Did a posted 'All Materials Sold F.O.B. Yard' sign make a lumber seller's separately stated truck-delivery charges nontaxable?

Plain-English summary

A lumber seller delivered goods in its own trucks and separately stated delivery charges. Its invoices showed no f.o.b. point, no purchase orders were produced at the hearing, and most orders were oral or placed by telephone.

The seller had posted signs saying “All Materials Sold F.O.B. Yard.” California said the sign alone did not show a specific intent to pass title before delivery when the sales contract required the seller to deliver.

Under the cited title rule, title passed when the lumber reached the customer. The cartage charges were therefore taxable.

Common questions

Was the posted f.o.b.-yard sign enough?

No.

Did separately stating delivery charges make them deductible?

No, because title still passed at delivery.

What additional evidence was missing?

The invoices named no f.o.b. point, and purchase orders said to exist in some cases were not produced.

Citations and references

• Former Civil Code § 1739, rule 5 — seller-required delivery and title passage, identified in the opinion as “Ruling 5”

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/557-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/557-0220.pdf

Original ruling text

STATE BOARD OF EQUALIZATION
OFFICE CORRESPONDENCE

557.0220
Place:
Date:

To:

Mr. W. E. Williams

From:

John H. Murray

Re:

The K--- L--- Co.
XXXX --- Avenue
---, California

Sacramento, California
July 23, 1953

Account No. X-XXXX (-)
Now: SY -- XX XXXXXX

This involves the application of tax to cartage charges for lumber delivered by taxpayer in its own trucks. Copies of invoices were presented at the preliminary hearing and the invoices showed a separate statement of delivery charges, but did not show any f.o.b. point. Purchase orders were said to have been received in some cases, but none were presented at the hearing. Most of the orders were oral and received by telephone. In some cases, customers came to the sales office. About July 1, 1950, taxpayer posted signs in its sales offices stating as follows: “All Materials Sold F.O.B. Yard”. We think that where taxpayer delivered the goods in its own truck, title to those goods passed upon delivery pursuant to Ruling 5, section 1739 of the Civil Code. The mere posting of the signs is insufficient to show an intention to pass title to the goods prior to delivery when the delivery is required under the contract of purchase. We have examined the memorandum prepared by Messrs. M---, B---, and K---, and find nothing in that memorandum which affects the above opinion.

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