Opinion ID: 2464143
Heading Depth: 1
Heading Rank: 5

Heading: Was sales tax due in Wyoming?

Text: [¶ 15] There are two types of sales at issue. The first includes sales in which out-of-state buyers would pick up a vehicle from Maverick at either the Cheyenne or Laramie store and return with the vehicle to their home state. The second includes sales in which a common carrier, acting on behalf of the out-of-state buyer, would pick up the vehicle from Maverick and deliver it out of state. Maverick contends that these sales were non-taxable destination sales and not subject to Wyoming sales tax. The Department responds that the buyers took possession in Wyoming; therefore, sales tax is due. The SBOE agreed with the Department, and the record supports the SBOE's decision. [¶ 16] Prior to January 1, 2008, and during the time at issue here, sale was defined as any transfer of title or possession in this state for consideration.... Wyo. Stat. Ann. § 39-15-101(a)(vii) (LexisNexis 2005). After January 1, 2008, sale was defined as any transfer of possession in this state for a consideration.... 2006 Wyo. Sess. Laws, Chap. 10, § 1. The issue in this case is whether transfer of possession or title took place in Wyoming or outside the state. Sales tax is imposed on [t]he sales price of every retail sale of tangible personal property within the state. Wyo. Stat. Ann. § 39-15-103(a)(i)(A). Sellers are required to collect and remit to the state the taxes imposed on sales of motorcycles and off-road vehicles. Wyo. Stat. Ann. § 39-15-107(a)(i) and (b)(viii). [¶ 17] The Wyoming Sales and Use Tax Regulations in effect at the relevant time, provided as follows: (q) Interstate Sales. (i) The point at which title or possession of tangible personal property passes to the purchaser shall determine the location of the sale. Tangible personal property shipped by the vendor at the time of sale and not used in Wyoming, to an out of state location may be considered a destination sale and not subject to the sales tax. .... (iii) Contracts of sale, sales invoices, bills of lading or other documentary evidence of the passage of title or delivery of tangible personal property to the purchaser inside or outside this state shall be retained by the vendor to establish the nature of the sale. If no such evidence is present, it shall be presumed that the sale occurred within the state and the vendor shall be liable for the sales tax thereon. Wyoming Sales and Use Tax Regulations, Ch. 2, Sec. 15 (2004). [¶ 18] Maverick argues that these were nontaxable destination sales because neither title nor possession was transferred in Wyoming. Maverick contends that the sale documents show that the parties intended for change of possession to happen in the buyer's home state and the buyer had only constructive possession until the vehicle actually arrived at the buyer's residence either because delivery was made by a third party, a common carrier, or because the customer was acting as his/her own delivery agent. Maverick's point is that because the parties intended this transfer would take place outside of Wyoming, the transfer of actual possession did not happen in Wyoming, and the transfer of the title to the vehicles also occurred outside Wyoming when the mailed title documents were received by the buyer. [¶ 19] The first assertion Maverick makes is that the invoices reflect the intent of both parties and they intended for transfer to occur in the buyer's home state. Maverick relies on Hercules Powder Co. v. State Bd. of Equalization, 66 Wyo. 268, 208 P.2d 1096, reh'g denied, 66 Wyo. 268, 210 P.2d 824 (Wyo.1949). As explained in Buehner Block Co., Inc. v. Wyo. Dep't of Revenue, 2006 WY 90, ¶ 23, 139 P.3d 1150, 1158-1159 (Wyo. 2006), Hercules Powder was a Delaware corporation, with offices in Salt Lake City, Utah, and Denver, Colorado, and little or no physical presence in Wyoming. Id., Hercules, 208 P.2d at 1097. Hercules was engaged in the manufacture and sales of explosives and incidental materials and sometimes took mail orders, from inside or outside Wyoming, for its products to be delivered to destination points within Wyoming. Id., Hercules, 208 P.2d at 1097-1100. This Court concluded [in Hercules ] that the sales at issue in that case were not subject to Wyoming sales tax statutes because the straight bills of lading under which the goods were shipped acted to transfer title to the goods to the consignees immediately upon shipment thereunder. Buehner, ¶ 23, 139 P.3d at 1159. The Court also relied upon the agency's own prior interpretation of the statutes as an alternative ground for decision. Hercules, 208 P.2d at 1110-12. The SBOE in this case properly interpreted Hercules as stating that the general rule that title passes at the point of shipment controls unless the circumstances clearly demonstrate a contrary intent. [¶ 20] The principles enunciated in Hercules are reflected in the Wyoming Uniform Commercial Code, Wyo. Stat. Ann. § 34.1-2-401. The SBOE relied upon the U.C.C. to determine that title passed to the buyer when the vehicle was physically delivered to the buyer or the buyer's agent. Wyo. Stat. Ann. § 34.1-2-401 provides in pertinent part: (a) Each provision of this article with regard to the rights, obligations and remedies of the seller, the buyer, purchasers or other third parties applies irrespective of title to the goods except where the provision refers to such title. Insofar as situations are not covered by the other provisions of this article and matters concerning title become material the following rules apply: .... (ii) Unless otherwise explicitly agreed title passes to the buyer at the time and place at which the seller completes his performance with reference to the physical delivery of the goods, despite any reservation of a security interest and even though a document of title is to be delivered at a different time or place; and in particular and despite any reservation of a security interest by the bill of lading: (A) If the contract requires or authorizes the seller to send the goods to the buyer but does not require him to deliver them at destination, title passes to the buyer at the time and place of shipment; but (B) If the contract requires delivery at destination, title passes on tender there. [¶ 21] Maverick first argues that it was improper for the SBOE to rely on the Wyoming U.C.C. statute because the comment to this section precludes reliance on the U.C.C. for regulatory purposes. Maverick then argues that if this statute is considered, it supports Maverick's argument because there was an explicit agreement that title would pass upon tender at the final destination. The comment to this section of the U.C.C. provides: 1. This Article deals with the issues between seller and buyer in terms of step by step performance or non-performance under the contract for sale and not in terms of whether or not title to the goods has passed. That the rules of this section in no way alter the rights of either the buyer, seller or third parties declared elsewhere in the Article is made clear by the preamble of this section. This section, however, in no way intends to indicate which line of interpretation should be followed in cases where the applicability of public regulation depends upon a sale or upon location of title without further definition. The basic policy of this Article that known purpose and reason should govern interpretation cannot extend beyond the scope of its own provisions. It is therefore necessary to state what a sale is and when title passes under this Article in case the courts deem any public regulation to incorporate the defined term of the private law. [¶ 22] The question of whether it is appropriate to consider the U.C.C. when determining questions of tax regulation has not been directly addressed in Wyoming. We now find that it was appropriate for the SBOE to rely on the U.C.C. as an objective test to determine when title passed. As noted by the district court, there is some historical basis for this. The opinion in Hercules relied, in part, on provisions of the Uniform Sales Act, which was the predecessor to the U.C.C. Hercules, 208 P.2d at 1103. See also, Wyo. Stat. Ann. § 34.1-1-102 (recognizing the Uniform Sales Act as one of the prior statutory schemes incorporated by the U.C.C.). Other jurisdictions have relied on the U.C.C. for assistance in resolving tax questions. A typical analysis is that of the Rhode Island Supreme Court: While we have some doubts whether the regulations make reference to the Code as that body of contract law which should apply when applicable, we can perceive no reason why, when a question arises under the regulations as to contract interpretation, we should not employ the Code as our frame of reference. In doing so, we adhere to the current realities of the marketplace and will, therefore, be better able to gauge the parties' intent in those instances where intent is decisive under the regulations. Rice Machinery, Inc. v. Norberg, 120 R.I. 542, 391 A.2d 66, 72 (1978). [¶ 23] Other jurisdictions applying the U.C.C. to resolve tax issues include: O'Brien v. Isaacs, 32 Ill.2d 105, 203 N.E.2d 890, 891 (1965); Continental Illinois Leasing Corp. v. Dep't of Revenue of State of Ill., 108 Ill. App.3d 583, 64 Ill.Dec. 189, 439 N.E.2d 118, 121 (1982) (To determine when, for taxation purposes, ownership of or title to property is transferred, Illinois courts have applied the title passing tests of the Uniform Commercial Code.); H.O. Anderson, Inc. v. Rose, 177 W.Va. 419, 352 S.E.2d 541, 548 (1986) (We find the provisions of the Uniform Commercial Code (U.C.C.) instructive in determining the passage of title in tax cases....); New England Yacht Sales, Inc. v. Comm'r of Revenue Servs., 198 Conn. 624, 504 A.2d 506, 509-510 (1986); Circuit City Stores, Inc. v. Comm'r of Revenue, 439 Mass. 629, 790 N.E.2d 636, 640 (2003) (Our tax statutes provide no explicit definition of the term `title,' and so we look for guidance to the Uniform Commercial Code ...). See also Crown Iron Works Co. v. Comm'r of Taxation, 298 Minn. 213, 214 N.W.2d 462 (1974); City of Richmond v. Petroleum Marketers, Inc., 221 Va. 372, 269 S.E.2d 389, 390 (1980); Franklin Fibre-Lamitex Corp. v. Director of Revenue, 505 A.2d 1296, 1299 (Del.Super.Ct.1985). [¶ 24] Maverick then asserts that even if the SBOE could use the U.C.C., the SBOE decision was still wrong because the parties had an express agreement that title would pass when the vehicle reached the buyer's home state. The SBOE found that the sale documents did not determine the point of transfer. We agree. The statement on the invoices, delivered out of state, is not sufficient to overcome the fact that actual possession was transferred in Wyoming at the time of pick-up. The parties could have but did not use other language in the invoice to suggest that the transfer of possession would occur in another location, such as clauses dealing with risk of loss or responsibility for selection of carriers; this wording was missing from the invoices. In addition, the reverse side of the invoices contained the following paragraph: We are not liable for failure to deliver or delay in delivery of the purchased vehicle. If the failure or delay is due, in whole or part, to any cause beyond our control or without our fault or negligence, we are not liable to you for any consequential damages, damages to property, damage or loss of use, loss of time, loss of profits or income, or any other incidental damages arising out of the sale or use of the purchased vehicle. An objective analysis indicates that transfer of possession occurred in Wyoming. The record supports the SBOE's findings. [¶ 25] Maverick contends that title was transferred to the buyer when the certificate of title or the manufacturer's statement of origin (MSO) was mailed to the buyer or the buyer's lender some weeks after the sale. Maverick uses the term title to mean the written documents that prove ownership. Wyoming has long recognized that title has a broader definition. Brown v. Wintermute, 59 Wyo. 254, 139 P.2d 435, 438 (1943) (`A party may have a title to property although he is not the absolute owner.') (quoting Roberts v. Wentworth, 59 Mass. 192, 5 Cush. 192 (Mass. 1849)). The statute uses the term title in a more general sense, and the statutory use of the term title means `[t]he union of all elements (as ownership, possession, and custody) constituting the legal right to control and dispose of property.' McAlpine v. Zangara Dodge, Inc., 144 N.M. 90, 183 P.3d 975, 977-978 (Ct.App.2008) (quoting Black's Law Dictionary 1522 (8th ed. 2004)). Title to a vehicle may be transferred, or passed, even though there is a failure to comply with code provisions concerning the certificate of title. State v. Montano, 93 N.M. 436, 601 P.2d 69, 74 (Ct.App.1979). The question is not when the buyer received his paperwork, but when he became the owner of the vehicle. [¶ 26] A majority of the transactions at issue involved out-of-state buyers who would come to either the Cheyenne or Laramie store, pick up the vehicle, and return to their home state. Maverick argues that those customers who picked up their vehicles were acting as their own agent and only had constructive possession for delivery purposes; therefore, possession did not transfer from the seller to the buyer until the buyer arrived home. Maverick relies almost entirely on State ex rel. Wyo. Dep't of Revenue v. Union Pacific R.R. Co., 2003 WY 54, 67 P.3d 1176 (Wyo.2003), to support the interesting argument that a person can be his own agent and have only constructive possession of an item that he controls. Reliance on the Union Pacific case in this instance is misplaced. [¶ 27] Union Pacific involved a case where the Department assessed tax on ballast used by the Union Pacific (UP). Some of the ballast was used by the UP in Wyoming and some was used in other states, but it was delivered to the UP for transportation to the out-of-state construction sites. The ballast used out of state was subject to inspection in the state to which it was delivered. The SBOE found that tax was due on the ballast used in Wyoming (the maintenance ballast) but not on the ballast used outside the state (the construction ballast). We affirmed, finding that the UP obtained complete control of the maintenance ballast because it was accepted without reservation. However, the construction ballast was transferred as a non-taxable destination sale because the purchaser retained the right to reject it, in which case, the ballast was returned at the seller's expense. Union Pacific, ¶¶ 14-15, 67 P.3d at 1183. We also specifically noted that the UP was the agent for the vendor. Id. There is nothing in the opinion to suggest that this Court found that the UP was acting as its own agent. [¶ 28] The contention that a person can act as his own agent presents several practical problems and is contrary to established law. A relationship of agency is established when two parties agree that one, the agent, shall act on behalf of and subject to the control of the other, the principal. The first section of the Restatement of Agency Law explains that an agent and a principal are different persons. Restatement (Third) of Agency Law § 1.01 (2006) states that `Agency' is the fiduciary relationship that arises when one person (a `principal') manifests assent to another person (an `agent') that the agent shall act on the principal's behalf and subject to the principal's control, and the agent manifests assent or otherwise consents so to act. This contemplates different entities for agent and principal. Franks v. Independent Prod. Co., Inc., 2004 WY 97, ¶ 11, 96 P.3d 484, 490 (Wyo.2004) (`Agency is a fiduciary relation which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control and consent.') (quoting True v. Hi-Plains Elevator Machinery, Inc., 577 P.2d 991, 999 (Wyo.1978)). [¶ 29] Furthermore, there is no logic to the assertion that a person in actual control of an object has only constructive possession. This term has often been used in the context of criminal cases and has a well-defined meaning: A person who, although not in actual possession, knowingly has both the power and the intention, at a given time, to exercise dominion or control over a thing, either directly or through another person, is in constructive possession of it. Dettloff v. State, 2007 WY 29, ¶ 31, 152 P.3d 376, 384 (Wyo.2007) (emphasis added). This definition is just as appropriate here. We do not accept the argument that a person may act as his or her own agent, and we hold that a customer who picked up a vehicle in Wyoming had actual possession at the time of pick-up. 2 Hellerstein & Hellerstein ¶ 18.02(2)(e), 18-14 (2010). The sale therefore occurred in Wyoming and was properly taxed. [¶ 30] The remaining transactions are those where delivery was made by a third-party carrier. The evidence was that Maverick might recommend a carrier; however, the customer ultimately chooses the carrier, and the contract is between the carrier and the customer. Under these facts, the carrier would be the agent of the buyer; and when possession was transferred to the carrier in Wyoming, sales tax was due. 2 Hellerstein & Hellerstein ¶ 18.01(2)(b), 18-9 (2010). [¶ 31] A review of the record indicates that substantial evidence supports the SBOE's finding that transfer of possession and title of these vehicles occurred in Wyoming, and the levy of a sales tax on these transactions is appropriate.