Pac. Coast Eng. Co. v. State of California

California Court of Appeal May 9, 1952 No. 7991Published

Before: Van Dyke

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Holding. The court held that a retailer's right to collect sales tax from a consumer is optional and must be established by the terms of the contract; where a contract is silent on the matter, the buyer is not obligated to pay the tax in addition to the agreed-upon price.

Issues

Whether a retailer has a mandatory duty under the Sales and Use Tax Law to collect sales tax from a consumer.
Whether a buyer is liable for sales tax in addition to the contract price when the contract is silent on the subject.

Disposition. affirmed

Quotations verified verbatim against the opinion

“Since the tax is levied upon the retailer and his right of reimbursement is optional and may be waived by him, it follows, we think, that reimbursement of the amount of the tax rests upon the contractual arrangements of the parties.”

“And even though the contract is silent as to whether that price includes or excludes a sales tax, the law will not by implication add to the burden of the buyer the amount of the tax as to which, the contract being silent, he is not bound.”

111 Cal.App.2d 31 (1952) 244 P.2d 21 PACIFIC COAST ENGINEERING COMPANY, Appellant,

STATE OF CALIFORNIA, Respondent.

Docket No. 7991. Court of Appeals of California, Third District.

May 9, 1952. [32] David D. Oliphant, Jr., for Appellant.

Edmund G. Brown, Attorney General, Ernest P. Goodman and James E. Sabine, Deputy Attorneys General, for Respondent.

[33] VAN DYKE, J.

The plaintiff has appealed from the judgment entered upon the sustaining of a general demurrer to plaintiff's first amended complaint. The controversy involves the rights of a seller of personal property to collect sales tax from the buyer.

Appellant is engaged in the manufacture and sale of barges, scows and similar equipment. The State of California, acting through the Board of State Harbor Commissioners for San Francisco Harbor, advertised for bids for the construction of two steel dump scows according to plans and specifications adopted by the board. The specifications provided: "Each bidder shall state a price for which he will furnish all materials, labor and equipment and construct and deliver to the Board two 300 cubic Yard Capacity Welded Steel Dump Scows, in accordance with the Plans and Specifications." (Italics ours.) Appellant was the successful bidder. The bid submitted on a bid form provided by the board stated: "The undersigned hereby proposes and agrees to construct the work described in annexed advertisement, according to the plans and specifications on file in your office, ... and will accept in consideration thereof, and as full compensation therefor, the sum of Sixty Four Thousand Eight Hundred and Fifty Dollars for each dump scow." (Italics ours.) The parties entered into a formal contract based upon the call for bids and the bid submitted. This contract provided, among other things: "This contract and all work and labor done and performed thereunder and payments made thereunder and transactions of whatsoever kind and nature done under and pursuant thereto or arising therefrom, are subject to the laws of the State of California, in such case made and provided and applicable thereto."

Pac. Coast Eng. Co. v. State of California

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