NATIONAL GEOGRAPHIC SOCIETY v. BOARD OF EQUALIZATION

Reset A A Font size: Print

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

NATIONAL GEOGRAPHIC SOCIETY, Plaintiff and Respondent, v. BOARD OF EQUALIZATION of the State of California, Defendant and Appellant.

Civ. 35629.

Decided: March 26, 1975

Evelle J. Younger, Atty. Gen., Ernest P. Goodman, Asst.Atty.Gen., Philip M. Plant, Deputy Atty. Gen., San Francisco, Cal., for appellant. Hanson, O'Brien, Birney, Stickle & Butler, Arthur B. Hanson, Washington, D. C., Broad, Khourie & Schulz, Professional Corporation, Michael N. Khourie, San Francisco, Cal., for respondent.

Defendant Board of Equalization of the State of California (hereinafter ‘Board’) appeals from the judgment of the San Francisco Superior Court in favor of plaintiff National Geographic Society (hereinafter ‘Society’).

Issue Presented:

Plaintiff's in-state activities do not provide sufficient nexus to make it liable for use taxes on materials purchased by California residents through mail orders to plaintiff's out-of-state office.

Record:

Plaintiff filed a complaint against defendant for refund of certain use taxes paid under protest. After trial before the court, without a jury, upon a stipulation of facts the court filed an amended judgment1 ordering defendant to refund to plaintiff $3,864.33 together with interest. Defendant appeals.

Stipulated Facts:

The National Geographic Society is a nonprofit scientific and educational organization incorporated in 1888 under the laws of the District of Columbia with its administrative offices located at 17th and M Streets, N.W., Washington, D. C.

The Society is exempted as an organization from the payment of federal income taxes under Internal Revenue Code, section 501, subdivision (c), subsection (3) as amended.

The stated objective for organization of the Society is ‘the increase and diffusion of geographic knowledge.’ Since 1890, the Society has supported exploration and research projects dedicated to increasing man's knowledge of earth, sea, sky and the universe. The scientific and educational information it obtains is made available to its members and subscribers through its monthly National Geographic Magazine (hereinafter ‘the Magazine’), its offerings of maps, atlases, globes, books and through school bulletins, television programs and research reports.

The Magazine, the official journal of the Society, is furnished only to members of the Society except for subscribing schools, libraries, bookdealers and corporations which represent less than 5 percent of total circulation.

Membership in the Society is open to all persons. The majority of such members joined the Society because they desired to obtain the Magazine. Applications for membership must be completed and mailed to the Society's headquarters in the Washington area. Members presently pay $7.50 a year for membership in exchange for which they receive one year's subscription to the Magazine. Members do not become entitled by virtue of their membership status to any other publications or articles of merchandise free of charge (except six month indexes); however, they do have the opportunity to purchase items published by the Society from its offices in Washington, D. C.

Nonmember subscribers to the Magazine (the schools, libraries, bookdealers and corporations referred to above) must pay $9.00 a year and are primarily restricted to institutions that are not eligible for individual membership in the Society.

As of June 1972, there were approximately 872,000 member subscriptions and 21,000 nonmember subscriptions to the Magazine in California.

The Magazine is exempted from California sales and use taxes as a ‘periodical’ under Revenue and Taxation Code section 6362.

The Society advertised offerings of maps, atlases, globes and books in the Magazine and by announcements mailed to members and subscribers during all periods relevant hereto. To take advantage of these offerings, an order form enclosed with the mail announcements or an order coupon in the Magazine is removed, completed and mailed to the administrative offices of the Society in Washington, D. C. Deliveries of such publications are made through the mail either directly from the Society's Washington and/or Maryland offices. Payment for the merchandise ordered is either cash with order or by a mailed billing following the purchaser's receipt of the merchandise. Finally, a small volume of merchandise is sold directly over the counter in the Washington, D. C. offices.

Although these offerings of maps, atlases, globes and books are made only in the Magazine and in mail announcements, anyone who removes an order coupon from the Magazine may order and receive such merchandise.

Since 1956, the Society has maintained two offices in California. One such office has been on the 10th floor of the 31-story Russ Building in San Francisco. Until 1965, the other was on the second floor of a two-story building at 8639 Wilshire Boulevard in Beverly Hills. Each office was staffed by a manager and a secretary.

During the period from August 1, 1963 through May 6, 1964, maps, atlases, globes and books of the type described above were sold to individuals over the counter from the San Francisco and Los Angeles offices of the Society totalling a sales' value as follows:

In comparison with local sales as tabulated in the foregoing schedule, the shipment of maps, atlases, globes and books exclusive of the Magazine to California Society members and residents from orders received at the Washington, D. C. office during the same period totalled a sales' value of $452,470.00.

With regard to the sales of maps, atlases, globes and books from the San Francisco and Los Angeles offices of the Society as described above, the offices did not verify whether or not a prospective purchaser was a member of the Society and sales could have been made to individuals who were neither members nor subscribers.

The Society paid to the Board state and local sales taxes plus appropriate penalties and interest upon sales totalling $546.20 described above, during the period April 1, 1964 to May 6, 1964. The Society does not seek refund of these taxes, penalties and interest.

At all times other than during the period from August 1, 1963 to May 6, 1964, no sales were made from the San Francisco and Los Angeles offices of the Society and said offices were again restricted in authority and function to solicitation of advertising for the Magazine.

During the period from April 1, 1964 to September 30, 1964 the Society made sales of maps, atlases, globes and books to California residents from its Washington, D. C. offices in the manner described above in the sum of $83,596.48.

Based upon the sales described above, the Society paid under protest a use tax collection liability as follows:

Plaintiff is not liable for the use taxes.

As stated in appellant's opening brief: ‘The sole question presented in this case is whether respondent's activities in the State of California provided sufficient nexus to support the constitutional imposition of a use tax collection liability measured by respondent's gross receipts from its sales of maps, atlases, globes and books from its District of Columbia and Maryland offices to California residents during the period from April 1, 1964 to September 30, 1964.’

During the time period for which the Board seeks the use taxes, the Society's sole contacts in California were the maintenance of two small offices in the state, each of which was staffed with a secretary and a salesman whose purpose was to solicit advertising to appear in the Magazine. The Board contends that the maintenance of the two offices for even that limited purpose subjects the Society to payment of use taxes on the mail order sales made outside the state to residents of the state.2 The Board contends that the imposition of the tax collection does not violate either the due process clause or the commerce clause of the United States Constitution.

Basically the California use tax statute seeks to make out-of-state sellers collect use taxes on items sold to California residents for use, storage or consumption in this state. It is the consumer who is taxed, but the retailer is liable for an amount equivalent to the tax due to his statutorily imposed duty to collect the tax. (Rev. & Tax.Code § 6203; Montgomery Ward & Co. v. State Bd. of Equalization (1969) 272 Cal.App.2d 728, 742–743, 78 Cal.Rptr. 373; cert. den. 396 U.S. 1040, 90 S.Ct. 688, 24 L.Ed.2d 684.)

One of the most recent Supreme Court cases on the question of whether imposition of a use tax liability violates the due process clause and the commerce clause states: ‘These two claims are closely related. For the test whether a particular state exaction is such as to invade the exclusive authority of Congress to regulate trade between the States, and the test for a State's compliance with the requirements of due process in this area are similar. See Central R. Co. of Pa. v. Commonwealth of Pennsylvania, 370 U.S. 607, 621–622, 82 S.Ct. 1297, 1306–1307, 8 L.Ed.2d 720 (concurring opinion of Mr. Justice Black). As to the former, the Court has held that ‘State taxation falling on interstate commerce * * * can only be justified as designed to make such commerce bear a fair share of the cost of the local government whose protection it enjoys.’ Freeman v. Hewit, 329 U.S. 249, 253, 67 S.Ct. 274, 277, 91 L.Ed. 265. See also Central Greyhound Lines, Inc. v. Mealey, 334 U.S. 653, 663, 68 S.Ct. 1260, 1266, 92 L.Ed. 1633; Northwestern States Portland Cement Co. v. State of Minnesota, 358 U.S. 450, 462, 79 S.Ct. 357, 364, 3 L.Ed.2d 421. And in determining whether a state tax falls within the confines of the Due Process Clause, the Court has said that the ‘simple but controlling question is whether the state has given anything for which it can ask return.’ Wisconsin v. J. C. Penney Co., 311 U.S. 435, 444, 61 S.Ct. 246, 250, 85 L.Ed. 267. See also Standard Oil Co. v. Peck, 342 U.S. 382, 72 S.Ct. 309, 96 L.Ed. 427; Ott v. Mississippi Val. Barge Line Co., 336 U.S. 169, 174, 69 S.Ct. 432, 434, 93 L.Ed. 585. The same principles have been held applicable in determining the power of a State to impose the burdens of collecting use taxes upon interstate sales. Here, too, the Constitution requires ‘some definite link, some minimum connection, between a state and the person, property or transaction it seeks to tax.’ Miller Bros. Co. v. State of Maryland, 347 U.S. 340, 344–345, 74 S.Ct. 535, 539, 98 L.Ed. 744; Scripto, Inc. v. Carson, 362 U.S. 207, 210–211, 80 S.Ct. 619, 621–622, 4 L.Ed.2d 60. See also American Oil Co. v. Neill, 380 U.S. 451, 458, 85 S.Ct. 1130, 1134, 14 L.Ed.2d 1.' (Nat. Bellas Hess v. Dept. of Revenue (1967) 386 U.S. 753, 756–757, 87 S.Ct. 1389, 1391, 18 L.Ed 505.)

The concept of some nexus, some minimum connection between the state and the person, property or transaction it seeks to tax is reiterated again and again in the cases. In American Oil C. v. Neill (1965) 380 U.S. 451, 85 S.Ct. 1130, 14 L.Ed.2d 1, the court restated this concept, but stated that even where a corporation has some in-state contacts, the corporation could exempt itself from use tax liability by a showing that no connection in reality existed between the in-state activities and the out-of-state sale. ‘These cases have also firmly established the doctrine that when a tax is imposed on an out-of-state vendor, ‘nexus' between the taxing State and the taxpayer is the outstanding prerequisite on state power to tax. Consistent with this requirement there must be ‘some definite link, some minimum connection, between a state and the person, property or transaction it seeks to tax.’ Miller Bros. Co. v. State of Maryland, supra, 347 U.S. at 344–345, 74 S.Ct. [535] at 539. Granted that when a corporation, pursuant to permission given, enters a State and proceeds to do local business the ‘link’ is strong. In such instances there is a strong inference that it exists between the State and transactions which result in economic benefits obtained from a source within the State's territorial limits. The corporation can, however, exempt itself by a clear showing that there are no in-state activities connected with out-of-state sales. In such instances, the transactions are said to be ‘dissociated from the local business,’ Norton Co. v. Department of Revenue, supra, 340 U.S. [534] at 537, 71 S.Ct. [377] at 380, [95 L.Ed. 517], and therefore may not, consistent with due process, be taxed.' (American Oil Co. v. Neill, supra, at p. 458, 85 S.Ct. at p. 1134.)

And in Montgomery Ward & Co. v. State Bd. of Equalization, supra, 272 Cal.App.2d 728, at p. 741, 78 Cal.Rptr. 373, 379, cert. den. 396 U.S. 1040, 90 S.C. 688, 24 L.Ed.2d 684, it was stated: “The due process clause requires ‘some definite link, some minimum connection, between a state and the person, property or transaction it seeks to tax.’ (Miller Bros. Co. v. Maryland (1954) 347 U.S. 340, 344–345 [74 S.Ct. 535, 98 L.Ed. 747] * * *) The state's action will satisfy the constitutional test ‘if by the practical operation of a tax the state has exerted its power in relation to opportunities which it has given, to protection which it has afforded, to benefits which it has conferred by the fact of being an orderly, civilized society.’ (Wisconsin v. J. C. Penney Co. (1940) 311 U.S. 435, 444 [61 S.Ct. 246, 85 L.Ed. 267] * * *)' [Citations.]' [Emphasis added.] That court further wrote, ‘The protection afforded and the benefits conferred must have some relationship to the transaction which the state seeks to burden.’ (Montgomery Ward & Co. v. State Bd. of Equalization, supra, at p. 745, 78 Cal.Rptr. at p. 382.)

In the instant case it is true that the Society had in-state activities. However, these activities were so ‘dissociated’ from the out-of-state sales that there is not sufficient nexus between the state and the Society to form a constitutional basis upon which the Society may be required to collect use taxes on the out-of-state sales.

What did the State of California give, in relation to the out-of-state sales, that the state can ask a return by way of requiring the Society to collect the use taxes? The answer is that the state provided no protections or benefits which were related to the out-of-state sales. Many California residents received the Magazine through the federal mail.3 The Society advertised offerings of the books, maps, globes and atlases in question in the Magazine. The Magazine subscribers were also solicited to purchase these items by circulars received through the mail. After reading about the items in the Magazine ads or circulars, those California residents who chose to do so then ordered the items by mail from an office of the Society in Washington, D. C. Deliveries were made through the mail from either the Washington, D. C. or Maryland Society office. As can be seen, all parts of the transactions were conducted through the federal mail, with the state playing no part and providing no benefits or protections.

However, the question must also be asked whether the Society's in-state activities were connected with the out-of-state sales. No real link may be established between the two. The Society maintained two small offices in California. A function of the secretary and salesman in each office was to solicit local businesses to advertise their merchandise and services in the Magazine. The solicitation of advertisements to appear in the Magazine had no effect upon whether California residents would purchase products of the Society which they saw advertised in the Magazine or in mailed circulars.

The fact that at one time the same type of products were sold in a relatively small amount to individuals over the counter in the two California offices presents no problem as that situation no longer exists. The only place where a California resident could have seen the items advertised was in the Magazine or in mailed circulars indicating that the items could be mail ordered.

The Board asserts that the Society's instate activities are integrally related to the out-of-state sales in that the advertising which the Society's resident employees solicited for the Magazine created revenue for the Magazine, and the Magazine, in turn, was the basic vehicle used to promote the Society's mail order items and also provided the source of the circulars' mailing list. As discussed above, the connection is too tenuous to provide a constitutional nexus.

There appear to be no opinions presenting factual situations close to that of the case at bench. However, both appellant and respondent rely strongly upon a few cases containing what they consider to be facts analogous to the instant case. The Board relies upon Nelson v. Sears, Roebuck & Co. (1941) 312 U.S. 359, 61 S.Ct. 586, 85 L.Ed. 888; Reader's Digest Association v. Mahin (1970), 44 Ill.2d 354, 255 N.E.2d 458, cert. den. 399 U.S. 919, 90 S.Ct. 2237, 26 L.Ed.2d 786; and Standard Pressed Steel Co. v. Washington Dept. of Rev. (1975) 419 U.S. 560, 95 S.Ct. 706, 42 L.Ed.2d 719.

Nelson v. Sears, Roebuck & Co., supra, 312 U.S. 359, 61 S.Ct. 586, 85 L.Ed. 888 considered whether an Iowa use tax was constitutionally applied to Sears' mail order business conducted directly between customers in Iowa and Sears' mail order houses located outside of Iowa. Sears was a New York corporation authorized to do business in Iowa, and having 12 retail stores in Iowa. The Supreme Court held that the use tax was constitutionally applied, on the theory that Sears was doing business in Iowa through its retail stores and thereby receiving benefits from the state for which the state had the power to exact a price; and that the mail orders were ‘not unrelated’ to Sears' course of business in Iowa. The court wrote, as to the privilege of doing business in the state: ‘Since Iowa has extended to it that privilege, Iowa can exact this burden as a price of enjoying the full benefits flowing from its Iowa business. Cf. Wisconsin v. J. C. Penney Co., supra. Respondent cannot avoid that burden though its business is departmentalized. Whatever may be the inspiration for these mail orders, however they may be filled, Iowa may rightly assume that they are not unrelated to respondent's courese of business in Iowa. They are nonetheless a part of that business though none of respondent's agents in Iowa actually solicited or placed them. Hence to include them in the global amount of benefits which respondent is receiving from Iowa business is to conform to business facts.’ (Nelson v. Sears, Roebuck & Co., supra, at p. 364, 61 S.Ct. at p. 588.) [Emphasis added.]

The Sears case is distinguishable from the case at bench because Sears had extensive in-state activities due to its 12 retail stores in the state, and that local business was related to the out-of-state sales. The 12 Iowa stores no doubt served as advertisement and inducement for local residents to purchase mail order items, which probably were the same or similar to merchandise found in the stores. Both the retail and the mail order operations were related to the same overall sales effort. In the case at bench there is no such relation between the selling of advertising space in the Magazine and the mail order purchase of books, globes, maps and atlases. Additionally, the benefits and protections afforded the 12 in-state retail stores in the Sears case must have been extensive. This is not so in the instant case.

Reader's Digest Association v. Mahin, supra, 255 N.E.2d 458 considered whether Illinois could hold Reader's Digest Association liable for collection of use taxes on the mail order purchase of books and phonograph albums by state residents during three months of 1967. The association was not licensed to do business in Illinois and had no office, sales house, warehouse or property in Illinois. It published a monthly magazine which was exempt from Illinois use tax, and also published books and record albums. The books and record albums could not be purchased in Illinois, but were ordered by mail from New York and shipped by mail to the purchaser. The evidence showed that during 1967 Reader's Digest Association solicited orders for the books and records by direct mail solicitation and by newspaper, radio, magazine and TV ads. The purely local advertising consisted of an ad in the Chicago Sun Times, and 305 radio and TV ads over Illinois stations.

Additionally, Reader's Digest Association wholly owned two subsidiaries in Illinois: Reader's Digest Sales and Services, Inc., and Reader's Digest Services, Inc., and held a 51% interest in Quality School Plan, Inc.

Reader's Digest Sales and Services, Inc. was licensed to do business in Illinois and had a Chicago office. The corporation solicited ads to appear in Reader's Digest magazine. Prior to the time period under consideration, the corporation had engaged in the door-to-door sale of records and record players.

Reader's Digest Services, Inc. was not licensed to do business in Illinois, owned no property in Illinois, and had one salesman residing in Illinois. The corporation published education material and a monthly Educational Edition of Reader's Digest.

Quality School Plan, Inc., in which Reader's Digest Association held a 51% interest, was not licensed to do business in Illinois and owned no property there, but had nine salesmen in the state who solicited orders for the Educational Edition of Reader's Digest.

The court there held, ‘Considering the full benefits flowing to plaintiff's aggregate business from its resident solicitors and local advertising, we find without further examination of the other subsidiaries an adequate basis for use-tax liability.’ (Reader's Digest Association v. Mahin, supra, 255 N.E.2d 458 at p. 460.) In this holding a full reading of the case reveals that the court is referring to the Reader's Digest Sales and Services, Inc. solicitation of ads to appear in the magazine when it refers to ‘resident solicitors,’ and that the court is referring to the advertising in the Chicago Sun Times and on local radio and TV stations when it refers to ‘local advertising.’

A comparison of the holding in the Reader's Digest case to the facts in the case at bench shows that while the Society similarly has resident employees soliciting ads to appear in the Magazine, there is no local advertising of the Society's products in local newspapers, or on local radio and TV stations as there was in the Reader's Digest case. Further, if one goes behind the holding in that case and considers all the facts presented, it is even more clear that the contacts between the state and Reader's Digest were far greater than the contacts in the case at bench.

In Standard Pressed Steel Co. v. Washington Dept. of Rev., supra, 419 U.S. 560, 95 S.Ct. 706, 42 L.Ed.2d 719, the appellant manufacturer with a home office and manufacturing plant in Pennsylvania and another plant in California appealed from a judgment upholding the imposition of Washington state's business and occupation tax levied on gross receipts of appellant resulting from its sale of aerospace fasteners to Boeing, its principal Washington customer. The appellant had one employee based in Washington, an engineer, whose office was in his home but who took no fastener orders from Boeing, but did consult with Boeing regarding its anticipated fastener needs and followed up any difficulties in the use of fasteners after delivery. The state taxing authorities found that appellant's business activities in Washington were sufficient to sustain the tax. The decision was affirmed on the appeal. The case is cited by defendant Board as applicable in the instant action. However, there is no comparison between Standard's connection with Washington and the Society's connection with California. The following quotation from the case shows this clearly. ‘The State Board of Tax Appeals found that the activities of Martinson [the appellant's engineer] were necessary to appellant in making it aware of which products Boeing might use, in obtaining the engineering design of those products, in securing the testing of sample products to qualify them for sale to Boeing, in resolving problems of their use after receipt by Boeing, in obtaining and retaining good will and rapport with Boeing personnel, and in keeping the invoicing personnel of appellant up to date on Boeing's lists of purchasing specialists or control buyers. . . . [¶] . . . appellant's employee, Martinson, with a full-time job within the State, made possible the realization and continuance of valuable contractual relations between appellant and Boeing.’ (Standard Pressed Steel Co. v. Washington Dept. of Rev., supra, at 561, 95 S.Ct. at p. 708.) Very definitely, Standard's agent Martinson was directly connected with the sale of its product to Boeing. In our case the Society's agents in California had no connection with the sale of its products. They did nothing to make Californians aware of the Society's products and had nothing to do with solving problems if any arose in connection with those products. Standard Pressed Steel is not in point.

Respondent, Society, relies upon American Oil Co. v. Neill, supra, 380 U.S. 451, 85 S.Ct. 1130, 14 L.Ed.2d 1; and Montgomery Ward & Co. v. State Bd. of Equalization, supra, 272 Cal.App.2d 728, 78 Cal.Rptr. 373, cert. den. 396 U.S. 1040, 90 S.Ct. 688, 24 L.Ed.2d 684.

The American Oil Co. case considered the issue of whether, where a licensed Idaho dealer in motor fuels sells and transfers gasoline outside the state for importation into the state by an agency of the federal government, the state may constitutionally impose an excise tax upon the transaction on the theory that the dealer constructively receives the gasoline in Idaho upon its importation. Although the case dealt with an excise tax on the ‘dealer’ who first ‘receives' the motor fuel in the state, not a use tax, the court applied the ‘nexus' test and held that since every phase of the transaction occurred outside the state, neither the fact that the dealer was licensed in the state nor that it performed activities in the state sufficed to uphold the tax. The court held that imposition of an excise tax with respect to an out-of-state transaction entirely dissociated from any in-state activity violated the due process clause. The case is analogous to the Society's situation where there are also in-state activities which are dissociated from the out-of-state sales.

In Montgomery Ward & Co. v. State Bd. of Equalization, supra, 272 Cal.App.2d 728, 78 Cal.Rptr. 373, the court considered whether Montgomery Ward should be held liable for the collection of use taxes on sales of goods delivered on credit at its Klamath Falls, Oregon and Reno, Nevada stores to customers who held charge accounts bearing California addresses.

Montgomery Ward was an Illinois corporation which conducted a nationwide retail sales business with retail stores in California and many other states. There were 21 Montgomery Ward stores and a regional office in California. Because the Reno and Klamath Falls stores were close to the California border, some California residents customarily shopped in those stores. Montgomery Ward carried on a continual advertising program throughout California, Oregon and Nevada by mail, TV, radio, newspapers and magazines, with the border stores in question engaging in local media advertising which impinged on the neighboring California counties.

The court found that the border stores did not receive such opportunities, protection or benefits from California that the state could burden Montgomery Ward's Nevada or Oregon businesses with the collection of use taxes on sales to California residents which were completed outside of the State of California without violating the due process clause.

As to the commerce clause, the court found that California had contributed nothing to the sales but the home residence of the purchaser and a future haven for the goods he purchased out of state. It concluded that the discriminatory imposition of a use tax collection liability unwarrantedly burdened the right of the out-of-state retailer to do business with residents of California.

While the Montgomery Ward case differs factually from the instant case, it does illustrate the principle that the taxable transaction must bear some relation to the in-state activities of a business in order for the state to constitutionally impose a use tax collection liability. In the case at bench, such a relationship between the in-state activities and the out-of-state sales does not exist.

The Society's activities in California are so dissociated from the activities sought to be taxed that there is no justifiable relationship between the two.

The soliciting in California of advertising for the Magazine does not provide the minimal nexus which is required for this state constitutionally to impose use taxes on the Society's mail order sales to California residents.

Judgment affirmed.

FOOTNOTES

FOOTNOTE.  

1.  The court first filed a judgment and then an amended judgment. As the amended judgment superseded the original judgment we consider herein only the amended judgment.

2.  The section involved is Revenue and Taxation Code section 6203: ‘Except as provided by Sections 6292 and 6293 every retailer engaged in business in this state and making sales of tangible personal property for storage, use, or other consumption in this state, not exempted under Chapters 3.5 or 4 of this part, shall, at the time of making the sales or, if the storage, use, or other consumption of the tangible personal property is not then taxable hereunder, at the time the storage, use, or other consumption becomes taxable, collect the tax from the purchaser and give to the purchaser a receipt therefor in the manner and form prescribed by the board. [¶] As respects leases constituting sales of tangible personal property, the tax shall be collected from the lessee at the time amounts are paid by the lessee under the lease. [¶] ‘Retailer engaged in business in this state’ as used in this and the preceding section means and includes any of the following: [¶](a) Any retailer maintaining, occupying, or using, permanently or temporarily, directly or indirectly, or through a subsidiary, or agent, by whatever name called, an office, place of distribution, sales or sample room or place, warehouse or storage place or other place of business. [¶](b) Any retailer having any representative, agent, salesman, canvasser or solicitor operating in this state under the authority of the retailer or its subsidiary for the purpose of selling, delivering, or the taking of orders for any tangible personal property. [¶](c) As respects a lease, any retailer deriving rentals from a lease of tangible personal property situated in this state.'

3.  As of June 1972 there were 893,000 California subscribers to the Magazine.

BRAY, Associate Justice.* FN* Retired Presiding Justice of the Court of Appeal sitting under assignment by the Chairman of the Judicial Council.

TAYLOR, P. J., and ROUSE, J., concur.