Rusan's, Inc. v. State

Hunter, C. J.

(dissenting) — I dissent. I agree with the majority that the test in the disposition of this case is whether the handling of the goods by Rusan’s was essentially comparable to a wholesaling function. The intent clause of RCW 82.04.270(2) clearly indicates that the legislative purpose is to impose a tax upon activities that would otherwise constitute a wholesaling function except for a sale of the goods taking place. The statute provides in part:

(2) The tax imposed by this section is levied and shall be collected from every person engaged in the business of distributing in this state articles of tangible personal property, owned by them from their own warehouse or other central location in this state to two or more of their own retail stores or outlets, where no change of title or ownership occurs, the intent hereof being to impose a tax equal to the wholesaler’s tax upon persons performing functions essentially comparable to those of a wholesaler, but not actually making sales: . . .

An examination of the cases in which we have held functions to be essentially comparable to a wholesaling activity under RCW 82.04.270 (2) discloses that none of these cases have a fact pattern similar to the present case.

In Standard Oil Co. v. State, 57 Wn.2d 56, 355 P.2d 349 (1960), cert. denied, 365 U.S. 859, 5 L. Ed. 2d 823, 81 S. Ct. *608827 (1961), we were concerned with a distribution of goods from a central depot to two or more retail outlets. There was a deposit and storage of petroleum products at a terminal storage plant, and a subsequent transfer of the products to bulk plants for distribution to ultimate consumers. The goods were commingled and unidentified at the distribution depot. We therefore held these activities to be essentially comparable to wholesale functions and taxable under the statute, supra.

In General Baking Co. v. State, 62 Wn.2d 18, 380 P.2d 727 (1963), we held that a distribution of bakery products from a central plant to its leased retail outlets and its own retail stores was a function essentially comparable to that of a wholesaler.

Our most recent consideration of this tax was in Air-Mac, Inc. v. State, 78 Wn.2d 319, 474 P.2d 261 (1970). In this case there was a constant transfer of inventory and parts between the stores with appropriate bookkeeping entries. We therein held each retail outlet was the central depot as to the other stores; that this was therefore essentially comparable to a wholesaling function and was subject to tax under the statute, supra.

Distinguishing the facts of the instant case, the dresses and other articles of apparel were purchased by Rusan’s buyers for each individual store and were shipped in boxes marked for that store. When the boxes arrived in Spokane, they were delivered to the downtown Rusan’s store where the merchandise was kept in the receiving room for a matter of hours while the clothing was steamed and marked with retail price tags. The clothing was placed on racks reserved for the store for which it had been purchased, and the racks were then transported to that store.

In view of these facts, it seems apparent that Rusan’s operation is not essentially comparable to a wholesaling function. The merchandise was ordered by buyers for each individual store. Rusan’s downtown store did hot receive or place the orders for the other retail outlets, nor did the downtown store have sufficient inventory to fill any orders. Rusan’s buyers did not order largé quantities of clothing *609requiring storage. Nor was the merchandise ordered with the intent to distribute or transfer it among the various outlets. The garments remained earmarked for the specific stores and were not commingled upon arrival at the downtown store. The goods were, in effect, received only for the purpose of steaming and pricing while en route to the stores for which they had been purchased for retail sale.

The judgment of the trial court holding Rusan’s activity was not taxable under the statute, supra, should be affirmed.

Rosellini, Neill, and Stafford, JJ., concur with Hunter, C. J.

March 10, 1971. Petition for rehearing denied.