Full opinion text
WEINBERGER, District Judge. The Board of Equalization of the State of California has petitioned to review an order of the Referee in Bankruptcy permanently enjoining the said Board from enforcing as against the trustee or the .bankrupt estate herein any of the provisions of the California Sales and Use Tax Law in connection with certain sales made by said trustee in bankruptcy. This review has been the subject of several hearings before this court and its submission for decision has been twice vacated and the same reopened at the insistence of counsel for the filing of further briefs; thereafter an amended certificate was filed by the Referee; additional briefs were requested by the court; an amicus curiae brief has been presented; the final hearing in this matter was had the latter part of 1949. The bankrupt herein, West Coast Cabinet Works, Inc., a corporation, was engaged in the business of manufacturing .and selling cabinets and filed sales tax returns and paid sales tax under the California Sales and Use Tax Law. On February 5, 1946, the corporation filed a petition under Chapter XI of the Bankruptcy Act, 11 U.S.C.A. § 701 et seq., and George T. Goggin as receiver of the debtor, was authorized to conduct the business and sell the same as a going concern; he applied to said Board for, and was granted a seller’s permit to engage in the business of selling tangible personal property, and during a period of a little over a month completed certain orders which the debtor had on hand, sold the completed articles and paid ■sales tax on his retail sales as provided in said Sales and Use Tax Law. On March 12, 1946, the West Coast Cabinet Works, Inc., was adjudicated bankrupt, and George T. Goggin as the appointed trustee was authorized to conduct the business of the bankrupt. As trustee in bankruptcy, Goggin applied for and was granted a permit to engage in the business of selling tangible personal property. The evidence show's that between March 12, 1946, and March 22, 1946, in conduct of said business, the trustee made sales at retail and also sales for resale, and paid sales taxes. No tax is claimed by the Board to be due for such period. On March 22, 1946, he was directed by order of the Referee to sell the assets of the estate either at public auction or private sale. Subsequent to the order to sell in liquidation, the trustee, in addition to various sales for resale, made at least twenty sales which were listed on his books as sales at retail; on ten of the twenty sales the trustee “collected sales tax reimbursement”, sales tax was reported and paid on all sales except certain sales made on March 29, 1946, as hereinafter set forth. On said date last mentioned, the trustee sold, at public auction, in open court, and subj ect to confirmation of court, five trucks which had been used by the bankrupt in the •conduct of his business for deliveries; each of said five trucks was sold to a different person; no “sales tax reimbursement” was collected; the sales were confirmed by the court; the amounts received from such sales were not included in any sales tax return. The Board made an additional determination of taxes due basing said assessment upon the gross receipts from the sales of the five trucks; notice of such assessment was mailed to the trustee, no petition for redetermination was filed within 30 days thereafter, whereupon a penalty of 10% was added by the Board to the amount of the tax. The trustee petitioned for an injunction, and after a hearing before the Referee the order here sought to be reviewed was made. In said order, the Referee found that the sales of the five trucks were not made by the trustee in the course of conducting the bankrupt estate, but were made under court order in the normal administration of the estate in liquidating the assets for the benefit of creditors, subject to the confirmation of court and that the trustee was not liable to the Board for sales tax based upon said sales, and that the Board was attempting to enforce payment of the tax claimed. There has not been raised a question as to the jurisdiction of this court to pass upon the question before us; it is of course elementary that the district courts have jurisdiction to review the orders of, the referees in bankruptcy. It is the duty of a district court, however, to examine into its own jurisdiction, whether or not the question is raised. See Associated Press v. Emmett, D.C.Cal., 45 F.Supp. 907, a decision rendered by Judge Leon R. Yankwich of this court, and cases therein cited. We believe it is also our duty to examine into the jurisdiction of the referee in bankruptcy, especially where an order restraining the enforcement of a state taxing statute is reviewed. We have considered the question of the Referee’s jurisdiction and, because we feel that the same depended upon matters which it is necessary to discuss with reference to other phases of this case, we shall set forth our views on such subject later in this opinion. On behalf of the trustee it is contended that in making the judicial sales by reason of which the tax is sought to be imposed, he was not a “retailer” within said Law; that he was not engaged in the business of making sales at retail; that it was not the intent of the Legislature that a trustee in bankruptcy making sales of the assets of a bankrupt estate, after adjudication, under order of court, in liquidation, should be considered a “retailer”; that if, under the law, such a trustee, making such sales can be held liable under the law as a “retailer”, the same, would constitute an interference with the administration of the Bankruptcy Act; that to require the trustee herein to obtain a permit from the State Board of California as a condition to the performance of his duties under the Bankruptcy Act is beyond the authority of the State; that the tax is levied directly upon the seller, thus constituting a burden upon the trustee in the performance of his duties-under the Bankruptcy Act. The Board maintains the trustee was a retailer under two theories, the first of which is: The trustee in bankruptcy in conducting the business of the bankrupt was a retailer within the meaning of the said Law, and the gross receipts from his sales of equipment used in the business óf a retailer including the five trucks sold on March 29, 1946, must be included within the measure of the tax. Counsel for the Board base their first contention on this theory: Congress has expressly provided by the Act of June 18, 1934, 28 U.S.C.A. § 124a, now Section 960’ in reyised Title 28 U.S.C.A., that a trustee in bankruptcy who conducts any business shall be subj ect to all State taxes applicable to such business the same as if such business were conducted by an individual or corporation; that the trustee once having conducted the business and sold at retail, when he disposes of assets, under an order of court to liquidate, still retains his role of retailer in making the liquidation sales. ‘ In support of this first contention, counsel cite Bigsby v. Johnson, 1941, 18 Cal.2d 860, 118 P.2d 289, 291, a decision of the California Supreme Court en banc. Bigsby was a printer, and as observed by the Court, already classified generally as a retailer under the California Sales and Use Tax Law when he sold one piece of used printing equipment. It was held he sold the said personal property at retail as a part of his business operations, and regardless of the fact that the property sold was not of the type usually sold by him in retail sales, he must include the gross receipts from said sale in the measure of the tax. Northwestern Pacific Railroad Co. v. State Board of Equalization, 1943, 21 Cal.2d 524, 133 P.2d 400, is also cited. In that case a railroad holding a retailer’s license for its “Stores Department” sold, pursuant to a long established practice, $100,000 worth of surplus rolling stock over a period of three years. The Supreme Court stated that the case was not distinguishable from Bigsby v. Johnson, supra, holding that specific sales of a retailer could not be segregated .from the bulk of its business and treated separately as isolated or occasional sales. The court also stated that even if it were to assume that the business of the railroad could be separated into two separate businesses, the sales, if considered made in the transportation business, were sufficient in number, scope and character to bring them within the purview o'f the taxing act. We are referred to the legislative history of section 124a in the cases of Boteler v. Ingels, 1939, 308 U.S. 57, 60, 521, 60 S.Ct. 29, 84 L.Ed. 78, 442 and Palmer v. Webster & Atlas Bank, 1941, 312 U.S. 156, 163, 61 S.Ct. 542, 85 L.Ed. 642. The Congressional Record, 73rd Congress, 2d session, p. 6656, shows us that the bill, prior to its amendment on the floor of the House, contained the word “receiver” only, and a statement was made at that time that it was directed toward receivers of corporations “appointed to run the business.” The amendment containing the words “liquidator, referee, trustee or other officer or agent” was offered and agreed to without discussion. Section 124a as passed on June 18, 1934, read as follows: “Any receiver, liquidator, referee, trustee, or other officers or agents appointed by any United States court who is authorized by said court to conduct any business, or who does conduct-any business, shall, from and after June 18, 1934, be subject to all State and local taxes applicable to such business the same as if such business were conducted by an individual or corporation: Provided, however, That nothing in this section contained shall be construed to prohibit or prejudice the collection of any such taxes which accrued prior to June 18, 1934, in the event that the United States court having final jurisdiction of the subject matter under existing law should adjudge and decide that the imposition of such taxes was a valid exercise of the taxing power by the State or States, or by the civil subdivisions of the State or States imposing the same. (June 18, 1934, ch. 585, 48 Stat. 993.)” Section 124a appears as Section 960 in Title 28 U.S.C.A, revised 1948, and now reads: “Any officers and agents conducting any business under authority of a United States court shall be subject to all Federal, State and local taxes applicable to such business to the same extent as if it were .conducted by an individual or corporation.” A study o'f some of the reported decisions construing former section 124a of Title 28 U.S.C.A. will be of interest, not only as to its legislative history but for consideration of other points raised in the briefs and arguments in the case at bar. In Boteler v. Ingels, 1939, 308 U.S. 57, 521, 60 S.Ct. 29, 84 L.Ed. 78, 442, a trustee in bankruptcy under Section 77B, 11 U.S. C.A. § 207, used certain vehicles in the conduct of the business of the bankrupt; did not obtain state licenses for such vehicles, and the state assessed delinquency penalties, under the California Motor Vehicle Code providing that such fees and penalties became statutory liens on the vehicles from the due date. The referee in bankruptcy ordered the vehicles sold free and clear of liens, but permitted the State ■ to file claims for the fees, without penalties, within thirty days or be forever barred. The Court of Appeals, 9 Cir., 100 F.2d 915, on appeal after review in the District Court, ordered the trustee to pay the accrued fees and penalties, and alternatively, ordered that the vehicles be disposed of subject to the lien of the State for the unpaid taxes and penalties. The Supreme Court in affirming the decision of the Court of Appeals held that the fees and penalties in issue were incurred by the trustee in operating the bankrupt business; that they were not owed by the bankrupt to the State as a “creditor” and that the State could not file proof of claim for such fees and penalties under section 57, sub. j, of the Bankruptcy Act, 11 U.S.C.A. § 93 sub. j., as a “creditor”. The Court then stated that Congress, in passing section 124a of Title 28 U.S.C.A. had declared with “vigor and clarity” [308 U.S. 57, 60 S.Ct. 32] that trustees and other court appointees who operate businesses must do so subject to state taxes the same as if such businesses were conducted by individuals. The Court also observed that it need not decide whether, without legislation such as section 124a, the fact that a local business in bankruptcy was operated by a bankruptcy trustee makes the business immune from state law and valid measures for their enforcement, stating, 308 U.S. page 61, 60 S.Ct. page 32: “Clearly, means of permitting such immunity from local laws will not be read into the Bankruptcy Act * * *. A State would thus be accorded the theoretical privilege of taxing businesses operated by trustees in bankruptcy on an equal footing with all other businesses, but would be denied the traditional and almost universal method of enforcing prompt payment * * *. . The Act of 1934 indicates a Congressional purpose to fácilitate — not to obstruct — enforcement of State laws; the court below correctly recognized and applied this Congressional purpose and its judgment is Affirmed.” In Zimmer v. New York State Tax Commission (In re Fonda, J. & G. R. Co.) 2 Cir., 1942, 126 F.2d 604, certiorari denied 316 U.S. 701, 62 S.Ct. 1299, 86 L.Ed. 1769, the Court of Appeals, holding that a receiver under Section 77 of the Bankruptcy Act, 11U.S.C.A. § 205, must pay franchise taxes accruing while he conducted the business of the bankrupt, indicated a difference between a receiver conducting the business and a trustee in 'bankruptcy not conducting the business; it was noted that the duties of the former were to preserve the status quo, while those of the latter were to liquidate; to retain the franchises of the corporation for rehabilitation rather than to wind up the enterprise. In Thompson v. State of Louisiana et al., 8 Cir., 1938, 98 F.2d 108, 111, the court, citing the cases of U. S. v. Whitridge, 231 U.S. 144, 34 S.Ct. 24, 58 L.Ed. 159, and People of State of Michigan, by Haggerty v. Michigan Trust Co., 286 U.S. 334, 52 S.Ct. 512, 76 L.Ed. 1136, and other cases which preceded the passage of section 124a, observed that Congress passed. Section 124a for the manifest purpose of putting at rest all doubt and uncertainty in regard to whether officers appointed by the Federal courts to conduct a business should be liable for local taxes applicable to the business conducted. Further it stated: “Congress has plenary legislative control over the administration of a . bankrupt estate. In re Landquist, 7 Cir., 70 F.2d 929. * * * Congress has, in the interest of justice or good will, by this Act directed the trustee to pay rather thaij. litigate these tax claims. By the sweeping terms of this statute all doubts have been resolved in favor of the state taxes. Viewed as an administrative order affecting the conduct of the estate, no question of constitutional power is involved, but merely one of legislative policy and discretion, over which the courts exercise no power of judicial review.” In re California Pea Products, D.C., 37 F.Supp. 658, is a case decided by Chief Judge Paul J. McCormick of this District, in 1941. ■ The judgment was not appealed, and the case has been cited as authority in many subsequent cases both in this and other circuits, also by text-writers on bankruptcy, and authors of law review articles. In re Davis Standard Bread Co., D.C., 46 F.Supp. 841, in 1941, a decision by Judge Ben Harrison of this' Distict, is also widely cited, as has been the decision of the Court of Appeals of the 9th Circuit, which affirmed the Davis Standard Bread ruling. State Board of Equalization of State of California v. Boteler, 9 Cir., 1942, 131 F.2d 386. The opinions in these three cases are of great importance to the question before us, and we shall advert to them in more detail hereinafter. In each the ruling was made that Section 124a did not apply to a trustee, who, after an adjudication, sold in liquidation under court order; it is true that the trustees in these cases had not conducted the businesses of the bankrupts, but we find no indication that any of the said decisions rested upon such fact. Contra to the cases holding that section 124a of 28 U.S.C.A. does not apply to a trustee in bankruptcy in liquidation, we find the cases of In re Mid America Co., 31 F. Supp. 601, a decision in 1939 of the Illinois District Court, S.D., N.D. and State of Missouri v. Gleick, 8 Cir., 1943; 135 F.2d 134. In the Mid America case, the district court ruled that a trustee in bankruptcy -was an employer with reference to individuals'engaged by him1 to perform services in connection with the administration of the-bankrupt estate in liquidation, and that the amounts due under the Illinois Unemployment Compensation Act were taxes within the meaning of Section 64, sub. a (4) of the Bankruptcy Act, 11 U.S.C.A. § 104, sub. a (4), and had priority under such section. The Court observed, 31 F.Supp. page 606, that by specifically including “trustees in bankruptcy” in the State’s definition of employing unit, is was meant that they were to be subject to the state law to the same extent as other employing units. Further, that a trustee in bankruptcy is required to pay all state and local taxes by virtue of 28 U.S.C.A. § 124a; that the contention that said section applied only to trustees who are actually carrying on the business of the bankrupt and not to liquidating trustees was unconvincing. The Court was of the opinion, 31 F.Supp. page 606: “The phrase ‘conduct any business’ should not receive a narrow and restricted interpretation, but should be construed to include any activity or operation in connection with the handling and management of the bankrupt estate. That this was the intention of Congress is clear from the further language of this section which makes the trustee ‘subject to all State and local taxes applicable to such business * * * as if such business were conducted by an individual or corporation.’ Obviously, if the bankrupts themselves liquidated -their respective businesses they would each be liable for contributions with respect to services performed for them in connection with such liquidation.” In State of Missouri v. Gleick, supra, the Missouri Act expressly included a trustee, but the trustee relied upon the exemption in the Act of employment in the service of the United States or an instrumentality thereof. The Court of Appeals held that only by a “strained” construction could the trustee be held to be an instrumentality of the United States, and adopted the reasoning of the Mid America case. The Court of Appeals further stated, however, that it was influenced in its conclusion by the case of Graves v. People of State of New York ex rel. O’Keefe, 306 U.S. 466, 59 S.Ct. 595, 83 L.Ed. 927, 120 A.L.R. 1466, where the salary of an employee of the HOLC had been held taxable' under State law. In addition, it was observed by the Court, 135 F.2d at page 137: “ * * " * In the present case the tax, as an expense of administration of the bankrupt estate, is payable from the assets of that estate. By no stretch of the imagination may its collection be held to impose any burden whatsoever upon the United States or to limit or restrict the bankruptcy court as a department of the federal government or the trustee in bankruptcy as an agent and officer of the court, in the discharge of the duties imposed by the Bankruptcy Act.” It further appeared from the opinion, 135 F.2d page 137, that the 'Court also considered the premise, that the state unemployment compensation laws were adopted at the invitation of'the national government, observing that in such circumstances an immunity of the federal instrumentalities from taxation'in the furtherance of the joint plan should not be implied where none was expressly provided by Congress. We are not, of course, called upon here to consider whether a trustee is an employer within state unemployment compensation acts, but we are unable to agree with the rulings in the two cases last discussed insofar as the same are based upon an application of section 124a of Title 28 U.S. C.A. In State Board of Equalization of State of California v. Boteler, 9 Cir., 131 F.2d 386, 388, the Court remarked that the circumstance that the assets sold by the trustee in liquidation had been utilized by the bankrupt in the conduct of a business no longer in existence had no materiality. In the instant case, we do not believe that the fact that the assets sold by the trustee had been utilized by the bankrupt, the receiver, the trustee in bankruptcy or any one of them in the conduct of a business had any materiality in the case before us. Section 47, sub. a of the Bankruptcy Act, 11 U.S.C.A. § 75, sub. a, by its terms charges the trustee with the primary duty of collecting and reducing to money the property of the estate; conducting the business is not a duty of a trustee as a matter of course, but a duty which may be imposed upon him by order of court, under Section 2(5) of the Bankruptcy Act, 11 U.S.C.A. § 11(5), when such court, in the exercise of its discretion, determines such procedure to be “necessary in the best interests of the estates.” In re Wiener, D.C., 7 F.Supp. 691, affirmed Brown v. Schwehm, 3 Cir., 72 F.2d 1010. It is our view that after adjudication, when such conduct of the business has been authorized by the court, a subsequent order to sell in liquidation marks the termination of such authority, as well as the termination of the business, and is the line of cleavage between conducting the business and liquidating it. A trustee cannot then be considered as “conducting the business of the bankrupt” within the meaning of Section 2(5) of the Bankruptcy Act, 11 U.S. C.A. § 11(5), nor as “conducting any business” within the meaning of Section 124a of Title 28 U.S.C.A., and any status such trustee may have been given by virtue of Section 124a as an “individual” or “corporation” conducting any business, is no longer to be attributed to him. Likewise, we do not believe that the fact that the same individual, George T. Gog-gin, was the receiver who conducted the business, the trustee in bankruptcy who conducted the business, and the trustee in bankruptcy who sold assets of the bankrupt estate after adjudication under order of court in liquidation, has any materiality here. At no time, acting under the orders of the court, could George T. Goggin have acquired any personal status as a retailer by virtue of the acts performed under such orders. The second theory which the Board has advanced is to the effect that if a trustee in bankruptcy makes “numerous” sales at retail, he is subject to the provisions of the California Sales and Use Tax Law, even though he had not previously conducted the business of the bankrupt, and even though the sales are made after adjudication, under order of court, and in liquidation of the bankrupt estate. Counsel argue that the word “trustee” in Section 6005 of the Law, Revenue and Taxation Code, defining “persons” subject to the Law includes by its express terms, a trustee in bankruptcy such as the one before us; that the sales involved were retail sales, Section 6007, which the trustee concedes; that the sales were made for “benefit” within the meaning of Section 6013; that the trustee was “engaged in business” within the meaning of Section 6013, and thus was a “retailer” within the meaning of Section 6015(a). A reading of Section 6005 does not disclose of itself a definite purpose to include “trustee in bankruptcy”, and especially a trustee in bankruptcy making sales, after adjudication under order of court, in liquidation. We agree, however, that the sales involved herein were retail sales, and were made for the benefit of the bankrupt estate. Whether the bankruptcy trustee in making such sales falls within a class which the taxing statute intended to reach, and if so, whether he can he considered a retailer under said statute, are questions this court must resolve. Counsel have not referred to any case decided by a California court construing the word “trustee” as used in said Section; we have found none; the three decisions of Federal courts in this Circuit which we mentioned above (In re California Pea Products, supra; In re Davis Standard Bread Co., supra; State Board of Equalization of State of California v. Boteler, supra) were rendered before the word “trustee” was inserted in said Section. It was said in Vermilya-Brown Co. v. Connell, 1948, 335 U.S. 377, at page 386, 69 S.Ct. 140, at page 145, 93 L.Ed. 76: “Words generally have different shades of meaning, and are to be construed if reasonably possible to effectuate the intent of the lawmakers; and this meaning in particular instances is to be arrived at not only by a consideration of the words themselves, but by considering, as well, the context, the purposes of the law, and the circumstances under which the words were employed.”. At page 388 of the opinion in 335 U.S., at page 146 of 69 S.Ct. the Supreme Court observed that no definite indication of purpose to include or exclude the matter before it appeared in the law there under consideration, and the Court felt it to be its duty to construe the word discussed in its opinion “as our judgment instructs us the lawmakers, within constitutional limits, would have done had they acted at the time of the legislation with the present situation in mind.” In Pacific Co. v. Johnson, 1932, 285 U.S. 480, 495, 52 S.Ct. 424, 428, 76 L.Ed. 893, it was stated: “A taxing statute, like others, must be read as a whole, as it stands on the statute books at its applicable date, and the legislative purpose in enacting it must be taken, regardless of forms of words, to envisage the obvious consequences which flow from its operation.” It thus will be necessary, in aid of ascertaining the intent of the Legislature of California, to consider the various sections of the Sales and Use Tax Law, as well as the legislative history of the Retail Sales Act of 1933. We are concerned primarily with the Law as it stood at the time the trustee is alleged to have become liable thereunder, to-wit, 1946, and unless otherwise indicated, we shall, for facility of expression, refer to the provisions of the law as they read in 1946 by using the present tense. The Sales and Use Tax Law of California is found in the Revenue and Taxation Code of said State. Division 1 relates to property taxátion. Division 2 refers to ten other types of taxes, namely: Part 1, Sales and Use Taxes, Sections 6001 to 7176, and parts 2 to 10 inclusive contain, respectively, sections relating to Motor Vehicle Fuel Tax, Use Fuel Tax, Motor Vehicle Transportation License Tax, Vehicle License Fee, Private Car Tax, Insurance Taxation, Inheritance Tax, Gift Tax, Personal Income Tax. Most of the provisions of the present Law relating to sales tax were taken from similar provisions found in the Retail Sales Act of 1933, as amended in 1935, 1937, 1939 and 1941; the same is true of the provisions relating to use tax, which were based upon provisions of the Use Tax Act passed in 1935, and subsequently amended. In 1941, effective in 1943, the California Legislature combined most of the provisions the two acts and the same were reinacted as the present Law and made a part of the Revenue and Taxation Code of the State of California as hereinbefore mentioned. Further amendments were made to some of the sections relating to either or both of the taxes in 1943, 1945, 1947 and 1949. of Part 1 of Division 2 of the said Code “Sales and Use Tax Law” is divided into eleven chapters. Chapter 1 contains definitions of various terms used in subsequent chapters, and Section 6002 of said chapter specifies that the definitions given in such chapter govern the construction of the Law except where the context otherwise requires, it is further stated that by “sales tax” is meant the tax imposed by Chapter 2 of the Law, and by “use tax” is meant the tax imposed by Chapter 3 thereof. •Section 6005 defining “person” was originally Section 2 of the Retail Sales Tax Act of 1933, and read: “‘Person’ includes, any individual, firm, copartnership, joint adventure, association, * * ■* corporation, estate, trust, business trust, receiver, syndicate.” St.1933, p. 2599, § 2(a). The'section was amended in 1935, 1937, 1939 and in 1941, to take effect in 1943, it was included as said Section 6005 of the Revenue and Taxation Code and from 1943 to 1945, the section included in its definition of “person” the following: “* * * any individual, firm, copartnership, joint adventure, association, social club, fraternal organization, corporation, estate, trust, business trust, receiver, syndicate, this State, any county, city and county, municipality, district, or other political subdivision thereof, or any group or combination acting as a unit.” In June of 1945, the section was amended to add the words “trustee” and “United States.” Section 6012 defines “gross receipts” as the total amount of the sale or lease or rental price as the case may be, of the retail sales or retailers without any deduction on account of cost of property sold, etc., cost of materials used, labor, etc., cost of transportation; includes any services that are part of the sale, any amount for which credit is allowed. Among matters not included in gross receipts are “Cash discounts allowed and taken on sales”; “Sale price of property returned by customers * * ”. By succeeding sections in Chapter 1, “sale” is defined briefly as any transfer of title or possession, etc., “retail sale” a sale other than for resale. Section 6013 of the Law defining “business” was the same.in 1946 as it appeared in the Retail Sales Act of 1933, and as it appeared after being reenacted in 1941, effective 1943, as a part of the Revenue and Taxation Code. It reads: “ ‘Business’ includes any activity engaged in by any person or caused to be engaged in by him with the object of gain, benefit or advantage, either direct or indirect.” Section 6014 defines “seller” as including “every person engaged in the business of selling tangible personal property the gross receipts from the retail sale of which are required to be included in the measure of the sales tax.”. Section 6015 of the Law defines “retailer” and subdivision (a) thereof was, in 1946, substantially the same as in 1933, though amendments to other portions of the section were made in 1935, 1937, 1939, and 1943. It reads, in part: “ ‘Retailer’ includes: “(a) Every person engaged in the business of making sales at retail or in the business of making retail sales at auction of tangible personal property owned by the person or others. “(b) Every person engaged in the business of making sales for storage, use or other consumption or in the business of making sales at auction of tangible personal property owned by the person or others for storage, use, or consumption.” Section 6051 of Chapter 2 relating to sales tax recites, in part: “For the privilege of selling tangible personal property at retail a tax is hereby imposed upon all retailers at the rate of (3% after June 30, 1945) of the gross receipts of any retailer from the sale of all tangible personal property sold at retail in this state * * * Except for the matter in parenthesis, the quoted portion of the Section reads as it did in 1933. We have found but little discussion in the opinions of the California courts concerning the purpose of the California Legislature in passing the forerunner of the present Law, the Retail Sales Act, in 1933. However in that year, a tax moratorium was provided by California for owners of real property, and we find a statement in an Illinois case, Svithiod Singing Club v. McKibbin, 381 111. 194, 44 N.E.2d 904, that the Illinois taxing statute, which, like the California statute lays a privilege tax upon persons engaged in the business of selling tangible personal property at retail, was enacted for the purpose of relieving property from direct taxation, and placing the burden upon the merchandising business; this, for the reason as explained by the Illinois court, that the merchandising business with its large stocks of wares needed greater police and fire protection, and benefited more greatly by being conducted under governmental protection. That the California taxing statute was enacted pursuant to a general trend on the part of many of the States to relieve property tax burdens is indicated in a resolution of the Legislature, No. 8, Stats. 1935, 51st Session p. 2398, wherein it was stated that the necessity for property relief in California and other states was imperative, and that 26 states in an effort to provide such relief had passed laws imposing taxes based on sales of tangible personal property. The Resolution was addressed to the Congress of the United States, and requested Congress to pass legislation permitting the levy of sales tax on sales moving in interstate commerce, stating that the judicial interpretation of the Federal Constitution prohibiting such a levy had resulted in a discrimination against local merchants. The Resolution set forth in full the provisions of a bill, § 2897, which had been introduced at the 73rd Congress, second Session, but which had failed of passage. It is significant that while § 2897 contained provisions requiring receivers, liquidators, and other officers of any court of the United States to pay all taxes, etc., of a state the same as persons, corporations, etc. (without the limitation regarding conducting any business, as found in section 124a of Title 28 U.S.C.A. passed during the 73rd Congress) the California Legislature saw fit to refer only to the interstate commerce features of the bill, and'did not request that any action be taken by Congress toward state taxation of officers of the United States courts. A study of the language used in a number of the California cases wherein the sales tax provisions of the said Law have been construed lends no encouragement to the contention of the Board that Section 6005 by its express terms includes, or was intended to include a trustee in bankruptcy such as the one involved herein. In People v. Herbert’s of Los Angeles, 1935, 3 Cal.App.2d 482, 39 P.2d 829, 830, the court described the California taxing statute as a tax upon the “retail dealer and upon him only”; “that in ultimate effect the fund out of which payment is made may be or in fact has been obtained by the dealer from his customers does not make the tax a levy upon the consumer.” Roth Drugs, Inc., v. Johnson, 1936, 13 Cal.App.2d 720, 57 P.2d 1022, 1030, characterized the sales tax as “an excise tax on the privilege of operating retail mercantile enterprises”; as a tax levied upon “occupations or on the marketing of goods by merchants;” as a tax upon “the privilege of maintaining occupations or business enterprises”. Western Lithograph Co. v. State Board of Equalization, 1938, 11 Cal.2d 156, 78 P.2d 731, 117 A.L.R. 838, is perhaps the case most widely cited on the subject of the California sales tax statute; the citation of this case has appeared in nearly every opinion rendered by the Federal, courts as well as the California courts, where the said statute is construed. On page 735 of 78 P.2d the word “merchandise” is used, page 736 of 78 P.2d, “an excise tax for the privilege of conducting a retail business”, “open market”; on page 737 of 78 P.2d we find language such as the tax is a necessary expense of “conducting the business”, “computed upon the gross receipts from the conduct of the business of the retail merchant”, “privilege tax on retailer of commodities”. In National Ice and Cold Storage Co. of California v. Pacific Fruit Express Co., 11 Cal.2d 283, 79 P.2d 380, 383, we find: “tax is a direct obligation upon the retailer for his privilege to conduct a retail business.” People v. Monterey County Ice, etc., 1939, 29 Cal.App.2d 421, 84 P.2d 1069, uses “merchants” and “merchandise” in referring to taxpayers and goods sold. Cases not dealing with mercantile establishments have been cited by counsel for the Board as •follows: Union League Club v. Johnson, 1941, 18 Cal.2d 275, 115 P.2d 425, is offered to the effect that the taxpayer need not be engaged in selling for profit so long as he sells for gain, benefit or advantage. While this case may provide an instance where the liability of the tax was not imposed upon what might be termed a mercantile enterprise, the tax was imposed upon a taxpayer specifically included under Section 6005 as amended in 1939, “social club, [and] fraternal organization.” Los Angeles City High School District v. State Board, 1945, 71 Cal.App.2d 486, 163 P.2d 45, is cited by said counsel as indicating that sales made pursuant to statutory law are subject to the sale® tax. The School District was held liable for the sales tax based upon sales, continuously and over a period -of years, of worn-out desks, etc. The Court pointed out at page 47 of its opinion in 163 P.2d that public corporations and political subdivisions had been made subject to the act with the apparent intention of making the “public business” of such bodies subject to the provisions thereof. It is also of interest that in the case just referred to, the appellants had cited the case of State Board of Equalization of State of California v. Boteler, 9 Cir., 131 F.2d 386, which we have heretofore mentioned as one of the Federal decisions holding the sales tax provisions of the Law did not apply to a trustee in bankruptcy after adjudication, selling in liquidation under order of court. The California Court of Appeal, 163 P.2d page 47, while refraining from expressing any opinion as to the correctness of the decision, stated that the Ninth Circuit case differed materially from Bigsby v. Johnson, supra, as well as the case before it, because “in the federal case the sale was not made in the course of conducting a business but in the process of putting an end to a business.” People v. Imperial County, 1946, 76 Cal. App.2d 572, 173 P.2d 352,, 353, is also cited by the Board on the same principle as the School District case discussed in the two preceding paragraphs. The sales involved had been made over a period of years by the County, and. were of crushed rock and gravel, wood, and ■ materials and equipment no longer needed for use in constructing and maintaining roads and highways. The Court stated the case at bar involved exactly the same principles as Los Angeles High School District v. State Board, supra, and approved the reasoning in said case. The Court held that if the sales had been made by any person or organization other than a governmental organization, sales tax liability would have arisen, and since the statute had been expressly made applicable to a county, the same result must follow. At this point we shall note another ruling- in the Imperial County case and to which we wish to refer hereinafter in another connection. The County demurred to the complaint for collection of the tax on the ground that a claim against the County had not been filed prior to suit ; that the time given by the taxing statute for bringing suit was inconsistent with the time given the county supervisors to act on claims, all contrary to the provisions' of the Political Code of the State of California governing counties in such matters. The District Court of Appeal stated the “special taxing -statutes control and take priority over the general statutes * * * Counsel for the Board also cite the case of In re Estate-of Schneider, 1944, 62 Cal.App. 2d 463, 145 P.2d 90, as authority for their statement that the sales tax has been applied to an executor; in the Schneider case the court did not decide whether the tax was applicable, holding it lacked jurisdiction in view of the remedy provided by the taxing statute of payment and suit for a refund. We have found only one decision in the California reports where an executor was held liable to pay the sáles tax, and in that case, tax accrued by reason of sales made in the conduct of the business of -the decedent. A California Court of Appeal, in an opinion reported in Re Morris’ Estate, 1940, 37 Cal.App.2d 155, 99 P.2d 294, 295, stated the tax was imposed upon every person or estate for the privilege of engaging in the business of selling tangible personal property at retail. It is to be noted the Court also ruled that the tax was hot to be classified merely as an expense of administration of the estate ; calling attention to the misdemeanor provisions of -the statute for selling without a license, the Court -stated that the sales tax is paramount to ordinary claims in the distribution of .a decedent's estate, should be paid forthwith when due, and reversed the Superior Court which had held the tax to be an ordinary expense of administration to be paid in due course of administration. Other cases appearing in the California reports have held that the furnishing of food, meals and drinks, the rendition of personal services along with the sale of personal property, the “conducting” of a race meeting where horses are claimed, a contractor furnishing personal services and materials, are subject to the law; but in all such cases it is observed that the taxpayer was “maintaining” a commercial enterprise, or was engaged in an occupation of habitually and continuously furnishing goods or services to the public, or was specifically made subject to the Law by express mention of the class within which the taxpayer fell, or the class of sales to be included in gross receipts. ' Counsel for the Board have said little about the trustee’s contention that the State has ho power to levy a tax upon the trustee herein for the privilege of performing the functions made mandatory by Congress under the Bankruptcy Act. Rather, counsel have intimated that the practical effect of the' said statute is to impose' the tax upon the consumer; this position is made evident 'by their statement that no substantial difference exists between the New York Municipal Sales Tax Law which was considered in the case presently cited, and the California Sales and Use Tax Law, and their assertion that the situation before this court is almost identical to that which was before the Court of Appeals of the Second Circuit in such case, City of New York v. Jersawit (In re Leavy et al.), 1936, 85 F.2d 25. Contrary to the Board’s assertion, we feel that according to the construction placed upon the New York City sales tax by the Court in the casé cited, a substantial difference exists: between the tax discussed in the Jersawit case and the California sales tax as construed by the California courts. The New York City tax was held by the Court of Appeals to be a tax imposed upon the consumer with the vendor the collector; the reasoning of the said Court appears to be based upon such premise. It found occasion in the Jersawit decision to refer to a previous opinion rendered by it in Re Flatbush Gum Co., 2 Cir., 1934, 73 F.2d 283, certiorari denied, People of State of New York v. Arnold, 294 U.S. 713, 55 S.Ct. 509, 79 L.Ed. 1247, and stated the latter case dealt with a tax levied by the State of New York upon,the privilege of selling tangible personal property at retail. The seller in the Flatbush case was a “receiver” in bankruptcy, who after adjudication . and pursuant to court order sold the bankrupt’s assets in liquidation. Mentioning the State statute did not include the words “receiver or trustee”, the Court in the Flatbush case observed that for this reason it was not called upon to decide “the rather baffling question of what is, or what is not, the imposition of a state tax upon an -instrumentality of the United States. * '* *”. [73 F.2d 284] After quoting its remarks in the Flat-bush case, the said Court in the Jersawit case stated, 85 F.2d page 27: “A tax on a -sale made by a trustee under an order of' court for purposes of liquidation if payable directly and primarily1 by him would doubtless be a burden on a governmental instrumentality, for a judicial sale in liquidation of a bankrupt estate would in a peculiar sense involve the exercise of a federal function. Indeed, without the exercise of such a function and the power thus to dispose of assets, administration in bankruptcy would hardly be practicable. A tax on the vendee in connection with a sale in liquidation of a bankrupt’s estate is, at least in a-formal sense, quite different from a tax for which .the vendor is made primarily liable.” Counsel for the Board also have cited the case of Bird & Jex Co. v. Anderson Motor Co., 92 Utah 493, 69 P.2d 510, decided by the Supreme Court of Utah in 1937; there a liquidating receiver who did not operate the business sought immunity from the sales tax of that State on the ground that he was an officer of the court appointed to liquidate the business, that his sales were subject to the confirmation of the court, that he was not a “person” ■ within the meaning of the State taxing statute. The Utah court held him liable, stating it appeared the receiver was not intended to -be immune from the" tax, and emphasized the importance of the fact that the tax was imposed- : upon the sale; that the receiver’s status was that of a “collector” for the State. Further, we note that the receiver was.acting under authority of a state law, and hot under the Bankruptcy Act. The cases construing the New York State tax, the New York City tax and the Utah tax illustrate the difficulty of applying judicial rulings with, reference to other taxing statutes to the problem before us. Reading some of the cases decided in State courts other than California, it has appeared to us, at first blush that we found an analogy to the situation here presented,but an examination of the taxing statute involved disclosed differences which could not be reconciled with the California Sales and Use Tax Law. Cases such as City of New York v. Jersa-wit, supra, and Bird & Jex Co. v. Anderson Motor Co., supra, might be of aid in resolving our problem, if we could bring ourselves to agree with counsel for the Board that the California taxing statute is of the same general effect as those where the purchaser is the taxpayer and the vendor is the collector; but the California courts have been most explicit in pointing out the differences between such statutes. Judicial emphasis has been especially noticeable in those cases wherein exemption from the sales tax provisions was claimed because the purchaser was engaged in interstate commerce, or was alleged to be a government instrumentality. For instance, in the case of Western Lithograph Co. v. State Board of Equalization, 11 Cal.2d 156, 78 P.2d 731, 117 A.L.R. 838, to which we have referred earlier, a national bank was- the purchaser; the California Supreme Court at page 733 of 78 P.2d discussing Metcalf & Eddy v. Mitchell, 1926, 269 U.S. 514, 523, 46 S.Ct. 172, 70 L.Ed. 384, on the subject of immunity of State and federal governments from taxation, quoted ftorn said case as follows: “ ‘But neither government may destroy the other nor curtail in any substantial manner the exercise of its powers. Hence the limitation upon the taxing power of each, so far as it affects the other, must receive a practical construction which permits both to function with the minimum of interference each with the other; and that limitation cannot be so varied or extended as seriously to impair either the taxing power of the government imposing the tax. * * * '. or the appropriate exercise of the functions of the government affected by it.’” ' The California Supreme Court then referred to the section of the taxing statute wherein the retailer might calculate the method of reimbursement to himself by listing separately the amount of the tax from the sales price, but held that this provision did not afford a basis for considering the tax to be laid on the consumer. Citing California cases, it was said at page 735, of 78 P.2d: “ * * * the act creates the relationship of sovereign power and taxpayer between the state and the retailer, and not between the state and the consumer.” The Court emphasized that the purchaser does not pay the tax. “He pays or may pay the seller more for the goods because of the seller’s obligation, but that is all.” At pages 735, 736 of 78 P.2d the nature of the taxing statute was thus succinctly phrased: “ * * * the tax being a direct obligation of the retailer and, so far as the consumer is concerned, a part of the price paid for the goods and nothing else, it is neither in fact nor in effect laid upon the consumer. It does not become a tax on the sale nor because of the sale,' but remains an excise tax for the privilege of conducting a retail business measured by the gross receipts from sales.” At page 737, of 78 P.2d, the Court observed that although the tax might lyesult in an increase in the price paid by the bank for the goods, the imposition of a privilege tax on the retailer did not interfere with the power of the government, or borrow money,, and that it did not .affect in any. substantial manner the efficiency of its agency in the performance, of its duties, and did not interfere with the exercise of the governmental functions delegated to its instrumentality. Since the decision in the Western Litho-graphCo., supra, case, there has been general uniformity in the construction given to the sales tax provisions of said Law by the California courts. We have found only a few phrases in the language of the reported opinions of such courts to indicate that the said tax might be construed as other than a tax upon the privilege of selling, or as being imposed upon anyone other than the seller. In the case of Kamp v. Johnson, 1940, 15 Cal.2d 187, 99 P.2d 274, an optometrist was held to be a retailer in his sales of completed glasses to his customers; the Supreme Court of California stated at page 276 of 99 P.2d that the broad definition of the statute with reference to “retail sale” compelled the conclusion that the legislature did not intend to leave any sale of tangible personal property untaxéd unless specific exemption were made, and that once a retail sale is established the only question for construction remaining is who is the retailer. We took the holding in this case as leaning toward a construction that the sales tax is imposed upon the “sale” rather than the privilege of selling; we note, however, that in 1947 the Legislature of the State of California added a special section to the Law, section 6018, making an optometrist or physician or surgeon a retailer of the materials furnished by him to his patients. Turning tó more recent decisions of the said Supreme Court, we found what at first appeared to be evidence of a construction of the sales tax provisions of said Law similar to Kamp v. Johnson, supra, as opposed to that of Western Lithograph Co., supra, in the majority opinion in Richfield Oil Corporation v. State Board of Equalization reported at 155 P.2d 1, 1944, and in the dissenting opinion on rehearing reported at 27 Cal.2d 150, 163 P.2d 1, 1945. On the first hearing before the said Supreme Court the majority opinion was written by its learned Chief Justice, and there seemed to be some indication in the language at page 5 of 155 P.2d that the Court was willing to construe the California sales tax provisions of the Law as a tax, if not on the goods sought to be exported by the Richfield Oil Company, at least as a levy upon the sale of the goods. The opinion held the California sales tax unconstitutional as contravening the prohibition of the United States Constitution against an impost on an export. A dissent was recorded by another justice, who felt that the California tax was upon a “privileges which the state was authorized to grant or deny” [155 P.2d 8] and distinguishable.from a personal property tax or a tax on the sale or because of the sale. The case was reheard by the California Supreme Court during the following year. This time the opinion of the Court was written by the dissenting justice of the previous hearing, and the tax was held valid. Therein it was insisted that the California sales tax was levied upon retailers for the privilege of selling tangible personal property at retail, citing Western Lithograph Co. v. State Board of Equalization, supra, and other California cases. The opinion also took notice of what was therein termed “the new approach” to the problem of “collision between state taxation and interstate commerce” as developed in the United States Supreme Court decisions cited therein, and stated at page 4 of 163 P.2d: “Under the foregoing authorities it is perfectly clear that had this been an interstate transaction it would have been subject to tax.” This decision was accompanied by a dissent of the Chief Justice of the Court, who, in his dissenting opinion, refused to apply the reasoning'of the cases cited in the majority opinion to cases dealing with exports, asserting that the prohibition of the federal Constitution with reference to imposts on exports was a different clause than the provision relating to interstate commerce, and again held the tax invalid as an impost upon an export. He stated, at page 7 of 163 P.2d: “It is apparent, however, that a new approach has been taken with respect to the problem of state taxation in the field of interstate commerce * * * Thus- if the present case involved the commerce clause * * * of the federal Constitution, it may be that the tax could properly be imposed, since it falls equally without discrimination, on all sales in the state * * * » Also on page 7 of the dissenting opinion in 163 P.2d we find: “Although the formal subject of the tax is the ‘privilege of selling’ * * * (citing Western Lithograph Co. v. State Board of Equalization, supra) it is clear that the actual taxable event is the sale * * * The United States Supreme Court has stated that in constitutional la.w cases the formal subject of a tax as declared by a state statute may be disregarded if the tax is in reality on something else * * * (Emphasis supplied.) The Supreme Court of the United States, in its opinion reported in Richfield Oil Corp. v. State Board of Equalization, 329 U.S. 69, 67 S.Ct. 156, 91 L.Ed. 80, held that whatever the validity of the California tax under the Commerce Clause, it was unconstitutional under the Import-Export Clause; that the two provisions were not co-terminous; that the Commerce Clause is cast, not in terms of a prohibition against taxes, but in terms of a power on the part of Congress to regulate commerce, and saying, 329 U.S. page 75, 76, 67 S.Ct. page 160: “ * * * The scope of the limitation [upon the power of the states] has been determined by the Court in an effort to maintain an area of trade free from state interference and at the same time to make interstate commerce pay its way * * * ‘that commerce between the states Shall not be unduly impeded by state action, and that the power to lay taxes for the support of state government shall not be unduly curtailed.’ That accommodation has been made by upholding taxes designed to make interstate commerce bear a fair share of the cost of the local government from which it receives benefits * * * and by invalidating those which discriminate against interstate commerce, which impose a levy for the privilege of doing it, which place an undue' burden on it * * The United States Supreme Court also noted the construction of the majority opinion at the second hearing of the Supreme Court of California, stating, 329 U.S. pages 83, 84, 67 S.Ct. page 164: “The California Supreme Court held that the tax is an excise tax for the privilege of conducting a retail business measured by the gross receipts from sales; that it is not laid upon the consumer and does not not become a tax on the sale or because of the sale * * * Any doubt as to uniformity of construction by the California courts on the subject of the nature of the sales tax here under consideration which we might have thought to discern from some of the language of the'wording of the Richfield opinions, or in the Kamp v. Johnson opinion, supra, would be speedily dissipated by the incisive tone of the unanimous opinion of the California Supreme Court in the case of Ains-worth v. Bryant, 34 Cal.2d 465, 211 P.2d 564. In that decision, written in November of 1949, we find a careful analysis of the California sales tax provisions, and a detailed comparison between such taxing statute and a San Francisco ordinance imposing the sales tax upon the consumer. A wealth of California cases construing the sales tax sections of said law is found in said opinion; 211 P.2d at page 569, the Court'observed that the nature of a tax must be ascertained by its incidents and from the natural and legal effect of the language employed; that it thus appeared that the San Francisco tax was exacted from the consumer upon each sale, and that so classified it fell under the generic heading of a sales tax; “but”, the Court stated, 211 P.2d at page 569, “it rests on a wholly different concept from that underlying an occupation tax imposed upon a merchant for the privilege of doing business and measured by the gross receipts from sales.” (Emphasis supplied.) The Court continued: “Illustrative of this- latter type is the California Retail Sales Tax Act, Stats. 1933, p. 2599; as amended, which ‘specifically declares that the tax is imposed on retail merchants, and not on the consumers.’ ” (Emphasis found.) The Court then followed with further quotations from the Law here under consideration, emphasizing in each instance the language referring to "retailer”; stating with further emphasis that while the act authorizes the tax to be collected from the consumer in so far as the same can be done, such section merely makes it optional with the retail merchant as to whether he will reimburse himself from his customers for the tax he is compelled to pay; (citing Roth Drug, Inc., v. Johnson, supra, 13 Cal. App.2d 720, 57 P.2d 1022) “as his direct obligation to the state in order ‘to be allowed to sell tangible personal property at retail.’” (Emphasis supplied.) Also at page 569 of 211 P.2d the Court quoted from Western Lithograph Co. v. State Board of Equalization, supra, 11 Cal.2d 156, 78 P.2d 731, at page 735, 117 A.L.R. 838, declaring, “ ‘The law contemplates the imposing of the fixed rate of the tax on the gross receipts, * * * and not on the individual sale of merchandised.” This language was also emphasized: “It does not become a tax on the sale nor because of the sale, but remains an excise tax for the privilege of conducting a retail business measured by the gross receipts from sales.’ ” In Martin Ship Service Co. v. City of Los Angeles, decided by the Supreme Court of California in February of this year, 34 Cal. 2d 793, 215 P.2d 24, 25, said Court construed a Los Angeles City tax levied upon the privilege of carrying on certain occupations and measured by the gross receipts therefrom as it applied to the plaintiff who was “engaged in local activities essential to interstate commerce.” The Court quoted from Interstate Oil Pipe Line Co. v. Stone, 1949, 337 U.S. 662, 69 S.Ct. 1264, 93 L.Ed. 1613, mentioning that the Supreme Court of the United States is concerned with “the practical operation of challenged state tax statutes, not with their descriptive labels”, but did not voice a construction of the Los Angeles City tax different than that it was a privilege tax upon plaintiff’s occupation. Citing most of the recent United States Supreme Court cases having to do with state taxes and interstate commerce, the California court discussed Interstate Oil Pipe Line v. Stone, supra, and stated that in such opinion four justices were willing to uphold the tax, though assuming it