DE ARYAN v. AKERS (1938)

Respondent Roy O. Akers has, at all of the times mentioned in the pleadings, been engaged in the business of selling certain supplies at retail at San Diego, California, and has, therefore, been a “retailer” within the meaning of that term as used in paragraph (e) of section 2 of the California Retail Sales Act of 1933, St.1933, p. 2600; and has been licensed as such retailer by the state board of equalization. On February 1, 1937, Akers sold to appellant two sheets of four-ply cardboard for 15 cents, and exacted from him as a sales tax and as something which he was required by the state to exact, an additional one cent which appellant paid under protest and brings this action to recover. Respondent testified that in making his reports at quarterly intervals to the state board of equalization and paying the tax to it on his sales he pays a tax of 3 per cent on the sales made by him for the accounting period, but does not report each individual sale or the amount collected by him on account of the tax for each individual purchase. The effect of collecting on an individual 15–cent sale an entire cent, is to collect in guise of a tax nearly 7 per cent on the amount of the sale. Since only 3 per cent on the amount of the sale is accounted for to the state the result is that the retailer by virtue of the collection which he has thus made over and above the selling price, retains a profit on a sale of that size of practically 4 per cent, or more than the state gets from it, all at the actual expense of the purchaser. The case presents no disputed question of fact. Judgment was given for respondent in the trial court and from such judgment the present appeal is taken.

As was said in National Ice & Cold Storage Company of California v. Pacific Fruit Express Company, Cal.Sup., 79 P.2d 380, with respect to the act under consideration (page 381):

“As far as here is important, the title of that statute is: ‘An act imposing a tax for the privilege of selling tangible personal property and for the privilege of furnishing, preparing or serving tangible personal property, providing for permits to retailers, [and] providing for the levying, assessing, collecting, paying and disposing of such tax.’ In part, section 3 of the statute, p. 2600, provides that: ‘For the privilege of selling tangible personal property at retail a tax is hereby imposed upon retailers.’ Various other excerpts from the statute which contain implications of the fact that the tax was intended to be levied upon retailers, are as follows: By section 9, p. 2602, it is provided that: ‘The tax levied hereunder shall be a direct obligation of the retailer. * The retailer shall * make out a return. * The retailer shall deliver the return together with a remittance of the amount of the tax due to the office of the board.’ By section 12, p. 2603, retailers are required to obtain permits to engage in the business of selling tangible personal property at retail. By section 13, p. 2604, a permit fee of $1 for each place of business of the retailer is required. By section 17, p. 2604, the Board of Equalization is authorized to make additional assessments of tax against a retailer. Section 18, p. 2605, authorizes the Board of Equalization to make arbitrary assessments of tax against a retailer. By section 20, p. 2605, a retailer is authorized to obtain a hearing for reassessment of taxes assessed against him. By section 23, p. 2606, refunds to retailers are authorized. Section 24, p. 2606, has reference to fraud or evasion of the tax on the part of a retailer. Section 26, p. 2607, provides for the collection of the tax from retailers; and the tax is declared a lien against his property. Section 27, p. 2609, requires retailers to keep records. Section 31, p. 2610, allows a retailer who has paid a tax under protest to bring an action for the recovery of such tax; and by section 32, p. 2611, penalties are provided for against retailers who may violate an order of the Board of Equalization.

“In opposition to that which may be termed the manifest intent of the foregoing provisions, the statute also contains certain other provisions, to wit: By section 4 thereof, p. 2600, it is provided that: ‘In any case where tangible personal property is sold at retail under a contract made prior to the effective date of this act, which specifies and fixes the sale price and such sale is taxable under this act, the seller may add the tax imposed by this act to the sale price and collect it from the buyer.’ Section 8 1/212 of the statute, p. 2602, contains the declaration that: ‘The tax hereby imposed shall be collected by the retailer from the consumer in so far as the same can be done.’ By section 8 of the statute, p. 2602, a retailer is inhibited from advertising in any manner that the tax will be assumed or absorbed by him, ‘or that it will not be added to the selling price of the property sold, or if added that it or any part thereof will be refunded.’ ”

The earliest case that has been brought to our attention in which the act is discussed is Meyer Construction Company et al. v. Corbett, D.C., 7 F.Supp. 616, where the complainants, which were corporations having contracts with the federal government for the erection of certain structures for military purposes, sought to enjoin certain retailers from adding to the prices of materials sold to the complainants for such erections, the amount necessary to reimburse themselves for the sales tax payable to the state under the terms of the act upon such sales. The opinion alludes to the above-quoted provision of section 8 1/212 of the act, p. 2602, to the effect that: “The tax hereby imposed shall be collected by the retailer from the consumer in so far as the same can be done *” and proceeds as follows (page 618):

“But that does not make the tax a consumer's tax. The provisions relating to the collection by the retailer from the consumer authorize or grant permission to the retailer to reimburse himself for the tax which he must pay to the state to be allowed to sell tangible personal property at retail. That this was the legislative intent is shown by section 9, paragraph 3 of the act [p. 2603], which reads:

“ ‘The board may by regulation provide that the amount collected by the retailer from the consumer, in reimbursement of taxes imposed by this act, shall be displayed separately from the list, advertised in the premises, marked or other price on the sales check or other proof of sale.’

“The Retail Sales Tax Act creates the relationship of sovereign power and taxpayer between the state and the retailer, and not between the state and the consumer.”

It had earlier in the opinion been said that the complainants were “not the proper parties to raise the issue that the United States of America will be hampered or impeded by the collection of a sales tax as here set forth”. The court concluded by saying that no one of the complainants was a retailer of tangible personal property, and that no one of them, therefore, was a proper party to oppose state legislation on the ground of its repugnance to the Federal Constitution.

In People v. Herbert's of Los Angeles, Inc., 3 Cal.App.2d 482, 39 P.2d 829, the state had brought an action to enforce the payment of taxes claimed under the provisions of the act and the situation was that a café operator, having enjoyed a retail sales business providing gross receipts of a certain volume, had failed to pay the tax imposed by the act, and thereafter executed a common-law assignment for the benefit of creditors. The question was what preference should, in the circumstances, be given to the tax, and whether such tax was any basis for imposing a lien upon the property in the hands of the assignee. Judgment had been entered against the assignee requiring the payment of the tax from the assets in his hands. The judgment was, on appeal affirmed. The court held that the tax was one imposed on the retailer and not the consumer and that not only was this evident from the preamble of the act but from “declarations to that effect which recur frequently in the statute, as, for example, in sections 3, 9, 22, 24 and 27” (page 829). Reference was made to Meyer Construction Co. v. Corbett, supra, as, though not of binding authority in the state court, yet having persuasive force. The court referred to the provisions of section 8 1/212, p. 2602, already alluded to, of the act and also to section 2, subdivision (f), pp. 2599, 2600, to the effect that: “for the purpose of this act the total amount of the sale price above mentioned shall be deemed to be the amount received exclusive of the tax hereby imposed; provided, that the retailers shall establish to the satisfaction of the board that the tax imposed hereunder had been added to the sale price and not absorbed by the retailer”. The court then went on to say:

“These provisions do, of course, indicate the source from which the retailer is authorized to reimburse himself for the tax which he must pay to the state ‘for the privilege of selling tangible personal property at retail.’ Section 3. The tax is upon the privilege of transacting the business. But we find in the statute nothing which imposes the tax upon the consumer, or which conflicts with the clearly expressed imposition of tax upon the retail dealer and upon him only. That in ultimate effect the fund out of which payment is made may be or in fact has been obtained by the dealer from his customers does not make the tax a levy upon the consumer.”

A hearing in the case was denied by the Supreme Court.

The act was again under discussion in Roth Drug, Inc., v. Johnson, 13 Cal.App.2d 720, 57 P.2d 1022, (hearing denied by Supreme Court). In that case the constitutionality of the statute was vigorously attacked but the imposition of the tax was held to be within the inherent power of the legislature, and specifically authorized, as well, by section 15 of article 13 of the State Constitution, authorizing the legislature to provide for the raising of revenue by any form of taxation not prohibited by the Constitution. Under the statute as it then stood the rate of the tax was 2 1/212 per cent of the retailer's gross receipts. St.1933, p. 2600, § 3. By amendment it is, as we have noted, now 3 per cent. St.1935, p. 1252, § 3. The court, inter alia, said (page 1028):

“The appellants contend that the act is not uniform in its application for the reason that section 8 1/212 thereof provides that, ‘The tax hereby imposed shall be collected by the retailer from the consumer in so far as the same can be done,’ and that since section 3 imposes a tax of 2 1/212 per cent. only on the gross receipts of sales it is impossible for the retail merchant to collect the tax from the purchaser on a single item which sells for less than 40 cents for the reason that the tax would then amount to less than one cent, which is the smallest coin known to the American financial system. It is argued that a tax based on the gross income of all retail businesses is discriminatory, unjust and void for the reason that it results in penalizing the honest, efficient merchant who relies for success on his good will, established by maintaining a large volume of business on small margins of profit which profit may even fall below 2 1/212 per cent. of his gross receipts, while others, who enjoy a small business with greater profit, may better afford to pay the tax. It is suggested the 15–cent stores, the drug stores, and other enterprises which depend for success upon numerous sales of small value, under the ‘breakdown’ system adopted by the California merchants, find it impossible to charge the tax to purchasers of numerous single articles of small value. It is asserted the overhead expense of maintaining a business for the sale of articles of small value is relatively greater than that of selling automobiles, machinery, household furniture, or equipment which normally return a much larger percentage of profit, and that the present tax system therefore favors the last-mentioned enterprises to the detriment of the former. We are of the opinion these distinctions furnish no reason for declaring the act unconstitutional for lack of uniform operation. The validity of an excise tax for the privilege of maintaining a business is not dependent on the various methods or conditions of every private enterprise.”

And again: “The act is not unconstitutional because section 8 1/212 thereof authorizes the retailer to collect the tax ‘from the consumer in so far as the same can be done.’ This act does not impose the tax on the consumer. The last-mentioned section merely authorizes the retail merchant to reimburse himself from the consumer in so far as it may be consistently done. He is not required to do so. He may waive that right.”

The court went on to say that: “there is no provision of the act which prohibits merchants from increasing the selling price of their commodities so as to cover the tax or any other legitimate item of cost which will enable them to make a fair profit on sales. Good will may be acquired by gaining the reputation of selling goods for small profit, but that practice may be extended to an extreme limit so as to invite bankruptcy as a penalty for enjoying good will.” The tax was further characterized as “an excise tax on the privilege of operating retail mercantile enterprises *.”

In People v. Ventura Refining Co., 204 Cal. 286, 268 P. 347, 283 P. 60, in construing the cognate provisions of the Motor Vehicle Fuel License Tax Act (Stats.1923, p. 571, and amendatory acts) the Supreme Court said of these provisions, that (page 350): “The clear intent of the law was to levy an excise or occupation tax upon distributors of motor vehicle fuel, giving such distributors, however, ample opportunity to fully indemnify themselves by adding the amount of the tax to the selling price of the fuel and thus in effect collect the tax from the consumer.” The Motor Vehicle Fuel License Tax Act was again under consideration in Rio Grande Oil Company v. Los Angeles, 6 Cal.App.2d 200, 44 P.2d 451 (hearing denied by Supreme Court), wherein a distributor of gasoline, having sold a quantity of the same to the city sought to recover the selling price inclusive of a separately stated item representing the amount of the tax, and the city defended on the ground that the effect would be to require the tax to be paid by the purchaser and that the municipality as purchaser could not be compelled to pay such a tax on fuel which it used for essential governmental purposes. The plaintiff nevertheless had judgment which was affirmed on appeal, the Appellate Court saying (page 452):

“It is apparent from what has been said that the tax is levied against the distributor and not against the city or its property; that in the enforcement of the tax the state is exercising its sovereign power against the distributor, which power it is authorized to so use, and not against the city, and therefore the city's contention is not tenable.”

In a companion case, Graham Bros., Inc. v. Los Angeles, 6 Cal.App.2d 203, 44 P.2d 452, decided by the same court on the same day wherein the same situation as concerning the Retail Sales Tax Act was involved as between the plaintiff and the city of Los Angeles, the same result was reached. In this case also the Supreme Court denied a hearing.

The Appellate Court for the Third District was, in M.G. West Co. v. Johnson, 20 Cal.App.2d 95, 66 P.2d 1211, confronted with a situation wherein the plaintiff and respondent had sold furniture to the Federal Land Bank of Berkeley and certain other fiscal agencies of the United States government, and paid under protest to the state the state sales tax upon its gross receipts from such sales and brought suit against the state treasurer to recover the amount so paid. The recovery had been allowed by the Superior Court of Sacramento county. The judgment was affirmed by the Appellate Court and a hearing in the Supreme Court denied. Under the applicable federal statute the institutions to which the furniture had been sold were exempt from state taxation. The Appellate Court said (page 99, 66 P.2d page 1213):

“The fact that the seller and not the purchaser is required to report and make payment to the state has been held to be immaterial. The excise tax, as we have shown, is passed on and becomes an added burden upon the purchaser.”

And again (page 102, 66 P.2d page 1214): “The impositions involved herein, claimed under the Sales Tax Act, supra, being an excise tax, and therefore a burden placed upon the privilege of doing business or preparing to do business by governmental agencies, constitute, to the extent of the tax, an unauthorized limitation of that privilege. The extent of the burden we think immaterial. We therefore conclude that, so far as the excise tax is concerned, calculated upon the price of office equipment purchased by the four banks, was and is invalid, and that the same having been paid under protest, the plaintiff is entitled to recover same.”

In Standard Oil Co. v. Johnson, Cal.Sup., 76 P.2d 1184, the plaintiff sought to recover from the state treasurer the amounts paid by it under protest as state gasoline tax calculated on the gross receipts from sales of gasoline made within the limits of the Yosemite National Park, and a like action involving payments made under the Retail Sales Tax Act was involved in a companion case known as Yosemite Park & Curry Co. v. Johnson, Cal.Sup., 76 P.2d 1191, and was coincidentally decided. The gist of this litigation centered about the question whether the effect of the legislation whereby the state relinquished to the federal government for most purposes its jurisdiction of the area included within the national park reserved a right of taxation sufficiently broad to include the imposition of the gasoline tax and retail sales tax upon retailers making sales therein, and the reservations were held to be sufficiently broad for that purpose. However, the court said (page 1190):

“A consideration of the taxing statutes shows that the tax is imposed respectively ‘upon retailers,’ section 3, Stats.1933, p. 2599, Stats.1935, p. 1252, and upon ‘distributors' of gasoline, and it has so been held. Roth Drug, Inc., v. Johnson, supra, page 736, 57 P.2d 1022; People v. Herbert's of Los Angeles Inc., 3 Cal.App.2d 482, 39 P.2d 829; People v. Ventura Refining Co., supra, page 294, 268 P. 347, 283 P. 60; Rio Grande Oil Co. v. Los Angeles, 6 Cal.App.2d 200, 201, 44 P.2d 451. This language in the statutes will not, of course, be construed to disturb the classification of taxable subjects—persons, property and business. State Tax on Foreign-held Bonds, 15 Wall. 300, 82 U.S. 300, 319, 21 L.Ed. 179; 26 R.C.L. p. 34; 1 Cooley on Taxation, p. 172. Neither does it mean that the excise taxes imposed should be considered as a tax ‘on persons' as a subject of taxation. The language of the statutes and the decisions still leaves the sales and gasoline taxes in the category of ‘excises' or tax on business.”

Western Lithograph Co. v. State Board of Equalization, Cal.Sup., 78 P.2d 731, again involved substantially the same question considered in M.G. West Co. v. Johnson, supra. The proceeding was one in mandamus to compel the state board of equalization to honor a claim for refund of sales taxes imposed pursuant to the Retail Sales Tax Act on account of certain sales made by the petitioner to the Bank of America Trust & Savings Association. The petitioner had included in its return for the quarter involved the gross amount received from the sales so made and had paid a tax of 3 per cent computed thereon. Its claim was that the purchaser is an instrumentality of the United States government and is not subject to any tax by the state except in the manner prescribed by section 5219, Revised Statutes (12 U.S.Code, sec. 548, 12 U.S.C.A. § 548), in conjunction with article 13, section 6, of the Constitution of California and the Bank and Corporation Franchise Act (Stats.1929, p. 19, as amended), which do not permit the imposition on the bank of a tax such as contemplated by the Retail Sales Tax Act. The court said (page 732): “We may assume, for the purposes of this proceeding, that if the tax imposed pursuant to the provisions of the State Retail Sales Tax Act is a tax on the consumer or purchaser of the goods sold, then the petitioner is entitled to the relief sought.” For the purpose of the discussion the court further assumed that the bank as a national bank is an instrumentality of the United States and as such not subject to tax by the state except with the consent of and in the manner prescribed by congress. The court then discussed the principles on which rest the respective immunities of the federal government and its agencies and the state and its agencies from taxation by each other and the limitations upon such immunities and then proceeded to consider various provisions of the Retail Sales Tax Act, saying, inter alia:

“Section 3 of the Act, as amended, St.1935, pp. 1252, 1253, provides: ‘For the privilege of selling tangible personal property at retail a tax is hereby imposed upon retailers at the rate of two and one-half per cent of the gross receipts of any such retailer from the sale of all tangible personal property sold at retail in this State on and after August 1, 1933, and to and including June 30, 1935; and at the rate of three per cent * on and after July 1, 1935.’ The term ‘gross receipts' is defined, section 2(f), as amended, St.1935, p. 1257, as the total amount of the sale price, with other inclusions not pertinent here; but also that ‘for the purpose of this act the total amount of the sale price above mentioned shall be deemed to be the amount received exclusive of the tax hereby imposed; provided that the retailer shall establish to the satisfaction of the board that the tax imposed hereunder had been added to the sale price and not absorbed by the retailer’.”

Thereafter the court proceeded as follows:

“The provisions of the act itself specifically are that the tax is laid upon and is a direct obligation of the retailer. Although the act furnishes the method by which the retailer may calculate reimbursement to himself by listing separately the amount of the tax from the sales price, nevertheless section 8 1/212 and other provisions of the act specially negative any intent of the Legislature that the tax should be considered as a tax on the consumer. In every case in which that question has arisen under the California Retail Sales Tax Act, the courts have uniformly and consistently recognized the legislative intent and adhered to the construction that the tax is upon the retailer and not upon the consumer.” (Citing cases hereinbefore discussed.) “Where the same question has arisen with reference to the administration and effect of similar provisions in the Motor Vehicle Fuel License Tax Act, St.1923, p. 571, as amended, the same answer has uniformly been given.” (Citing other cases hereinbefore discussed.)

“The law contemplates the imposing of the fixed rate of the tax on the gross receipts, as defined by the act, and not on the individual sale of merchandise; and the provision for a bookkeeping method to compute the amount of the tax separately from the sales price does not alter this fact.”

In its further discussion the court went on to say:

“The tax being a direct obligation of the retailer and, so far as the consumer is concerned, a part of the price paid for the goods and nothing else, it is neither in fact nor in effect laid upon the consumer. It does not become a tax on the sale nor because of the sale, but remains an excise tax for the privilege of conducting a retail business measured by the gross receipts from sales.”

The court concluded that no right to recover the tax existed, thereby in effect overruling M.G. West Co. v. Johnson, of which it said:

“It is true that a petition in the West Company Case for a hearing in this court was denied. * It is likewise true that the denial of the petition for a hearing in this court after decision by the District Court of Appeal in the West Company Case was not ‘an affirmative approval by this court of the propositions of law laid down in such opinion’.”

We are thus brought back to the last decision of the Supreme Court affecting the act, from which we have already quoted, National Ice & Cold Storage Company of California v. Pacific Fruit Express Company. That action was brought for declaratory relief. The defendant had entered into a contract with the plaintiff extending over a period of years for supplying it with ice for cars used in both interstate and intrastate business. The contract had been in existence prior to the enactment of the Retail Sales Tax Act and fixed the prices at which ice was to be furnished. Upon the act becoming effective the plaintiff undertook to add to the price the tax imposed by the statute under the purported authority of section 4 of the act, p. 2600, and to obtain an adjudication that such additional amount was payable by the defendant. It was otherwise held both by the trial court and the Supreme Court, not upon the ground that the contract for the ice was antecedent to the enactment of the statute but upon the ground that it has become settled law that the tax is one imposed upon the retailer and not upon the consumer. The court did not question the legislature's power to impose such a tax upon the consumer but held that it could not in one breath impose it upon the retailer, who alone was made liable to the state for its payment, and then provide for his reimbursement at the expense of the consumer. Reasoning from the circumstances that the imposition is in terms made upon the retailer the court said:

“As a legal deduction, it has been judicially declared that a tax constitutes a debt owed by the person upon whom such tax has been legally imposed; and aside from equitable considerations (which here are not involved), to baldly legislate that without, and in the absence of either due or any process of law, a legal debt that is owed by one person must be paid by another, is quite at variance with ordinary notions of that which may be termed the administration of justice. It therefore may be deemed concluded, that as far as may concern the particular or any other provision of the statute to which attention hereinbefore has been directed, which purports either directly or indirectly to authorize the retailer of ‘tangible personal property’ to collect from or to charge to the purchaser thereof the tax imposed upon its retailer ‘for the privilege of selling’ such property, is unconstitutional and consequently invalid. But it should be noted that it is not because of any asserted or assumed lack of power in the state in the first instance to impose a tax on a purchaser of ‘tangible personal property’ that the invalidity of the several provisions of the statute is adjudged, but rather for the reason that having first directed the imposition of a tax on the retailer of such property, by the terms of the statute he is authorized to compel the purchaser to assume the retailer's direct liability in that regard, that the unconstitutionality of the several provisions of the statute is made to appear. However, such declaration of the law is not intended to indicate the illegality of authority which may be lodged in a retailer to ‘pass on’ the tax to a purchaser with the latter's consent thereto, either expressly or impliedly given. That sort of arrangement between interested parties in such a sale is not here involved.”

The court in terms decided that section 4 of the act is invalid as purporting to require one person to pay the debt of another and we are of the opinion that it necessarily follows from the language of the decision above italicized that sections 8 and 8 1/212 of the act, p. 2602, are for the same reason invalid and unenforcible.

We come then to the situation presented by the instant case. There was no legal inhibition against the addition by Akers, to the 15 cents which the parties treated as the price of the two sheets of cardboard bought by de Aryan, of one cent or any other amount that Akers might have chosen to ask for the cardboard. When Akers should have fixed his price it would have been de Aryan's privilege either to pay or to refuse to buy at that price. Indeed, it may, for the purposes of the present discussion, be conceded that had the denominations of available coins admitted doing so, Akers and de Aryan might, if they chose, have freely agreed that de Aryan should pay to Akers 15 cents for the cardboard and 4 1/212 mills as a tax, and that Akers might then with propriety have collected the 15 cents, together with the 4 1/212 mills and under the permission accorded him by the closing provision of subdivision (f) section 2 of the act, pp. 2599, 2600, have, in accounting to the state, paid it the 4 1/212 mills as the tax computed upon the basis of a 15–cent sale. Akers did not, however, in fact take either of these courses. On the contrary, he represented to de Aryan that he was in effect deputized by the state to collect the 4 1/212 mills for its use and benefit and that, since there was no coin small enough to enable that to be done without paying more, that he was required by the state to collect an entire cent additional to the 15 cents at which he chose to fix the price of the cardboard. Doubtless all this was done in good faith, but it was, nevertheless, done. Because he could not otherwise get the cardboard and because other merchants in the region selling cardboard were making the same representations and demands, de Aryan paid the exaction under protest. Thereupon he brought the instant action in the Superior Court to recover the final cent so paid. In disposing of his appeal to this court from the judgment given against him we must necessarily determine, (a) whether or not his payment of the additional cent may be regarded as in effect a voluntary payment, leaving him without standing to test in any court any question of illegality in its exaction; (b) if he is entitled to litigate the question anywhere, whether or not in the bringing of his suit in the Superior Court he was in the proper forum; and, (c) if both of the foregoing inquiries are to be resolved in his favor, then whether or not upon the merits of the case he is entitled to recover the cent sued for.

It is the general rule that one who has paid an illegal demand with full knowledge of its illegality cannot recover the same back unless the payment was necessary to protect his person or property, even though the payment was made under protest. 20 Cal.Jur. 965, and cases cited. On the other hand it is also the rule that: “If an illegal demand is made by one holding an official position with color of authority to enforce the same and such demand operates as a restraint upon the exercise of an undoubted right or privilege and in its enforcement there is no opportunity of contesting its validity, payment of the demand in order to remove such restraint is compulsory and not voluntary. Thus payment exacted by and made to an officer in excess of his legal fees in order to obtain the performance of an official duty to which the payor is entitled without such payment is compulsory and may be recovered back.” 20 Cal.Jur. 968; 21 Cal.Jur. 963, and cases cited. This is true even though the exaction has been made in entire good faith and for the benefit of the public treasury but under color of a statute subsequently declared unconstitutional. Lewis v. San Francisco, 2 Cal.App. 112, 82 P. 1106; Trower v. City and County of San Francisco, 152 Cal. 479, 92 P. 1025, 15 L.R.A., N.S., 183.

In denying the appellant relief the trial court relied, according to its memorandum, on Texas Company v. Harold, 228 Ala. 350, 153 So. 442, 92 A.L.R. 523. There the Texas Company had been engaged in the business of distributing gasoline and motor oils brought by it from without the state of Alabama but stored in its tanks at Mobile for sale and distribution to its customers. Taxes were imposed upon it for the privilege of making such sales of gasoline and motor oil at stated rates per gallon sold. The Texas Company raised its price per gallon for gasoline and motor oil in corresponding amounts and collected the increased prices on making sales. Harold, a customer engaged in operating service stations, paid the increased prices, which he testified that he was able in turn to pass on in making sales to his customers in respect of the gasoline but not in respect of the motor oil. The Texas Company paid the taxes to the county under protest. Subsequently the taxes were adjudged unconstitutional and the amounts thereof refunded to the Texas Company. Thereupon Harold sued it to recover the difference between what it had charged him for gasoline and oils after the tax had been imposed as compared with what he had paid for the same theretofore. Recovery was allowed by the trial court but judgment reversed on appeal by the Supreme Court, which said (page 444):

“This question is to be answered by a determination here of the further question, viz., Was the price paid by the plaintiff [referring to Harold who was plaintiff in the lower court] the composite price to be paid at all events for the gasoline and oil? In other words, Was the item of tax absorbed in a total price to be paid at all events for the gasoline?

“The plaintiff, it is true, was allowed over the objection and exception of the defendant to state in terms that he paid the tax to the defendant, but this statement was only a conclusion of the plaintiff, which his testimony, as well as the other evidence in the case, showed was erroneous. *

“If the tax was absorbed in the total price to be paid at all events, then it would follow, as we see it, that the plaintiff has no right to the money sued for. In other words, if the price charged the plaintiff for the gas was placed at such figures as to take care of, or absorb the tax, and was to be paid at all events as the selling price of the gas and oil, the plaintiff is without remedy. His position would be no different than that of any other purchaser of goods who has to pay therefor a price, increased by the seller to take care of tariff or other taxes. We take it, in such a case, if the tariff or tax should be held illegal, the purchaser would not have a remedy against the seller to recover the amount of tariff or tax figured by the seller in fixing the price of the commodity.”

The Alabama Supreme Court then went on to hold that such was the situation in the case before it and therefore that Harold had no legitimate grievance.

It seems clear to us that Texas Company v. Harold involved a different situation from the one with which we are here confronted. In the instant case Akers was assuming the position of the state's mandatary for collecting this tax and turning in to the public treasury so much of the cent exacted by him as was actually due the state. In other words, he claimed to be acting not only by the authority but under the compulsion of the Retail Sales Tax Act pursuant to the purported inhibitions and requirements of sections 8 and 8 1/212 thereof. While it may be true that de Aryan was not compelled to buy cardboard of him, the fact is nevertheless one of sufficient public notoriety to invoke our judicial notice that Akers' attitude has been practically universal among retailers in this state in endeavoring to comply with what they have conceived to be their duties under the act. So that, for practical purposes, we may consider that de Aryan would have had to submit either to the exaction on Akers' part or to a like one elsewhere if he wanted cardboard. The exaction being thus made under color of public authority we do not think that de Aryan's payment of it under protest is any obstacle to his maintaining, in a proper tribunal, an action to recover it. A case in point, so far as that question is concerned, is Wayne County Produce Co. v. Duffy–Mott Co., Inc., 244 N.Y. 351, 155 N.E. 669, decided by Chief Judge Cardozo. There the plaintiff had bought from the defendant certain sweet cider and been charged for it a price stated to be 14 1/212 cents per gallon, subject to a stated discount, plus the manufacturer's war tax of 10 per cent, which was to be paid in full without discount. After the tax had thus been collected and paid over by the seller of the cider to the federal government a court ruling was made that sales of sweet cider were subject to no tax. Thereupon the seller recovered the tax paid from the government and the buyer brought suit to recover it from the seller. The court said:

“We think the plaintiff must prevail. This is not a case where the item of the tax is absorbed in a total or composite price to be paid at all events. In such a case the buyer is without remedy, though the annulment of the tax may increase the profit to the seller. Moore v. Des Arts, 1 N.Y. 359. This is a case where the promise of the buyer is to pay a stated price, and to put the seller in funds for the payment of a tax besides. In such a case the failure of the tax reduces to an equivalent extent the obligation of the promise. The form of the transaction was not thoughtless or accidental. It was deliberate and purposed.”

We have reached the further conclusion that the Superior Court was the proper forum for bringing the action. Indeed, by reason of the small amount sued for it could be such only if the legality of a tax is involved. There has, of course, been some suggestion in the argument that the attack made on the particular exaction complained of goes to the validity of the Retail Sales Tax Act as a whole. Whatever may, in that respect, be appellant's position, we think that the validity of the tax as an excise tax on the retailer's right to engage in making sales is, in view of the decisions, no longer open to question. We do agree, however, that the legality of the attempt to exact the tax, as a tax, from an unwilling consumer is involved in the instant case and that section 8 1/212 of the act though in the Roth Drug Case, supra, described as permissive, purports to require the retailer to make such an exaction wherever possible. We think that the question involving the legality of the incidence of the tax is in that respect a question involving the legality of the tax, though not as a tax upon the retailer. This action certainly does involve the legality of using the tax under the authority purported to be given by the express terms of section 8 1/212 of the act and under the purported sanction of section 8 of the act for exacting its amount, specifically as a tax, from the consumer. The validity of the act in so far as it is susceptible of being construed as authorizing the exaction of the tax as such from the consumer is therefore indubitably here involved. We think that this case is therein distinguished from Meyer Construction Co. v. Corbett, supra, wherein, as we saw, the consumer was held not to be entitled to raise the question of the constitutionality of the tax because it is a tax upon the retailer. The consumer is entitled to question the validity of any statutory authorization purporting to require him to pay an indebtedness due from the retailer to the state. In the circumstances we hold that the Superior Court had jurisdiction of the action and therefore that jurisdiction exists to entertain the appeal.

We think that the third and final inquiry is, in effect, answered by the conclusion reached by the Supreme Court in National Ice & Cold Storage Company of California v. Pacific Fruit Express Company, supra. Akers has disclaimed in attitude and argument any intention to have exacted the additional cent under discussion otherwise than as he was compelled to do so by the terms of the act, and he made his attitude in that respect known to de Aryan at the time the cent was exacted. Therein this case is distinguished from Texas Company v. Harold, supra. Those provisions of the act purporting to require the retailer to exact anything from the consumer as a tax have now been adjudged invalid and their invalidity, though declared in general terms by the Supreme Court in the National Ice & Cold Storage Company Case, goes in our opinion to all the purported inhibitions and requirements of sections 8 and 8 1/212 of the act. Akers never did make any claim that the final cent which he exacted was any part of the price of the cardboard sold. In these circumstances it amounts, in his hands, to money had and received for the use and benefit of de Aryan.

The judgment is reversed and the Superior Court is directed to enter judgment in de Aryan's favor against Akers for one cent.

HAINES, Justice pro tem.

We concur: BARNARD, P.J.; MARKS, J.