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E.J. Stanton & Sons v. Los Angeles County, 78 Cal.App.2d 181, 177 P.2d 804

Facts

E. J. Stanton and Sons, engaged in the wholesale and retail lumber business for 50 years, imported hardwoods from various countries. The lumber was unloaded at the Los Angeles Harbor, sorted, and stored in bins according to type and size. After sales were made from these bins, the remaining lumber was taxed. The dispute arose over whether the remaining lumber, after partial sales, was still considered an import and thus exempt from state taxation.

Respondent has been for 50 years engaged in the wholesale and retail lumber business in Los Angeles county. One of its activities has been the importation of hardwoods from Central and South American republics, Australia, the Philippines and other oriental lands.

Issue

The main legal issue is whether the remaining lumber, after portions had been sold, was subject to state taxation or retained its status as an import exempt from such taxation.

The question involved is whether respondent as importer had so treated certain taxed lumber as to incorporate it into the mass of property in this state thereby removing it from the inhibition of the federal constitution against a state's assessing duties on imports.

Rule

The court applied the principle that an import remains exempt from state taxation as long as it is in its original form or package. However, once the import is sold or mixed with other property, it loses its distinctive character and becomes subject to state taxation.

The law governing the exemption of importations from local taxation had its genesis in section 10 of Article I of the organic law of the United States.

Analysis

The court analyzed the facts surrounding the handling of the lumber, noting that once the lumber was sorted, sold in part, and mixed with new shipments, it lost its status as an import. The court emphasized that the act of sorting and selling portions of the shipment incorporated the remaining lumber into the mass of property in the state, making it taxable.

The circumstances attending the shipments in question are additional reasons for concluding that the several boards or timbers were not original packages.

Conclusion

The court concluded that the judgments in favor of E. J. Stanton and Sons were to be reversed, and judgments were to be entered in favor of the County of Los Angeles, as the lumber had lost its status as an import and was subject to state taxation.

It is therefore ordered that all three judgments be and they are reversed with directions to enter judgments in favor of appellants as prayed.

Who won?

The County of Los Angeles prevailed in the case because the court found that the lumber had been incorporated into the mass of property in the state and was thus taxable.

The court concluded that the judgments in favor of E. J. Stanton and Sons were to be reversed, and judgments were to be entered in favor of the County of Los Angeles.

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