Case Name: H. L. E. MEYER, JR., et al., Respondents, v. STATE BOARD OF EQUALIZATION, Appellant
Court: Supreme Court of California
Jurisdiction: California
Decision Date: 1954-03-01
Citations: 42 Cal. 2d 376
Docket Number: Sac. No. 6273
Parties: H. L. E. MEYER, JR., et al., Respondents, v. STATE BOARD OF EQUALIZATION, Appellant.
Judges: 
Reporter: California Reports
Volume: 42
Pages: 376–398

Head Matter:
[Sac. No. 6273.
In Bank.
Mar. 1, 1954.]
H. L. E. MEYER, JR., et al., Respondents, v. STATE BOARD OF EQUALIZATION, Appellant.
Edmund G. Brown, Attorney General, James E. Sabine and Irving H. Perluss, Assistant Attorneys General, and Norman B. Peek, Deputy Attorney General, for Appellant.
Anthony J. Kennedy and Carl Kuchman for Respondents.

Opinion:
EDMONDS, J.
H.Meyer and B. Meyer, doing business as H. L. E. Meyer, Jr. and Company, paid retail sales taxes on shipments of coke from an Illinois manufacturer to various consumers in California. In computing the taxes, the Meyers omitted from their calculations of "gross receipts" the costs of transporting the coke. Based upon such costs, an assessment for additional taxes was levied by the State Board of Equalization and paid by the Meyers under protest. After exhausting their administrative remedies, they sued for the amount of the protested payment, and the appeal is from a judgment in their favor.
The transportation charges were stated separately from the purchase price, the complaint charged, and the transportation occurred after the sale of the coke to the purchaser. The Meyers also asserted that the assessment of a sales tax upon transportation charges is an unconstitutional burden upon interstate commerce. In paragraph VIII of the complaint it was alleged that "said sales were made by Pickands Mather & Co., Cleveland, Ohio, as agents for Interlake Iron Corporation, South Chicago, Illinois, and plaintiffs as broker to purchasers in California." (Italics added.)
The board's answer admitted or denied expressly some of the allegations of the complaint, but others, including those stated in paragraph VIII, were not mentioned.
By stipulation, the sole evidence presented at the trial consisted of the documents used in connection with a shipment of coke to General Metals Corporation, a California company. It was agreed that this shipment is representative of all of the purchases covered by the additional assessment. The documents show the following transaction:
Upon receiving from General Metals a purchase order for a quantity of coke, the Meyers executed with Pickands Mather and Company, agents for Interlake Iron Corporation, a coke sales contract naming Meyer and Company as buyer, Pickands Mather, agents, as seller, and General Metals as consignee. The coke was shipped to General Metals under a uniform straight bill of lading, the original together with a weight certificate and Pickands Mather's invoice being sent to Meyer and Company. The invoice stated the quantity of the coke and the price, "22.10 Per Ton f. o. b. Cars Oakland, California, Transportation Charges Collect & Allowed."
The Meyers then sent to General Metals their own invoice, attached to which was the original bill of lading and original weight certificate. This invoice was addressed to General Metals and recited as "Bought of H. L. E. Meyer Jr. & Co." the same quantity of coke at "23.10 per 2000# fob car Oakland, Calif. Transportation charges collected & allowed."
As conclusions of law from the stipulated facts, the trial court determined that in the transactions covered by the additional assessment, the Meyers acted as brokers and not as buyers or sellers, and there was no sale within the meaning of section 6006 of the Revenue and Taxation Code. It was further concluded that such an additional assessment would be an unconstitutional burden upon interstate commerce. As "findings of fact" it was declared that the transportation occurred after the sale of the coke to the California consumers and that such charges were stated separately from the purchase price.
The board contends that each of these conclusions is erroneous. It takes the position that the transaction was a sale of the coke to the Meyers and a resale by them to General Metals Corporation.
The "finding of fact" that the transportation charges, separately stated, were incurred after the sale of the coke is also challenged by the board. No conclusion of law was drawn from it as to whether such charges are to be excluded from "gross receipts" as defined by section 6012 of the Revenue and Taxation Code. However, for the purpose of this appeal, such finding may be treated as a conclusion of law. (Cf. Lencher v. Chase, 98 Cal.App.2d 794, 802 [220 P.2d 921].)
The Meyers take the position that title passed to General Metals Corporation when the coke was delivered to the carrier. The board asserts that title passed to the Meyers at the time the coke was delivered to the consignee, and did not pass to General Metals until such delivery or a later time. It points out that the sale to Meyer and Company was f.o.b. destination point and a similar arrangement existed between the Meyers and General Metals.
The sole evidence being the written documents without qualifying testimony, their legal effect is a question of law, and the interpretation given to them by the trial court is not binding upon appeal. In the absence of extrinsic evidence, "there is no issue of fact, and it is the duty of an appellate court to make the final determination in accordance with the applicable principles of law." (Estate of Platt, 21 Cal.2d 343, 352 [131 P.2d 825] ; Moore v. Wood, 26 Cal.2d 621, 629-630 [160 P.2d 772] ; Western Coal & Min. Co. v. Jones, 27 Cal.2d 819, 826-827 [167 P.2d 719, 164 A.L.R. 685] ; Estate of Fleming, 31 Cal.2d 514, 523 [190 P.2d 611].)
By the contract between them, Piekands Mather agreed to sell and Meyer and Company agreed to buy the coke. Meyer and Company was described as "buyer" with Piekands Mather as "seller." Piekands Mather's invoice to the Meyers states charges for coke "sold to" Meyer and Company. Similarly, the invoice sent to General Metals states charges for coke "bought of H. L. E. Meyer Jr. & Co." The bill of lading and weight certificate covering the shipment were sent to the Meyers, and there is a complete absence of any direct dealings between Piekands Mather and General Metals.
Rule 5 of section 1739 of the Civil Code provides: "If the contract to sell requires the seller to deliver the goods to the buyer, or at a particular place . . . the property does not pass until the goods have been delivered to the buyer or reached the place agreed upon." Here the sales contract provided for consignment of the coke to General Metals Corporation, "Foot of 105th Avenue, Oakland, California."
No contract between Meyer and Company and General Metals Corporation was included in the stipulation of facts.' However, the purchase order of General Metals and Meyer and Company's invoice both provide for f.o.b. delivery, Oakland being stated as the destination point. Under the principles discussed in connection with the sale between Pickands Mather and Meyer and Company, title did not pass to General Metals until after the delivery of the coke in Oakland.
The fact that General Metals was the consignee of the coke does not exonerate the Meyers from liability for the sales tax. The Supreme Court of Alabama in an almost identical transaction concluded that, in legal effect, it was a sale and resale. (Graybar Electric Co. v. Curry, 238 Ala. 116 [189 So. 186], affirmed 308 U.S. 513 [60 S.Ct. 139, 84 L.Ed. 437]; rehearing denied 308 U.S. 638 [60 S.Ct. 259, 8,4 L.Ed. 530].)
A similar situation was shown in Standard Oil Co. v. Johnson, 24 Cal.2d 40 [147 P.2d 577], in which a sales tax was sought to be levied upon shipments of fuel oil to out-of-state destinations under standard bills of lading naming the buyer consignee, with freight charges prepaid by the shipper. The court held that there was no tax liability. "Whether or not delivery to a carrier constitutes delivery to the buyer depends upon the intention of the parties as ascertained from the contract and the other circumstances of the case, and ordinarily, unless a contrary intent appears, where the seller contracts to deliver goods át a given destination and he delivers them to a carrier consigned to the buyer with freight charges paid by the seller (f.o.b. point of destination), the delivery to the carrier does not constitute delivery to the buyer and title does not pass until the goods have arrived at their destination." (Pp. 45-46.)
The Meyers seek to distinguish the Standard Oil case on the ground that there the freight charges were paid by the seller and included in the costs of the sale. In the present case, it is argued, the freight charges were paid by General Metals and allowed by the Meyers in their invoice to General Metals, and by Pickands Mather in their invoice to Meyer and Company, as a deduction from the sales price. Such a distinction is immaterial. The present situation is expressly included within the scope of the retail sales tax under Sales and Use Tax Ruling No. 58 (Cal. Admin. Code, tit. 18, § 2028) which provides that in an f.o.b. destination contract, no deduction may be taken for freight whether paid by the shipper or paid to the carrier by the purchaser and deducted from the sales invoice as a "freight allowance." In principle, there should be little distinction between the two situations, particularly where, as here, the transaction is handled as a charge to the buyer's open account.
The trial court's conclusion that the levy of a sales tax upon the shipments included within the assessment would be an unconstitutional burden upon interstate commerce is based apparently upon the erroneous view as to the nature of the transactions which has been advanced by the respondents. However, it is not an interstate sale by Pickands Mather which is being taxed but an intrastate sale from Meyer and Company to General Metals. Accordingly, the claim of unconstitutionality is without merit. (Cf. Wiloil Gorp. v. Pennsylvania, 294 U.S. 169, 175 [55 S.Ct. 358, 79 L.Ed. 838]; Graybar Electric Co. v. Gurry, supra, at pp. 189-190.)
The appeal is presented on a partial clerk's transcript consisting of the judgment roll and the notices designated by rule 5(d) of the Rules on Appeal, and including the exhibits which comprise the stipulation of facts. The pleadings include an amendment to the board's answer which declares that it was filed "Pursuant to leave of court contained in the Memorandum Directing Findings filed in the above entitled matter on November 20, 1951. ' ' No contention is made by the Meyers that the amendment was filed without authority, and it must be presumed that the recital in the pleading is correct. (Livermore v. Webb, 56 Cal. 489, 492; Dowling v. Comerford, 99 Cal. 204, 206 [33 P. 853]; Riverside County v. Stockman, 124 Cal. 222, 223-224 [56 P. 1027]; Segerstrom v. Scott, 16 Cal.App. 256, 260 [116 P. 690]; Gaddis v. Grant, 39 Cal.App. 437, 439 [179 P. 410].) In the Segerstrom case it was said: "The amended answer itself declares that the same was filed by leave of the court 'first had and obtained, ' and there is nothing appearing on the judgment-roll inconsistent with this statement of the amended answer. In the absence of an affirmative showing to the contrary, this declaration of the amended answer' must be accepted as verity, and even if it contained no such declaration and there was no proper affirmative showing that it was not true, this court would be compelled to indulge the presumption that the amended answer was duly filed, or filed with the trial court's permission." (16 Cal.App. p. 260.) Thus, in the absence of both a direct assertion that the pleading was unauthorized and a motion by the Meyers to augment the record to include a transcript of that proceeding, this court must presume that the amendment was proper.
The Meyers assert, however, that it "is established by the pleadings . . . that title passed from Interlake Iron Corporation . to the California Purchasers, with plaintiff serving as broker." They take the position that a fact once admitted remains an admission, regardless of whether a contrary amendment to the pleading is filed, with or without permission from the court.
It is well established that an amendatory pleading supersedes the original one, which ceases to perform any function as a pleading. (Pfister v. Wade, 69 Cal. 133, 138 [10 P. 369] ; Kentfield v. Hayes, 57 Cal. 409, 411; Collins v. Scott, 100 Cal. 446, 453 [34 P. 1085]; Darsie v. Darsie, 49 Cal.App.2d 491, 493 [122 P.2d 64]; Viera v. Viera, 107 Cal. App.2d 179, 180 [236 P.2d 630].) Accordingly, the only answer that may be considered as a pleading is the one modified by the board's amendment. (Cf. Bray v. Lowery, 163 Cal. 256, 260 [124 P. 1004].)
It is generally recognized, however, that a superseded pleading may be given some evidentiary effect, although the courts are not in accord as to the circumstances under which it may be considered. (See IV Wigmore on Evidence (3d ed. 1940) 61, § 1067.) By a long line of decisions, it is established in this state that such a pleading is not admissible as direct evidence to establish a fact in issue. (Mecham v. McKay, 37 Cal. 154, 165; Ponce v. McElvey, 51 Cal. 222, 223; Morris v. Lachman, 68 Cal. 109, 112 [8 P. 799] ; Osment v. McElrath, 68 Cal. 466, 470 [9 P. 731, 58 Am.Rep. 17] ; Wheeler v. West, 71 Cal. 126, 128 [11 P. 871] ; Stern v. Loewenthal, 77 Cal. 340, 343-344 [19 P. 579] ; Ralphs v. Hensler, 114 Cal. 196, 198-199 [45 P. 1062]; Miles v. Woodward, 115 Cal. 308, 316 [46 P. 1076]; Pollitz v. Wickersham, 150 Cal. 238, 248 [88 P. 911]; Cornwell v. Mulcahey, 62 Cal.App. 658, 661 [217 P. 568]; Gajanich v. Gregory, 116 Cal.App. 622, 629 [3 P.2d 389] ; Jackson v. Pacific Gas & Elec. Co., 95 Cal.App.2d 204, 209 [212 P.2d 591].) The reason for this view is that the use of superseded plead ings to such extent as to embarrass the amending party is in derogation of the policy of liberality in permitting amendments to pleadings. (See Taft v. Fiske, 140 Mass. 250, 252 [5 N.E. 621, 622].) However, where the party has testified in the action, a superseded pleading may be offered for the purpose of impeachment. (Johnson v. Powers, 65 Cal. 179, 180 [3 P. 625]; O'Connor's Estate, 118 Cal. 69, 71 [50 P. 4]; Schuh v. R. H. Herron Co., 177 Cal. 13, 17 [169 P. 682]; Williams v. Seiglitz, 186 Cal. 767, 774 [200 P. 635] ; Weissbaum v. Eibershutz, 211 Cal. 170, 173 [294 P. 396] ; Kambourian v. Gray, 81 Cal.App.2d 783, 789 [185 P.2d 27] ; but see Caccamo v. Swanston, 94 Cal.App.2d 957, 969 [212 P.2d 246].) And pleadings in prior actions or in others which are pending may be considered either as evidence or for the purpose of impeachment. (Duff v. Duff, 71 Cal. 513,. 522 [12 P. 570] ; Kamm v. Bank of California, 74 Cal. 191, 197 [15 P. 765]; Coward v. Clanton, 79 Cal. 23, 28 [21 P. 359]; Mellor v. Rideout, 83 Cal.App. 621, 626 [257 P. 173]; Estate of McCarthy, 127 Cal.App. 80, 87 [15 P.2d 223]; Tieman v. Red Top Cab Co., 117 Cal.App. 40, 45 [3 P.2d 381]; Ocean View Memorial Park v. Caminetti, 59 Cal. App.2d 703, 711 [139 P.2d 674]; Dolinar v. Bedone, 63 Cal. App.2d 169, 176 [146 P.2d 237] ; Jones v. Tierney-Sinclair, 71 Cal.App.2d 366, 373-374 [162 P.2d 669]; McNeil v. Dow, 89 Cal.App.2d 370, 373 [200 P.2d 859],) Under these decisions, the board's original answer was not admissible to establish that the Meyers acted as broker in the transaction.
But even in those jurisdictions which allow a superseded pleading to be admitted as direct evidence of a fact in issue, the board's original answer would not serve to support a judgment for the Meyers. As stated by Dean Wig-more in his work on evidence, "since the superseded pleading is offered, like any other statement of the party constituting a quasi-admission, as an item in the general mass of evidence against the party, it must of course be put in evidence at the proper time. It therefore cannot be commented on in argument unless . it has been thus formally offered in due season." (IV Wigmore on Evidence, 68, § 1067.) Here the superseded pleading was not offered in evidence; on the contrary, the action was tried upon a stipulation of facts consisting solely of documents evidencing a representative transaction. Any attempt now to rely upon the original answer must be rejected because of the failure timely to offer it as evidence.
Although not stated specifically in their briefs, the Meyers apparently take the position that it was error for the trial judge to permit an amendment to the answer. They describe the amendment as "belated" and assert that an "attempt after trial to amend a pleading so as to deny what was admitted is completely ineffectual."
Even if it may be assumed that the Meyers, who have not appealed from the judgment, properly may attack the trial court's ruling on the amendment (Cf. Ray v. Parker, 15 Cal. 2d 275, 282 [101 P.2d 665] ; Salter v. Ulrich, 22 Cal.2d 263, 268 [138 P.2d 7, 146 A.L.R. 1344]; Henigson v. Bank of America, 32 Cal.2d 240, 244 [195 P.2d 777] ; Mott v. Horstmann, 36 Cal.2d 388, 393 [224 P.2d 11]) the record does not support their position. Although it has been stated that "a party will not be allowed to file an amendment contradicting an admission made in his original pleadings" (Treager v. Friedman, 79 Cal.App.2d 151, 172 [179 P.2d 387]; Tognazzi v. Wilhelm, 6 Cal.2d 123, 127 [56 P.2d 1227] ; Rhode v. Bartholomew, 94 Cal.App.2d 272, 278 [210 P.2d 768]), that rule is not without exception. Such an amendment may be allowed where it is clearly shown that the earlier pleading is the result of mistake or inadvertence. (Tognazzi v. Wilhelm,, supra at p. 127; Jackson v. Pacific Gas & Elec. Co., supra at 95 Cal.App.2d 212; Seidell v. Anglo-California Trust Co., 55 Cal.App.2d 913, 923 [132 P.2d 12] ; LeCyr v. Dow, 30 Cal.App.2d 457, 462-463 [86 P.2d 900] ; Cox v. Rosenberg, 58 Cal.App. 181, 188 [208 P. 377].) Nor is it error to allow the amendment after the trial had been completed. (Feigin v. Kutchor, 105 Cal.App.2d 744, 748 [234 P.2d 264] ; Burrows v. Burrows, 18 Cal.App.2d 275, 279 [63 P.2d 1135].) As stated in Seidell v. Anglo-California Trust Co., supra, where an amendment to an answer was allowed to include a denial inadvertently omitted from an earlier pleading, "It is a well-established rule which is founded on good reason and justice that a court should exer cise great liberality in permitting amendments of pleadings at any and all stages of the trial to present adequately all issues which are properly involved in the litigation." (55 Cal.App.2d, p. 923.)
Although the Meyers do not allege specifically that granting leave to file the amendment was an abuse of the trial judge's discretion, they argue that they were precluded from reopening the case to present additional evidence. (Citing Federated Income Properties v. Hart, 84 Cal.App.2d 663 [191 P.2d 59] ; Crawford v. Senegram, 7 Cal.App.2d 449 [46 P.2d 173]; and Eddy v. American Amusement Co., 21 Cal.App. 487 [132 P. 83].) These cases approved denial of permission to reopen a cause for additional evidence when the evidence, because merely cumulative or corroborative, or lacking in conviction would not alter the result. The Meyers do not point to any evidence which could be produced to disprove or discredit the legal effects of the documents.
An abuse of discretion by the trial judge in making procedural rulings will never be presumed, but must appear affirmatively from the record. (Berry v. Chaplin, 74 Cal. App.2d 669, 672 [169 P.2d 453].) On the facts here shown it is clear that the board's failure to deny the allegation in question was not intentional; otherwise there would have been no reason for it to file an answer, enter into a stipulation as to the facts, or go on trial, for the obligation to make refund would have been established by the pleadings. In any event, no transcript of the proceedings relating to the allowance of the amendment has been included in the record on appeal, and in the absence of an application to augment it, that record must be presumed to include all matters material to appellate review of the judgment. (Rules on Appeal, rule 52; cf. Estate of Pierce, 32 Cal.2d 265, 274-275 [196 P.2d 1] ; People v. Crain, 102 Cal.App.2d 566, 582 [228 P.2d 307].) On the record properly before this court, no abuse of discretion appears.
There is no merit in the fina] contention by the Meyers, that the amended answer expressly admits that the taxable sales were made by someone other than they. The complaint alleged that "said sales were made by Pickands Mather & Co. . . . and plaintiffs as broker to purchasers in California." (Italics added.) It is clear from the complaint that the sales were by Pickands Mather "and plaintiffs." Very properly, the board has never denied the original sales by Pickands Mather, but seeks to impose a tax upon the resale by the Meyers. It is the capacity in which the resale is made that is disputed, and the Meyers do not assert that the amendment is formally insufficient to place that fact in issue.
In summary, the amended pleadings placed in issue the legal capacity of the Meyers and the nature of the transactions for which a tax has been exacted. A determination of those issues requires a construction of legal documents, a question of law. Reasonably construed, the documents indicate a sale of coke to the Meyers with a resale by them to General Metals.
The judgment is reversed.
Gibson, C. J., Traynor, J., and Spence, J. concurred.
Section 6012 of the Revenue and Taxation Code provides: " 'Gross receipts' mean the total amount of the sale . . . price . . . without any deduction on account of any of the following: . . .
"(c) The cost of transportation of the property prior to its sale to the purchaser. . . .
" 'Gross receipts' do not include any of the following: . . .
"(g) Transportation charges separately stated, if the occurs after the sale of the property is made to the purchaser."
" 'Sale' means and includes:
"(a) Any transfer of title or possession . of tangible personal property for a consideration."
In Rhode v. Bartholomew, 94 Cal.App.2d 272 [210 P.2d 768], an amended complaint was filed containing allegations inconsistent with the original one. The court said: "The allegations of the original complaint which were stricken stand as admissions of the facts alleged. A party will not be permitted to disprove admissions in his pleadings." (P. 279.) This statement is not supported by reasons or citation of authority, nor is the holding in Lowmiller v. Monroe, Lyon & Miller, Inc., 101 Cal.App. 147, 153 [281 P. 433, 282 P. 537]. In Miller v. Lee, 66 Cal.App.2d 778, 785 [153 P.2d 190], it was said that a superseded pleading may be admitted "as. containing admissions . . . [and] for the purpose of impeaching" the opposing party's testimony. That the pleading may be considered for the latter purpose is established by the California eases. (See infra.)
In Coward v. Clanton, supra, 79 Cal. 23, it was held error to reject an offer of the respondent's answer in another action, which the respondent claimed had been "superseded" by his pleadings in the action then before the court. Although the language used in the decision is broad, the holding is consistent with the authorities previously cited.