Opinion ID: 1175317
Heading Depth: 1
Heading Rank: 2

Heading: principal/agent status

Text: EMCI asserts that it is not liable for the tax because under the terms of the management agreement it is the Tribe's agent in the operation of the bingo games and food concessions. It directs us to various provisions in these agreements to support its theory of agency status. The Commission argues to the contrary that these documents fail to establish EMCI's claimed legal position vis-a-vis the Tribe. The law does not presume an agency status is present. The burden of proving the existence, nature and extent of the agency relationship rests ordinarily upon the party who asserts it. [10] EMCI must not only meet this burden, but, as a protesting taxpayer, it also must sustain the burden of proving the tax assessment was erroneous. [11] Neither of these responsibilities was met here. A written contract which leaves the parties' true status in doubt may not be accepted as conclusive of agency status. Status is determined from the facts and the interaction of the parties  one vis-a-vis the other. [12] If the facts show control by the principal, then agency can be established regardless of the labels attached by the contract. [13] EMCI had an opportunity at the Commission hearings to establish its agency status dehors the written arrangements with the tribe but it failed to do so. No testimony was presented at the hearings relating to the parties' conduct. The evidence focused mainly on the three contractual agreements between EMCI and the Tribe. [14] These documents do not establish that the essential characteristics of an agency relationship were present  i.e. that EMCI owed a fiduciary duty to the Tribe and had agreed to be subject to its control. [15] In short, the taxpayer/EMCI must bear here a double burden  to establish agency and to demonstrate the tax was erroneous. EMCI did not sustain its onus when it showed merely the contractual arrangements with the Tribe. The writings by themselves fail to establish agency; they leave the precise legal status in a clouded or inconclusive state. The contractual arrangements reveal no more than amorphous notions compatible both with franchisor-franchisee or an independent contractor relation. EMCI needed to go one step further and show that the factual interaction revealed an agency relation. This could have been done by demonstrating the Tribe's control in two important areas  control over the finances of the bingo operation and the Tribe's exclusive control of the revenue collected from the bingo and concession sales. Because there is no evidence in this record dehors the inconclusive written arrangements to prove EMCI's status as the Tribe's agent, we must hold that EMCI has failed to show that it was the Tribe's agent in the operation of the bingo games and concession sales. [16] EMCI also disclaims any liability for the payment of the sales tax because its written agreement with the Tribe releases it from that responsibility. This argument is without merit. The incidence of the tax on revenue from bingo activities cannot be governed by private arrangement; rather, it is exacted by law. People who take funds that are subject to tax are responsible to the government for its payment regardless of any private arrangement to the contrary. [17] The agreements under review do not indicate who is responsible for the payment of taxes; there is merely a provision which attempts to immunize EMCI from that liability. [18] The tax was assessed against EMCI because it was a vendor rather than agent in the conduct of the bingo games in question and collected the revenues from that activity. There is nothing in the record to indicate that the Tribe had exclusive control of these revenues. In short, because EMCI failed to establish its agency status vis-a-vis the Tribe, it cannot be exonerated by its written agreement with the Tribe from the incidence of the tax which falls as a matter of law. We hence conclude that EMCI has not met its burden of proving that the assessment was erroneously made. Affirmed. DOOLIN, C.J., and LAVENDER, SIMMS, KAUGER and SUMMERS, JJ., concur. HODGES, J., dissents. HARGRAVE, V.C.J., disqualified.