Marsh Wall Products, Inc. v. County of Los Angeles

FORD, J.

This is an appeal from a judgment denying recovery of taxes paid under protest.

In its complaint, the plaintiff alleged that on the first Monday in March 1957, it had in its warehouse in the city of Los Angeles “certain merchandise and inventory of the value on said date of the sum of $89,282.18,” which fact was set forth in the personal property affidavit filed by it with the tax assessor. It was further alleged that that was “the total amount of the inventories owned, possessed or controlled by plaintiff as of that date,” but that the tax assessor “did assess to plaintiff personal property consisting of inventories in the sum of $100,000.00, as of the first Monday in March, 1957.” The principal ground upon which the appellant sought a recovery of that part of the taxes which had been paid under protest was that “the total amount of the tax so assessed to plaintiff was excessive in that it was based, in part, upon personal property which was not in existence on the first Monday in March, 1957,” in part upon personal property not owned by it on that date, and in part upon personal property not situated within the county of Los Angeles on that date.

At the trial of the matter, it was the position of the respondents that the claim asserted by the appellant was one of overvaluation of property by the assessor and that no recovery could be had because the appellant had not first pursued its administrative remedy before the county board of equalization.

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The soundness of that position in the light of the pertinent facts is the basic question presented on this appeal. A summary of the evidence presented to the trial court will be given.

May Waner, a deputy assessor, testified that the assessed value placed by her on property was approximately 50 per cent of its market or cash value as determined by her. She

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believed that she first talked to Mr. Crampton of Marsh Wall Products, Inc., sometime in April of 1957, but did not then place any value on the merchandise and inventory. She was in the warehouse at least three times. She noticed no material change in quantities of merchandise and inventory from one occasion to the other. On May 27, 1957, she was at the appellant’s premises and went through the warehouse. On that date she reached a determination that the assessed value of the merchandise and inventory was $100,000, the cash or market value being ascertained to be at least $200,000. She described that property as consisting of a product in the nature of a finished wallboard, which was in sheets piled in stacks in the warehouse. There were a “great many” stacks. She had no figures as to the total footage of the inventory, but she had the personal property affidavit which the appellant had filed. The office manager told her that from time to time a report was made to the insurance company as to the inventory and that the minimum insurance coverage was never under $200,000. The warehouse foreman told her that they tried to turn their stock every four months. The personal property affidavit stated that the gross sales for the year 1956 were $661,891 in amount, and that the gross profit was 10 per cent. In determining the assessed value to be $100,000, she used the information to which she testified, including that in the personal property affidavit, as well as what she saw in viewing the property. As to her use of the figures contained in the affidavit, her testimony was: “ Q. In other words, if they had an inventory of, a market value or full cash value of $89,282 on their premises as of the first Monday of March and if they had average inventory of that amount, they would have a stock turnover based on their cost of sales of 6.6; is that correct? A. Yes. Q. Now, is the stock turnover of 6.6 practicable ? Have you ever encountered such a high rate of stock turnover ? A. No, I have not in that type of business; never.' ’