State Sales Tax or Use Tax Liability of Webber Furniture, Scottsbluff, Neb., Matter of

• Citation: 290 N.W.2d 865
• Decision Date: 09 April 1980
• Docket Number: No. 12670,12670
• Parties: In the Matter of STATE SALES OR USE TAX LIABILITY OF WEBBER FURNITURE, SCOTTSBLUFF, NEBRASKA.
• Court: Supreme Court of South Dakota

Page 865

290 N.W.2d 865

In the Matter of STATE SALES OR USE TAX LIABILITY OF WEBBER FURNITURE, SCOTTSBLUFF, NEBRASKA.

No. 12670.

Supreme Court of South Dakota.

Argued Nov. 9, 1979

Decided April 9, 1980.

Harold H. Deering, Jr., of May, Adam, Gerdes & Thompson, Pierre, for appellant, Webber Furniture.

Gene R. Woodle, Asst. Atty. Gen., S.D. Dept. of Revenue, Pierre, for respondent, State of South Dakota.

HENDERSON, Justice.

ACTION

Appellant Webber Furniture Company appeals from a judgment of the Circuit Court, Sixth Judicial Circuit, affirming the Secretary of Revenue's order that appellant collect and remit to the South Dakota Department of Revenue a use tax on all sales made to South Dakota residents, pursuant to the provisions of SDCL Chapters 10-46 and 10-52. We affirm.

FACTS

A hearing was held on May 25, 1977, before a hearing examiner for a determination of the scope of appellant's tax liability by virtue of its business dealings in the State of South Dakota. The parties stipulated to certain facts outlined below, which were submitted at both administrative and circuit court levels.

Appellant is a Nebraska corporation with its principal place of business in Scottsbluff, Nebraska. It maintains no offices in the State of South Dakota and all sales of furniture and other merchandise to residents of South Dakota are transacted at the store of Webber's Furniture Company in Scottsbluff. Appellant has a policy of delivering furniture to the residence of the purchaser without charge. Delivery of furniture and other merchandise to residents in South Dakota is made in a truck owned by appellant and driven by two of its employees. These two truckers, appellant's only employees within the state, do not solicit sales. Appellant has, however, solicited customers in South Dakota by purchasing advertising in this state, as evidenced by an ad appearing in an Ellsworth Air Force Base area newspaper. A Nebraska sales tax is not collected on sales to out-of-state residents; however, inscribed upon each invoice and sale order appears the following statement: "This purchase may be subject to use tax in your home state."

On October 7, 1977, with Webber's consent, the Department of Revenue conducted an audit of appellant's accounts, covering the period from 1975 through September The Secretary of Revenue ruled that Webber's contacts in the state, particularly the transportation and delivery of furniture within the state, made it subject to the collection provisions in SDCL 10-46. On November 28, 1978, the circuit court entered judgment affirming the Department of Revenue's ruling in the matter.

1977, to determine its gross sales of furniture and other merchandise to South Dakota purchasers. The audit, which was made part of the record before the hearing examiner, revealed that in the year 1975, appellant made sixty-three sales to South Dakota residents totaling $48,428.52. This represented approximately fifteen percent of appellant's total sales that year. In 1976, appellant made sixty-seven sales of furniture and other merchandise to residents of the state in the amount of $61,599.36. This accounted for approximately twenty percent of appellant's business that year. From January through September of 1977, appellant transacted twenty-seven sales with South Dakota residents in the total amount of $22,658.05.

ISSUES

I.

Is appellant a retailer maintaining a place of business in the State of South Dakota as defined by SDCL 10-46-1(7) and SDCL 10-46-20?

II.

Does the State's imposition of liability for the collection of a use tax upon appellant violate the due process clause of the Fourteenth Amendment to the United States Constitution?

DECISION

I.

Appellant contends that it does not fall within the definition of a "retailer maintaining a place of business in the state," and therefore the Secretary's attempt to impose the onus of collection upon it, rather than collecting from each customer individually, is unwarranted and violative of SDCL 10-46. SDCL 10-46-20 provides that every retailer maintaining a place of business in this state, and making sales of tangible personal property for use in this state shall, at the time of making such sale, whether within or without this state, collect a use tax from the purchaser. A "retailer maintaining a place of business in the state," as defined in SDCL 10-46-1(7), includes:

(A)ny retailer having or maintaining within this state, directly or by a subsidiary, an office, distribution house, sales house, warehouse or other place of business, or any agents operating within the state under the authority of the retailer or its subsidiary, irrespective of whether such place of business or agent is located here permanently or temporarily or whether such retailer or subsidiary is admitted to do business within this state pursuant to the laws of the state of South Dakota granting the rights of foreign corporations to do business in said state. (Emphasis supplied.)

The stipulated facts clearly establish that appellant has no office, saleshouse, warehouse, or any other type of business establishment in this state. The question becomes whether the deliverymen, who admittedly neither solicit nor make sales but do make minor furniture adjustments, are agents sufficient to bring appellant within the purview of SDCL 10-46-20. The state urges that SDCL 10-46-20, in conjunction with SDCL 10-46-1(6) and (7), permits the Secretary of Revenue to impose the collection responsibility on appellant. SDCL 10-46-1(6) ¹ provides:

(W)hen, in the opinion of the commissioner of revenue, it is necessary for the efficient administration of this chapter to regard any salesman, representatives, truckers, peddlers or canvassers as agents of the dealers, distributors, supervisors, employers, or persons under whom they operate or from whom they obtain the tangible personal property sold by them irrespective of whether they are making sales on their own behalf or on behalf of such dealers, distributors, supervisors, employers or persons, the commissioner of revenue may so regard them and may regard the dealers, distributors, supervisors, employers or persons as retailers for purposes of this chapter. (Emphasis supplied.)

Appellant contends that the clear implication is that the legislature intended its taxing jurisdiction to extend only to those "agents" present in the state who make or solicit sales, either on their own behalf as independent contractors or on behalf of some retailer.

The construction of a statute is a question of law. Therefore, the decisions of the administrative agency, as well as the trial court, are fully reviewable. City of Milwaukee v. Wisconsin Employment Relation Commission, 71 Wis.2d 709, 239 N.W.2d 63 (1976); In re Sales & Use Tax Determination, 225 N.W.2d 571 (N.D.1974). Nevertheless, the construction and interpretation given the statute by the agency charged with its administration is entitled to great weight. Udall v. Tallman, 380 U.S. 1, 85 S.Ct. 792, 13 L.Ed.2d 616 (1965); Milwaukee County v. Department of Industry, 80 Wis.2d 445, 259 N.W.2d 118 (1977).

We agree with the interpretation of the Department of Revenue and the trial court that appellant's deliverymen, who truck furniture into the state, are agents sufficient to bring Webber within the purview of SDCL 10-46-20, making it subject to the collection provisions contained therein. It is apparent that if the legislature intended to restrict the scope of SDCL 10-46-1(6) to persons who solicit sales, truckers would have been excluded from the list of those persons who may be regarded as agents for...