Arizona State Tax Commission v. Parsons-Jurden Corp.
| Decision Date | 28 January 1969 |
| Docket Number | No. 1,CA-CIV,PARSONS-JURDEN,1 |
| Citation | 9 Ariz.App. 92,449 P.2d 626 |
| Parties | ARIZONA STATE TAX COMMISSION et al., Appellants, v.CORPORATION, a New York corporation, Appellee. 722. |
| Court | Arizona Court of Appeals |
Gary K. Nelson, Atty. Gen., Darrell F. Smith, Former Atty. Gen., by James D. Winter, Asst. Atty. Gen., for appellants.
Boyle, Bilby, Thompson & Shoenhair, by David W. Richter, Tucson, for appellee.
This is an appeal by the defendant Arizona State Tax Commission from a judgment of the trial court which granted the motion of the plaintiff, Parsons-Jurden Corporation, for summary judgment and denied defendant's motion for summary judgment. Since the matter turns upon the interpretation to be applied to undisputed facts, this Court is free to substitute its analysis of the record for the analysis of the record by the trial court Goodyear Aircraft Corp. v. Arizona State Tax Com'n, 1 Ariz.App. 302, 402 P.2d 423 (1965), keeping in mind that in a motion for summary judgment the facts are viewed most strongly against the moving party. Lowery v. Universal Match Corporation, 6 Ariz.App. 98, 430 P.2d 444 (1967).
We are called upon to determine whether an agreement between plaintiff and the Duval Corporation for 'Engineering Design and Procurement of Materials' for a copper mill located in Mohave County, Arizona, was a sales contract as the defendant Tax Commission contends, and therefore subject to the Transaction Privilege Tax, § 42--1309 and § 42--1312 A.R.S. and the Education Excise Tax, § 42--1361 A.R.S., or merely a purchasing agent contract as plaintiff contends, and therefore not subject to the said taxes.
On 18 March 1963 Parsons-Jurden Corporation executed in New York a contract with Duval Sulphur and Potash Company which provided that Parsons-Jurden Corporation would provide engineering procurement, accounting, and all other associated 'home office services necessary' for the construction of a copper concentrator and related facilities on the premises of Duval Sulphur and Potash Company at Mineral Park near Kingman, Mohave County, Arizona. Plaintiff, Parsons-Jurden, was a corporation qualified to do business in New York and Minnesota with its home office in New York City. Plaintiff did not manufacture or fabricate any material or equipment sold to Duval in Arizona. Plaintiff, at a cost of some $27,000, sent experts to Arizona to inspect the installation but other than that they had no office, plant, warehouse, dealer, or representative in Arizona. The contract provided for compensation of Parsons-Jurden Corporation on a cost-plus fixed-fee basis. The fixed fee was 1% Of the estimated cost of the contract. The estimated price of the supplies and equipment furnished by Parsons-Jurden Corporation under the contract was included in the base on which the 1% Fee was computed. The contract contained an advance payment provision and designated Parsons-Jurden Corporation as an independent contractor. Pertinent portions of the contract read as follows:
'(3.2) PROCUREMENT:
'CONTRACTOR shall procure such machinery, equipment, materials, and supplies including construction equipment and tools as OWNER shall direct (hereinafter referred to as 'Materials'); shall expedite the delivery thereof, together with inspection at the points of manufacture and/or at the job site, and do other items of a procurement nature necessary for the project.
'CONTRACTOR shall procure all materials, equipment and services by competitive bidding and make award to the lowest acceptable bidder, unless otherwise instructed by OWNER.
'Prior to the twentieth day of each month, CONTRACTOR shall advise OWNER, with adequate supporting detail, as to the amount of money that CONTRACTOR expects to spend during the succeeding month on behalf of the AGREEMENT, whereupon OWNER shall promptly advance, within ten (10) days, such amount to CONTRACTOR.'
During the period in question Parsons-Jurden spent some $9,256,193.22 of Duval's money. The audit by the Arizona State Tax Commission determined that $8,233,162.99 of said amount represented taxable sales. Plaintiff, pursuant to § 42--1415 A.R.S., petitioned for 'Hearing Correction of Redetermination' of the assessment. Hearing was held before the State Tax Commission at which time testimony of the Secretary and Treasurer of Parsons-Jurden was taken:
'Q In your operation under this contract did the Parsons-Jurden Company ever assert any ownership rights over the procured materials?
'Q Did you ever hold yourself out to third parties as an owner of--
Mr., hopkins also testified:
'Q But your duties and...
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