Opinion ID: 2099037
Heading Depth: 1
Heading Rank: 9

Heading: georgia power central barge line transaction

Text: Georgia Power originally entered into an agreement with Valley Line Company (Valley Line) to ship coal from Ford Dock to Pride, Alabama. Valley Line assigned its interest in the contract to Central Barge, a common carrier and an affiliate of Valley Line. Pursuant to the contract, Central Barge transported the coal from Ford Dock to Pride, Alabama. The waybills issued by the railroad show that the coal was shipped from Ford Dock by Central Barge, the shipper, to Georgia Power, the consignee. Based on these arrangements, the Department contends that Cora Dock and Central Barge were Union Electric's and Georgia Power's respective representatives for purposes of receiving physical possession of the coal and that the transactions are taxable. We do not agree. This court has previously held that a transaction by which a purchaser buys goods which are delivered to him, or his representative, within the taxing State may properly measure a tax, even though both parties know that the goods are purchased for use outside of the State and they are so used. ( American Airlines, Inc. v. Department of Revenue (1974), 58 Ill.2d 251, 259; Pressed Steel Car Co. v. Lyons (1955), 7 Ill.2d 95, 98-99.) The Department contends that Cora Dock and Central Barge were the purchasers' representatives for purposes of the Use Tax Act, and delivery of the coal to Cora Dock and Central Barge constituted delivery to the purchasers. The appellees contend that Cora Dock and Central Barge were not their representatives and that possession with power to control was deferred until actual delivery to the out-of-state facilities. Thus, the first question we must decide is whether Cora Dock or Central Barge acted as the appellees' representatives when they received physical possession of the coal. The Department's regulations do not define the term representative. Consequently, the appellees argue that we should apply the definition given to that term in the Uniform Commercial Code (UCC). (See Sinclair Refining Co. v. Department of Revenue (1971), 50 Ill.2d 201, 205-06; O'Brien v. Isaacs (1965), 32 Ill.2d 105, 107 (cases which applied the definitions found in the UCC in construing the provisions of the ROTA).) Section 1-201(35) of the UCC defines a representative as: an agent, an officer of a corporation or association, and a trustee, executor or administrator of an estate, or any other person empowered to act for another. (Ill. Rev. Stat. 1987, ch. 26, par. 1-201(35).) The appellees maintain that in the present case, neither Cora Dock nor Central Barge was empowered to act on their behalf. Union Electric contends that Cora Dock was an independent contractor whose authority was limited to the transfer of coal from the rail cars to the river barges; Georgia Power contends that Central Barge was an independent common carrier whose responsibilities were limited to transporting coal by barge from Ford Dock, Illinois, to Pride, Alabama. Under these circumstances, the appellees argue that Cora Dock and Central Barge were not their representatives as the term is defined in the UCC. The Department argues that although the term representative is not defined in its regulations, the Department construes that term to be broader than the definition contained in the UCC. The Department does not restrict the term to agents and employees, but construes the term to mean one who stands in the place of another for the purpose of receiving physical possession of property, and urges this court to adopt that construction. In arguing that Cora Dock was acting as a representative of Union Electric, the Department places considerable emphasis on the facts that the coal was shipped f.o.b. mine or Cora Dock and that Union Electric scheduled the coal shipments and either paid the freight costs outright or reimbursed the seller for the freight costs. As to Georgia Power, the Department argues that the facts that the seller shipped the coal f.o.b. Ford Dock, that Georgia Power reimbursed the seller for the cost of transporting the coal to the dock and loading it onto barges, and that Georgia Power contracted for the shipment of the coal by barge support its position that Central Barge was acting as Georgia Power's representative. We agree with the Department that the term representative is not limited to those acting in an agency capacity. When a statutory term is undefined, that term must be given its ordinary and popularly understood meaning. ( Canteen Corp. v. Department of Revenue (1988), 123 Ill.2d 95, 105; Lake County Board of Review v. Property Tax Appeal Board (1988), 119 Ill.2d 419, 423.) A common definition of the term representative is one who stand[s] for or in the place of another: act[s] for another or others: constitut[es an] agent for another [especially] through delegated authority. (Webster's Third New International Dictionary 1926 (1986).) Thus, while a representative can be an agent, he need not be one. We nonetheless find that Cora Dock and Central Barge were not the appellees' representatives as contemplated by the regulations. Our review of the record indicates that Cora Dock is a coal transfer facility which, pursuant to the contract between it and Union Electric, is responsible for the transfer of coal from railroad cars to river barges. The bills of lading clearly indicate that Cora Dock, not Union Electric, was the shipper of the coal to Meramec. A review of the Georgia Power transaction similarly establishes that Central Barge was acting as a common carrier in transporting the coal from Ford Dock to Pride, Alabama, and that Georgia Power was the consignee. It is clear that reloading was a necessity of the carriage from the mines to the plants and there is no evidence to indicate that Cora Dock or Central Barge had authority to do anything with the coal other than facilitate its transportation. Consequently, we hold that the purchasers did not, either personally or through their representatives, receive physical possession of the coal within Illinois. We note that the Department has submitted, as additional authority, citation to a virtually identical provision contained in the home rule municipal retailers' occupation tax act (Ill. Rev. Stat. 1987, ch. 24, par. 8-11-1), the county retailers' occupation tax act (Ill. Rev. Stat. 1987, ch. 34, par. 409.1), the Local Mass Transit District Act (Ill. Rev. Stat. 1987, ch. 111 2/3, par. 355.01(b)) and the Regional Transportation Authority Act (Ill. Rev. Stat. 1987, ch. 111 2/3, par. 704.03(e)), apparently as support for its position that the appellees received possession of the coal in Illinois. Those provisions state: For the purpose of determining the local governmental unit whose tax is applicable, a retail sale, by a producer of coal or other mineral mined in Illinois, is a sale at retail at the place where the coal or other mineral mined in Illinois is extracted from the earth. This paragraph does not apply to coal or other mineral when it is delivered or shipped by the seller to the purchaser at a point outside Illinois so that the sale is exempt under the Federal Constitution as a sale in interstate or foreign commerce. Nothing in this Section shall be construed to authorize a municipality [county, Metro East Mass Transit District or Regional Transportation Authority] to impose a tax upon the privilege of engaging in any business which under the constitution of the United States may not be made the subject of taxation by this State. (Emphasis added.) (Ill. Rev. Stat. 1987, ch. 24, par. 8-11-1; see also Ill. Rev. Stat. 1987, ch. 34, par. 409.1; Ill. Rev. Stat. 1987, ch. 111 2/3, par. 355.01(b); Ill. Rev. Stat. 1987, ch. 111 2/3, par. 704.03(e).) We do not believe that these provisions bolster the Department's argument. It is clear from the unambiguous language of those provisions that the sale of coal is considered a sale at the site of the mine only for purposes of determining which local governmental unit may tax the sale. By their own terms, those provisions do not apply to sales in which the coal is shipped or delivered to the purchaser out-of-state. Consequently, these provisions do not affect our analysis. Our conclusion that Cora Dock and Central Barge were not acting as the appellees' representatives is further supported by the Department's own interpretation of the regulations as contained in a private letter ruling issued by the Department. (See Private Letter Ruling No. 81-0264, March 5, 1981.) Private letter rulings are informal rulings, opinions or letters issued by the Department in response to an inquiry or request for an opinion regarding the applicability of a tax or an exemption and, pursuant to statute, are required to be published, maintained as a public record, and made available for public inspection and copying. (See, e.g., Ill. Rev. Stat. 1987, ch. 120, pars. 439.3, 441, 2017.) Although the private letter ruling in question has not been made part of the record, we take judicial notice of it as it constitutes a public record. (See In re W.S. (1980), 81 Ill.2d 252, 256-57 (courts may take judicial notice of public records); see also People v. Pollution Control Board (1984), 103 Ill.2d 441, 447.) Private Letter Ruling No. 81-0264 specifically deals with the shipment of coal in interstate commerce and provides in part: SUBJECT FILE: COAL INTERSTATE COMMERCE       [A seller is] considered to be making an exempt interstate commerce shipment to the purchaser where [the seller] deliver[s] the goods at a point in Illinois to an independent common or contract carrier for delivery at a point outside Illinois to the purchaser if [the seller] pay[s] the carrier for its transportation charge (even if [the seller is] later reimbursed by the purchaser), or if [the seller is] shown on the waybill or bill of lading as the shipper. [A seller is] considered to be the shipper to the out-of-State destination, with the purchaser first receiving the physical possession of the property outside Illinois, if [the seller is] shown as the consignor or shipper on the bill of lading even if the purchaser contracted with the carrier for the transportation service and pays the carrier directly. The purchaser is deemed to be receiving the physical possession of the property in Illinois even when the property is transported out of Illinois by a carrier to the purchaser in another state if the purchaser hires and pays the carrier direct and is shown on the shipping document as the consignor or shipper as well as being the consignee. The fact that the transaction is FOB at some point in Illinois will not alter the taxability of the transaction. (Emphasis added.) (Department of Revenue, Private Letter Ruling 81-0264, March 5, 1981.) Based upon this letter ruling, the facts upon which the Department places so much emphasis, namely, that the coal was shipped to a f.o.b. point in Illinois and that the purchasers contracted with and/or paid for the carriers, are immaterial to the taxability of the shipments since the purchasers were not shown to be shippers or consignors on the shipping documents. Consequently, under the standards enunciated in the private letter ruling, the transactions in the present case would not be taxable. We recognize that normally private letter rulings have no precedential effect. (See Citizens Utility Co. v. Illinois Commerce Comm'n (1988), 124 Ill.2d 195, 217.) However, we also note that whenever private letter rulings contain any policy of general applicability, the Department is required, by statute, to adopt such policy as a rule. (See Ill. Rev. Stat. 1987, ch. 120, pars. 493.3, 441.) The above cited letter ruling clearly contains a policy of general applicability; the letter ruling is further significant because it reflects the policy which was in effect during the time period at issue in the Union Electric case. Thus, while we do not view the private letter ruling as precedent, we find it instructive as it evidences the Department's stated construction of the regulations. The Complete Auto test (see Complete Auto Transit, Inc. v. Brady (1977), 430 U.S. 274, 279, 51 L.Ed.2d 326, 331, 97 S.Ct. 1076, 1079), discussed by the appellate court, becomes relevant only when there has been a determination that the transaction is taxable by the State. In light of our finding that the transactions were not taxable under the Use Tax Act or the ROTA, there is no need to consider the question of whether taxation of the coal purchases contravenes the provisions of the commerce clause. For the reasons stated above, the judgments of the appellate court are affirmed. Judgments affirmed.