Caldor, Inc. v. Heffernan

Decision Date21 April 1981
CourtConnecticut Supreme Court
Parties, 25 A.L.R.4th 740, 7 Media L. Rep. 1747 CALDOR, INC. v. Gerald J. HEFFERNAN, Tax Commissioner. EASTERN COLOR PRINTING COMPANY v. TAX COMMISSIONER.

James A. Fulton, Norwalk, with whom, on the brief, was George F. Carroll, Jr., Norwalk, for plaintiff in the first case.

Pamela M. Taylor, Waterbury, with whom was Donald McPartland, Waterbury, for plaintiff in the second case.

Robert L. Klein, Asst. Atty. Gen., with whom were Morris Borea, legal intern, and, on the brief, Carl R. Ajello, Atty. Gen., and Ralph G. Murphy, Asst. Atty. Gen., for defendant in both cases.

J. Charles Mokriski and Vanessa L. Bryant, Hartford, filed a brief as amicus curiae.

Before BOGDANSKI, PETERS, ARMENTANO, SHEA and WRIGHT, JJ.

ARMENTANO, Associate Justice.

These two cases are sent to us on a reservation. Because they present identical legal issues, they are consolidated for the purpose of this opinion. There has been a stipulation of facts. The plaintiff Eastern Color Printing Company (printer) is a letterpress printer of preprints. A preprint is a euphemism for the familiar advertising supplement which is inserted into newspapers and advertises the merchandise of a retailer. The plaintiff Caldor, Inc. (retailer) owns and operates retail department stores within the state of Connecticut.

The retailer contracts with the printer to produce preprints advertising its merchandise. The retailer also contracts with newspaper publishers 1 for the sole purpose of inserting the preprints into the newspaper; it uses the circulation of the newspaper as a distribution vehicle for its advertising supplement. "Mechanicals" contain the material to be included in the advertising preprints and are submitted to the printer by the retailer. The mechanicals typically take the same form as advertising material which the retailer regularly submits to newspaper advertising departments and must conform to each newspaper's specifications as to size, packing format and content. The retailer and each newspaper agree on the date of insertion of the preprint which contains, in addition to the advertisements, the name and date of the newspaper into which it is to be assembled and a designation that it is a supplement.

The printer arranges for the delivery of the preprints to the newspaper publishers and, once accepted, the retailer and the printer relinquish all right to custody, ownership or authority over them. The newspaper personnel exercise complete control over the advertising supplements and assemble them into each newspaper.

On September 12, 1975, the tax commissioner for the state of Connecticut issued a notice of a proposed sales tax assessment in the amount of $76,727.56 against the printer for the period between July 1, 1971, through December 31, 1974, based on the printer's charges to all its customers for the printing of preprints. The printer protested the tax assessment.

On or about July 28, 1976, the retailer filed a claim 2 for a refund of $47,025, which represented the sales tax paid by the retailer to the printer.

Both the printer and the retailer claimed that the sale of preprints was exempt from the sales tax either because they were "newspapers" within the meaning of General Statutes § 12-412(f) or because they were materials which became an ingredient or component part of a tangible personal property to be sold within the meaning of General Statutes § 12-412(r). 3

After two separate hearings the tax commissioner, acting by his deputy, decided that the exemptions cited by the retailer and the printer, respectively, did not apply and that the sales of the preprints were subject to the sales tax authorized by General Statutes § 12-408. 4

Both the retailer and printer appealed the commissioner's decision to the Superior Court. See General Statutes § 12-422. After the parties closed the pleadings, they entered into a stipulation of facts and reserved the action for the consideration and advice of this court on three questions. See Practice Book §§ 3133 and 3134.

I

The first question is set out: Do preprints qualify as "newspapers," within the meaning of General Statutes § 12-412(f), so that they are exempt from the sales tax?

Section 12-412(f) 5 provided at the time of the transaction in question that the sales tax shall not apply to the gross receipts from the "(s)ales of newspapers." Since exemptions to the sales tax operate, if at all, when the sale is made, in order for the plaintiffs to take advantage of this exemption, the definition of "newspapers" must include preprints at the time they are printed and delivered by the printer. Connecticut Theater Foundation, Inc. v. Brown, 179 Conn. 672, 675, 427 A.2d 863 (1980); Fusco-Amatruda Co. v. Tax Commissioner, 168 Conn. 597, 609, 362 A.2d 847 (1975).

Since "newspaper" is not defined by any Connecticut statute, regulation or opinion known or cited to us, the term must be construed according to the commonly approved usage of the language. General Statutes § 1-1; Rosnick v. Aetna Casualty & Surety Co., 172 Conn. 416, 422, 374 A.2d 1076 (1977). The word must be given its plain and ordinary meaning; Carlson v. Kozlowski, 172 Conn. 263, 266, 374 A.2d 207 (1977); and be interpreted in its natural and usual meaning unless the context indicates that a different one was intended. Whitfield v. Empire Mutual Ins. Co., 167 Conn. 499, 505, 356 A.2d 139 (1975). Where a statute does not define a term it is appropriate to look to the common understanding expressed in the law and in dictionaries. Doe v. Manson, --- Conn. ---, ---, 438 A.2d 859 (42 Conn.L.J., No. 34, pp. 5, 6) (1981).

Taxing statutes are to be strictly construed. Naylor v. Brown, 166 Conn. 581, 587, 353 A.2d 709 (1974). Any statute creating a tax exemption must likewise be strictly construed against the party claiming an exemption. Connecticut Theater Foundation, Inc. v. Brown, supra, 179 Conn. at 676, 427 A.2d 863. If there is no ambiguity in the language of the statute, it does not become ambiguous merely because the parties contend for different meanings. In the absence of ambiguity it is unnecessary to resort to principles of statutory construction such as the resolution of ambiguity in favor of the taxpayer. Harris Data Communications, Inc. v. Heffernan, --- Conn. ---, ---, 438 A.2d 1178 (42 Conn.L.J., No. 24, pp. 17, 18) (1981).

"Newspaper" has been defined as "a paper that is printed and distributed daily, weekly, or at some other regular and usu. (sic) short interval and that contains news, articles of opinion (as editorials), features, advertising, or other matter regarded as of current interest ...." Webster, Third New International Dictionary; see Black's Law Dictionary (5th Ed.) for a similar definition.

Although we have not yet defined the term, other courts have done so. A newspaper is " '(a) paper printed and distributed, at stated intervals, usually daily or weekly, to contain news, advocate opinions, etc., now usually containing also advertisements and other matters of public interest ....' " Christopher v. American News Co., 171 F.2d 275, 281 (7th Cir. 1948), quoting Webster, Second International Dictionary. "The present-day newspaper, in addition to carrying 'items of general news interest,' contains enormous quantities of advertising, political comment, chess problems, cross word puzzles, ... comics, and special features of unending variety. The sum total is known as a newspaper ...." Friedman's Express v. Mirror Transportation Co., 71 F.Supp. 991 (D.N.J.1947), aff'd, 169 F.2d 504 (3d Cir. 1948). See East Suburban Press v. Township of Penn Hills, 40 Pa.Cmwlth. 438, 397 A.2d 1263, 1265 n.2 (1979); Nevada State Press Assn. v. Fax, Inc., 79 Nev. 82, 84-85, 378 P.2d 674 (1963); In re Paradise News Press, 151 Cal.App.2d 496, 498-99, 311 P.2d 555 (1957); In re Sterling Cleaners & Dyers, 81 F.2d 596, 597, (7th Cir. 1936).

All the definitions identify two common characteristics of a newspaper: (1) It is published at short, regular intervals, usually not exceeding a week, and (2) it routinely reports a myriad of topics so that it appeals, at least in part, to a wide spectrum of the general public. These two characteristics of newspapers are conspicuously absent from the preprints under consideration in this appeal. There is no stipulation that they were prepared at short, regular intervals 6 and since they consist entirely of one merchant's advertising, their appeal goes no further than a small select group of consumers interested in purchasing the merchandise of a particular retailer. They cannot be newspapers at the time they are printed and delivered by the printer.

The printer and the retailer also argue that a "newspaper preprint incorporated into and distributed with a newspaper is an integral part of the newspaper and therefore (falls within the newspaper exemption of General Statutes § 12-412(f) )." The source of authority for their proposition is Friedman's Express v. Mirror Transportation Co., supra. The issue in that case involved an exemption from the Interstate Commerce Act for motor vehicles used exclusively "in the distribution of newspapers." Vehicles carrying comic sections of newspapers were held to be within the exemption, even though the comic sections were printed in a separate plant and transported from the printer to the newspaper for assembly with other sections. The court decided that a comic supplement fell within the definition of newspaper since it was an "integral part of the newspaper ... because it has assumed the character of the journal of which it is a part," and it does not lose "its character when it is not in company with the other sections though destined for no other purpose than union with such other component parts of the total bulk, which later (is known as a newspaper)." Id., 992. In Sears, Roebuck & Co. v. State Tax Commission, 370 Mass. 127, 345...

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