California Motor Transport Co. v. State Board of Equalization

TRAYNOR, J.

I dissent. Under the California Motor Vehicle Transportation License Tax Law as construed by this court, an operator of motor vehicles engaged in intercity transportation of goods must include in the taxable gross receipts from such transportation revenue derived from services incidental to the intercity transportation. This court has held that receipts from a pickup and delivery service maintained for door-to-door delivery are taxable as part of the gross receipts from intercity transportation of the goods. (Bekins Van Lines, Inc. v. Johnson, 21 Cal.2d 135 [130 P.2d 421]; Southern California Freight Lines v. State Board of Equalization, 72 Cal.App.2d 26 [163 P.2d 776].) As in those cases, the pickup and delivery service in the present case was maintained by plaintiff for door-to-door delivery of goods moved between cities, and was as much a part of the intercity transportation. The facts found by the trial court establish no substantial difference between the taxpayers’ activities in those cases and the activities of plaintiff in the present case. The holding that- even though others must include revenue derived from a pickup and delivery service in their taxable gross receipts, plaintiff need not, affords plaintiff an unwarranted competitive advantage over others engaged in the same activities.

The California Motor Vehicle Transportation License Tax Law (now incorporated in the Revenue and Taxation Code and hereafter cited according to the section numbers of that *225code) provides: “A license tax is hereby imposed upon operators at the rate of 3 per cent of the gross receipts of the operators from operations.” (§ 9651.) The term ‘‘operator’’ includes “any person engaging in the transportation of persons or property for hire or compensation by or upon any public highway in this State, either directly or indirectly.” (§ 9603.) “‘Gross receipts’ include all receipts from the operation of motor vehicles entirely within this State . . . ‘Gross receipts’ do not include revenue derived by an express company from the shipment of property over the lines of common carriers, but do include revenue derived by an express company from the transportation of the property in motor vehicles operated by it.” (§ 9606.) The statute does not apply to “operators of motor vehicles operated within incorporated cities.” (§ 9653.) It exempts “the gross receipts derived from the transportation of persons or property wholly within incorporated cities or between incorporated cities and private property or wholly on private property where no portion of the public highway outside the corporate limits of the cities is traversed in such operation. ” (§ 9653.)

In Bekins Van Lines Inc. v. Johnson, supra, the plaintiff was engaged in intercity transportation of household goods. It objected to including in its taxable gross receipts compensation for the moving of goods from one house or the placing of them into another before and after its transportation over intercity highways on trucks operated by plaintiff; it also objected to including in its taxable gross receipts compensation derived from an intracity pickup and delivery service maintained for the transportation of small consignments to and from its intercity terminals. In holding such compensation to be part of plaintiff’s gross receipts from taxable operations, this court stated: “The plaintiff concedes that the words ‘operation of motor vehicles’ as used in the definition include loading and unloading activities at the sidewalk. However, the goods must be taken to and from the sidewalk as an inseparably preparatory activity connected with the loading and unloading operations. We therefore fail to see how the plaintiff can be excused from the payment of a proportion of the license tax based on its claim that more than 50 per cent of gross receipts from operations was derived from time devoted to such preparatory activities. The preparatory activities sought to be expected are *226just as much part of and essential to transportation, and therefore to operation of motor vehicles, as are actual loading and unloading operations which are also preparatory to the rolling of the vehicle along the highways. To adopt the plaintiff’s suggestion would be to add to the language of the definition a limitation which the Legislature did not express, and which it must be deemed it did not intend. If the Legislature intended to exclude from ‘operation’ as defined every incidental service and activity customary and essential in the matter of transporting goods for compensation and hire it could easily have said so. By failure to use any such limiting words the Legislature indicated its intention of not so limiting or circumscribing the meaning or scope of the act. (In re Bush, 6 Cal.2d 43 [56 P.2d 511].) . . . Nor may any distinction be made by the plaintiff on its returns between intercity hauls which require for convenience an intra-city pick-up and delivery service, and those which do not require such service in the convenient method of initiating or terminating such intercity transportation. . . . No invalidity may be said to attach by reason of the fact that the plaintiff here is taxed on its intra-city pick-up and delivery service in connection with its intercity hauls are distinguished from its strictly intra-city business. (In re Bush, supra.)” (21 Cal.2d 135, 140-142; see, also, Southern California Freight Lines v. State Board of Equalization, supra.)

In the present case plaintiff rendered separate monthly bills to the express company for “terminal to terminal line haul charges” and for “pick-up and delivery services at Los Angeles and Oakland.” Plaintiff’s bills for May, 1941, which are illustrative of plaintiff’s dealings with the express company, included as freight hauled from terminal to terminal “Northbound 5,709,572 lbs.” and “Southbound 6,631,411 lbs.” The same amount of “Northbound” or “Southbound” freight was picked up or delivered by plaintiff in Los Angeles. Accordingly, there is no dispute that the same goods were moved by plaintiff in its intercity hauls and in its intraeity pickup and delivery service. The latter was the first or last step of the intercity transportation of the goods moved by plaintiff for the express company.

None of the facts found by the trial court, on which the majority opinion relies, affects the decisive fact that plaintiff’s intraeity pickup and delivery service was incidental to the moving of the goods between cities. It is immaterial *227that plaintiff used different trucks for transporting goods within city limits and for hauling them from terminal to terminal. The plaintiff in the Bekins case relied on the use of separate trucks, but this court held that the use of such trucks in operating a pickup and delivery service was simply a convenient method of starting or terminating intercity transportation. It is also immaterial that for the operation of its pickup and delivery service plaintiff secured a permit as a city carrier, and that the certificate of convenience and necessity under which it moved freight over intercity highways was limited to the carrying of freight from terminal to terminal. Receipts from activities that are part of intercity transportation of goods are taxable regardless of- whether any permit is required to engage in such activities. (In re Bush, 6 Cal.2d 43, 51 [56 P.2d 511].) If a special permit is secured for certain activities, it does not follow that these activities are disconnected from other activities of the carrier.

The present case cannot be distinguished on the grounds that plaintiff engaged in transporting goods for the express company and not for the consignors of the goods, or that it kept separate accounts of its receipts from transporting goods between the terminals and its receipts from the intracity pick-up and delivery service. It is settled that an operator is taxable on receipts from the transportation of goods whether he rendered his services to one or several customers or whether he engaged in his activities as an agent or as an independent contractor. (In re Bush, 6 Cal.2d 43, 54 [56 P.2d 511].) Separate charges for the pickup and delivery service were made by the plaintiff in the Bekins case as well as by plaintiff in the present ease. The fact that plaintiff entered the receipts from the hauling of goods between the terminals and from its intraeity pickup and delivery service in separate accounts does not mean that the two activities were unconnected and that plaintiff operated two unrelated businesses. A carrier like any other business may keep separate accounts to ascertain the revenue obtained from its various activities. The tax applies because of the taxpayer’s activities in transporting goods for hire on the public highways of the state, not because it keeps accounts in a certain way. Plaintiff’s pickup and delivery service is as much an integral part of its intercity transportation of goods as such service was in the Bekins and Freight Lines eases, supra, and is not made less so by mere bookkeeping entries.

*228The present case is clearly distinguishable from Pioneer Express Co. v. Riley, 208 Cal. 677 [284 P. 663]. In that case different corporations were engaged in making intercity hauls and operating an intracity pickup and delivery service. It was contended that there was unity of control as to the two corporations, but this court declined to go behind the corporate entities. In the present case the same corporation is engaged in hauling the goods between terminals and in the intraeity pick-up and delivery service.

The decision of this case depends solely upon whether plaintiff’s pickup and delivery service was part of its intercity transportation service. In my opinion it was, whether or not it may be regarded as a separate business. The majority opinion, however, regards as controlling the question whether the taxpayer has so segregated its activities that the pickup and delivery service may be regarded as a separate business. Even if such a segregation were the test of taxability under the statute, the question whether the service is operated as a separate business would not present an issue for the final determination of the trial court. The problem would involve questions of both law and fact. What a taxpayer’s activities are is a question of fact; whether such activities give rise to tax liability is a question of law depending on what the statute means and how it applies to the facts. (Estate of Madison, 26 Cal.2d 453, 456 [159 P.2d 630]; Bodinson Mfg. Co. v. California Employment Com., 17 Cal.2d 321, 326 [109 P.2d 935]; County of Sierra v. County of Nevada, 155 Cal. 1, 14 [99 P. 371]; Signal Hill v. County of Los Angeles, 196 Cal. 161, 168 [236 P. 304]; Mitchel v. Brown, 43 Cal.App.2d 217, 222 [110 P.2d 456]; see 23 Cal.Jur. 719; 10 Cal.Jur. 882.)

In this case the purposes of plaintiff in operating the pickup and delivery service, the conditions under which the service was operated, and its relation to the intercity transportation, are either undisputed or ascertainable from the findings. Even under the separate business test of the majority opinion, the taxability of the receipts from the service in question should be determined as a matter of law, and this court should hold such receipts taxable on the ground that there is no essential distinction between this case and the Bekins and Freight Lines cases where the operators maintained pick-up and delivery service for the same purposes, under essentially the same conditions, and in the same relation to their intercity transportation.

*229If trial courts can reach different decisions under such circumstances, and such decisions are to be final, some taxpayers may be subject to taxation but others engaged in essentially the same activities may not. The majority opinion, by leaving it to the trial courts to make final determinations whether the statute applies to given facts gives some taxpayers a competitive advantage over others, thus defeating the uniform operation of the statute throughout the state.

Gibson, C. J., and Spence, J., concurred.

Appellant’s petition for a rehearing was denied January 15,1948. Gibson, C. J., Traynor, J., and Spence, J., voted for a rehearing.