City of Los Angeles v. Clinton Merchandising Corp.

This case involves the narrow question of whether the City of Los Angeles in assessing defendant’s license taxes properly interpreted the term “gross receipts” to cover all of the amounts defendant handled rather than the gross amount it received for the services it rendered. The case presents the further question of whether the city properly assessed defendant as a “person . . . selling . . . goods . . . at wholesale.” For the reasons hereinafter set out we believe the city properly assessed the tax in the second, but not in the first, instance.

Defendant appeals from a judgment sustaining the assessments in both respects for the years 1955 through 1958. The city measured the assessments by “gross receipts” under three separate sections of the Los Angeles Municipal Code: (1) $40.20 under section 21.167, based on gross receipts from defendant’s retail sales of merchandise to its employees; (2) $8,840.18 under section 21.166, based on gross receipts from defendant’s wholesale merchandising; and (3) $3,392.84 under section 21.190, based on gross receipts for services rendered by defendant exclusive of sales activities. Defendant does not contest the retail sales assessment (§…