty and the Supreme Court of Louisiana held plaintiff liable. In the United States Supreme Court it was argued that, as the coal was mined in Pennsylvania and taken on the navigable waters of the United States through several states for the purpose of sale in those states, and as the coal was sold while still on these navigable waters, the Louisiana statute when attempted to be applied to plaintiff’s activities was a regulation of interstate commerce, in conflict with the commerce clause of the federal Constitution, and, therefore, void. The court held contra, using the following language:

“The decision of the court in Brown v. Houston, 114 U. S. 622 [ 29 L. Ed. 257 , 5 Sup. Ct. Rep. 1091 ], thus rendered, seems to be conclusive of the case now before the court. The property in this case, as in that, still belongs to the original owners in Pennsylvania, but is brought on the navigable waters of the United States, in boats and barges to Louisiana for the purposes of sale, and is subject to taxation and sale as any other property of the citizens of the United States is subject when it becomes incorporated into the bulk of the property of the country, unless there be some special exemption set forth why it should not be thus taxed and sold, of which there is none here.”

In Kelley v. Rhoads, 188 U. S. 1 [ 47 L. Ed. 359 , 23 Sup. Ct. Rep. 259 ], sheep from Utah, destined for Nebraska, were being driven through Wyoming, grazing as they went, the intention being to ship them by rail after they had passed through that state. While the court held that under the circumstances the Wyoming authorities could not tax

“The law upon this subject, so far as it concerns interference with interstate commerce, is settled by several cases in this court, which hold that property actually in transit is exempt from local taxation, although if it be stored for an indefinite time during such transit, at least for other than natural causes or lack of facilities for immediate transportation, it may be lawfully assessed by the local authorities.”

In American Steel & Wire Co. v. Speed, 192 U. S. 500 [ 48 L. Ed. 538 , 24 Sup. Ct. Rep. 365 ], plaintiff, a New Jersey corporation, operated various manufacturing plants in states other than Tennessee. Its common method of selling was to have solicitors canvass the jobbers in Tennessee and adjoining states and receive orders for goods. The articles ordered would then be manufactured at the various plants. To facilitate the delivery of its products the steel company selected Memphis, Tennessee, as a distributing point and made the following arrangement with the Patterson Transfer Company of that city. The products were shipped from these plants to Memphis in plaintiff’s name as consignee, the Patterson Transfer Company received, sorted and stored them and made deliveries to the persons to whom the goods had been sold. The Patterson Company took no part in selling the goods but merely delivered the goods as instructed by the Steel Company. The Steel Company contended that the goods had acquired no situs in Tennessee since they were moving in interstate commerce from the place of manufacture for delivery to the persons to whom they had been sold. The court held the products to be taxable in Tennessee, using the following language:

“With these facts in hand we are of opinion that the court below was right in deciding that the goods were not in transit, but, on the contrary, had reached their destination at Memphis, and were there held in store at the risk of the steel company, to be sold and delivered as contracts for that purpose were completely consummated.”

In General Oil Co. v. Crain, 209 U. S. 211 [ 52 L. Ed. 754 , 28 Sup. Ct. Rep. 475 ], oil from wells in Pennsylvania and Ohio was shipped in tank-ears to Memphis, Tennessee,

“Its oil was not in movement through the state. It had reached the destination of its first shipment, and it was held there,- not in necessary delay or accommodation to the means of transportation, as in State, Detnold, Prosecutor, v. Engle [ 34 N. J. L. 425 ], supra, but for the business purposes and profit of the company. It was only there for distribution, it is said, to fulfill orders already received. But to do this required that the property be given a locality in the state beyond a mere halting in its transportation.”

In Bacon v. Illinois, 227 U. S. 504 [ 57 L. Ed. 615 , 33 Sup. Ct. Rep. 299 ], grain from the west had been shipped via Chicago destined for New York and Philadelphia under contracts with the railway company which permitted the temporary removal of the grain at Chicago for inspection, sacking, etc., after which it was to go on to New York and Philadelphia. Plaintiff had bought this grain and the shipping contracts from the original owners while the grain was still in transit from the west to Chicago, and had had the grain temporarily stored in grain elevators in Chicago for the purpose of inspection, etc., where it was to remain only long enough for that purpose and then to continue its journey to New York and Philadelphia. None of the grain was to be disposed of within the state of Illinois. Plaintiff contended that, since the grain was moving in interstate commerce, it was not subject to personal

“But neither the fact that the grain had come from outside the state, nor the intention of the owner to send it to another state, and there to dispose of it, can be deemed controlling when the taxing power of the state of Illinois is concerned. The property was held by the plaintiff in error in Chicago for his own purposes and with full power of disposition. It was not being actually transported, and it was not held by carriers for transportation. The plaintiff in error had withdrawn it from the carriers. The purpose of the withdrawal did not alter the fact that it had ceased to be transported and had been placed in his hands. He had the privilege of continuing the transportation under the shipping contracts, but of this he might avail himself or not, as he chose. He might sell the grain in Illinois or forward it, as he saw fit. It was in his possession, with the control of absolute ownership. He intended to forward the grain after it had been inspected, graded, etc., but this intention, while the grain remained in his keeping, and before it had been actually committed to the carriers for transportation, did not make it immune from local taxation. He had established a local facility in Chicago for his own benefit, and while, through its employment, the grain was there at rest, there was no reason why it should not be included with his other property within the state in an assessment for taxation which was made in the usual way, without discrimination. ’ ’

In Susquehanna Coal Co. v. South Amboy, 228 U. S. 665 [ 57 L. Ed. 1015 , 33 Sup. Ct. Rep. 712 ], plaintiff, a Pennsylvania corporation, shipped its coal from mines in Pennsylvania via the Pennsylvania railroad across New Jersey, destined for delivery in New York'and states east thereof. The coal arriving at the port of South Amboy; New Jersey, consigned to plaintiff, was there to be transferred to bottoms and shipped to states east of New York. If, upon its arrival at South Amboy, bottoms were on hand, the coal was immediately transferred from the cars to the bottoms, -otherwise it was dumped into a storage yard of the railroad company to be transferred to bottoms as they became available. Overruling the coal company’s contention that the coal was in interstate commerce,

In Doscher v. Query, 21 Fed. (2d) 521, after stating that the commerce clause of the federal Constitution will not protect property from local taxation after its journey has ended, the court says: “And this is true notwithstanding the goods have been transported in interstate commerce to the place where they are sought to be taxed, and are intended for shipment into other states, if they have reached the destination of their first journey and are being held by the owner for disposition in the ordinary course of business, and the stoppage be not a mere temporary delay in transportation.”

It remains to apply the principles thus enunciated to the facts in the case at bar. Plaintiff here expressly consigned the taxicabs in question to itself, thus retaining title until the drafts had been paid by Uhler. As not only the taxicabs themselves but the drafts likewise had both been sent to San Diego it is obvious that the sale was to be consummated in that city. The only reason why this was not done was that Uhler failed to pay the drafts.. We then have a condition where property consigned to plaintiff in its own name has completed its journey and is stored in a warehouse in San Diego awaiting a sale in that city. By no course of reasoning could it be said that these

In none of the eases cited above, except Pittsburgh & Southern Coal Co. v. Bates, had the articles arrived at their ultimate destination. The ’ purposes for which they were temporarily held in the locality assessing the tax were all purposes connected with transporting them to their ultimate destination. And yet these breaks in the continuity of the journey were held to take them out of interstate commerce sufficiently to subject them to local taxation. All the stronger are the facts here presented, where the goods had arrived at their ultimate destination a few days before the assessment date, had been placed in a public warehouse, no further transportation being contemplated and none, in fact, commenced for a period of nearly six months thereafter.

In a . well-reasoned and well-considered opinion of the Supreme Court of Idaho, Columbia Motors Co. v. Ada County, 42 Idaho, 678 [ 48 A. L. R. 950 , 247 Pac. 786 ], the court.had under consideration a state of facts on all-fours with the case at bar, and, after reviewing the federal decisions on the subject, reached the conclusion that the automobiles were taxable.

Counsel for plaintiff has cited a number of decisions, in none of which, however, is the taxability of personal property under consideration. The only case involving taxation of any kind cited is Robbins v. Taxing District of Shelby County, 120 U. S. 490 [ 30 L. Ed. 694 , 7 Sup. Ct. Rep. 592 ], and there the sole question was the validity of an occupation tax imposed by a county on traveling salesmen who represented commercial houses outside the state, and which case is not in point on the subject involved in this appeal.

For the foregoing reasons the judgment is reversed and the cause remanded to the trial court, with directions to enter judgment for the defendant.

Marks, J., and Barnard, J., concurred.