Voss v. Gray

Citation298 N.W. 1,70 N.D. 727
Decision Date02 May 1941
Docket Number6691
CourtUnited States State Supreme Court of North Dakota

298 N.W. 1

70 N.D. 727

CLIFTON L. VOSS, Individually and Doing Business as Voss Studio, Respondent,

JOHN GRAY, as Tax Commissioner of the State of North Dakota, Appellant

No. 6691

Supreme Court of North Dakota

May 2, 1941

Syllabus by the Court.

1. A photographer who for a consideration makes photographs on their order for patrons who sit for them is the owner of and has title to such photographs until they are accepted and delivered.

2. Photographs are tangible personal property and, when made and delivered for a consideration on the order of the person who sits for them, there is a sale subject to the tax imposed by the Sales Tax Act, chapter 249, Session Laws 1937.

Appeal from District Court, Cass County; Daniel B. Holt, Judge.

Action by Clifton L. Voss, individually, and doing business as the Voss Studio, against John Gray, as Tax Commissioner of the State of North Dakota, challenging the validity of sales tax assessed on photographs made by plaintiff for patrons who sat for photographs to be made on their order. From a judgment for plaintiff setting aside the assessment, the defendant appeals.

Reversed and case remanded.

CHRISTIANSEN, J., dissenting.

Alvin C. Strutz, Attorney General, C. E. Brace, Assistant Attorney General, and T. A. Thompson, for appellant.

The sales tax levied under the North Dakota Sales Tax Act (Laws 1937, chap. 249) is a consumers tax, that is a tax laid upon and paid by the purchaser.

A photograph is personal property and, being corporeal in character, it is tangible personal property. Cusick v. Com. 260 Ky. 204, 84 S.W.2d 14.

Tangible property is such property as may be seen, weighed, measured, and estimated by the physical senses and which is capable of being possessed. People ex rel. Astor Trust Co. v. State Tax Commission, 174 A.D. 320, 160 N.Y.S. 854; Black's Law Dictionary, 3d ed. p. 1702.

Tangible property is that which may be felt or touched. Croswell, Inc. v. Jones, 52 F.2d 880; Williams v. Osage County, 84 Kan. 508, 114 P. 858, 34 L.R.A.(N.S.) 1221.

Clair F. Brickner, for respondent.

Photography is a science, at least a liberal art which is made efficient and valuable only by knowledge and skill, as the result of some science, observation, combination, and experimentation not readily acquired. New Orleans v. Robira, 11 L.R.A. 141.

A photographer making a portrait photograph for a customer has no title in the photograph. 34 L.R.A.(N.S.) 1137; 42 L.R.A.(N.S.) 386; L.R.A.1915C 839.

Where the photographer takes the portrait for the sitter under employment by the latter, it is the implied agreement that the property in the portrait is in the sitter. Altman v. New Haven Union Co. 254 F. 113; Lumiere v. Robertson-Cole Distribution Co. 280 F. 550, 24 A.L.R. 1317; Corliss v. Walker Co. 57 F. 434, 31 L.R.A. 283; Levyeau v. Clements, 175 Mass. 376, 50 L.R.A. 397; Moore v. Rugg, 44 Minn. 28, 46 N.W. 141, 9 L.R.A. 58; Klug v. Sheriffs, 7 L.R.A.(N.S.) 366.

To constitute a sale there must be a transfer of the absolute or general property. 55 C.J. 48; Benjamin, Sales, 6th Am. ed. § 1; State v. Colonial Club, 154 N.C. 177, 69 S.E. 771, Ann. Cas. 1912A 1079; Associated Newspapers v. Phillips, 294 F. 849.

Manufacturer of electrotypes, stereotypes, and matrices for use of customers, in manufacture of which materials represented from 5 to 12 per cent of the sum paid by customers, held not subject to retailers' occupation tax. A.B.C. Electrotype Co. v. Ames (Ill.) 4 N.E.2d 476.

The Retailers' Occupation Tax Act is inapplicable where sales are a mere incident to practice of profession or performance of personal services requiring skill or artistic ability. Herlihy Mid-Continent Co. v. Nudelman, 367 Ill. 600, 12 N.E.2d 638.

Nuessle, J. Burr, Ch. J., and Burke and Morris, J., concur. Christianson, J. (dissenting).



[70 N.D. 729] The plaintiff is a photographer, licensed pursuant to the provisions of chapter 188, Session Laws 1939. He carries on his business in the city of Fargo. He held a sales permit issued by the state tax commissioner but refused to collect and pay sales tax upon photographs made by himself [298 N.W. 2] for patrons who sat for photographs to be made on their order.

The tax commissioner ruled that when these photographs were thus made and delivered there was a sale of tangible personal property within the meaning of the Sales Tax Act, chapter 249, Session Laws 1937. Accordingly, upon the plaintiff's failure to collect and pay the tax pursuant to the statute, the tax commissioner notified him to appear and show cause why his sales tax permit should not be revoked and why he should not pay the tax assessed. The plaintiff protested and demanded a hearing. A hearing was had and the commissioner then made his order, denying plaintiff's protest and affirming the assessment. Thereupon the plaintiff, pursuant to § 13 of the Sales Tax Act, perfected an appeal to the district court. Testimony was taken on the issues made, the cause was submitted, and the court found for the plaintiff and ordered judgment accordingly. Judgment was entered and the tax commissioner perfected the instant appeal.

[70 N.D. 730] The Sales Tax Act, chapter 249, Session Laws 1937, provides:

"Sec. 1. (b) 'Sale' means any transfer, exchange, or barter, conditional or otherwise, in any manner or by any means whatsoever, for a consideration.

"(c) 'Retail Sale' or 'Sale at Retail' means the sale to a consumer or to any person for any purpose, other than for processing or for resale, of tangible personal property and the sale of steam, gas, electricity, water, and communication service to retail consumers or users, and shall include the ordering, selecting or aiding a customer to select any goods, wares, or merchandise from any price list, or catalogue, which said customer might order, or be ordered for such customer to be shipped directly to such customer. By the term 'processing' as used in this act is meant tangible personal property that is used in manufacturing, producing or processing and which becomes an ingredient or component part of other tangible personal property and which latter tangible personal property becomes subject to the retail sales tax. The sale of an item of tangible personal property for the purpose of incorporating it in or attaching it to other real or personal property otherwise exempt from the sales tax shall for the purposes of this act be considered as a sale of tangible personal property for a purpose other than for processing.

"(d) 'Business' includes any activity engaged in by any person or caused to be engaged in by him with the object of gain, benefit, or advantage, either direct or indirect.

"(e) 'Retailer' includes every person engaged in the business of selling tangible goods, wares, or merchandise at retail. . . .

"Section 2. There is hereby imposed . . . a tax of two per cent (2%) upon the gross receipts from all sales of tangible personal property, consisting of goods, wares or merchandise except as otherwise provided in this act, sold at retail in the state of North Dakota to consumers or users; . . .

"Section 3. There are hereby specifically exempted from the provisions of this Act and from computation of the amount of tax imposed by it, the following:

"(a) The gross receipts from sales of tangible personal property which this State is prohibited from taxing under the Constitution or laws of the United States or under the Constitution of this state.

[70 N.D. 731] "(b) The gross receipts from the sales, furnishing or service of transportation service.

"(c) The gross receipts from sales of tangible personal property used for the performance of a contract on public works executed prior to May 1st, 1935.

"(d) The gross receipts from sales of tickets or admissions to state, county, district and local fairs, and the gross receipts from educational, religious, or charitable activities where the entire amount of such receipts is expended for educational, religious, or charitable purposes.

"(e) The gross receipts from the sale by any school board of this State of books and school supplies to regularly enrolled students at cost."

Without further reciting the provisions of the act it is enough now to say that the tax thus imposed is a tax on the consumer. Jewel Tea Co. v. State Tax Comr. ante, 229, 293 N.W. 386.

The tax commissioner contends that when photographs are made and delivered to order for a money consideration, the transaction results in a sale of tangible personal property and accordingly the tax prescribed in § 2 of the act, quoted [298 N.W. 3] above, must be paid to the photographer by the person whose photograph is thus taken and, by the former, accounted for to the state. On the other hand, the respondent insists that there is no sale of tangible personal property; that the contract is, in fact, a contract for personal service; that the property in the photographs, the product of the transaction, is at all times in the person whose photograph is taken, and so no tax is payable.

The plaintiff testified as to the manner of the carrying on of his business, as to the cost of the material used -- cards, paper, chemicals etc., and as to the manner in which he makes his charges. His testimony is that the cost of the various materials used amounts to only from 1 1/2 to 2 1/2 per cent of the charge that is made for the finished photograph, paid by the person procuring it. The remainder of his charge is made for his services in the use of the requisite appliances and in the retouching and finishing of the negatives from which the likenesses are reproduced. He makes no charge for the folders provided to protect the photographs, though the cost of these is much greater than that of the paper and chemicals used in making the photographs. Nor does it appear that any charge is made for the studio [70 N.D. 732] and its appurtenances, or for...

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