Court Opinion

ID: 9631199
Source: CourtListenerOpinion
Date Created: 2023-08-22 10:31:32.149945+00
Date Added: 2024-06-11T18:07:50.129517
License: Public Domain

ERICKSON, Justice,
dissenting:
I respectfully dissent. In my view, both the district court and the court of appeals correctly held that Norwest substantially complied with the requirements of section 39-26-117(1)(b), 16B C.R.S. (1982) and that Norwest’s property is exempt from the tax lien imposed by section 39-26-117(1)(a). Norwest Leasing, Inc. v. Charnes, 767 P.2d 775 (Colo.App.1988). The district court, in granting summary judgment for Norwest, concluded that the filing of a financing statement, a legal description of the property and a schedule of the leased property substantially complied with and was sufficient to carry out and comply with the intent of section 39-26—117(1)(b).
A rule of substantial compliance should be applied to avoid an unjust and unfair result when the terms of a statute have been substantially carried out resulting in compliance with the reasonable objectives and purposes of the statute. Jones v. Short, 696 P.2d 665, 667 (Alaska 1985); Superior/Ideal, Inc. v. Board of Review, 419 N.W.2d 405, 407 (Iowa 1988); In re Estate of Rudd, 140 Mont. 170, 177, 369 P.2d 526, 530 (1962). The facts in each particular case provide the basis for determining whether there has been substantial compliance. Trussell v. Fish, 202 Ark. 956, 960, 154 S.W.2d 587, 590 (1941).
The majority notes that the purpose of section 39-26-117 is to facilitate the collection of unpaid sales taxes by providing the state with a lien on property leased by a retailer in the amount of the unpaid taxes and by giving the lien a first priority over other interests in the property. However, the statute also reflects a legislative intent to permit a lessor who has “made a bona fide lease to a retailer” to obtain relief from the state’s lien if the leased property can be reasonably identified from the lease description and the lease does not grant the lessee a right to purchase the property. See § 39-26-117(l)(b). The Department does not contest the sufficiency of the property description in either the lease or the document filed by Norwest and concedes that the lease does not contain an option to purchase. In this case, application of a substantial compliance rule to the filing requirements of section 39-26-117(l)(b) does not prevent the Department from collecting unpaid sales taxes but protects a lessor’s statutorily recognized property interest.
When Norwest filed the document in issue, it did not have the benefit of the majority’s interpretation of the statute and attempted to comply with the statute. The trial court found, based on the evidence, that the document contained more information than the Department's standard memorandum form. The trial court also found that the Department did not examine the county records prior to the seizure of Nor-west’s property. Norwest’s failure to file a copy of the lease with the county clerk and recorder and its failure to specifically state that the lease did not provide P.H. Markets with the right to purchase the equipment did not prejudice the Department. See Zamel v. Port of New York Authority, 56 N.J. 1, 5-7, 264 A.2d 201, 203-04 (1970) (Port Authority not prejudiced by failure of plaintiff to strictly comply with statutory notice requirements).
Under the circumstances, I would affirm the trial court and the court of appeals, and would hold that Norwest substantially complied with the requirements of section 39-26-117(l)(b) and was entitled to exemption of its property from the state’s tax lien.
I am authorized to say that ROVIRA and LOHR, JJ., join in this dissent.