Dakota Harvestore Systems, Inc. v. South Dakota Dept. of Revenue, No. 13875

CourtSupreme Court of South Dakota
Writing for the CourtHENDERSON; FOSHEIM; WOLLMAN; WOLLMAN
Citation331 N.W.2d 828
PartiesDAKOTA HARVESTORE SYSTEMS, INC., Defendant and Appellant, v. SOUTH DAKOTA DEPARTMENT OF REVENUE, Plaintiff and Appellee. . Considered on Briefs
Docket NumberNo. 13875
Decision Date17 February 1983

Page 828

331 N.W.2d 828
DAKOTA HARVESTORE SYSTEMS, INC., Defendant and Appellant,
v.
SOUTH DAKOTA DEPARTMENT OF REVENUE, Plaintiff and Appellee.
No. 13875.
Supreme Court of South Dakota.
Considered on Briefs Feb. 17, 1983.
Decided March 30, 1983.

Frank P. Gibbs of Simons, Gibbs, Feyder & Myers, Sioux Falls, for defendant and appellant.

Gene R. Woodle, Asst. Atty. Gen., S.D. Dept. of Revenue, Pierre, for plaintiff and appellee.

HENDERSON, Justice.

PROCEDURAL HISTORY

In 1981, the South Dakota Department of Revenue (the Department) audited Dakota Harvestore Systems, Inc. (Harvestore) for the fiscal periods of January 1, 1978, to December 31, 1980. As a result of the audit, the Department determined that Harvestore owed $40,125.42 in contractor's excise tax pursuant to SDCL 10-46A-1. An administrative hearing was conducted by the Secretary of Revenue on May 28, 1981, with findings of fact, conclusions of law, and an order entered in favor of the Department during November of 1981. Harvestore filed notice of appeal to the circuit court on December 3, 1981. On January 30, 1982, the parties entered into a stipulation of facts. The appeal was heard on April 21, 1982, in circuit court, Minnehaha County, and the administrative order was affirmed on April 27, 1982. We affirm.

Page 829

FACTS

Harvestore, who sells and installs farm silos, concedes that the contractor's excise tax of SDCL 10-46A-1 applies to units sold directly to the farmer by Harvestore. At issue is Harvestore's other method of distribution which involves a sale by Harvestore to Agristor Leasing, Inc. (Agristor), who in turn leases the silo to the farmer, with Harvestore installing the structure. In the lease, title to the silo remains with Agristor and upon a farmer's default, Agristor can remove the silo. The parties' lease denominates the silo as personal property. When the lease terminates, the farmer can: (a) return the silo to Agristor; (b) extend the lease; or (c) purchase the silo at its fair market value.

Harvestore contends that the leased silos are not improvements to real property under SDCL 10-46A-1 because of the parties' intent and the ease of which the units may be removed by Agristor. The silos generally weigh five tons, are up to 90 feet in height, and are affixed with anchor bolts to heavy concrete slabs. Removal of the silos involves raising the structure, then removing each ring in five-by-nine foot sections.

ISSUES

I.

ARE LEASED SILOS, WHICH ARE ANCHORED TO CONCRETE SLABS, IMPROVEMENTS TO REAL PROPERTY AND THEREFORE SUBJECT TO SDCL CHAPTER 10-46A, THE CONTRACTOR'S EXCISE TAX?

II.

WAS THE ADMINISTRATIVE AGENCY'S DECISION CLEARLY ERRONEOUS?

DECISION

I.

SDCL 10-46A-1, the contractor's excise tax, provides:

There is hereby imposed an excise tax upon the gross receipts of all prime contractors and subcontractors engaged in realty improvement contracts, at the rate of one and one-half percent.

Further, by reference, SDCL 10-46A-2 includes contractors who construct silos within the classification of "prime contractors" in SDCL 10-46A-1. Although it is conceded that Harvestore is a contractor within the meaning of SDCL ch. 10-46A, Harvestore asserts that SDCL 10-46A-1 is inapplicable because the leased silos are intended to be personalty and therefore are not "realty improvement contracts."

SDCL 43-1-3 delineates real property as: "That which is affixed to land." SDCL 43-33-1 then provides:

A thing is deemed to be affixed to land when it is attached to it by roots, as in the case of trees, vines, or shrubs; or imbedded in it, as in the case of walls; or permanently resting upon it, as in the case of buildings; or permanently attached to what is thus permanent, as by means of cement, plaster, nails, bolts, or screws.

We also have looked to general factors to aid in our determination: (a) annexation to the realty, either actual or constructive; (b) its adaptability to the use and purpose for which the realty was used; and (c) the intention of the party making the annexation. Metropolitan Life Ins. Co. v. Jensen, 69 S.D. 225, 9 N.W.2d 140 (1943). Among the generalized factors, the intention of the party making the annexation is controlling. First Nat'l Bank of Aberdeen v. Jacobs, 273 N.W.2d 743 (S.D.1978). As we held in First Nat'l Bank, 273 N.W.2d at 746:

This intent is not the secret intent in the...

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23 practice notes
  • Saugatuck Dunes Coastal All. v. Saugatuck Twp., 160358
    • United States
    • Supreme Court of Michigan
    • July 22, 2022
    ...considered "aggrieved" in the absence of special damages). But see Brown v East Lansing Zoning Bd of Appeals, 109 Mich.App. 688, 699-701; 331 N.W.2d 828 (1981) (holding that allegations that the development would "intensify the change in the character of the neighborhood as well as increase......
  • Saugatuck Dunes Coastal All. v. Saugatuck Twp., 160358
    • United States
    • Supreme Court of Michigan
    • July 22, 2022
    ...considered "aggrieved" in the absence of special damages). But see Brown v East Lansing Zoning Bd of Appeals, 109 Mich.App. 688, 699-701; 331 N.W.2d 828 (1981) (holding that allegations that the development would "intensify the change in the character of the neighborhood as well as increase......
  • Permann v. South Dakota Dept. of Labor, Unemployment Ins. Div., No. 15390
    • United States
    • Supreme Court of South Dakota
    • April 21, 1987
    ...310 (S.D.1983); Page 116 Matter of Ackerson, Karlen & Schmitt, 335 N.W.2d 342 (S.D.1983); Dakota Harvestore v. S.D. Dept. of Revenue, 331 N.W.2d 828 (S.D.1983); Fraser v. Water Rights Commission, 294 N.W.2d 784 (S.D.1980). Still other cases indicate our standard of review of agency decision......
  • Petition of Famous Brands, Inc., No. 14269
    • United States
    • South Dakota Supreme Court
    • February 16, 1984
    ...442 (S.D.1983); Matter of Ackerson, Karlen & Schmitt, 335 N.W.2d 342 (S.D.1983); Dakota Harvestore v. South Dakota Dep't of Revenue, 331 N.W.2d 828 (S.D.1983); Deuter v. South Dakota Highway Patrol, 330 N.W.2d 533 (S.D.1983); Weltz v. Bd. of Educ. of Scotland School Dist., 329 N.W.2d 131 (S......
  • Request a trial to view additional results
23 cases
  • Saugatuck Dunes Coastal All. v. Saugatuck Twp., 160358
    • United States
    • Supreme Court of Michigan
    • July 22, 2022
    ...considered "aggrieved" in the absence of special damages). But see Brown v East Lansing Zoning Bd of Appeals, 109 Mich.App. 688, 699-701; 331 N.W.2d 828 (1981) (holding that allegations that the development would "intensify the change in the character of the neighborhood as well as increase......
  • Saugatuck Dunes Coastal All. v. Saugatuck Twp., 160358
    • United States
    • Supreme Court of Michigan
    • July 22, 2022
    ...considered "aggrieved" in the absence of special damages). But see Brown v East Lansing Zoning Bd of Appeals, 109 Mich.App. 688, 699-701; 331 N.W.2d 828 (1981) (holding that allegations that the development would "intensify the change in the character of the neighborhood as well as increase......
  • Permann v. South Dakota Dept. of Labor, Unemployment Ins. Div., No. 15390
    • United States
    • Supreme Court of South Dakota
    • April 21, 1987
    ...310 (S.D.1983); Page 116 Matter of Ackerson, Karlen & Schmitt, 335 N.W.2d 342 (S.D.1983); Dakota Harvestore v. S.D. Dept. of Revenue, 331 N.W.2d 828 (S.D.1983); Fraser v. Water Rights Commission, 294 N.W.2d 784 (S.D.1980). Still other cases indicate our standard of review of agency decision......
  • Petition of Famous Brands, Inc., No. 14269
    • United States
    • South Dakota Supreme Court
    • February 16, 1984
    ...442 (S.D.1983); Matter of Ackerson, Karlen & Schmitt, 335 N.W.2d 342 (S.D.1983); Dakota Harvestore v. South Dakota Dep't of Revenue, 331 N.W.2d 828 (S.D.1983); Deuter v. South Dakota Highway Patrol, 330 N.W.2d 533 (S.D.1983); Weltz v. Bd. of Educ. of Scotland School Dist., 329 N.W.2d 131 (S......
  • Request a trial to view additional results

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