Court Opinion

ID: 9530591
Source: CourtListenerOpinion
Date Created: 2023-08-07 04:01:23.916926+00
Date Added: 2024-06-11T13:28:11.079657
License: Public Domain

UDALL, Justice
(dissenting).
This case was tried in the lower court upon an agreed statement of facts, hence there is no conflict of evidence to be resolved. Under such circumstances it is well settled that this Court is.in nowise bound by the conclusions of law drawn by the trial court. I have a deep and abiding conviction that my brethren of the majority, in affirming the judgment of the lower court, are departing from sound principles of tax law to the serious detriment of all other taxpayers in the State.
In my opinion the Court is improperly throwing a mantle of local tax immunity over plaintiff’s manifold operations in this State which is not deserved. The case is really being decided upon the basis that plaintiff’s sales and the doing of certain work incident thereto, are in the same class —for taxation purposes — as the sales made by an itinerant drummer who solicits orders in a State which are sent directly to the out-of-state home office for acceptance and filling or delivery back to the buyer. Concededly as to such sales, the State of the buyer has no local grip on the seller. McLeod v. J. E. Dilworth Co., 322 U.S. 327, 64 S.Ct. 1023, 88 L.Ed. 1304. I believe this reasoning utilizes an unwarranted premise as a basis for judgment; that in fact plaintiff’s operations — hereinafter detailed — are as different from the old-style “drummer’s” modus operandi as daylight is from dark.
The proper yardstick to apply is: has plaintiff, as an out-of-state concern, by its overall operations in Arizona so localized its activities as to permit it to compete on *276an equal basis with local merchants ? If it has then its sales are taxable in Arizona, otherwise not. Norton Co. v. Department of Revenue (cited in majority opinion); Hartman, State Taxation of Interstate Commerce, Dennis & Co., pp. 102, 103, 110. Furthermore, these activities, I believe, should be viewed from the position of the potential customer, i. e., can the buyer expect to receive the same service from plaintiff as he could from a local business selling cotton gins ?
Let us examine plaintiff’s localized activities as shown by the record. Generally these may be grouped into solicitation, stock of repair parts, availability of erection, service, and repair personnel. More specifically I point out
1. Plaintiff has residing here a full time sales representative who is on salary and commission, and this man took part in nearly every sale made in the area.
2. Plaintiff maintains in this state a stock of repair parts for its gins. These parts are on consignment to Food Machinery and Chemical Corporation, who handle the sales, but they are the property of plaintiff.
3. For the right to handle these parts on consignment, Food Machinery provides plaintiff’s sales representative with desk space, use of telephone, and a telephone listing. Plaintiff and its employees make 'full use of these facilities, meeting customers there, meeting there themselves and using it as a base of'operations.
4. The sales representative had available locally at this office the records, plans, and other material necessary for such technical and sales assistance as needed by its customers.
5. Plaintiff has resident here two highly trained and. skilled “erectors” who — where called for by contract — erect, service, and repair the cotton gins sold.
It may well be that any one of these factors or activities taken separately would not justify Arizona imposing a tax, but it is the overall localized activities which must be considered in determining whether the facts are sufficient to predicate the tax. Norton case, supra. No two of these tax cases are the same and each must be judged upon its own peculiar facts. In my opinion the legal principles enunciated in the Norton case, and the Ensign case (75 Ariz. 220, 254 P.2d 1029), are controlling here. Perhaps, because of the local outlet feature, the facts are stronger than in the instant case. Nevertheless, I verily believe that plaintiff has by its overall activities subjected itself to taxation in Arizona, even though it has very studiously tried to escape it. To rule otherwise is to allow plaintiff a competitive advantage and discriminate by taxation against his local competitor. The tendency of late has been for the U. S. Supreme Court to draw a finer balance between two conflicting philosophies, thereby permitting the States to force operators such as plain*277tiff to bear their fair share of the tax burden.
Finally, it should be noted that plaintiff’s total sales covered by the audit period of 2 years and 9 months amounted to $1,180,-621.62. A tax of $8,857.29 was voluntarily paid on sales amounting to $442,864.48. Pray tell where is the difference between the localized sales on which the tax was paid, and the sales involved in this suit amounting to $737,757.14 upon which the State levied and collected a tax of $14,755.-15 ? Factually it would appear that all the sales were either intrastate sales to begin with or, as I believe, the localized activities of plaintiff have removed them from the sacrosanct status of interstate sales. Certainly there is not an iota of proof which shows the sales in question here to be one whit different from those upon which the tax . was paid. It is inconceivable that the tax is valid if it can be passed on to the purchaser but otherwise is invalid. This commingling strongly indicates tax liability. In such an anomalous situation it becomes all the more important that the “overall activities” be most carefully scrutinized. B. F. Goodrich Co. v. State, 1951, 38 Wash.2d 663, 231 P.2d 325, 330, 331, certiorari denied 342 U.S. 876, 72 S.Ct. 167, 96 L.Ed. 659.
For all of the foregoing reasons I would sustain the tax levied by the Tax Commission and reverse the judgment of the lower court granting plaintiff tax immunity.