Court Opinion

ID: 3987785
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:43:54.651201+00
Date Added: 2024-06-11T14:18:23.365917
License: Public Domain

I concur.
The only question here is: Was there a taxable moment after these engines reached this state? These engines were not withdrawn from use and consumption as an instrumentality of interstate commerce prior to their reaching this state. They came into this state on their own power, and on their own wheels. If they were propelling a train of cars as well as their own weight when they entered this state then there is no conceivable use and consumption to which any instrumentality could be placed that would be more clearly a use and consumption in interstate commerce than they would be performing at that time. The situation is the same if they were propelled into this state by another engine on their own wheels. In such case the wheels were carrying the machinery of which they were composed into the state and thus performing the same function that another car would perform had these engines been dismantled and placed on such other car and hauled into the state. Any car hauling a load of freight into this state would be performing a function in interstate commerce. Or if they were propelling their own weight into this state their wheels would be performing the function of another car if they were hauled into the state on such other car, and their engines would be performing the function of the engine which pulled them into the state in case they were hauled into the state on another car. Thus when these engines entered this state they were performing functions and being used and consumed in interstate commerce.
Did the inspection of these engines for refueling and repairing at the roundhouse before they were put to use as switch engines after they entered the state constitute a taxable moment during which the interstate function which they were performing when they entered the state had ceased and their functions in interstate commerce as switch engines had not commenced? Counsel for the state strenuously urge that it did. They rely for support of their position *Page 106 
on the U.S. Supreme Court decisions of Southern Pacific Co. v.Gallagher, 306 U.S. 167, 59 S.Ct. 389, 83 L.Ed. 586, andPacific Telephone  Telegraph Co. v. Gallagher, 306 U.S. 182,59 S.Ct. 396, 83 L.Ed. 595, and Southern Pacific v. StateBoard of Equalization, decided by the Sacramento County Superior Court, which was appealed to the District Court of Appeals but later dismissed. This was a case of original jurisdiction and is not reported so we will give it no further consideration.
In Southern Pacific Co. v. Gallagher, supra, the railroad company purchased outside of the state of California for the operation of its road, rails, equipment, machinery, tools and office supplies, for the purpose of replacing, repairing or installing, damaged or wornout equipment and making improvements and extension in accordance with previously determined plans. The storage of such goods was merely incidental. Much of the material was fabricated for special use in the transportation system, then shipped into California and installed upon arrival. The movement from the loading place to the final placement was as nearly continuous as managerial efficiency can contrive. No new rolling stock was involved. Where rolling stock was repaired by the use of such materials it again moved in interstate transportation the same as do cars after being stocked with supplies.
The Supreme Court of the United States held that the articles which were ordered according to specifications and were suitable only for utilization in transportation facilities and were installed immediately upon arrival at the California destination, constituted a case where no taxable moment occurred in the state of California if any such a situation was presented in that case. It further held that at the time when such articles reached the end of their interstate transportation, and had not begun to be consumed in interstate operation at that moment the tax on storage and use in California became effective because there was necessarily a moment after which the interstate movement was completed and the interstate consumption had not yet *Page 107 
begun. The Pacific Telephone  Telegraph Co. v. Gallagher, supra, presented a similar situation involving telephone and telegraph instruments, and the holding was the same.
The state urges that those cases cannot be distinguished from this case. That here there was a taxable moment when after the engines came into this state and their movement in interstate commerce had ended they were withdrawn from consumption and use in interstate commerce by being taken to the roundhouse for inspection and repair before being used as switch engines within this state. In my opinion there is a clear distinction between those cases and this one. There the materials and appliances came into the state of California merely as freight, they were not then being used or consumed as intrumentalities in interstate commerce, but were merely being hauled as freight in an interstate movement. After such interstate movement was ended there was of necessity a period of time required before they were installed as a part of the transportation equipment and their use and consumption in interstate commerce could commence. And it was only during such time that the taxable moment occurred. Here these engines entered this state installed and equipped and being used and consumed in interstate commerce. The fact that there was a short period of time after they entered this state during which they were not actively engaged in or being used and consumed in interstate commerce because they were temporarily standing still and inactive does not constitute a withdrawal from interstate commerce. If that were the case then the fact that no train was passing over a track would constitute such a withdrawal of the track from interstate commerce until another train passed. Nor does the fact that these engines were taken to the roundhouse for inspection and repair constitute such a withdrawal. All of this time these engines were on the tracks equipped and except for some possible minor defect were ready for use and intended for such use and consumption in interstate commerce, and such inspection and repair does not have the effect of withdrawal from *Page 108 
such commerce. I therefore concur that there was no taxable moment in this case.
McDONOUGH, J., concurs for the reasons states in the opinions of PRATT and WADE, JJ.