Voss v. Gray

Citation70 N.D. 727,298 N.W. 1
Decision Date02 May 1941
Docket NumberNo. 6691.,6691.
PartiesVOSS v. GRAY, Tax Com'r.
CourtUnited States State Supreme Court of North Dakota

70 N.D. 727
298 N.W. 1

GRAY, Tax Com'r.

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, Atty. Gen., C. E. Brace, Asst. Atty. Gen., and T. A. Thompson, of Bismarck, for appellant.

Clair F. Brickner, of Fargo, for respondent.


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 section 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.

[1] The Sales Tax Act, chapter 249, Session Laws 1937, provides:

“§ 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 such 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. * * *

§ 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. * * *

§ 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.

(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 Company v. State Tax Commissioner, 70 N.D. ---, 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 section 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 and its appurtenances, or for the camera and other appliances. Plaintiff's testimony is that it is his practice when a customer appears and desires to have his photograph taken, to give the customer a sitting at which several exposures are taken. He advises the customer that there is a fixed charge for this service. Proofs are then made from the negatives which are developed and the customer indicates whether he desires photographs finished from these or any of them. If he does, a further charge is made for the photographs thus finished. Accordingly, there are two charges made. One for the sitting, and if the proofs developed are satisfactory, a further charge for the finished photograph.

Though the plaintiff testified at length touching the above matters, the record is silent as to what becomes of the negatives-whether he retains them or turns them over to his customers with the finished photographs. These negatives are the essential objects in the process of making the photographs. On them is expended the greater part of the service required of the photographer. To perfect them it is necessary that he possess and exercise artistic skill and technique. When perfected a great number of reproductions may be made from each negative.

[2] Plaintiff's chief contention is that under the plan and system in effect in carrying on his business he never at any time has any property in the finished photographs which he delivers to his customers. Accordingly, he contends that there is no sale within the definition of sale contained in the statute and that any consideration he may receive is in return for his services and the exercise in the performance of those services of his artistic ability and skill.

We are, however, unable to agree with these contentions. When an individual desiring photographs goes to a studio and arranges to have his likeness taken and reproduced, the ultimate result of the transaction is the sale of the photographs. Until they are delivered or paid for they belong to the photographer. The relation between the photographer and his customer, who contracts to have his photograph taken and finished, is a confidential one and there is implied in the contract of employment an agreement that no photographs thus taken and finished may be sold or delivered for any purpose to any other person than the one who makes the contract without the latter's consent. See, Moore v. Rugg, 44 Minn. 28, 46 N.W. 141, 9 L.R.A. 58, 20 Am.St.Rep. 539;Corliss et al. v. Walker Co. et al., C.C., 57 F. 434 and 64 F. 280, 31 L.R.A. 283; Pollard v. Photographic Company, L.R. 40 Ch.Div. 345; Melville v. Mirror of Life Company, 2 Chancery 531; Murray v. Heath, 1 B. & Ad. 804, 109 Eng.Rep. (Full Reprint) 985. We need not here determine to whom in the ordinary case the...

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19 cases
    • United States
    • United States State Supreme Court of North Dakota
    • June 4, 2002
    ...and judicial deference to longstanding administrative agency interpretation of a statute. The majority also ignores Voss v. Gray, 70 N.D. 727, 298 N.W. 1 (1941), in which this Court concluded there was legislative acquiescence to the Tax Commissioner's longstanding interpretation of "tangib......
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