Appeal of Jackpine Gypsies Motorcycle Club, Inc., No. 15163

CourtSupreme Court of South Dakota
Writing for the CourtWUEST; HENDERSON; SABERS; HENDERSON; HERTZ
Citation395 N.W.2d 593
PartiesIn the Matter of the Appeal of JACKPINE GYPSIES MOTORCYCLE CLUB, INC., and Black Hills Motor Classic, Inc., From the Decision of the Secretary of Revenue. JACKPINE GYPSIES MOTORCYCLE CLUB & Black Hills Motorcycle Classic, Inc., Plaintiffs and Appellees, v. SOUTH DAKOTA DEPARTMENT OF REVENUE, Defendant and Appellant.
Decision Date05 November 1986
Docket NumberNo. 15163

Page 593

395 N.W.2d 593
In the Matter of the Appeal of JACKPINE GYPSIES MOTORCYCLE
CLUB, INC., and Black Hills Motor Classic, Inc.,
From the Decision of the Secretary of
Revenue.
JACKPINE GYPSIES MOTORCYCLE CLUB & Black Hills Motorcycle
Classic, Inc., Plaintiffs and Appellees,
v.
SOUTH DAKOTA DEPARTMENT OF REVENUE, Defendant and
Appellant.
No. 15163.
Supreme Court of South Dakota.
Argued Feb. 12, 1986.
Decided Nov. 5, 1986.

John T. Hughes, Sturgis, for plaintiffs and appellees.

Page 594

John Dewell, Asst. Atty. Gen., Pierre, for defendant and appellant; Mark V. Meierhenry, Atty. Gen., Pierre, on brief.

WUEST, Chief Justice (on reassignment).

The South Dakota Department of Revenue (Department) appeals from a circuit court decision reversing an order of the South Dakota Secretary of Revenue (Secretary) which directed the Jackpine Gypsies Motorcycle Club, Inc. and the Black Hills Motorcycle Classic, Inc. (Clubs) to pay retail sales tax due on the ticket sales from their annual Black Hills Motorcycle Classic. We reverse.

The Clubs are nonprofit corporations that sponsor the Black Hills Motorcycle Classic and Rally (Classic). The Classic is a week-long series of motorcycle events held in Sturgis and the surrounding Black Hills of South Dakota. The Classic has been an annual event since 1941, and each August there are racing events and other sponsored festivities.

The Department contends that retail sales tax is due on the Club's ticket sales from the 1984 Classic. The Clubs insist that their receipts are exempt from tax under SDCL 10-45-13(3), which states in pertinent part:

There are specifically exempted from the provisions of this chapter and from computation of the amount of tax imposed by it, the gross receipts from the following:

(3) Admissions to community operated celebrations and shows sponsored by a Chamber of Commerce or other similar nonprofit organization if the county, city or town in which the activity takes place officially sponsors the activity and no charge is made to the operators of the celebration or show for the use of county, city or town facilities or services[;]

The Secretary determined that Sturgis was not an official sponsor of the event and ruled that the Clubs were liable for sales tax. The Clubs refused to make their records available to the Department and instead appealed the Secretary's decision to the circuit court.

The circuit court reversed the Secretary's decision because the Department's interpretation of SDCL 10-45-13(3) holding there must be an official resolution to indicate the city's official sponsorship was too narrow an interpretation. The trial court held under the totality of the circumstances the city's support for the event constituted official sponsorship. The court found that the statute is ambiguous and fails to give notice to counties, cities or towns that intend to hold similar community operated celebrations, and all ambiguity should be resolved against the taxing authority.

On review, this court is not bound by any presumption that the circuit court decision was correct. We essentially review the agency decision on a fact question as did the circuit court. Raml v. Jenkins Methodist Home, 381 N.W.2d 241, 242 (S.D.1986); State Division of Human Rights v. Miller, 349 N.W.2d 42, 46 n. 2 (S.D.1984). We will uphold the ruling on a question of fact unless, in light of the entire record, the decision is clearly erroneous or we are left with a firm and definite conviction that a mistake has been made. Raml, 381 N.W.2d at 242-243; SDCL 1-26-37; See also, Kienast v. Sioux Valley Co-op, 371 N.W.2d 337, 339 (S.D.1986); Stavig v. South Dakota Highway Patrol, 371 N.W.2d 166, 168 (S.D.1986).

The Secretary of Revenue concluded that "no official sponsorship was ever presented to the city council of Sturgis nor was any action taken by vote of that body to effect an official sponsorship of the 1984 Classic," and therefore Sturgis was not an official sponsor of the Black Hills Motorcycle Classic. We hold the Secretary was not "clearly erroneous."

Specific exemptions from a tax will be construed in favor of the taxing power. Application of Veith, 261 N.W.2d 424 (S.D.1978). In order for appellees to be exempt from sales tax on the receipts from admissions to their events, the events must be officially sponsored by the City of Sturgis. The legislature amended SDCL 10-45-13(3) in 1983 by an Act to clarify certain

Page 595

sales tax exemptions and the Act specifically required official sponsorship of the activity by the county, city, or town in which the event takes place. Sponsorship by the local chamber of commerce is no longer sufficient to qualify under this exemption. The change provides that the city must actually be a sponsor, and this implies a formal test of sponsorship.

Governing bodies of municipalities take official action through ordinances or resolutions. 62 C.J.S., Municipal Corporations Sec. 160 (1955); 5 McQuillin, The Law of Municipal Corporations Sec. 15.03 (3d ed. 1986); See also, Baker v. Jackson, 372 N.W.2d 142 (1985); SDCL 19-1-1 (defining and discussing ordinances and resolutions). A decision must be evidenced by a resolution, which in effect encompasses all actions of the municipal body other than ordinances. McQuillin, supra at Secs. 15.02, 15.06. Statutes authorize such formal procedures for the purpose of assuring timely notice to the electors of the administrative decisions and determinations of the governing body and provide a full and fair opportunity to refer its decisions to the voters for approval or rejection. Roush v. Town of Esmond, 73 S.D. 406, 43 N.W.2d 547 (1950). The Secretary found that there was no such official action taken by the City.

A community can do many things to help support an annual event that takes place there without necessarily becoming an official sponsor of the event. It may act to insure the public safety or even take steps to insure the overall success of the event.

Sturgis budgeted for extra law enforcement and maintenance of public areas to regulate and insure public safety. It closed Main...

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5 practice notes
  • Sturgis Motorcycle Rally, Inc. v. Rushmore Photo & Gifts, Inc., No. 17-1762
    • United States
    • U.S. Court of Appeals — Eighth Circuit
    • November 2, 2018
    ...does not make the city "an official sponsor" of the event. In re Appeal of Jackpine Gypsies Motorcycle Club, Inc. , 395 N.W.2d 593, 595 (S.D. 1986). We agree and hold that the jury could not infer from the onerous planning that the City undertakes to provide infrastructure for the......
  • Permann v. South Dakota Dept. of Labor, Unemployment Ins. Div., No. 15390
    • United States
    • Supreme Court of South Dakota
    • April 21, 1987
    ...the clearly erroneous standard. We have reiterated this holding in numerous other cases. Appeal of Jackpine Gypsies Motorcycle Club, 395 N.W.2d 593 (S.D.1986); Application of Northwestern Bell Tel. Co., 382 N.W.2d 413 (S.D.1986); S.D. Wildlife Federation v. Water Mgt. Bd., 382 N.W.2d 26 (S.......
  • Meyer v. Santema, No. 19694
    • United States
    • Supreme Court of South Dakota
    • January 16, 1997
    ...11-4-10 (granting right to referendum and right to protest changes in zoning ordinances); In re Jackpine Gypsies Motorcycle Club, Inc., 395 N.W.2d 593, 595 (S.D.1986) ("Statutes authorize such formal procedures for the purpose of assuring timely notice to the electors of the administra......
  • State Sales and Use Tax Liability of Pam Oil, Inc., Matter of, Nos. 51-12390-5S and 51-17459-3S
    • United States
    • Supreme Court of South Dakota
    • April 25, 1990
    ...granting exemptions from a tax are to be construed in favor of the taxing power. Appeal of Jackpine Gypsies Motorcycle Club, Inc., 395 N.W.2d 593, 594 (S.D.1986); Matter of Sales Tax of Valley Queen Cheese, 387 N.W.2d 39, 40 (S.D.1986); Burlington Northern, supra at 146. Based upon these we......
  • Request a trial to view additional results
5 cases
  • Sturgis Motorcycle Rally, Inc. v. Rushmore Photo & Gifts, Inc., No. 17-1762
    • United States
    • U.S. Court of Appeals — Eighth Circuit
    • November 2, 2018
    ...does not make the city "an official sponsor" of the event. In re Appeal of Jackpine Gypsies Motorcycle Club, Inc. , 395 N.W.2d 593, 595 (S.D. 1986). We agree and hold that the jury could not infer from the onerous planning that the City undertakes to provide infrastructure for the......
  • Permann v. South Dakota Dept. of Labor, Unemployment Ins. Div., No. 15390
    • United States
    • Supreme Court of South Dakota
    • April 21, 1987
    ...the clearly erroneous standard. We have reiterated this holding in numerous other cases. Appeal of Jackpine Gypsies Motorcycle Club, 395 N.W.2d 593 (S.D.1986); Application of Northwestern Bell Tel. Co., 382 N.W.2d 413 (S.D.1986); S.D. Wildlife Federation v. Water Mgt. Bd., 382 N.W.2d 26 (S.......
  • Meyer v. Santema, No. 19694
    • United States
    • Supreme Court of South Dakota
    • January 16, 1997
    ...11-4-10 (granting right to referendum and right to protest changes in zoning ordinances); In re Jackpine Gypsies Motorcycle Club, Inc., 395 N.W.2d 593, 595 (S.D.1986) ("Statutes authorize such formal procedures for the purpose of assuring timely notice to the electors of the administra......
  • State Sales and Use Tax Liability of Pam Oil, Inc., Matter of, Nos. 51-12390-5S and 51-17459-3S
    • United States
    • Supreme Court of South Dakota
    • April 25, 1990
    ...granting exemptions from a tax are to be construed in favor of the taxing power. Appeal of Jackpine Gypsies Motorcycle Club, Inc., 395 N.W.2d 593, 594 (S.D.1986); Matter of Sales Tax of Valley Queen Cheese, 387 N.W.2d 39, 40 (S.D.1986); Burlington Northern, supra at 146. Based upon these we......
  • Request a trial to view additional results

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