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District Court of Appeal, Second District, Division 2, California.


Civ. 13618.

Decided: July 24, 1942

Stanton & Stanton and Henry C. Rohr, all of Los Angeles, for appellant. J. H. O'Connor, Co. Counsel, and Gordon Boller, Deputy Co. Counsel, both of Los Angeles, for respondents.

From a judgment in favor of defendant predicated upon the sustaining of a demurrer without leave to amend to an application for a writ of mandate to compel defendants to cancel tax assessments levied upon lumber, petitioner appeals.

The undisputed facts are:

From 1937 to 1940 inclusive petitioner imported shipments of Philippine mahogany from the Philippine Islands into the port of Long Beach. The lumber was milled and finished in the Philippines and then shipped to Long Beach, where it was unloaded from steamships and stored in piles in the yard of a warehouse. The lumber was shipped in individual pieces and not packed nor in any manner bundled together. When unloaded it was stacked in piles, one piece upon another. Each shipment was filed separately and kept to itself. From the piles of lumber thus received portions were sold to customers outside the state of California. When it was sold, petitioner directed its warehousemen to make shipment of the respective pieces of lumber purchased to the purchaser and petitioner paid the cost of loading and freight. Petitioner never maintained an office in California, its principal office being located in Portland, Oregon.

The county of Los Angeles assessed a tax against the lumber of petitioner remaining in the yard at Long Beach on the first Monday of March, 1938, and also a similar assessment was made on the lumber remaining in the yard on the first Monday in March, 1939.

Two questions are presented for determination, which will be stated and answered hereunder seriatim.

First: Did petitioner as a foreign corporation, which had not recorded with the secretary of state and county clerk certified copies of its articles of incorporation have the right to maintain the present action?

This question must be answered in the affirmative. It is the law of California that a foreign corporation may not maintain an action or proceeding in any court of this state upon any intrastate business, unless it has filed with the secretary of state a certified copy of its articles of incorporation and also filed a certified copy thereof in the office of the county clerk of the county where its principal place of business in this state is located. (§§ 405, and 408, Civ.Code.)

The foregoing requirements, however, are not applicable to foreign corporations which are engaged solely in interstate and foreign commerce. Under the facts set forth above, which were admitted as true by respondent's demurrer, petitioner was engaged solely in interstate and foreign commerce and, therefore, was entitled to maintain the present proceeding without complying with the requirements of section 405, Civil Code.

Second: Where milled and finished lumber is imported into the state of California and not packaged or bundled together but simply shipped by individual pieces and unloaded and stacked in piles, one piece upon another, and thereafter a portion of said lumber is sold by a nonresident owner who does not maintain an office in the state of California to customers outside of the state of California, is the lumber which remains in the state of California subject to a personal property tax of the county in which it is located?

This question must be answered in the negative and is governed by the following pertinent rules of law:

(1) The law is settled that a state or a subdivision thereof may not constitutionally levy a tax upon a thing during the time it retains its character as an import and remains the property of an importer in a warehouse in the original form or package in which it was imported. (Art. I, § 10, Constitution of the United States; Brown v. State of Maryland, 12 Wheat. 419, 6 L.Ed. 678, 684; F. May & Co. v. New Orleans, 178 U.S. 496, 507, 20 S.Ct. 976, 44 L.Ed. 1165.)

(2) An original package as applied to interstate and international commerce is a package, bundle, or aggregation of goods put up in original form, covering, or receptacle for transportation and as a unit transported from one state or nation to another. It is the identical package delivered by the consignor to the carrier at the initial point of shipment in the exact condition in which it was shipped. (15 Corpus Juris Secundum, (1939), Commerce, § 28, p. 310; Guckenheimer v. Sellers, C.C.S.C., 81 F. 997, 1000.)

The case of Mexican Petroleum Corp. v. City of South Portland, 121 Me. 128, 115 A. 900, 26 A.L.R. 965, cited by respondent and apparently strenuously urged in the trial court, which reaches a contrary conclusion, has been expressly disapproved as the law in this state. (See Philippine Ref. Corp. v. Contra Costa County, 24 Cal.App.2d 665, 669, 76 P.2d 163.)

(3) The fact that a portion of shipments of goods is sold or offered for sale, leaving the remainder intact in their original packages does not make the balance subject to state taxation. (State v. Board of Assessors, 46 La.Ann. 145, 15 So. 10, 49 Am.St.Rep. 318, 320; Mexican Petroleum Corp. v. Louisiana Tax Commission, 173 La. 604, 138 So. 117, 120; City of Galveston v. Mexican Petroleum Corp., D.C.Tex., 15 F.2d 208.)

Applying the foregoing rules to the facts of the instant case, it is our opinion that the original package was each individual piece of lumber, since the lumber was not bundled or in any manner bound together and was the identical thing delivered by the consignor to the carrier at the initial point of shipment and it so remained at all times here in question. There can be no doubt that, had one piece of lumber alone been shipped, it would have constituted the original package and not been subject to taxation under the facts set forth above. Had two or three or a dozen pieces of lumber been shipped, it is likewise obvious that each individual piece of lumber would have constituted an original package. The fact that there were thousands of individual packages did not change the character of each piece of lumber as an original package. Therefore, under the first rule above stated the county was without authority to levy a tax upon the lumber which remained in the original packages and which had not, under the admitted facts, been mingled with the mass of property of this state.

For the foregoing reasons the judgment is reversed with directions to the trial court to overrule the demurrer and allow respondents a reasonable time within which to answer, if they be so advised.

McCOMB, Justice.

MOORE, P. J., concurred.