Sears, Roebuck & Co. v. County of Los Angeles

Defendants County of Los Angeles and City of Compton appeal a judgment in favor of plaintiff Sears, Roebuck & Company in an action to recover taxes paid under protest. The issue is whether certain goods imported by Sears and stored in its warehouses pending distribution to Sears’ retail outlets during fiscal years 1973, 1974, and 1975 are immune from ad valorem taxation.

This litigation tracks certain changes in the applicable statutory and case law, which we summarize as follows: The import-export clause of the United States Constitution prohibits the states from laying any “imposts or duties on imports or exports.” (U.S. Const., art. I, § 10, cl. 2.) In 1827 the United States Supreme Court in Brown v. Maryland, 25 U.S. (12 Wheat.) 419 [ 6 L.Ed. 678 ], determined that the import-export clause also prohibited taxation of imported goods. The court added, however, that goods lose their status as imports and become taxable when they have been “so acted upon” by the importer as to “become incorporated and mixed up with the mass of property in the country.” But so long as the goods “[remain] the property of the importer, in his warehouse, in the original form or package in…