THE VON HAMM YOUNG CO v. CITY AND COUNTY OF SAN FRANCISCO (1946)

Plaintiff recovered judgment for personal property taxes paid under protest which were assessed on the first Monday in March, 1943, from which judgment the defendant appeals.

The findings follow the stipulation of facts as augmented by the additional evidence introduced in the form of testimony, and the reasonable inferences that may be drawn therefrom. In order to discuss the general principles of law applicable, the facts in the transcript and stipulation of facts must be briefly summarized: Plaintiff is in the business of buying goods from manufacturers and dealers for shipment and resale to Hawaii and has never sold any goods in California. Prior to the outbreak of the war with Japan in 1941 all goods shipped by plaintiff were either shipped direct from eastern points, via the Panama Canal, or by rail to the west coast and trans-shipped to Hawaii. For several months after the declaration of the war there was a cessation of commercial shipping to Hawaii and plaintiff placed its goods in a local warehouse. A system of shipping permits was finally evolved pursuant to the orders of the War Shipping Administration and plaintiff was completely governed by the system of shipping permits, which entailed awaiting an opportunity to place any part of its stored goods on ships to the islands. On notice from Hawaii, additional commodities were purchased at points outside and inside California, and stored for shipment to Hawaii if space was not available upon arrival in San Francisco. The problem of obtaining merchandise and shipping it to Hawaii was acute and the tax involved was assessed by the City and County of San Francisco on goods warehoused in San Francisco awaiting space on outgoing ships to Hawaii.

The sole issue involved in this case is the effect of the commerce clause (art. I, sec. 8, cl. 3, U. S. Constitution) upon the power of the municipality to levy an ad valorem property tax upon these warehoused goods. Preliminarily it should be noted that the commerce clause was not enacted to assist those engaged in such commerce to evade a state tax burden merely because of the increase in the cost of doing business. McGoldrick v. Berwind-White Co., 309 U.S. 33, 60 S.Ct. 388, 84 L.Ed. 565, 128 A.L.R. 876. However, it is necessary to examine the operation of the state statute as applied to the facts in each case to determine whether there is discrimination and injury to the particular property in interstate commerce. Best & Co. v. Maxwell, 311 U.S. 454, 61 S.Ct. 334, 85 L.Ed. 275. In general it may be stated that a state has jurisdiction to tax commodities within its borders unless there is a superior jurisdictional right by some other governmental agency, such as another state or the United States, with whose powers its exercise might conflict. It is conceivable that when commodities are assembled they may be taxable in one state until delivered for the purpose of exportation beyond the state border. Coe v. Town of Errol, 116 U.S. 517, 6 S.Ct. 475, 29 L.Ed. 715. After exportation begins it is possible that the goods may, by ill fortune in passing through different areas, receive a double personal property tax, depending on the time that the goods pass through and the period selected in each state as the date to impose the tax; as an example, the first Monday in March in California, Dant & Russell, Inc., v. Board of Supervisors, 21 Cal.2d 534, 133 P.2d 817; the second Monday in April in Michigan, Diamond Match Co. v. Village of Ontonagon, 188 U.S. 82, 23 S.Ct. 266, 47 L.Ed. 349; May 1st in Minnesota, State of Minnesota v. Blasius, 290 U.S. 1, 54 S.Ct. 34, 78 L.Ed. 131. Consequently, where interstate commerce is concerned, the Supreme Court has enunciated the rule in the many cases hereafter cited that where goods are in transit in interstate commerce, they are not subject to tax by jurisdictions through which they pass on their interstate journey. To permit such taxation would subject interstate commerce to double taxation and a discrimination to which intrastate commerce of the same kind is not subject.

In support of its position that the warehoused goods were not in transit when the assessment was made, appellant relies on a series of cases each based on varying sets of facts, while respondent cites as its authority cases decided on different facts from those cited by appellant. The rule that governs the determination of this case is to be reached by examining the distinctions between this and other cases decided by the United States Supreme Court and the California Supreme Court. It should be noted that in many of the decisions, particularly in the United States Supreme Court, there is a marked purpose to protect interstate and foreign commerce from the attempted inroads of state government. In California it has been said in a case in which the taxpayer has appealed to the Supreme Court of the United States: ‘It is apparent, however, that a new approach has been taken with respect to the problem of state taxation in the field of interstate commerce, and that there are various local activities by a taxpayer within a state sufficient to support a non-discriminatory tax although the tax may have some incidental effect on interstate commerce.’ Richfield Oil Corp. v. State Board of Equalization, 27 Cal.2d 150, 163 P.2d 1, 7. In considering the following cases it should be noted that none were decided in view of governmental war emergency measures, which fact primarily marks the difference between this case and all other cases called to our attention. The main question involved in Coe v. Town of Errol, supra, was whether products of a state are liable to taxation like other property within the state though intended and partially prepared and deposited at the point of shipment for exportation to another state. In brief, the question was, Does the intent to export control the taxability of things within a state? The court in that case stressed the point relative to the change of mind of the owner. The goods (at page 528 of 116 U.S., at page 479 of 6 S.Ct., 29 L.Ed. 715) ‘were to remain until it should be convenient to send them to their destination.’ The goods were taxed in the same manner as other goods and not solely because there was a delay in transportation.

In Diamond Match Co. v. Village of Ontonagon, supra, the complainant was an owner of lumber mills. It became necessary on account of a fire to move one hundred eighty million feet of logs, which was more than complainant intended to move in one season, from Michigan to Wisconsin. It was not the intention of the complainant to transport in any one season more than twenty million feet. The rest of the logs were left at the mouth of the river near Ontonagon. In the present case the goods had not reached their destination and the admitted intent was to move the property at the earliest possible date that governmental regulations would permit. In American Steel & Wire Co. v. Speed, 192 U.S. 500, 24 S.Ct. 365, 48 L.Ed. 538, the evidence showed that the goods had reached their destination and were not in transit. They were held in storage to be sold, as contracts for that purpose were consummated.

The principal reliance of appellant is placed upon General Oil Co. v. Crain, 209 U.S. 211, 28 S.Ct. 475, 52 L.Ed. 754. In that case certain oil in two tanks was in transit from Pennsylvania to the place of sale in Arkansas. There was a delay in Tennessee for the purpose of separation, distribution and re-shipment of the oil for a period in accord with the nature of the business and the exigencies of transportation. The oil in tank No. 1 was sold before shipment and the oil in tank No. 2 was to be sold in Tennessee to various purchasers. It appears that at some point enroute it was necessary to change the oil from tanks to barrels. The General Oil Company conducted a business located at Memphis, Tennessee, for the change in form and contents of the reshipments. In the Crain case there are comments on cases other than the cases previously mentioned herein. The pertinent comments appear as follows (at pages 229, 230 of 209 U.S., at page 481 of 28 S.Ct., 52 L.Ed. 754):

‘In Kelley v. Rhoads, 188 U.S. 1, 23 S.Ct. 259, 47 L.Ed. 359, a flock of sheep driven from a point in Utah across Wyoming to a point in Nebraska, for the purpose of shipment by rail from the latter point, was held to be property engaged in interstate commerce, and exempt from taxation by Wyoming under the statute taxing all live stock brought into the state ‘for the purpose of being grazed.’ There was no difficulty in the case except that which arose from the contention that the mannet of transit was adopted as an evasion of the statute. Otherwise the grazing of the sheep was as incidental as feeding them would be if transported by rail. The pertinence of the case to the present controversy is in its summary of the principles of prior cases, expressed in the following passage: ‘The substances of these cases is that, while property is at rest for an indefinite time, awaiting transportation, or awaiting a sale at its place of destination, or at an intermediate point, it is subject to taxation. But, if it be actually in transit to another state, it becomes the subject of interstate commerce and is exempt from local assessment.’ Property, therefore, at an intermediate point between the place of shipment and ultimate destination may cease to be a subject of interstate commerce. Necessarily, however, the length and purpose of the interruption of transit must be considered.

‘In State v. Engle, Receiver, etc. [34 N.J.L. 425, 435, 5 Vroom 425, 435], coal mined in Pennsylvania and sent by rail to Elizabethport, in New Jersey, where it was deposited on the wharf for separation and assortment for the purpose of being shipped by water to other markets for the purpose of sale,—it was held that the property was not subject to taxation in New Jersey. The court said: ‘Delay within the state, which is no longer than is necessary for the convenience of transshipment for its transportation to its desination, will not make it property within the state for the purpose of taxation.’ See also in State v. Carrigan [39 N.J.L. 35, 36, 10 Vroom 35, 36], where coal also shipped from Pennsylvania to a port in New Jersey and remaining there no longer than was necessary to obtain vessels to transport it to other places was held to be in course of transportation, and not subject to the taxing power of the State. In Burlington Lumber Co. v. Willetts, 118 Ill. 559, 9 N.E. 254, the principle was recognized that property in transitu was not subject to the taxing power of a state, but was held that logs in rafts sent from Wisconsin to Burlington, Iowa, by the Mississippi river, a part of which were stopped at a place in Illinois called Boston Harbor, to be there kept until needed at Burlington for mill purposes, were subject to taxation. The court said that the property was ‘kept at New Boston on account of the profit of the owners to keep it there;’ and further, that the company was engaged in business in the state, beneficial to itself, and its property was so located as to claim the protection of the laws of the state and hence was liable to taxation.' Emphasis added. See, also, Susquehanna Coal Co. v. City of South Amboy, 228 U.S. 665, 33 S.Ct. 712, 57 L.Ed. 1015.

The court stated that there was alleged a business which voluntarily brought the commodity to rest in the State of Tennessee and held (at pages 230, 231 of 209 U.S., at page 482 of 28 S.Ct., 52 L.Ed. 754:) ‘The company was doing business in the state, and its property was receiving the protection of the state. 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, etc., v. Engle, supra, but for the business purposes and profit of the company.’

Champlain Realty Co. v. City of Brattleboro, 260 U.S. 366, 43 S.Ct. 146, 67 L.Ed. 309, 25 A.L.R. 1195, is important on the question of temporary delay. At page 376 of 260 U.S., at page 149 of 43 S.Ct., 25 A.L.R. 1195, the court said: ‘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.’ With Bacon v. People of State of Illinois, 227 U.S. 504, 33 S.Ct. 299, 57 L.Ed. 615, General Oil Co. v. Crain, supra, and other cases as authority, the court further said: ‘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 Hughes Bros. Timber Co. v. State of Minnesota, 272 U.S. 469, 476, 47 S.Ct. 170, 172, 71 L.Ed. 359, the court stated: ‘The mere power of the owner to divert the shipment already started does not take it out of interstate commerce if the other facts show that the journey has already begun in good faith and temporary interruption of the passage is reasonable and in furtherance of the intended transportation, as in the Champlain Co. case.’

Carson Petroleum Co. v. Vial, 279 U.S. 95, 49 S.Ct. 292, 73 L.Ed. 626, decided later than any of the previously cited cases, was a petition by the Carson Petroleum Company to enjoin a Louisiana sheriff from laying and levying against it an alleged illegal assessment of ad valorem duties on a quantity of oil. Interference with foreign commerce in oil was the question involved. The oil was forwarded in tank los to St. Rose, a few miles from New Orleans. No oil was sold at St. Rose except that which was exported, the oil being of a different type than that used for domestic purposes. The business consisted of unloading from railroad tank cars into storage tanks and thence to tankers supplied by buyers for shipment to foreign parts In the Carson case, it is said (at pages 100, 101, of 279 U.S., at page 293 of 49 S.Ct., 73 L.Ed. 626): ‘The oil in each railroad tank car, however, is not segregated or assigned or destined to any particular cargo or shipment abroad, but is pumped into the large storage tanks, having the capacity of many tank cars, and is held in the tanks until a ship arrives, or until a sufficient quantity of oil is accumulated to make up a cargo. * * * The oil is shipped from the storage tanks in the same condition in which it was received from the tank cars, without being treated in any way. The oil is never kept on hand at St. Rose any longer than is necessary. The quantity on hand is always awaiting either the arrival of a ship or the accumulation of a sufficient quantity to load a ship.’ A conflict may appear in the General Oil Co. v. Crain, supra, and Carson Petroleum Co. v. Vial, supra, cases, but in the latter case, speaking of the Crain case, the court said (at pages 105, 106 of 279 U.S., at page 295 of 49 S.Ct., 73 L.Ed. 626): ‘We do not think in deciding the case at bar that we should give the Crain case the force claimed for it by the court below and by counsel for the state. Since its decision this court has had to consider several cases where there was transhipment of the commodity from local carriage in a state to a ship at an export port and conveyance thence to a foreign destination. There has been a liberal construction of what is continuity of the journey, in cases where the court finds from the circumstances that export trade has been actually intended and carried through.’ In the Vial case, the court quoted extensively from Texas & N. O. R. Co. v. Sabine Tram Co., 227 U.S. 111, 33 S.Ct. 229, 57 L.Ed. 442. In the latter case it was not known when the commodity—lumber—left the starting point on the ship destined to receive the property. The lumber remained at the port awaiting a ship that could be chartered by the exporter. In the Vial case the Crain decision was distinguished if not disapproved, and the Sabine case used as the authority for the decision reversing the decision of the Supreme Court of Louisiana directing and decreeing that the tax, with penalties, be imposed. In the Vial case the court said (at pages 107, 108, 109 of 279 U.S., at page 295 of 49 S.Ct., 73 L.Ed. 626):

“The determining circumstance is that the shipment of the lumber to Sabine was but a step in its transportation to its real and ultimate destination in foreign countries. In other words, the essential character of the commerce, not its mere accidents, should determine. It was to supply the demand of foreign countries that the lumber was purchased, manufactured and shipped, and to give it a various character by the steps in its transportation would be extremely artificial.' * * *

‘We do not think the Sabine Tram Co. case can be distinguished from the one before us. It has been suggested that in the present case there was a failure to fix the exact point of destination abroad before shipment and that this prevents a continuity required in a continuous exportation. But there was the same indefiniteness on this point in the Sabine Tram Co. case. Then, it is said, there was no separation of the various shipments of oil from the interior points to the tanks and thence to ships at the port of shipment. But in the Sabine Tram Co. case cars of lumber were sent to the transshipment point without regard to the filling of one order or another. In both cases the delay in transshipment was due to nothing but the failure of the arrival of the subject to be shipped at the same time as the arrival of the ships at the port of transshipment.’ (Emphasis added.)

It is interesting to note that in California the distinction between the Crain and Vial cases has been recognized in Philippine Refining Corp. of New York v. Contra Costa County, 24 Cal.App.2d 665, 76 P.2d 163, a case involving the question whether certain cocanut oil, temporarily stored in tanks in Contra Costa County, was subject to local personal property taxation. The action was one to recover taxes paid under protest. The facts appear in the Philippine Refining Corp. opinion as follows (at pages 666, 667 of 24 Cal.App.2d, at page 164 of 76 P.2d): ‘It is further alleged therein that plaintiff conducts said importing business by aggregating orders sufficient to fill one or more tanks available in steamers and when sufficient orders have been aggregated, plaintiff makes importations of oil and said oil is discharged from the steamers at its said plant at Point San Pablo; that on the first Monday in March, 1933, by reason of the manner of conducting said import business, plaintiff had on hand at its plant a quantity of oil imported on four steamers. The facts concerning the amount, the time of arrival, and time of departure from said plant of the oil in question were set forth in detail. It was further alleged that none of said oil was held by plaintiff for indiscriminate sale, but that it was imported for sale under said several contracts and thereafter delivered to the purchasers pursuant thereto, approximately 90 per cent of the oil continuing its journey to purchasers outside the state of California and the remaining 10 per cent. continuing its journey to purchasers within the state of California; that at all times in question title to said oil remained in plaintiff and that said oil remained in the original form in which it had been imported into the United States; that said oil was on the taxing date in question an import into the United States from a point beyond the territorial limits thereof and was in the course of an interstate and foreign movement and in transit and was not legally assessable or taxable by virtue of the provisions of the Constitution and laws of the United States.’ The trial court sustained demurrers without leave to amend. The judgment was reversed upon the authority of Carson Petroleum Co. v. Vial, supra, with directions to overrule the demurrers. In considering the Crain and the Vial cases, the court spoke as follows (at page 669 of 24 Cal.App.2d, at page 165 of 76 P.2d): ‘Respondents cite and rely mainly upon the case of General Oil Co. v. Crain, 209 U.S. 211, 28 S.Ct. 475, 52 L.Ed. 754. The case is clearly distinguishable. It appears there that the oil was brought from the north to a distribution plant in Memphis. It was there placed in storage tanks and indiscriminately sold and distributed from that point. After a time, in an attempt to escape a local tax, part of the oil was put in tank No. 1, marked ‘Oil already sold in Arkansas, Louisiana and Mississippi,’ while the oil which had not been sold was kept in the other tanks. This case is thoroughly discussed in Carson Petroleum Corp. v. Vial, supra, both of said cases having been decided under the commerce clause.'

On the special facts in State of Minnesota v. Blasius, 290 U.S. 1, 54 S.Ct. 34, 78 L.Ed. 131, it was determined that the shipment involved was not suspended but ended. The transportation had ceased and the tax was properly assessed on the regular tax day and there was no federal right to immunity from the tax. In determining the question, Mr. Chief Justice Hughes declared (at pages 9, 10 of 290 U.S., at page 37 of 54 S.Ct., 78 L.Ed. 131): ‘The ‘crucial question,’ in determining whether the state's taxing power may thus be exerted, is that of ‘continuity of transit.’ Carson Petroleum Co. v. Vial, 279 U.S. 95, 101, 49 S.Ct. 292, 293, 73 L.Ed. 626 [628]. * * * If the interstate movement has begun, it may be regarded as continuing, so as to maintain the immunity of the property from state taxation, despite temporary interruptions due to the necessities of the journey or for the purpose of safety and convenience in the course of the movement. * * * The question is always one of substance, and in each case it is necessary to consider the particular occasion or purpose of the interruption during which the tax is sought to be levied. * * * The mere power of the owner to divert the shipment already started does not take it out of interstate commerce if it appears ‘that the journey has already begun in good faith and temporary interruption of the passage is reasonable and in furtherance of the intended transportation.’ Hughes Bros. [Timber] Co. v. [State of] Minnesota, 272 U.S. 469, 476, 47 S.Ct. 170, 172, 71 L.Ed. 359 [362].'

From the above decisions certain factual bases appear to be necessary if a local government desires to lay an impost or a property tax on imports or exports beyond the necessities of executing local inspection laws. If a commodity is in transit to another state or a foreign country it comes within the powers granted to the federal government and the prohibition on the states stemming therefrom, implicitly or explicitly contained in art. I, secs. 8 and 10 of the federal Constitution until it comes to rest at its destination. The foregoing excerpts from the cases indicate that whether a tax or duty may be imposed may depend upon the character and kind of the commodity, the original intention of the owner, the possible change of intent, the continuity of transit, the control the owner retains to change the destination, the purpose and cause of an interruption, whether voluntary or involuntary, the length of the interruption and whether the interruption results in profit or loss to the owner or shipper. Coe v. Town of Errol, supra; Diamond Match Co. v. Village of Ontonagon, supra; American Steel & Wire Co. v. Speed, supra; General Oil Co. v. Crain, supra; Champlain Realty Co. v. Brattleboro, supra; Hughes Bros. Timber Co. v. State of Minnesota, supra; Carson Petroleum Co. v. Vial, supra; Philippine Refining Corp. v. Contra Costa County, supra; State of Minnesota v. Blasius, supra; Texas & N. O. R. Railroad Co. v. Sabine Tram Co., supra; Kelley v. Rhoads, supra; Swift and Co. v. United States, 196 U.S. 375, 25 S.Ct. 276, 49 L.Ed. 518; Bacon v. People of State of Illinois, 227 U.S. 504, 33 S.Ct. 299, 57 L.Ed. 615. It must not be understood that any one of the requisites enumerated, standing alone, would necessarily determine the question one way or the other. As an instance, the original intent if demonstrated by competent evidence would be a circumstance to consider, but subsequent actions might show a change of attitude. The preliminary movements in preparation for shipment might show an intent to export or not to export. All the facts must be considered in determining the essentially factual question of whether the goods are in transit or not. Each case is subject to factual distinctions from any other case.

In a California Supreme Court decision, Dant & Russell, Inc., v. Board of Supervisors, supra, it was held that certain lumber from out of the state ‘had come to rest in this state and was held here at petitioner's pleasure’; that it was part of property within the state and therefore subject to taxation. The court there said (at page 536 of 21 Cal.2d, at page 818 of 133 P.2d): ‘The commerce clause of the United States Constitution [citing cases] protects the lumber from state and local taxation while in transit (Coe v. Town of Errol, 116 U.S. 517, 6 S.Ct. 475, 29 L.Ed. 715; Carson Petroleum Co. v. Vial, 279 U.S. 95, 49 S.Ct. 292, 73 L.Ed. 626; Kelley v. Rhoads, 188 U.S. 1, 23 S.Ct. 259, 47 L.Ed. 359; Hughes Bros. Timber Co. v. [State of] Minnesota, 272 U.S. 469, 47 S.Ct. 170, 71 L.Ed. 359) and from discriminatory state legislation because of its out-of-state origin after the transit ends. [Citing cases.]’

It is now necessary to examine the specific findings and supporting facts in this case in the light of the above tests to determine whether they support the trial court's conclusion that the warehoused commodities were in transit in interstate commerce at the date the municipality attempted to levy the property tax. Extensive reference is made to the findings which mirror the stipulation of facts and the oral evidence with a few exceptions which will be noted. The transcript supports the following findings without conflict:

‘Plaintiff is engaged in business as a wholesale and retail merchant, and insurance agent and broker, in the Territory of Hawaii. Plaintiff is not and never has been engaged in business or qualified to engage in business of any kind in the State of California. (Emphasis added.)

‘In the course of plaintiff's business, plaintiff purchased from manufacturers or dealers in various states of the United States the merchandise required for the conduct of such business. All of such merchandise is sold by plaintiff in the Territory of Hawaii and none of it is or ever has been sold by plaintiff in the State of California.

‘Prior to the outbreak of the war with Japan on December 7, 1941, all merchandise purchased by plaintiff outside of California (or at places in California other than San Francisco) for resale in the Territory of Hawaii, was shipped to plaintiff through the Panama Canal to Hawaii, or overland by rail to San Francisco, where it was loaded on vessels immediately upon its arrival in San Francisco, and was thereafter carried by such vessels to the Territory.

‘* * * No commercial cargo was transported from the mainland to the Territory between December 7, 1941 and March, 1942. When shipments were resumed, they were made, and have continued to the present time to be made, exclusively from West Coast ports, since the War Shipping Administration, which has operated all American cargo vessels since December 7, 1941, took all ships off the Panama Canal route to Hawaii.

‘From March, 1942 until the present time there has been a continuous shortage of vessels for the transportation of goods from the mainland to the Territory of Hawaii. The shortage was acute as late as April, 1943, due in part to the backlog of cargo built up during the time no ships were running between the mainland and the Territory.

‘Martial law was declared in Hawaii on December 7, 1941, by the Civil Governor of Hawaii and the Commanding General of the Hawaiian Department of the United States Army, acting simultaneously under the authority of Section 67 of the Organic Act of the Territory [48 U.S.C.A. § 532]. On January 26, 1942, the Military Governor issued General Orders No. 56, authorizing the control of imports into the Territory by officials appointed by him, namely, the Director of Materials and Supplies Control, and the Director of Food Control. Such control was required by the shortage of shipping space, and the consequent necessity of allocating shipping space among commodities and between the shippers of such commodities. A system of control of imports was established immediately upon the resumption of shipments in March, 1942. Under it all persons desiring to import goods into the Territory were required to secure shipping permits from the Director of Materials and Supplies Control, or the Director of Food Control. The allocation of cargo space between importers holding such permits was accomplished by the San Francisco representative of the Military Governor. Thus, no importer was allowed to ship goods from the mainland to the Territory without (a) securing a shipping permit, and (b) securing an allocation of cargo space for the goods. At all times from March, 1942, to the present time, more cargo has been offered for shipment to the Territory than could be carried by the available ships.

‘Instructions regarding the allocation of cargo space were given by the San Francisco representative of the Military Governor to Matson Navigation Company, which was appointed by the War Shipping Administration as booking agent for all commercial cargo shipped from West Coast ports to Hawaii. The War Shipping Administration directed Matson Navigation Company to follow the instructions of the San Francisco representative of the Military Governor in allocating cargo space between holders of shipping permits.

‘The foregoing system of controlling shipments from the mainland to Hawaii was in effect from March, 1942, until June, 1944, when the system was somewhat modified. On March 10, 1943, the power to regulate imports into the Territory was returned by the Military Governor to the Civil Governor, but the system of control was not changed. * * *

‘On the first Monday in March, 1943, plaintiff was the owner of certain goods temporarily located in warehouses in San Francisco, which it had purchased for resale in the Territory of Hawaii, and for all of which it had secured shipping permits from the Military Governor of Hawaii prior to purchasing the goods. The majority of said goods were purchased from sellers outside the State of California; a small percentage (approximately 1% in cost) was purchased from sellers at points in California other than San Francisco, California; and a small percentage (approximately 10% in cost) was purchased in San Francisco.

‘All of said goods (except those purchased in San Francisco) had been shipped by rail to San Francisco prior to the first Monday in March, 1943, en route to the Territory; they were all consigned by the shippers to plaintiff at Honolulu, Hawaii. Upon arrival of the goods in San Francisco the railroad notified plaintiff of their arrival. Cargo space was not available for shipment of the goods when they arrived in San Francisco, and plaintiff therefore caused the goods to be delivered to San Francisco warehouses to be held temporarily until cargo space should become available. (Where cargo space was available when goods arrived in San Francisco, they were immediately loaded on vessels and shipped to the Territory.)

‘All of such goods were removed from the warehouses, placed on board vessels, and shipped to the Territory as soon as cargo space was allocated for them by the San Francisco representative of the Military Governor of Hawaii. None of such goods were processed or changed in form subsequent to their purchase by plaintiff and prior to their shipment from San Francisco to the Territory; and none of them were held or detained in San Francisco for any purpose other than to await the allocation of cargo space. Plaintiff had urgent need for the goods in the Territory and had ample warehousing space for them there, and the storage of the goods in San Francisco was not for plaintiff's benefit or convenience, but resulted in a substantial detriment to plaintiff, because it caused plaintiff to incur handling and storage charges that would have been avoided if the goods had not had to be warehoused. The sole reason for such temporary storage was the shortage of shipping and the wartime controls upon the transportation of goods from the mainland to the Territory, imposed by reason of such shortage. * * * The said tax was and is a tax levied on personal property in the course of interstate commerce between the states of the United States and the Territory of Hawaii.’ (Emphasis added.)

The above findings are fully supported by the evidence. The appellant's assertion that the italicized portions of the findings are incorrect rests on an interpretation of the facts which the trial court made. The evidence might have been susceptible to opposing inferences. In that state of the record if it existed, an appellate court is bound by the trial court's conclusion on a matter of fact. It therefore appears that the goods were warehoused in San Francisco owing to emergency conditions over which plaintiff had no control. The articles were desperately needed in Hawaii; were intended for Hawaii and were continued on their journey to Hawaii as soon as space was available—some in a few days and for some of the articles shipping facilities were not available for a few months. The storage of the goods ‘enroute’ instead of immediate trans-shipment was not plaintiff's voluntary act and resulted in no profit to plaintiff but in a distinct loss in storage, cartage and hiring expediting employees in San Francisco while seeking allocations of cargo space in which to continue the goods forward to their intended destination. Only by such storage could the necessary commerce be carried on in the emergency period, and the warehousing was solely to further the interstate transportation of the goods as shown by the record in this case. Consequently the evidence is ample to support the findings and fully protects the judgment. Of course it is possible that the owner of property, even in a wartime emergency period, might attempt under the guise of the interstate commerce rule to evade a just local tax, but such fact does not appear in this case.

The defendant and appellant presents a special objection to the refusal of the trial court to permit taxes to be imposed on goods purchased in San Francisco. The objection is based upon the theory that the journey of these goods had not begun. These goods were obtained and added to property purchased in other states, the journey of which had merely been interrupted, as above demonstrated. Defendant seeks further to fortify the objection upon the ground that the goods may have been in the warehouse at the date of purchase or may have been moved there by the seller or the plaintiff. The latter claim is not well founded when the record is examined. In the stipulation of facts the description of each commodity, the quantity, the cost, the point of origin, the date received at the warehouse in San Francisco, the date that each article or quantity of goods were shipped to Hawaii and even the name of the vessel appear. If any of these items happened to be incorrect, the trial court was the tribunal in which to make an investigation.

The first part of the objection is likewise untenable. There must be a point of time when each article becomes ‘in transit.’ The goods purchased in Louisiana, South Carolina or New York, when committed to a carrier for transportation, were in transit. Champlain Realty Co. v. City of Brattleboro, supra. Goods in intermediate areas, collected by the carrier and added to the interstate commerce articles, are likewise immediately subject to the same protection. An involuntary interruption, particularly one caused by war conditions, should not change the legal aspect or position of the goods. The amount of goods which happened to be obtained in San Francisco when designated en route to Hawaii became subject to the protection of the federal constitutional commerce clause, in view of the peculiar emergency situation with respect to through shipments. There is no claim that plaintiff was dishonest or seeking to evade a legitimate impost or duty. All the goods were shipped to the original intended destination—Hawaii. The evidence is sufficient to show that all the goods, including the goods purchased in San Francisco, had entered into the stream of interstate commerce flowing to Hawaii in the only manner possible in wartime.

Some of the goods had not been delivered to a common carrier. Wartime governmental regulations prohibited this but ‘the property had already been launched upon its export journey’ and had ‘been placed in the hands of an instrumentality whose sole purpose is to export goods, thus indelibly characterizing the process as a part of exportation.’ Richfield Oil Corp. v. State Board of Equalization, supra, 163 P.2d 2. The Richfield Oil case holds that the goods should be delivered to a common carrier, but wartime regulations limiting such delivery were not presented in that case. The goods had been indelibly characterized as ‘part of exportation.’ The question is one of fact. The trier of the facts has declared his conclusion. There is no basis upon which this court, as a matter of law, may declare to the contrary. Whether the delay was caused by respondent or by the United States government; whether respondent acquiesced in an undue delay; and whether the government action was instituted in furtherance of safe transportation that forbade transportation without a permit are questions of fact.

One final argument of appellant must be noted. Part of the warehoused goods consisted of intoxicating liquor. Liquors received the lowest priority in cargo space and hence were detained until clothes, trucks, automobiles and accessories, mechanical instruments, etc., were forwarded. However, the transcript indicates that at times liquors were shipped as a type of goods that could be placed on deck around essential airplanes. Further, liquor at times was on the monthly list of necessary articles required in the Hawaiian Islands as prepared by the civilian governor. In this connection, appellant contends that the commerce clause does not prevent the taxation of intoxicating liquor. The twenty-first amendment to the Constitution of the United States provides that the importation into any state ‘for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.’

The majority opinions in the two cases relied upon by appellant—Duckworth v. State of Arkansas, 314 U.S. 390, 62 S.Ct. 311, 86 L.Ed. 294, 138 A.L.R. 1144 and Carter v. Virginia, 321 U.S. 131, 64 S.Ct. 464, 88 L.Ed. 605—for its position that the twenty-first amendment to the United States Constitution takes interstate liquor commerce without the protection of art. I, sec. 8, cl. 3, hold no more than that interstate liquor commerce is subject to reasonable regulation in view of the interests of the state in respect to that type of commerce. Having once determined that the liquor was in transit, levy of an ad valorem property tax cannot be considered regulation. Appellant places reliance on Gooderham & Worts, Ltd. v. Collins, 50 Cal.App.2d 716, 123 P.2d 922. That case involved a question of fact concerning the state excise tax on sales of liquor within the state. The court properly held that on the facts of the case whether a sale had taken place within the state was a question of fact decided adversely by the trial court to the plaintiff who was a licensed distributor of distilled spirits in San Francisco. The decision is not relevant to the facts of this case. No question is raised as to the payment of the Alcoholic Beverage Control Act, St.1935, p. 1123, tax on the liquor sales to plaintiff in California and it must be admitted that the liquor was never purchased or imported for ‘use’ in California.

The taxpayer had the burden of showing that the personal property tax was not applicable to the facts of this case. Plaintiff taxpayer, as the trial court found, sustained that burden.

The judgment is affirmed.

On Rehearing.

The petition for rehearing is denied. Presiding Justice Peters votes for granting a rehearing for reasons hereafter stated.

I believe the petition for rehearing should be granted. I fully agree with the opinion heretofore filed in so far as it holds that as to those articles purchased outside the state the city and county had no power to tax. Those goods in a very real sense were in interstate commerce and the reason they were in the state was because the means of transportation had broken down as a result of the war emergency. But, in my opinion, a different rule applies to the goods purchased in this state and certainly as to the goods purchased in San Francisco. It is incontrovertible that as long as goods remain part of the mass of local goods they are subject to local taxation. The taxing power of the state continues until those goods are separated from the mass of local goods. Here a substantial part of the goods were purchased in San Francisco and stored in warehouses to await shipment to Hawaii. While in the warehouses and before being delivered to a common carrier for shipment the goods remained part of the general mass of state goods subject to local taxation. That was the express holding in the leading case of Coe v. Town of Errol, 116 U.S. 517, 527, 6 S.Ct. 475, 478, 29 L.Ed. 715, where it was stated: ‘But no definite rule has been adopted with regard to the point of time at which the taxing power of the state cases as to goods exported to a foreign country or to another state. What we have already said, however, in relation to the products of a state intended for exportation to another state will indicate the view which seems to us the sound one on that subject, namely, that such goods do not cease to be part of the general mass of property in the state, subject, as such, to its jurisdiction, and to taxation in the usual way, until they have been shipped, or entered with a common carrier for transportation, to another state, or have been started upon such transportation in a continuous route or journey.’

At page 528 of 116 U.S., at page 479 of 6 S.Ct., 29 L.Ed. 715, it is stated: ‘But this movement does not begin until the articles have been shipped or started for transportation from the one state to the other. The carrying of them in carts or other vehicles, or even floating them, to the depot where the journey is to commence, is no part of that journey. That is all preliminary work performed for the purpose of putting the property in a state of preparation and readiness for transportation. Until actually launched on its way to another state, or committed to a common carrier for transportation to such state, its destination is not fixed and certain. It may be sold or otherwise disposed of within the state, and never put in course of transportation out of the state. Carrying it from the farm or the forest to the depot is only an interior movement of the property, entirely within the state, for the purpose, it is true, but only for the purpose, of putting it into a course of exportation. It is no part of the exportation itself. Until shipped or started on its final journey out of the state its exportation is a matter altogether in fieri, and not at all a fixed and certain thing.’ See, also, Minnesota v. Blasius, 290 U.S. 1, 9, 54 S.Ct. 34, 78 L.Ed. 131.

For these reasons I believe a rehearing should be granted to reconsider this point.

WARD, Justice.

PETERS, P. J., and SCHOTTKY, J. pro tem., concur.