text: Mart Realty, Inc. v. Norberg, 111 R.I. 402 | Casetext Search + Citator
  Sears, Roebuck Co. v. Norberg
  January 5, 1973. Petition for certiorari was considered and held pending filing of opinion in Mart Realty,…
  Randall v. Norberg
  A conclusion will not be upheld, however, when it stands in contradiction to the undisputed facts. See Mart…
  Full title:MART REALTY, INC. vs. JOHN H. NORBERG, Tax Administrator
  111 R.I. 402 (R.I. 1973)
  303 A.2d 361
  In Mart Realty the parties had stipulated that, once certain items were deposited in the mail, they were beyond the control of the taxpayer.
  Summary of this case from Randall v. Norberg
  1. TAXATION. Use Tax. Persons Liable for Tax. Receipt of Personal Property. Under so-called use tax which imposes a tax upon the storage, use, "or other consumption" of tangible personal property, court holds that receipt of such property by the taxpayer in this state is a necessary, integral and indispensable part of "other consumption" as ordained by pertinent statutory provisions. G.L. 1956 (1970 Reenactment) §§ 44-18-20, 21.
  2. TAXATION. Use Tax. Application to Other Than Ultimate Consumer. Where requisitioning, printing, and sending of circulars were under sole direction of parent Delaware Corporation from its advertising department in Massachusetts, and circulars were mailed to "Occupants" in Rhode Island area by direct mailing firm in New Hampshire, the cost of which was ultimately paid by petitioner, a subsidiary of the parent corporation operating in Rhode Island, taxing authority was not justified in imposing tax on petitioner under statute which authorized a tax based on consumption. G.L. 1956 (1970 Reenactment) §§ 44-18-20, 21.
  3. USE TAX. Basis for Imposition. Control Theory. Assuming, as did the trial justice, that use tax imposed upon distribution of advertising circulars in Rhode Island was valid under theory that there was a bringing about of control which constituted a taxable event, appellate court points out that, since the question of control was one of fact to which the parties had stipulated, consistent therewith the placing of the circulars in the mail by a direct mailing firm in New Hampshire addressed to "Occupants" rendered them, subject to prevailing postal regulations, beyond, for practicable purposes, the control of corporation assessed a Rhode Island use tax. G.L. 1956 (1970 Reenactment) §§ 44-18-20, 21.
  CERTIORARI petition to review judgment entered in Superior Court relative to a tax imposed upon petitioner, heard and petition granted, judgment quashed, and case remitted to Superior Court for entry of judgment in accordance with opinion.
  Tobin, Decof, LeRoy Silverstein, Michael A. Silverstein, Matthew T. Marcello, III, for plaintiff.
  Richard J. Israel, Attorney General, W. Slater Allen, Jr., Special Asst. Attorney General, Perry Shatkin, Chief Legal Officer, Division of Taxation, for defendant.
  The facts are not in dispute. We shall refer only to such facts as are pertinent to the determination of this case. Mart Realty, Inc., the taxpayer here, is the wholly-owned subsidiary of Mammoth Mart, Inc., a Delaware corporation, hereinafter referred to as "Mammoth," with executive offices in East Bridgewater, Massachusetts. During the period April 1, 1967 to August 31, 1970, Mammoth's advertising department in East Bridgewater ordered from a printer doing business in Lowell, Massachusetts, certain advertising circulars. After the circulars were printed, they were sent by the printer via an independent carrier chosen by the printer, to Mailways, Inc., hereinafter "Mailways," a direct mailing firm in Manchester, New Hampshire, for the purpose of being mailed to Rhode Island residents who reside in the taxpayer's area. At Mailways the circulars were addressed to "Occupants" — not to specific individuals — followed by such occupant's address in Rhode Island. The mailing lists from which the addresses were taken are the exclusive property of, and are controlled by Mailways. Neither the taxpayer nor Mammoth possessed any ownership interest in or exercised any dominion or control over those mailing lists. Mammoth does reserve the right to limit the geographical area or areas to be covered by any one mailing distribution. After the circulars were addressed, they were delivered by Mailways directly to the United States post office in Manchester, New Hampshire, postmarked third-class mail, and sent under bulk mailing rates to the Rhode Island residents. When the circulars were delivered to the United States post office and deposited in the United States mail in Manchester, they were beyond the control of Mammoth, the taxpayer and Mailways, but are subject, however, to postal regulations in effect at such time of delivery and deposit. Once a circular is placed in the post office box of the boxholder or delivered to the rural free delivery box, or put in the mail slot at the house, neither Mammoth nor the taxpayer owns the circular.
  The taxpayer, being aggrieved by the assessment made by the Division of Taxation, requested a hearing in accordance with the provisions of G.L. 1956 (1970 Reenactment) § 44-19-17. After such hearing the tax administrator filed a written decision in compliance with the requirements of § 42-35-12. On the basis of certain findings of fact made by him, he held that the excise tax imposed by §§ 44-18-20 and 44-18-21 is a tax imposed on the use, storage or other consumption, and that in this case it was not imposed on storage or use, but on consumption. He affirmed the tax assessed by the Division of Taxation.
  General Laws 1956 (1970 Reenactment) § 44-19-17 reads as follows:
  "Hearing by administrator on application. — Any person aggrieved by any assessment, deficiency or otherwise, shall notify the tax administrator in writing within ten (10) days from the date of mailing by the tax administrator of the notice of such assessment and shall request a hearing relative thereto; and the tax administrator shall, as soon as practicable, fix a time and place for such hearing and shall, after such hearing, determine the correct amount of the tax, interest, and penalties; provided, that when a jeopardy assessment or determination shall be made such hearing shall not be had unless the jeopardy assessment with penalties and interest shall have been paid. The tax administrator may decrease or increase the amount of any determination.
  General Laws 1956 (1970 Reenactment) § 44-18-20 in pertinent part reads as follows:
  Thereafter the taxpayer, being aggrieved by the decision of the tax administrator, filed a petition in the Superior Court under § 42-35-15 alleging that the assessment was erroneous and praying for relief therefrom. In his decision affirming the action of the tax administrator, the trial justice said that each of the following would constitute consumption, namely, (1) the receipt and reading of these circulars by an occupant, (2) the receipt and discarding of the circulars, and (3) the receipt and tearing up or destruction of the circulars by the ultimate occupant. He held that the tax administrator was correct in determining that consumption took place in the state.
  We agree with the trial justice's statement that the following situations would constitute consumption, namely, "the receipt and reading," "the receipt and discarding" and "the receipt and tearing up or destruction of the circulars by the ultimate occupant." In each of these instances receipt of the materials, that is, physical possession, is an integral part of the consumption. While all of these definitions may apply to the ultimate recipient, the question remains whether they apply to petitioner here. In other words, even if we assume there was a consumption in Rhode Island, the question remains whether there was a consumption in this state by petitioner who never "received," "tore up," "destroyed," "discarded" or "wore away the advertising circulars." Since petitioner never received the circulars in this state, we fail to see how petitioner could be a "person * * * otherwise consuming in this state."
  We believe that the reasoning of the court in the Ohio case is applicable here.
  See also Montgomery Ward and Co. v. Department of Revenue, Kentucky Board of Tax Appeals No. K67-R-9, Order K-1172, June 26, 1968, C.C.H. 201-035.
  The trial justice concluded that "* * * the consumption by the taxpayer in this instance consisted of bringing about this delivery to Rhode Island occupants * * *." We find nothing in the statute which authorizes such a conclusion. As we have previously stated, §§ 44-18-20 and 44-18-21 are clear and unambiguous. Section 44-18-20 imposes an excise tax " * * * on the storage, use, or other consumption in this state of tangible personal property * * * purchased from any retailer * * *." And § 44-18-21 imposes liability for such tax upon "[e]very person * * * otherwise consuming in this state tangible personal property * * *." Nowhere does the statute mention "the bringing about" of the consumption. The statute mentions only consumption.
  On the basis of the record before us we must conclude that there was no control over the circulars once they were deposited in the United States mail in Manchester, New Hampshire, and there was no agency relationship between the taxpayer and the United States mails which resulted in the taxpayer "otherwise consuming" the circulars "in this state." We agree that the trial justice was called upon only to determine whether the tax administrator had acted in an unreasonable, clearly erroneous, or unlawful fashion in assessing the facts in this case but, as we have stated, it was error to impose the tax in question on this taxpayer and therefore the trial justice should have reversed the decision of the tax administrator.
  Mr. Justice Powers participated in the decision but retired prior to its announcement. Mr. Justice Doris did not participate.