Did a purchase-order bailee clause preserve interstate-sale exemption when the buyer's representatives received and substantially worked on a truck chassis in California?

Plain-English summary

An unidentified recipient asked for the Board's sales-tax view of a heavily redacted truck-chassis arrangement. The PDF's missing names make some roles unreadable. The live annotation supplies labels: out-of-state corporation A, wholly owned by California corporation B, bought a chassis from a California manufacturer and instructed delivery to California corporation C for installation of a body and tanks. The order called C a bailee for the seller.

After installation, the truck went to B in Richmond for painting. The PDF says it later went to Salt Lake City by Insured Driveaway under redacted instructions and mentions charges for the chassis and deliveries, but the redactions prevent reliable assignment of every instruction and charge.

Tax Counsel E. H. Stetson distinguished a possible contract under which the seller would have been responsible for obtaining a completed truck of specified design, correcting improper performance and delivering it in Salt Lake City. In that situation, counsel said it might be possible to characterize the seller as obligated to deliver the specified completed truck there.

The described contracts were different. The chassis was turned over first to one company and then another, each performing work under contract with the buyer. Counsel treated those in-state deliveries for the buyer's business purposes and convenience, plus the substantial work, as inconsistent with the seller retaining ownership.

Those activities were an exercise of ownership by the buyer's representatives and overcame the purchase order's "bailee clause." Counsel therefore maintained that the redacted seller could not treat its chassis sale as an exempt interstate-commerce sale.

No statute, regulation, case or constitutional provision is cited. The source supplies no complete purchase order, contract, specification, carrier record, price, tax amount or later proceeding. The live annotation clarifies the corporate roles but omits the PDF's alternative seller-responsibility discussion and Salt Lake City delivery detail.

Common questions

Did calling the installer a seller's bailee control the tax result?

No. Counsel looked past the recital to the California handoffs and substantial work performed under contracts with the buyer.

What showed delivery to the buyer in California?

The buyer's representatives received the chassis for the buyer's business purposes and performed substantial installation and painting work on it.

Did later delivery to Salt Lake City make the chassis sale exempt?

No. Counsel concluded that the buyer's representatives had already exercised ownership and received delivery in California.

What contract might have produced a different analysis?

Counsel described a possible arrangement making the seller responsible for obtaining a completed truck of specified design, correcting improper performance and delivering it to the purchaser in Salt Lake City. The source says the actual contracts did not establish that structure.

Can every corporation's identity and contractual role be recovered from the PDF?

No. Extensive redactions break several sentences. The live annotation supplies the A/B/C labels and parent-subsidiary relationship, while the PDF supplies location and delivery details.

Does the source document an assessment or refund claim?

No. It provides no tax amount, filing, audit, assessment, payment, claim, appeal or later outcome.

Citations and references

• Truck-chassis purchase order and bailee clause — described but absent and heavily redacted
• Buyer-representative installation and painting contracts — described but absent
• Insured Driveaway Salt Lake City delivery arrangement — named without its carrier records
• November 23, 1953 Tax Counsel letter — concludes the sale was not exempt without citing legal authority
• Official Annotation 325.0800 — supplies corporate labels and relationships omitted by PDF redactions

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: Annotation 325.0800
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/325-0800.pdf

Original ruling text

325.0800

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

November 23, 1953
Dear
Your have requested our views as to the application of sales tax under the following facts:
--- Company, a corporation wholly owned by --- Company, issues a purchase order to --- Oakland, for a truck chassis, with instructions to deliver it to --- Oakland. The order contains a "bailee clause" stating that --- acts as bailee for --- then installs on the chassis tanks and a body, sold to --- by ---. Upon completion of the installation, the truck is delivered to --- Company, Richmond, to be painted. Following this, the truck, upon instructions issued by ---s delivered to Salt Lake City by Insured Driveaway. --- charges -- Company for the chassis, and for delivery to --- and for delivery --- to Salt Lake City. The responsibility of --- appears to be to have the chassis delivered to --- where -will place tanks and body thereon, and then to have it delivered to --- where ---will paint the truck. After these operations have been performed it is apparently --- obligation to ship the complete truck to --- Company in Salt Lake City. Were it the obligation of --- to have all these things done and be responsible for any improper performance, it might then well be said that --- was obligated under the contract to obtain a truck of certain specifications and deliver it to the purchaser at Salt Lake City. It appears, however, that prior to such delivery there has been a turning over of the chassis first to --- which performs work on the chassis under contract with --- and then it is turned over to ---Company which performs further work under contract with ---. We believe that these deliveries in this state to the buyer's representatives for business purposes and convenience of the buyer, and the substantial work performed on the chassis by the buyer's representatives are inconsistent with any theory of retention of ownership by ---. We further believe that these activities by the buyer's representatives constitute the exercise of ownership sufficient to overcome the effect of the recital in the "bailee clause" and to compel a conclusion that there has been delivery to the buyer's representative in this state. Thus, we remain of the opinion that --- is not entitled to claim as an exempt sale in interstate commerce its sale of the chassis to ---.

Very truly yours,
E. H. Stetson
Tax Counsel
EHS:pf
cc: Oakland - Tax Administrator