Cuna Mut. Ins. Soc. v. Wisconsin Dept. of Revenue

• Decision Date: 09 August 1984
• Docket Number: No. 83-075,83-075
• Citation: 355 N.W.2d 541,120 Wis.2d 445
• Parties: CUNA MUTUAL INSURANCE SOCIETY, Petitioner-Respondent, v. WISCONSIN DEPARTMENT OF REVENUE, Appellant.
• Court: Wisconsin Court of Appeals

Page 541

355 N.W.2d 541

120 Wis.2d 445

CUNA MUTUAL INSURANCE SOCIETY, Petitioner-Respondent, v. WISCONSIN DEPARTMENT OF REVENUE, Appellant.

No. 83-075.

Court of Appeals of Wisconsin.

Argued Feb. 17, 1984.

Opinion Released Aug. 9, 1984.

Opinion Filed Aug. 9, 1984.

Bronson C. La Follette, Atty. Gen., and Gerald S. Wilcox, Asst. Atty. Gen., argued, for appellant.

Judith W. Cooper, argued, Madison, for petitioner-respondent.

Before GARTZKE, P.J., and BABLITCH and DYKMAN, JJ.

DYKMAN, Judge.

The Department of Revenue determined that Cuna Mutual Insurance Society's publication Dimensions is subject to sales and use tax. ¹ The Tax Appeals Commission affirmed the deficiency determination. We affirm the circuit court's reversal of the Tax Appeals Commission's order. The issue is whether Dimensions is "advertising", exempt from Wisconsin's sales and use tax under sec. 77.54(25), Stats. (1977). Because the Tax Appeals Commission erroneously interpreted sec. 77.54(25), we conclude that Dimensions is advertising, and therefore affirm the circuit court.

Cuna Mutual Insurance Society (CUNA) is a life insurance company whose business is to provide insurance for credit unions and their members. CUNA and its subsidiaries are known collectively as the CUNA Mutual Group and sell their products and services only to credit unions and credit union members. The record indicates that the publication Dimensions is produced and paid for by the CUNA Mutual Group and is sent monthly, free of charge, to all credit unions in the United States and 59 countries where companies within the Group do business. 94.3% of all copies of Dimensions are distributed outside of Wisconsin. Dimensions is a 16-page magazine containing a variety of articles relating to CUNA's products and services, CUNA's relationship to the credit union movement, and CUNA's commitment of selling to and servicing only credit unions and their members. Each issue of Dimensions is labeled a CUNA Group publication. CUNA considers Dimensions to be part of its advertising program.

Scope of Review

"In reviewing a circuit court order reversing an order of an administrative agency, an appellate court's scope of review is the same as that of the circuit court." L&H Wrecking Co., Inc. v. LIRC, 114 Wis.2d 504, 508, 339 N.W.2d 344, 346 (Ct.App.1983). Section 227.20(1), Stats., provides that judicial review is confined to the record. Section 227.20(5) requires the reviewing court to set aside or modify an agency's action if it finds that the agency has "erroneously interpreted a provision of law." Section 227.20(6) provides that if an agency's action is based upon a finding of fact which is not supported by "substantial evidence in the record" the reviewing court shall set aside the action.

In Nottelson v. ILHR Department, 94 Wis.2d 106, 115-17, 287 N.W.2d 763, 768 (1980), the court said:

[O]ne of the most troublesome issues in administrative law is determining whether ... the application of a statutory concept to a concrete fact situation, should be treated as a question of fact or of law for purposes of judicial review. In many cases we have said that the determination of whether the facts fulfill a particular legal standard is a question of law. ... Nevertheless, merely labeling the question as a question of law and labeling the commission's determination as a conclusion of law does not mean that the court should disregard the commission's determination. [The application of a statutory interpretation to a concrete fact situation] calls for a value judgment, and judicial review of such a value judgment, though a question of law, requires the court to decide in each type of case the extent to which it should substitute its evaluation for that of the administrative agency. We have recognized that when the expertise of the administrative agency is significant to the value judgment (to the determination of a legal question), the agency's decision, although not controlling, should be given weight. [Footnotes and citations omitted.]

Interpretation of Section 77.54(25), Stats. (1977)

Section 77.54(25), Stats. (1977) sets out the following exemption from sales and use taxes:

The gross receipts from the sale of and the storage of printed material which is designed to advertise and promote the sale of merchandise, or to advertise the services of individual business firms, which printed material is purchased and stored for the purpose of subsequently transporting it outside the state by the purchaser for use thereafter solely outside the state. [Emphasis added.]

The Commission made findings of fact in interpreting sec. 77.54(25), Stats. (1977). Finding # 12 states:

"Dimensions advertises companies of the Cuna Mutual Insurance Group, their activities, products and services, and their commitment to the credit union movement."

Finding # 14 states:

"The publication Dimensions, is used by and is helpful to agents of [Cuna] in marketing [its] line of services to its customers who receive the publication. [Cuna] competes with many major insurance companies for sales of services to credit unions but [Cuna] is the only organization which deals exclusively with credit unions and their members."

Finding # 15 is termed a finding of fact but is a conclusion of law. It states:

"[Cuna's] publication, Dimensions, while including what could be characterized as advertising to promote [Cuna's] services and products, does not when taken as a whole constitute advertising or institutional advertising so as to qualify for the exemption under section 77.54(25), Stats."

As the circuit court did in its review, we treat Finding # 15 as a conclusion of law. A mislabeled finding will be treated by the reviewing court as what it is rather than what it is called. Connecticut General Life Ins. Co. v. DILHR, 86 Wis.2d 393, 405, 273 N.W.2d 206, 211 (1979). When reviewing an administrative agency's conclusions of law, the reviewing court is not bound by those conclusions but will sustain them if reasonable. Bruns Volkswagen, Inc. v. DILHR, 110 Wis.2d 319, 322, 328 N.W.2d 886, 888 (Ct.App.1982).

Tax exemption statutes are to be strictly construed in favor of taxation. Ramrod, Inc. v. Department of Revenue, 64 Wis.2d 499, 504, 219 N.W.2d 604, 607 (1974). However, "non-technical words used in a statute are to be given their ordinary and accepted meaning when not specifically defined, and this meaning may be ascertained from a recognized dictionary." Kania v. Airborne Freight Corp., 99 Wis.2d 746, 766, 300 N.W.2d 63, 71 (1981). "Advertise" is not defined in the statute. It is a non-technical word, not a term of art in tax law. Consequently, we are as capable as the Commission to determine the meaning of "advertise." Pabst v. Department of Taxation, 19 Wis.2d 313, 324, 120 N.W.2d 77, 82-83 (1963).

The American Heritage Dictionary of the English Language 19 (New College ed. 1980), defines "advertise" as follows: "[t]o call the attention of the public to a product or business; ... to proclaim the qualities or advantages of (a product or business) so as to increase sales." Webster's Third New International Dictionary 31 (4th ed. 1976), defines "advertise" as: "to call public attention to esp. by emphasizing desirable qualities so as to arouse a desire to buy or patronize ...." To advertise a product or service which is for sale to the public, it is necessary to draw the potential consumer's attention to it by presenting its good qualities and benefits, creating a desire to possess it. The...