Ready Trucking, Inc. sued BP Exploration & Oil Company flk/a BP Oil Company for breach of contract, claiming that BP breached the parties’ agreement by failing to collect and remit “all applicable sales tax” on Ready’s numerous purchases of diesel fuel. Both Ready and BP filed motions for summary judgment. The trial court granted BP’s motion and denied Ready’s motion. Ready challenges both rulings.
Ready Trucking is an interstate motor common carrier and has a truck terminal in Ellenwood. At this terminal, Ready maintains two 10,000-gallon storage tanks for diesel fuel for its truck fleet. Since 1989, Ready has been a customer of BP and its predecessor, Gulf Oil Company, and regularly purchased diesel fuel from BP. When the account was established, Ready sent to BP a Georgia ST-5 Sales and Use Tax Certificate which provided that Ready was exempt from taxation on the purchase of certain enumerated goods. Ready had a business practice of sending a certificate to certain vendors in case that vendor had items that would be tax-exempt if Ready purchased them.
Between April 1, 1994, and December 31, 1996, the period at issue, Ready made approximately 150 separate purchases of diesel fuel from BP. For each sale, BP sent an invoice to Ready showing the price, amount of diesel fuel being purchased, and the various taxes included in each transaction. Although by law, as the agent collecting taxes on behalf of the State, BP was required to collect and remit all applicable taxes owed on its sales, BP did not collect or remit a required one percent state sales tax and a one percent local tax because BP mistakenly believed, based on Ready’s ST-5 Certificate, that Ready was exempt from having to pay these two taxes on diesel fuel purchases.
During a sales and use tax audit of Ready’s accounts conducted in early 1997, the Georgia Department of Revenue (“Department”) discovered the error. The audit revealed the shortfall in taxes paid by Ready between April 1, 1994, and December 31, 1996. Consequently, the Department billed Ready $37,801.56, including a $25,560.55 assessment in back taxes owed for fuel purchased by Ready from BP during that period as well as $12,240.91 in penalties and interest.
After the trial court entered summary judgment for BP and denied Ready’s motion, Ready filed this appeal.
1. Although the State, under OCGA § 48-8-35, could have held BP liable for the back taxes instead of Ready, it was authorized to choose to recover from Ready under OCGA § 48-8-30 (g), and Ready has now paid the taxes and penalties. See Dittler Bros., Inc. v. AMR Intl.,
2. Ready claims that under the terms of the approximately 150 sales agreements between Ready and BP, BP was required to pay these two taxes to the proper authorities and that it breached that agreement. It also claims that BP cannot hide behind the tax exemption certificate because BP had the burden of ensuring that the proper taxes were paid.
Each purchase was made based on either an oral or facsimile quote of the price per gallon for the fuel. The parties do not contend that the discussion or the facsimile ever mentioned the applicable taxes. However, the parties do not dispute that as a retail seller, BP incurred a statutory obligation to collect and remit all applicable sales taxes to the State. OCGA § 48-8-30 (b). This obligation necessarily became a term of the agreement because “laws in existence at the time a contract is executed are part of that contract.” (Citation and punctuation omitted.) Wilensky v. Blalock,
By claiming that it relied on Ready’s ST-5 exemption certificate, BP essentially argues that the parties had an agreement to the contrary. But it is beyond dispute that the exemption certificate does not expressly state that Ready is exempt from the tax on its purchase of diesel fuel. Further, the certificate states: “The supplier must exercise ordinary care to determine that the tangible personal property
But, each invoice sent as a confirmation of each order shows beyond dispute that BP did not in fact charge Ready the two forms of sales tax at issue in this case on any of the approximately 150 transactions. Don Dougherty, the president of Ready, while reviewing these invoices during his deposition, readily admitted, “[w]ell, obviously it says that there is no sales tax charged on it, that it’s sales tax exempt. And the next line is the exemption certificate number, which confirms the number on the Georgia use and sales tax exemption certificate.” Although Dougherty conceded that he had probably seen the invoices before being deposed, he explained he had not realized the exemption appeared on them. He further testified that he, and therefore Ready, was aware at the time that Ready was not entitled to such an exemption and he would have expected Ready’s office manager to have inquired why BP exempted Ready from the sales taxes. Ready’s office manager, the sole employee responsible for accounts payable, testified that she merely verified the price per gallon and paid no attention to the sales tax information on the invoices. Ready never contacted BP to question the exemption.
Under these circumstances, the Georgia codification of the Uniform Commercial Code resolves this dispute. Article 2 of the UCC governs transactions involving the sale of goods. See Mail Concepts v. Foote & Davies, Inc.,
if within a reasonable time a writing in confirmation of the contract and sufficient against the sender is received and*704 the party receiving it has reason to know its contents, it [constitutes a writing enforceable] against such party unless written notice of objection to its contents is given within ten days after it is received.
OCGA § 11-2-201 (2). See Jem Patents v. Frost,
Whether a party is a merchant under the UCC is a question of law for the court. Perez-Medina v. First Team Auction,
It is undisputed that BP sent 149 invoices to Ready which confirmed the fact that BP was not withholding either of the two missing taxes and that Ready never revoked its acceptance, in whole or in part, of the terms appearing on the invoices within ten days as required by OCGA § 11-2-201 (2). See Jem Patents,
3. For the same reasons, Ready’s contention that the trial court erred by granting summary judgment to BP lacks merit. See Odem,
Judgment affirmed.
Notes
At the time of the sales, BP knew that motor fuels were subject to both of the two taxes at issue in this case. And, Gavin Atkinson, BP’s tax director, testified that BP discovered that the ST-5 exemption did not apply to diesel fuel sales to Ready after Ready filed suit and BP researched the issue.
As Ready correctly points out, one is free to enter into an agreement to reimburse another for a tax obligation, as long as the State ultimately receives the proper amount of tax. See Chilivis v. Rogers Oil Co.,