Were carriers reselling salt when they used it to refrigerate shippers' merchandise and billed separately by hundredweight?

Plain-English summary

California treated a carrier as consumer of salt used to refrigerate merchandise for shippers. A separate 99-cent-per-hundredweight charge to the shipper or another carrier did not turn the salt into property resold by the carrier that furnished and used it.

Former section 6359.5 did not apply to carriers buying salt as consumers. The memorandum therefore treated the salt sale as 100-percent taxable even when refrigerated food moved in interstate commerce. It does not print the statute or use the words dry ice; that phrase appears only in the live annotation.

Conference, billing, ice cases, citation defect, and missing transaction

W. W. Mangels wrote to Board staff member V. M. Ekstrom after a conference with Mr. Stetson. The conference record, question and supporting file are absent. A redacted taxpayer and account appear, without business details.

The taxpayer used salt to refrigerate shippers' merchandise. It might bill the shipper or another carrier a separate 99 cents per hundredweight. Mangels said the carrier actually furnishing the salt remained consumer either way. No salt, merchandise, shipper, carrier, hundredweight, bill, invoice, payment or purchase is supplied.

The reasoning followed two ice cases. The source names People v. Monterey Ice & Development Co. but prints 24 Cal.App.2d 421. Legal-research verification did not resolve that reporter; the named case is People v. Monterey County Ice & Development Co., 29 Cal.App.2d 421. The source's 24 is preserved rather than silently corrected.

People v. Puritan Ice Co., 24 Cal.2d 645, resolved to the named California Supreme Court case. As summarized in the memorandum, Pacific Fruit Express rented refrigerator cars and consumed ice placed in them despite separately charging vegetable buyers. Mangels extended that consumer reasoning from a refrigerator-car lessor to a carrier and from ice to salt.

The source then applies the same reasoning to redacted M Company when it was the carrier placing purchased salt in cars. No company, car, route, food, shipper, purchase or billing record is included.

Carriers consuming salt could not use former section 6359.5. The source declares the salt sale 100-percent taxable regardless of interstate food shipment but supplies no statute text, supplier, price, measure, rate, return, audit, assessment, payment, claim, appeal or outcome.

The live 400.0220 annotation preserves carrier consumption, separate billing, 100-percent taxation and interstate-commerce irrelevance. It calls section 6359.5 the ice or dry ice exemption; the supporting memorandum discusses ice cases and salt but does not use dry ice. It also omits the 99-cent charge, other-carrier billing, cases, M Company, identity conflict, citation defect and missing record.

The official route, individual page and tracker identify Annotation 400.0220, while the document body and PDF metadata identify 440.0220. An official-domain exact-number search found no separate 440.0220 live entry. This page follows the document's published route without changing the original source text.

The official one-page PDF has a clean rendered text layer and no body-page image. Two fresh downloads and extractions matched exactly, and the preserved source tail remains byte-identical after removal of only pdftotext's terminal newline and form feed.

What this means for you

Carriers and refrigerated transport businesses

A separate refrigerant charge did not change the carrier's consumer status under this historical view. Document who buys, furnishes and uses the refrigerant, the property and route, billing, and the exact exemption claimed.

Accountants and tax professionals

Do not rely on the source's malformed Monterey Ice reporter or infer dry ice from the memorandum. Verify current section 6359.5 treatment and preserve purchases, charges, use, shipment and tax records.

Common questions

Did separately billing the shipper change the carrier's status?

No. The carrier furnishing and using the salt remained consumer.

What if the carrier billed another carrier?

The carrier furnishing and using the salt remained consumer even when it billed another carrier.

Did interstate food shipment establish the ice exemption?

No. The memorandum denied section 6359.5 treatment for salt even when food moved interstate. Dry ice appears in the live annotation, not the source letter.

Why does the source show 440.0220?

That is the number printed in the memorandum and PDF metadata. The official annotation index and PDF route identify this item as 400.0220.

Was 24 Cal.App.2d 421 a valid Monterey Ice citation?

No. It did not resolve; the named case is reported at 29 Cal.App.2d 421. The source's printed citation remains unchanged.

What quantity or tax amount was involved?

The source supplies neither salt quantity nor purchase price, tax measure, rate, assessment, payment or outcome.

Citations and references

• Former California Revenue and Taxation Code section 6359.5 — historical ice exemption found unavailable for salt
• The source prints People v. Monterey Ice & Development Co. as 24 Cal.App.2d 421; the named case is People v. Monterey County Ice & Development Co., 29 Cal.App.2d 421 (1938)
• People v. Puritan Ice Co., 24 Cal.2d 645 (1944)
• Conference with Mr. Stetson — referenced but not included
• Taxpayer and M Company; carriers and shippers; salt, cars and food; routes; purchases, bills and 99-cent charges; section 6359.5 text; tax measure and rate; return; audit; assessment; payment; claim; appeal; and outcome — described or implicated but not included

Verbatim support

From the official October 14, 1954 memorandum:

In other words, whether or not a separate charge is made for the salt, the carrier actually furnishing the salt is a consumer.

The same rule should apply where a carrier rather than a person engaged in renting refrigerator cars so uses the refrigerant.

In other words, the sale of the salt to them is 100% taxable whether or not the food products will be shipped in interstate commerce.

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Live annotation: Annotation 400.0220
• Original supporting opinion: 400.0220 PDF

Original ruling text

STATE BOARD OF EQUALIZATION
OFFICE CORRESPONDENCE

Place:
Date:

To:

Mr. V. M. Ekstrom (HGG)

From:

W. W. Mangels

Re:

[A]
--- --- ----- ---, California

440.0220
Sacramento, California
October 14, 1954

Account No. -- -- XXXXX

As a result of our conference with Mr. Stetson, it was agreed that taxpayer is a consumer of the salt which it uses to refrigerate merchandise for shippers. This is true whether or not taxpayer bills the shipper a 99 cent per hundred-weight separate charge for the salt used. The taxpayer should also be regarded as a consumer even though he should bill another carrier the 99 cents per hundred-weight for the salt. In other words, whether or not a separate charge is made for the salt, the carrier actually furnishing the salt is a consumer. This is in line with the reasoning of the “ice” cases, People v. Monterey Ice & Dev. Co., 24 Cal. App. 2d 421, and People v. Puritan Ice Company, 24 Cal 2d

645. In the Puritan Ice Company case, the Supreme Court of California held that Pacific Fruit
     Express Company, a corporation engaged in renting refrigerator cars, was the consumer of ice which it placed in the cars even though a separate charge was made to the buyers of the vegetables for the ice. The same rule should apply where a carrier rather than a person engaged in renting refrigerator cars so uses the refrigerant. And the same rule should whether the refrigerant is salt or ice. In those cases where the [M] Company is the person which is the carrier placing purchased salt in the cars, it too should be regarded as a consumer in accordance with the foregoing reasoning. You will also note that carriers which purchase salt and are regarded as consumers are not entitled to avail themselves of the provisions of Section 6359.5 of the Law. In other words, the sale of the salt to them is 100% taxable whether or not the food products will be shipped in interstate commerce.

WWM:ja