State Ex Rel. Clayburgh v. American West Community Promotions, Inc.

2002 ND 98 Dakota, By of North

STATE

Through Commissioner, its CLAYBURGH, Appellee.

Rick

AMERICAN WEST COMMUNITY INC.,

PROMOTIONS,

Appellant.

No. 20010223.

Supreme Court of North Dakota.

June

VandeWalle, C.J., filed a concurring

opinion. J.,

Sandstrom, dissenting filed a opin-

ion.

Stacey (argued), Tronson C. the Tax Office, PLLP, ND, Law Fargo, appel- for lant. (argued)

Daniel Lucian Rouse and Rob- (appeared), ert W. Special Wirtz Assistant General, Attorneys Wayne K. Ste- (on brief), nehjem Attorney General, Bis- marck, ND, appellee. for MARING, provides which Justice. tangible personal are taxable as sales of Community Pro- American West property.

motions, from a court appeals Inc. district Judge affirming an order of the North Administrative Law judgment (“ALJ”) rejected argu- American which West’s Dakota State Commissioner $20,883.51 in ment and concluded was liable American West liable held $20,883.51 in sales tax to the state of tax. reverse the decision We Tax Com- North Dakota. The Commissioner issued district court and remand to the adopting the ALJ’s recommended proceedings for further consis- order missioner law on opinion. findings fact conclusions of tent with this February appeal- 2001. American West ed the Commissioner’s order the district I February July court on 2001. On Community West Pro- [¶ American 2] judgment the court district issued (“American West”) motions, is an ad- Inc. order, which affirmed the Commissioner’s repre- firm that vertising marketing and appealed and American West to this retail, food, approximately sents and Court. North merchants in Dakota. service produces promotional cou- American West II pon of its clients and books on behalf Our review a decision [¶5] ways, the markets books various includ- is by agency governed ads, mail, an administrative ads, ing newspaper radio direct Ringsaker N.D.C.C. 28-32-19. See through promotional telephone cam- Director, Dept. Transp., v. N.D. sell each and paign. books for $43.95 ¶ 127, 5, limit ND 328. We coupons coupon entitling contain hold- our to the record before the admin review prod- free variety ers to a of discounts and not agency, istrative and we do review the participating and services from mer- ucts See id. Sec decision the district court. State, September chants. 28-32-19, N.D.C.C., requires tion us to through its Tax Commissioner agency’s unless: affirm decision (“Commissioner”), conducted a sales and As a 1) use tax audit of American West. preponderance does evidence audit, 2) result of the the Commissioner con- support agency’s findings; not American had made taxable cluded West support agency’s findings fact do not Dakota, in North coupon 3) sales of its books decision; of law and its its conclusions pay failed sales tax. American but the consti- agency’s decision violates challenged 4) this conclusion re- West rights appellant; tutional quested hearing. an administrative Adminis- comply did not with the Agencies pro- Act in its trative Practice hearing, At the administrative 5) proce- ceedings; agency’s rules or argued its books coupon West American appellant have not afforded dures and, personal tangible are not 6) agency’s decision hearing; fair thus, not to sales tax under is in accordance with law. not Furthermore, § 57-39.2-02.1. N.D.C.C. ¶ Moore, argued v. 1998 ND West the Commissioner Dworshak American Moore, Greenwood v. statutory authority promulgat- (quoting exceeded (N.D.1996)).1 81-04.1-01-28, ing 545 N.W.2d N.D. Admin. Code affirming grounds for not an adminis- note 28-32-46 adds addi- tional We III statutory language. See Consol. Tel. v. ¶ Corp., Western Wireless 209, 7, 2001 ND argues American West 699; Rocky Mountain Oil & 637 N.W.2d in concluding erred Commissioner was Conrad, Gas Ass’n 405 N.W.2d liable for sales tax because when it sells a (N.D.1987). coupon selling tangible per book it When the at statute issue is property, intangible right nature, sonal complex but technical this def- receive discounts its clients. The appreciable, erence is and we will be reluc- responds that Commissioner the issue in tant to substitute our interpretation case not whether the interpretation. the Commissioner’s intangible property, ¶ Tel, Indust., Consol. NL 7; Inc. v. Commissioner’s promul whether the act in Comm’r, State Tax Admin. gating N.D. Code 81-04.1-01-28 (N.D.1993). However, an administra- scope beyond was of the Commission tive agency’s construction of a statute is statutory er’s authority. much weight accorded less only when the issue be resolved a court is a non- [¶ 7] The issue of whether of law. See 2B Norman question technical correctly interpreted Commissioner a stat J. Singer, Statutory Statutes and Con- question ute is a of fully law which is (6th struction 49:04, Rev.); 24 ed. 2000 by See appeal. reviewable this Court on Co., see also Light Kansas Power and X-Ray Northern Inc. v. ex Co. v. State rel. Hanson, Corp. Commission, State (N.D.1996).2 733, 394, 542 735 237 Kan. N.W.2d (1985) The P.2d interpretation (stating Commissioner’s of a that deference is statute entitled to some deference if to agency interpretations it administrative is unambiguous does not contradict clear and not required where the issue “is not tech- decision, agency August trative effective pay ed in North Dakota must use tax appeal 2001. American West filed regardless its on those materials who owns of however, regulation, presents Commissioner’s decision them." This on March Therefore, problems ambigu- former N.D.C.C. same as the 29-32- statute: ous of applies. give use the term "contractor.” We weight "practical some to the construction agency of a administering statute it” 2. The dissent our on asserts reliance Northern give weight long-contin- and we also "to the analysis X-Ray "oversimplifies" the in this ued, practical placed construction on stat- X-Ray case because contends Northern did charged duty utes officers with the of not acquiescence involve either applying them.” The record before us long- administrative rule or deference to a unambiguous "long-contin- no shows nor standing agency interpretation administrative Moreover, interpretation. ued” we will not Contrary of a statute. to the dissent's asser- long-standing agency interpre- to even a tion, defer X-Ray following Northern contained the that, contrary tation is to the intent concerning giv- discussion deference to be legislature. Therefore,we will not un- agency's defer interpretation en to an of a statute as reservedly agency interpretation to the evidenced in an administrative rule: “contractor." Our at conclusion is odds with that of the (citations omitted) X-Ray, Northern at 738 Commissioner, effect, argues, who added). (emphasis It was after the Court anyone who a enters contract to install determined that it would not defer "unre- tangible personal property into real estate is servedly” to N.D. Admin. Code 81-04.1- a contractor under section 57-40.2-03.3. 04.20 that it then addressed the issue of The Commissioner asks us to X-Ray whether Northern defer was a "contractor” "contractor," agency's interpretation meaning within the of the statute. See id. 81-04.1-04.20, NDAC, points ("The to section question remaining is whether North- says which contractor or "[a] subcontractor ern is a pro- contractor under the definition installing 43-07-01(3)."). materials into real locat- vided in section agency’s 9] An administrative nical, statutory ques- of a construction also interpretation N.Y. statute is entitled law”); Dworman v. Matter tion of re weight Re- if Community additional Housing & State Div. of contemporaneous after newal, enacts statute 704 N.Y.S.2d 94 N.Y.2d (“[W]here, (1999) statute and continuous construction 725 N.E.2d statutory agency. an administrative See Schmut here, pure question is one Bureau, Comp. 78 N.D. on zler v. Workmen’s dependent only accurate interpretation (1951); intent, Payne v. there is apprehension of compe- Bd. the Teachers’ Ins. & Ret. rely any special Trustees little on basis Fund, expertise of administrative tence or (1948). Payne, this Court discussed the regulations are interpretive and its agen given should be to an much less deference that to be accorded therefore (citation omitted) (internal in cy’s and continuous quota- contemporaneous weight.” omitted)). terpretation Legisla when the statute tion marks subsequent to the ture reenacts the statute in this case is issue [¶8] interpretation: correctly inter whether the Commissioner disputed agency’s It [the “[t]angible personal preted phrase interpretation] has been the administra- property, consisting of practice adoption since the tive See N.D.C.C. 57-39.2- merchandise.” time the During legislature law. 02.1(l)(a). made many has met sessions and inter pure statutory phrase is matter of to the law but none several amendments presents a nontechnical pretation and regard procedure. There Co., X-Ray question of law. See Northern leg- strong presumption that the least (rejecting 542 N.W.2d at Commis approved the islature knew and contem- “con interpretation of the word sioner’s poraneous practical construction and tractor”). Thus, in this the issue case does placed upon the officers [statute] complex and not involve such technical charged its administration. with appreciable level as to warrant matters inter to the Commissioner’s deference entitled to “Executive construction is See, Corp. e.g., Kinney Shoe pretation. im- weight where it has been additional Hanson, ex rel. 552 N.W.2d State byas pliedly legislature, indorsed (N.D.1996) (Commissioner’s conclusion of the statute or the the reenactment inter-company transfers which reduce one, in the passage of a similar same liability part of a sub federal tax are not ” terms,.... substantially same tax was entitled sidiary’s state deduction Similarly, in Payne, See at 557-58. Indust., deference); NL appreciable to Schmutzler, this Court stated: (Commission Inc., at 146-47 en- and the Following codification treating operating net loss er’s method for statute], and its reenact- actment of corporation [the was entitled es of a multi-state Compensation deference); ment ... the Workmen’s Western Gas appreciable Resources, interpretation Bureau continued Heitkamp, Inc. v. (Commissioner’s (N.D.1992) the limita- this Act in accordance with de Chapter in S.L.1929. recov tions set out termination that field condensate as un- treated the statute The Bureau gas from natural was oil within the ered contempo- changed. practical tax enti meaning of the oil extraction was deference). placed upon the construction raneous appreciable tled to 260, S.L.1929.”); charged the officers its Singer, supra statute ter see also may (“A 49:08, be considered in de- § enforcement contemporaneous inter- termining meaning of the law. pretation is one made or soon after the enactment.”). time of Nor we Schmutzler, con- at 652. agency interpre- cerned with continuous Legislature reen has in tation this case because between the § 57-39.2-02.1 four times acted N.D.C.C. years 1984 and there no admin- was amended N.D. Ad since Commissioner providing istrative rule for the taxation of pro § Code 1989 to min. 81-04.1-01-28 books, of coupon prior sales coupon of sales of vide the taxation sales of books were only taxed tangible personal proper such by persons when books were “sold However, ty. the 1989 amendments to engaged selling taxable § commodities or N.D. Admin. were Code 81-04.1-01-28 promulgated years services.” after Admin. Code 81-04- applied 1984); first the sales tax to (repealed sales 02-71.2 see June also “[t]angible (Oct. personal property, consisting of N.D. Admin. Code 81-04.1-01-28 wares, 1986). goods, or merchandise.” See 1935 Thus, Payne the rule established 276, § ch. 2 (applying N.D. Sess. Laws and Schmutzler is afforded much less “tangible personal tax to sales weight in supra this case. See Singer, consisting property, (“[T]he 49:08, rules that an adminis- merchandise,”). Thus, unlike the adminis trative interpretation of an act is entitled interpretations Payne at issue in trative may controlling weight not be invoked Schmutzler, we are concerned where the was neither con- contemporaneous with a construction of a contemporaneous tinuous nor with the en- (“It Payne, statute. See 35 N.W.2d at 557 statute.”); actment of the Singer, see also disputed agency’s interpre [the is not 49:04, (listing supra proximity in time prac tation] has been the administrative enactment of the aas factor statute law.”); adoption of tice since the bearing on the agen- conclusiveness of the Schmutzler, 652 (“Following 49 N.W.2d at statute). cy’s interpretation of the [the codification the enactment of 11] The reenactment statute], [¶ doctrine is also and its reenactment ... the weight afforded less in Compensation Workmen’s Bureau this case because contin in interpretation nothing ued the this Act in there is history of accor the of Chap- out in dance the limitations set or in 57-39.2-02.13 the record 11, However, 3. are that show Com- July There documents the Commissioner dated 1989. provided missioner the interim the Administrative the fact that eleven members of the Ad- Rules Committee a con- present memorandum which ministrative Rules Committee at the 11, 1989, forty July the of meeting tained text different administra- object did not to the 1989, 11, July meeting tive rules at a of that 1989 amendments to N.D. Admin. 81- Code committee. See Minutes Legisla- Administrative 04.1-01-28 is not evidence that the of Comm, 11, 1989); appendix (July Assembly Rules K approved tive as a of whole Eklund, State Memorandum Tax Commissioner dat- amendments. See Eklund v. 538 of 11, 182, July (N.D.1995) ed (noting 1989. 1989 version of N.D. N.W.2d Admin. Code 81-04.1-01-28 was one of the sup- the Administrative Rules Committee memorandum, forty ported rules in and Ad- setting the "income shares” model for object Legislative ministrative Rules Committee did not support Assembly child while the adoption any thirty- rejected to it or of of other the use of the “income shares” mod- el). Furthermore, certainly nine rules listed See memorandum. this fact is not Minutes Rules 8 Legislative Assembly Administrative Comm. evidence of what the in- of 11, 1989); (July Memorandum State Tax applied tended when first the sales tax to

203 amendments); to any tion if it fails offer Legisla- indicate the to Court before to the 1989 amendments Capital Coop., Electric Inc. v. Public Ser- ture considered during § 81-04.1-01-28 N.D. Admin. Code (N.D. Comm’n, 534 vice 592 N.W.2d § 57- of N.D.C.C. any the reenactments v. N.D. Workers 1995) (same); Effertz Singer, supra 49:09, 109- 39.2-02.1. See Bureau, (N.D. Comp. 525 693 (“[The doctrine] does 10 reenactment v. Northern States Power Co. 1994); leg- that the nothing indicates apply where Comm’rs, R.R. Board of 71 N.D. directed to the islature had its attention (1941) (“And construing 'in N.W. upon reen- interpretation administrative meaning the court statute doubtful is no indication Where there actment. weight long-continued give will to practical construc- to which the extent placed practical construction thereon followed, questiona- rule has tion was duty of charged with the execut- officers omitted).4 value”) (footnotes ble statute,’ judi- ing applying Nonetheless, we have cial such construction of statute held, the doctrine of through court, legislative acqui- inferior on acquiescence, that even inaction judi- departmental escence both subsequent to an part of (citations omitted)). cial construction.” entitles interpretation of statute agency Nevertheless, the reenactment doctrine interpretation additional agency’s merely legislative acquiescence Eklund, v. See Eklund weight. statutory interpretation and can be aids in (N.D.1995) (legislature is compelling overridden more consider- presumed to know the construction its X-Ray, Northern acquiesces in that construc- ations. See statutes and Congress was "[tjangible personal property, consist- some indication that contains sales merchandise,” wares, goods, approved administrative ing aware of and (citation omitted)); § 2 Isaacs v. N.D. Sess. Laws ch. construction.” 1935. Bowen, (2d Cir.1989) "tangible sales 865 F.2d (applying the tax ("Mere consisting reenactment is insufficient. It must personal property, merchandise,”). approval appear Congress expressed also agency interpretation.”); AFL-CIO v. Brock, (D.C.Cir.1987) 835 F.2d require courts evidence of ex- Numerous ("This consistently required has court also press legislative approval inter- of an approval express congressional of an adminis- significant pretation they will attribute before be viewed as if it is to trative weight to the reeanctment doctrine. See mandated.”); Simplot statutorily Co. Commissioners, J.R. States v. Bd. United. Commission, 849, 820 110, 135, 120 Idaho State 98 S.Ct. 55 L.Ed.2d 148 U.S. ("[W]e (1991) require 'some- P.2d (1978) impermissible (stating "it is legislative thing actual more' to determine approval of from the unex- draw inferences merely reenacting the statute after intent than Congress," Congress plained inaction of (em- an it has received construction.” agency’s presumed is to have ratified an in- State, original)); Inc. v. phasis in GE Solid history terpretation where "the of Tax., Director, N.J. Division Congress re-enactment showed that of (1993) ("Where regulation A.2d agreed interpretation”); that ABC Rent- ordinary primary and is with the Commissioner, inconsistent als 142 F.3d statutory language, meaning it should Cir.1998) of the (10th ("[R]eenactment without disregarded, subsequent despite the reen- be statutory language change in and relevant statute, at in the absence actment of the least Congressional are at best unre- mere inaction showing specifi- a clear Congressional of intent to liable indications of cally regulation approved and considered the of adopt an construction administrative re-enacting provision.” (emphasis in Congressional ap- in The inference of statute. stronger history original)). proval when (“[W]e long- exclusively agricultural pur- will not defer to even a used for poses. that is standing agency interpretation con- trary the legislature.”); to the intent of furnishing b. The or service of com- (“Executive Payne, 35 at 558 con- munication services or steam other weight entitled to additional struction is processing agri- than steam used for impliedly been indorsed by where it has products. cultural legislature, as the reenactment of places c. Tickets or admissions one, passage of a similar statute or amusement or ath- entertainment or substantially the in the same or same events, including letic amounts ” terms, added)); (emphasis .... Schmut- charged participation for in an amuse- (“The zler, practical at 652 and ment, entertainment, or athletic activ- contemporaneous placed upon construction ity, including furnishing charged the statute the officers with its bingo any playing cards may enforcement be considered deter- machine for or amusement entertain- mining (emphasis meaning law.” response ment in the use coin. of a (stat- added)); 49:07, Singer, supra imposed by ap- The tax this section agency’s long-standing ing inter- percent plies only eighty pretation be can overridden more com- gross receipts coin-op- collected considerations). pelling erated amusement devices. Magazines periodicals. d. and other Having addressed leasing renting e. The or of a hotel weight afforded to the Commissioner’s in or or motel room tourist court accom- terpretation 57-39.2-02.1(1), of N.D.C.C. modations. we now turn to the statute itself. Section leasing renting f. The or 57-39.2-02.1(1), N.D.C.C., types lists the personal property the transfer title transactions to sales tax: subjected to which has been to a Except expressly pro- as otherwise chapter retail sales tax under this or a 2 for vided subsection sales of mobile chapter tax use under 57-40.2. homes used for residential or business g. Coal mined in this state and used purposes; for of farm machinery, heating buildings, except for coal machinery parts, farm repair irriga- in agricultural processing used sug- or equipment exclusively agri- tion used refining plants. ar beet cultural purposes; except as other- 57-39.2-02.1(1). Nowhere provided in expressly chapter, wise 57-39.2-02.1(1) section any is there refer imposed percent there tax of five coupons ence to or books. Section upon gross receipts retailers from 81-04.1-01-28, Code, pro N.D. Admin. including all sales at retail leasing or part, coupons, coupon vides in “[s]ales renting tangible personal property books, and other which certificates entitle section, provided in this within this state price holder to a discount other following to consumers users: advantage purchase on the of goods or services,

a.Tangible personal property, con- goods whether or not the or ser wares, goods, tax, sisting of or merchan- or vices are sales use dise, except used tangible personal mobile homes as prop taxable sales of erty.” Thus, residential or purposes business in enacting N.D. Admin. farm machinery, machinery 81-04.1-01-28, § farm re- Code the Commissioner pair parts, irrigation equipment merely explain procedure did not a coupon personal tute sales of tax to sales of the sales applying 57-39.2-02.1(l)(a). § under N.D.C.C. books, coupon concluded that sales of but per “[t]angible sales of books constituted primary goal Our in [¶ 14] wares, goods, of consisting property, sonal statutory is to construction ascertain the merchandise,” 57- under N.D.C.C. or Legislature. intent of the See Western 39.2-02.1(l)(a). coupons books If sales of Resources, 489 at 872. In Gas N.W.2d per “[tjangible sales of do not constitute intent, Legislature’s ascertaining the we wares, goods, consisting of property, sonal plain language first of look merchandise,” on such an action or each of statute give statute word would amount to part of the Commissioner ordinary meaning. its See Estate of ¶ of an unauthorized amendment N.D.C.C. 226, 7, Thompson, 1998 ND 586 N.W.2d 57-39.2-02.1(1). As in explained we construe the statute as whole We Comp. Moore v. N.D. Bureau: Workmen’s provisions of its if give effect each possible. language Id. If the of the statute regulations power to make is Since unambiguous, ig is clear and we cannot nature, legislation may in administrative pretext nore that under language guise of enacted under the its be pursuing spirit its because the by issuing “regulation” which exercise presumed from intent is clear the face of with, alters, harmony is out of or which However, if language Id. statute. extends, limits, being or the statute ad- ambiguous, may we statute is resort ministered, or which is inconsistent with the statute. Id. interpret extrinsic aids to expression of the lawmakers’ intent ambiguous tax statute is so “[I]f a statutes. The administrative other respect intention with power must exercised within officer’s be doubtful, is meaning the statute provision the framework of the bestow- must resolved in favor of the doubt be him and ing regulatory powers on Oil, Rocky Mountain taxpayer.” he adminis- policy of the statute which at 281. N.W.2d policy in ters. He cannot initiate tangible personal sense, regard to fundamentally pur- [¶ 15] must true property, plain language of N.D.C.C. by the policy predetermined sue a same 57-39.2-02.1(1) provides: from he his author- power which derives percent ity. imposed a tax of five [T]here gross upon receipts retailers (N.D.1985) (quoting N.W.2d including leasing all retail Pharm., Properties N.D. Board Med. v. renting tangible personal property (N.D.1956)). regula- A section, provided within this state in this tion exceeds the Commissioner’s which following to consumers users: authority or statutory conflicts with the personal property, con- Tangible a. implements void. See statute sisting goods, or merchan- ¶ 128, 30, Traynor, 1997 Little v. ND .... dise 766; Tracy, Little not, however, has defined Legislature (N.D.1993). Thus, the determina- personal property, “[t]angible the phrase Commissioner exceed- tion of whether the wares, or merchan- consisting authority statutory promulgating ed dise,” 57-39.2- as used coupon rule sales of books as which taxes 02.1(l)(a). tangible personal property neces- sales of provided a has sarily turns on the resolution the issue “tangible personal property” consti- definition whether (7th use tax Dictionary ed.1999); North Dakota’s statutes. As Law see 57-40.2, Omdahl, used in ch. N.D.C.C.: also Bismarck Tribune Co. (N.D.1966) (stating property” means: “Tangible personal personal tangible property “personal Tangible goods, a. the fur- including handled”). property that can be touched or cards, bingo wares, nishing of and mer- Thus, 57-39.2-02.1(l)(a) § N.D.C.C. could chandise, gas, when furnished or literally be every construed to delivered to consumers or users within transaction which per- the transfer of state, vulcanizing, this and the sale of sonal property that can be touched or han- recapping, retreading services for However, dled occurs to sales tax. tires. question of item whether an falls within leasing renting tangible b. The or the literal tangible personal definition of personal sale, use, property, storage, property is question distinct or consumption which has been a tangible whether taxable personal sale of subjected previously ato retail sales or property place. has taken example, For use tax in this state. items such as promissory notes and stock c. purchase magazines The or other clearly certificates fall within the literal Provided, periodicals. “maga- words definition of tangible personal property; periodicals” zines and other as used in however, for taxation purposes, such items newspa- do not subdivision include generally regarded are intangible prop- pers magazines periodicals nor or erty because their value is derived from free nonprofit corpo- furnished intangible rights represent. they See organization ration or to its or members Navistar Int’l Transp. Corp. v. State payment by because of its members of Equalization, Board Cal.4th membership fees or dues. (1994). Cal.Rptr.2d 884 P.2d d. gravel of sand severance or Thus, intangible right may an be evidenced from the soil. physical object capable of perception 57-40.2-01(8). definition, § N.D.C.C. This senses, nevertheless, by the considered however, help is of little to us in this case intangible property purposes of the law only portion because the of the definition of taxation. provisions Id. As other possibly could include books is 57-39.2-02.1(1) § illustrate, N.D.C.C. phrase “tangible goods.” fact that mere a transaction involves the 57-40.2-01(8)(a). Thus, § N.D.C.C. even literally transfer of what per- rely definition, if we were on property, sonal necessarily does not mean necessary would interpret be for us to of “[t]angible sale personal property, phrase goods” § “tangible 57- N.D.C.C. consisting goods, wares, or merchan- 01(8)(a),just necessary as it is for us 40.2— dise,” has occurred under N.D.C.C. 57- to interpret phrase personal “[tjangible 39.2-02.1(l)(a). property, consisting of goods, merchandise,” of N.D.C.C. 57-39.2- Under 57-39.2- 02.1(l)(a). 02.1(1), sales of tickets places of amuse- phrase “tangible per ment or entertainment or athletic events sonal property” literally “[cjorpore means are listed as taxable events distinct from personal al kind; personal of any tangible personal property, con- seen, property that can weighed, be mea sisting goods, wares, or merchandise. sured, felt, touched, any 57-39.1-02.1(l)(c). way or is in See N.D.C.C. When perceptible to the purchases ticket, senses.” See Black’s an individual item of

207 ney for the Office of the North General that can be touched or personal property transferred, i.e., explained: itself. the ticket Tax Commissioner Dakota State handled is Thus, N.D.C.C. if were to construe we imposes a broadly law tax on The 57-39.2-02.1(l)(a) all encompass to sales § tangible personal property, on sales of can that be personal property in which of certain ser- furnishing the sale or the transferred, sales of handled is touched or vices, desig- on of the sale certain in sales of be subsumed tickets would intangibles, not lim- including nated thereby ren property, tangible personal leasing renting tangible ited to the or of 57-39.2-02.1(l)(c) § dering N.D.C.C. personal property. specific services v. N.D. surplusage.” See Bruns “mere steam, subjected gas, to are electrici- tax Bureau, Comp. ND Workers ty, water and communication services. ¶ presume do not 595 N.W.2d 298. We intangibles semi-intangibles or sub- an idle act. Legislature intended such or jected to tax are tickets admissions to Council, Housing North Dakota Fair See amusement, places entertainment or of ¶ Peterson, ND Inc. v. events, including the amounts athletic (“Statutes are construed N.W.2d 551 participation therein as well charged Adams provision.”); to each give effect as of a receipts playing derived Dakota County Record v. North Greater machine for amusement or entertain- (N.D.1995) Ass’n, n. 529 N.W.2d response to of ment in the use a coin it to con (stating that would be absurd maga- subscriptions and the sale of in manner that would statute strue periodicals. zines and redundant). portion of the statute render Maichel, Joseph Dakota R. North Sales 57-39.2-02.1(1) Rather, § when N.D.C.C. and Their Laws General Use give whole to effect to each is read as a Application, 47 Rev. N.D. Law on the it reveals an intention provision, omitted) added). (1971) (footnote (emphasis distinguish sales part of the 57-39.2-02.1(1), Thus, § under N.D.C.C. personal property, consisting “[tjangible of consisting “[tjangible property, all of sales merchandise,” wares, goods, see merchandise,” sub- goods, are 57-39.2-02.1(l)(a), from sales N.D.C.C. tax, intangible ject sales but sales rights services in which intangible subject tax are to sales unless tangible personal property the transfer specifically designated. of such symbolize the transfer occurs to 19j that note under N.D.C.C. [¶ We Comptroller Treasury v. rights. See 57-39.2-02.1(1), “[mjagazines Arena, Ltd., Washington Md.App. Nat’l as periodicals” are also listed other (Spec.App.1986) 504 A.2d from sales taxable events distinct (finding tickets substantial evidence property, consisting of personal “[tjangible symbols an abstract merely physical wares, or merchandise.” Dept. Revenue v. right); Wisconsin 57-39.2-02.1(l)(d). The rea- N.D.C.C. Club, 111 Brewers Baseball Milwaukee understood this distinction best (1983) son for 383, 388 Wis.2d history Dako- by examining the of North of tickets to baseball (reasoning sales maga- applied ta’s tax to sales personal not sales of games were al- magazines had zines. While sales merely tickets “were property because the apart from ways to sales tax been the holder was establishing indicia event”). providing for their any provision specific to admission to entitled taxation, tax if sales was debatable discussing an earlier version of publishers sell- 57-39.2-02.1, collected from Attor could be Special Assistant ing magazines. part to subscriptions of to Legislature distinguish See sales Hearing on S.B. House magazines tangible per sales of Before Comm, Taxation, on Fin. & 37th N.D. rather, property, sonal this subsection (Feb. 1961) Legis. 27, (testimony Sess. is a remnant of the earlier tax on sales of Jakes, Department); Kenneth see subscriptions magazines. to Time, Hulman, also Inc. Ill.2d case, In when American (1964) (applying 201 N.E.2d book, West tangible sells a coupon person- object true of the transaction test to de transferred, i.e., property al coupon is subscriptions if maga termine sales of to However, book American itself. when of tangible personal zines constituted sales book, West sells a intangible prop- Maichel, supra, at property); 384 (listing transferred, erty i.e., is right also to subscriptions magazines sales of receive discounts and products free and intangible semi-intangible sales of or prop services from American West’s clients. erty). Therefore, in the Legislature right sale of the to receive discounts § amended former N.D.C.C. 57-39-02 to and products free is not one of the sales of impose a tax “all’ of subscriptions on sales intangible property that is designated as magazines periodicals.” and other See 57-39.2-02.1(1). § taxable under N.D.C.C. § Sess. Laws ch. 2. In Maichel, supra, at 384. When a trans- provision was modified to read action tangible involves both a transfer of “[mjagazines periodicals, and other includ personal property and a intan- transfer of ing subscriptions thereto.” 1963 N.D. gible personal property desig- that is not However, § Sess. Laws ch. nothing taxable, nated as it is often difficult to legislative history in the indicates that this determine whether the transaction is sub- any way modification was in intended to ject to sales tax under the stat- governing affect the manner in sales of maga which Court, ute. Supreme The Minnesota subscriptions zines and sales of to maga determining mailing whether lists used zines were taxed the 1961 under amend tangible direct-mail merchandiser were Compare ments. H.B. 38th N.D. personal property under use Minnesota’s (1963) Legis. Report Sess. the' statutes, tax explained: Comm, House on and Fin. Taxation on view, In our question presented (1963) Legis. H.B. 38th N.D. Sess. close, extremely instant case is (Explanatory Note Amendments to H.B. we 559). do not find the resolution In- easy. deleted the tangible information, property, such as phrase “including subscriptions thereto” may be with or transferred without the 57-39.2-02.1(l)(d), § from N.D.C.C. there use a tangible medium. When by eliminating on the tax sales of sub used, tangible is medium it is scriptions often magazines, but maintaining case that such use merely tax magazines on incidental that had to the substance of the existed both transaction be- under the 1961 amendments prior supplier tween the the consumer of 1961 amendments. See 599, 2; intangible. taxing 1981 N.D. ch. Yet our Sess. Laws Hear statute Comm, ing on S.B. makes regarding the House no distinction the na- Before Taxation, tangible Fin. ture property on 47th N.D. Legis. (Feb. 1981) taxation; (testimony tangible Sess. if property or Sen. is used Olin). Thus, consumed, history as the il use consumption such lustrates, 57-39.2-02.1(l)(d) not, however, N.D.C.C. taxed. Our statute does not represent does an intention impose consumption on the a tax on use or “[t]angible personal property, tute property. intangible personal merchan consisting use line demarcation between 57-39.2-02.1(l)(a). dise,” use of its and the intangible under N.D.C.C. one. is not clear earlier, manifestation 57-39.2- As discussed 02.1(1) imposes tax on all sales of Reve- v. Comm’r Fingerhut Prods. Co. (Minn.1977). “[tjangible personal property, consisting of nue, 606, 610 258 N.W.2d wares, merchandise,” it only or goods, determining To aid in [¶21] intangible a on imposes tax those in which taxability of a transaction the specifically designated property that tangible per transfer of both volves the 57-39.2-02.1(1). taxable. See N.D.C.C. intangible personal property and sonal book, coupon a American West sells When jurisdictions focus of property, a number i.e., tangible property, the personal both “essence,” object,” the “true of on the or i.e., book, intangible coupon property, and See, Tonight e.g., Dine Out transaction. and free right the to discounts receive Servs., Club, Dept. 210 Inc. v. Revenue of from American products and services 580, (1989); 567, Consol. 556 A.2d 583 Conn. clients, Conse are transferred. West’s Corp. Dept. s v. Revenue eightway Fr of of whether 652, 963, to resolve the issue Tax., quently, P.2d 966 112 Idaho 735 and (1987); coupon of books are Dept. Reve American sales First Nat’l Bank v. West’s of nue, “[t]angible personal 421 Ill.2d 51 Ill.Dec. 85 taxable as sales of (1981); Occidental N.E.2d consisting of property, Tax., v. Revenue and Corp. Dept. Chem. if merchandise,” the we must determine of (La.Ct.App.2000); 401 751 So.2d essence, object, the are the true Revenue, Sneary S.W.2d v. Dir. 865 intangible rights to or the (Mo.1993); v. Tab Bullock Statistical 345 products free and receive discounts and (Tex. ulating Corp., 549 S.W.2d 168 West’s clients. services from American 1977). object on test “focuses true stipulated have parties in this case to deter the essentials the transaction any of dispute facts do the the and not buyer object mine real the seeks.” administrative law findings factual Sneary, at 345. Under 865 S.W.2d therefore, We, make this determi judge. test, a transaction which involves appeal. as matter of law on See nation a in tangible and property transfer of both Bank, Ill.2d 51 Ill.Dec. Nat’l First to sales tangible property 175,176, (applying 421 N.E.2d object in if true enter tax the consumer’s to affirm test essence of the transaction ing the transaction is to obtain into taxpay that the the trial court’s conclusion intangible id. In such property. purchases computer pro software er’s transactions, tangible property “serves intangible prop purchases were grams transmission exclusively as the medium of law); erty as a Occidental Chem. matter intangible product for an or service” (stating that Corp., 751 So.2d at 400-401 utility may be discard “is of little even that a trial conclusion transac court’s it to buyer has used obtain ed after personal constituted sale of tion component.” Id. intangible access personal intangible than property rather “primarily legal conclusion was statutory light In one”); Tray- 57-39.2-02.1, than a factual Ash rather we of N.D.C.C. framework ¶5, nor, ND object the transaction test find true (“Because presented stipulated parties Amer determining to be whether useful exhibits, presents appeal coupon books consti- facts ican West’s sales of law.”); only questions X-Ray, intangible right Northern to free meals. See id. (declining defer to issue, at 582-83. resolving this the Commissioner’s court reasoned: determining ap contractor and on word A conclusion as to whether the sales peal taxpayer that a fall did not within the applicable tax plaintiffs mem- statutory definition of a contractor where bership requires fees determination dispute); facts of the case were not object the true of the transaction be- Questar Revenue, Sys. Data v. Comm’r of tween the club and its members. We (Minn.1996) (examin must therefore ascertain whether ing the essence of the transaction between object of that pro- true transaction is taxpayer as a question it’s customers vide club members with a and a card law).5 of directory or to upon bestow them the Tonight, In 23] Dine the [¶ Out Su- intangible right to free under meals preme applied Court of Connecticut the specified conditions. The determinant is object of test true the transaction to re- parties. the intention of the think We presented solve issue similar to the one intention Obviously, is evident. case. 556 A.2d at 582-83. Dine prospective club members not en- are Tonight, paid Out members of a club pay plaintiff ticed to the prospect for the membership fee in for a exchange card obtaining of directory, card and a that entitled them to a meal with free the items that would be of no little or value purchase of a equal second meal of or without the right concomitant to receive greater value at participating restaurants free meals. Conversely, plaintiff the plan. the club’s at See id. 581. A expect could not stay to in business directory member also received a offering only sale card and direc- participating id. restaurants. See Under tory. Manifestly, the non qua sine of statutes, tangible Connecticut’s sales tax the transaction between the and its club personal property “person- was as defined intangible members to right re- seen, may weighed, al which be free ceive meals and to access measured, felt or which is in touched or knowledge of an expanding list of res- any other manner to perceptible Thus, provide taurants that senses.” See id. at 4. them. The mem- 582 n. issue was Tonight bership whether Dine card and directory merely Out was engaged of selling tangible member- indicia that intangible right inci- ship directories, cards and the selling dental aids to its exercise. Because the only publish- any Our research has two revealed aware of Ohio case in which it was stated object that the determination of ed cases in which it the true of a was stated the deter- transaction is a factual rather determination object mination of the true aof transaction is TV, legal generally than a one. See WBNS a factual determination. See Financial Com- 572, Tracy, Inc. v. 75 Ohio St.3d N.E.2d 664 243, puter Lindley, Serv. v. 70 St.2d Ohio 436 938, (1996) curiam); Amerestate, (per 939—41 1025, curiam); (1982) (per N.E.2d 1027 Servi- 222, Tracy, 72 Inc. v. Ohio St.3d 648 N.E.2d Collins, 80, Clean Indust. v. St.2d 50 Ohio 362 1336, (1995) curiam); (per Community 1337 648, (Ohio 1977) curiam). (per N.E.2d 652 Tracy, Co. v. Mut. Ins. 73 Ohio St.3d cases, Subsequent Supreme these two (1995) curiam); (per N.E.2d 223-24 Co- significantly Court Ohio modified man- Ohio, Limbach, lumbia Gas Inc. v. 69 Ohio applied object ner in which it the true test. (1994) (per St.3d 633 N.E.2d Limbach, Emery Indust. v. 43 Ohio St.3d curiam); Limbach, General Corp. Motors (1989) (per N.E.2d (1989) Ohio St.3d 541 N.E.2d curiam). modification, curiam). Since (per we are un- of coupon club that sales books are tax plaintiff cluded between transaction essentially personal property, con- able sales and its members intangible right free has veyance Legislature of an the distinction made meals, plaintiffs membership personal fees “[t]angible prop between sales of imposition wares, erty, consisting goods, are not or mer chandise,” rights sales tax. intangible Connecticut and sales of outweighs the conclusion. Commissioner’s omitted). (citations at Id. only interpreted has The Commissioner membership cards Similar phrase “tangible personal property” to coupon Tonight, in Dine Out include sales of books since little sells would be of that American West 81-04.1-01-28, see N.D. Admin. Code right or no without the concomitant value distinguished has while products to receive discounts free “[t]angible personal property, con sales from American clients. services West’s wares, merchandise,” sisting goods, 583; Tonight, 556 A.2d at See Dine Out intangible rights since Sneary, 865 345. American S.W.2d 276, § Laws see N.D. Sess. ch. stay in business expect could West personal proper (listing “tangible coupons by attempting to sell books ty, consisting of or merchan rights if no to receive discounts $43.95 dise,” as taxable events distinct from Likewise, coupons. were attached to those places “sales of tickets or admissions to willing pay consumers would not be events”). “[T]he amusement and athletic if coupon West for books American $43.95 rules that an administrative they coupons not use the in those could controlling weight an act is entitled to to receive discounts from American interpreta may not be invoked where the It, therefore, evi- clients. seems West’s contempo tion was neither continuous nor pays dent that when a consumer American the stat raneous with enactment of book, coupon the true West a $43.95 49:08, Singer, supra ute.” See object pur- of the transaction is not the Furthermore, interpre an agency’s while books, coupon tangible chase but is entitled to defer long-duration tation intangible right to receive purchase ence, long “we not will defer even products discounts free services standing interpretation that is con American See Dine West’s clients. trary legislature.” to the intent of 583; Tonight, at see also Navistar Out 738; X-Ray, 542 at ac Northern 651, 884 Corp., Cal.Rptr.2d Int’l Trans. One, Inc. v. N.D. Bd. cord Medcenter State (“[F]or purposes of the law of P.2d at 110 ¶ 17, Pharm., ND taxation, intangible as of property is defined 49:07, 634; Singer, supra § see also that is it- including personal property not (stating agency’s long-standing in valuable, intrinsically self derives terpretation can be overridden more evi- represents its value from what or considerations). compelling dences.”). coupon books We conclude the merely serve as medi- themselves statutory scheme [¶ 26] intangible ums of an transmission 57-39.2-02.1, when read as a 556 A.2d at right. Tonight, See Dine Out whole, intent manifests 583; Sneary, 865 at 345. S.W.2d personal property intangible the sale of tax specifically identified and listed as unless Although Commis Construing tax. the stat- sioner, through promulgation of N.D. 81-04.1-01-28, suggested by in the manner has con ute broad Admin. Code skills”). contrary run Thus, Commissioner would to this writer’s when a consumer by taxing intangible per- intent all sales of purchases a book such as a novel or a tangible per- sonal evidenced textbook, tangible product of an indi- property, sonal no matter how negligible skills, vidual’s a sale of “[t]angible person- Moore, the intrinsic thereof. value al property, consisting (An 374 N.W.2d at 74 administrative offi- merchandise,” has taken place. See Nav- policy cer “cannot initiate in the true Corp., istar Int’l Trans. 35 Cal.Rptr.2d sense, fundamentally pursue but must (“[T]he 651, 884 at P.2d sale of books policy predetermined by the power same pamphlets, although ‘purchased for from which he derives his authority.”). the author’s ideas rather than for their designat- Because the has not physical components,’ generally tax- coupon ed the sale of books as a sale of able.”). intangible personal property that is sub- In contrast to novels and text- ject to sales tax under N.D.C.C. 57- books, coupon books are books of “certifi- 39.2-02.1(1), any we must resolve doubt entitling cate[s] ticket[s] the holder to a about their taxation favor of American specified right, redemption for cash or Oil, Rocky West. See Mountain gifts, purchase reduced price, etc.” Web- (“[I]f a tax statute is ambig- (2d ster’s New Dictionary World coll. uous so that the intention with ed.1980) (defining coupon). An individual’s respect meaning of the statute is purpose in buying coupon book is not to doubtful, the doubt must be resolved itself, obtain the book but to obtain the favor of taxpayer.”). reaching right to receive discounts repre- that are conclusion, any juris- we are not aware of sented the coupons. See Dine Out diction interpreted that has the sale of Tonight, 556 A.2d at 583. tangible personal property to include the books are used exclusively as mediums to coupon sale of books. do not We intimate and, transfer this intangible right once this not, our could if it so right is expires, exercised or coupon the chose, coupon tax the sale of books. How- essentially books are worthless. See Dine ever, currently N.D.C.C. 57-39.2-02.1 Tonight, 583; Out 556 A.2d at Sneary, 865 exists, coupon sales of books are not tax- S.W.2d at 345. Unlike novels and text- able as “[tjangible personal sales of prop- books, items coupon such as books and erty, consisting or mer- tickets are little or no value without the chandise.” rights concomitant to receive discounts In concluding that the Commis- and attend events. See Dine Tonight, Out sioner did statutory not exceed authority 583; 556 A.2d at Washington Arena, Nat’l in taxing coupon sales books as sales of 504 A.2d at 672. tangible personal property, the ALJ analo- gized coupon books to sales of IV

novels agree and textbooks. We do not [¶ 29] this We reasoning. The sale of a conclude that sales of coupon novel textbook, or a merely is not books are not sales of “[tjangible personal the sale of raw intangible property, information. consisting goods, wares, Sioux or Cfi Revenue, Newspapers Sec’y merchandise,” Falls under 57-39.2- (S.D.1988) 02.1(1). Thus, (concluding portion of N.D. Admin. syndicated newspaper columns were Code provides: 81-04.1-01-28 which information, intangible raw coupons, books, were “Sales of coupon and other produet[s] “finished of an artist’s or a certificates which entitle the holder to a coupon advantage represented on the or services price other discount or Com-, services, Tax whether book was not the basis for the purchase goods rather, are goods argument; argu- or services not the missioner’s tax, as sales of are taxable coupon sales or use itself ment was book was beyond tangible personal property,” personal property. Nor was statutory au- scope of the Commissioner’s authority Tax Commissioner to Moore, therefore, is, thority void. See purchaser pay that the tax on the require Consequently, price, notwithstanding original purchase is not liable American West coupon, issue before the Court. $20,883.51 tax assessed sales Commissioner, in example, For the Tax X-Ray, Northern Commissioner. the same section of the Administrative Cf (holding taxpayer that a at 738 concerned, are Code with which we the ad- hable for taxes under was neither 81-04.1-01-28, Admin. Code has enacted regulation’s regulation nor the ministrative regulation that states manu- “[w]hen statute). reverse the deci- governing We facturer, processor, or wholesaler issues a court and remand sion of the district coupon entitling purchaser to credit on proceedings further Commissioner purchased, the item the tax is due on the opinion. consistent with gross receipts.” total So, too, regulation provides [¶ 34] KAPSNER, JJ. NEUMANN [¶ 30] gift certificates or other forms of concur. may credit which be redeemed WALLE, Justice, concur- Chief VANDE equivalent holder for cash value are not ring. sold, subject to tax when but “the value of opinion I concur in the Justice [¶ 31] these certificates is taxable when re- I Maring has authored for the Court. if they deemed are redeemed for taxable separately only emphasize write goods or services.” by the state argued case was to the Court Thus the issue before Court theory the Com Tax Commissioner on or method on challenged the rationale authority to decide that missioner has premised the which the Tax Commissioner coupon tangible personal ques- taxation of the books. The at the value property which could be taxed can tion of whether the Tax Commissioner under they at which were sold N.D.C.C. portion tax on that of the collect sales 57-39.2-02.1(1). agree § I the Tax Com for price good paid and services with authority to given missioner is not and is coupons was not before the Court tangible personal property that declare as by opinion ex- not answered the Court’s property. which is not such cept coupon extent that the book to the argument were told at oral We [¶ 32] taxed as the sale of cannot be for coupons that when the are redeemed personal property. products or free or services from discounts merchant, participating sales tax is I the dissent agree do not [¶ 36] only paid actual amount collected on the and deference legislative acquiescence that coupon holder. the retailer interpretation agency to administrative the sale of a justify the transformation of authority The of the Tax Com- [¶ 33] tangible per- paper coupons into taxing the book regulation missioner to enact a purposes. taxation Nei- coupon sonal purchaser coupons, hold- necessary to revise er, products agree ther do I it is part for that of the cost of the legislative acquiescence authority. legislature’s our law on ercised The case in- interim agency to administrative Administrative Rules Committee and deference in question reviewed the rule Legislative acquiescence and to see wheth- terpretation. properly implemented er it was significant to me where the Tax is more deference or whether it subject to two reasonable Commissioner conflicted with the statute is intent; Here, I the Tax the Administrative constructions. consider construction is not a rea- Rules Committee concluded it did not. Commissioner’s ¶¶ review, 52-60. of the statute for the After sonable construction infra majority opinion. legislature amended in the reenacted reasons stated times, are, all, only tools to a N.D.C.C. 57-39.2-02.1 four leav- They after assist ing N.D. Admin. un- construing They a statute. Code 81-04.1-01-28 court touched. not absolutes. The [¶ 40] books are undeni- Justice,

SANDSTROM, dissenting. ably tangible touchable, physical per- — — respectfully I dissent. The ma- [¶ 88] property. majority sonal does not jority has misstated our law on dispute taxing clearly such judicial deference acquiescence and taxing power within the of the State. The longstanding administrative inter- becomes, question legislature what has the pretation majority of a statute. The also done and what has it intended? The ma- Gray, ignores Foss v. 70 N.D. 298 jority argue does not that the answer is (1941), in which this Court conclud- N.W. statute, clear on the face of the arrives legislative acquiescence ed there was at its by looking jurispru- answer longstanding in- the Tax Commissioner’s dence of states other than North Dakota. terpretation “tangible personal proper-

ty” though the was —even I contemporaneous original with the not ¶¶ 7-8, The majority, [¶ 41] frames adoption of the statute. the issue for review as “whether the Com correctly interpreted Commissioner has au- missioner phrase thority adopt ‘[t]angible personal administrative rules hav- property, consisting of ” ing the force and effect of law. See or merchandise’ and cites (“commissioner Co., N.D.C.C. 57-39.2-19 X-Ray Northern Inc. v. ex State Hanson, (N.D. may prescribe regulations all rules and rel. 1996), provisions inconsistent with the of this proposition that “whether chapter, necessary correctly and advisable for its the Commissioner interpreted a question detailed administration to effectuate statute is a fully of law which is purposes”); appeal.” 28-32-06 reviewable this Court on effective, (“Upon becoming X-Ray rules have the Northern did not involve either until legislative acquiescence force and effect of law amended or to an administra repealed by agency, declared invalid tive rule or deference to a longstanding decision, by suspended a final agency interpretation court administrative aof by Although found to be void the administrative statute. in agency Northern committee, repealed rules X-Ray attempted argue or determined regulations its by provided “contractor,” the office of the council be- a definition for adoption cause the authority agency’s interpretation of the Court found the repealed helpful rules is or transferred to another was not because its definition of agency.”). The Tax ambiguity Commissioner has ex- “contractor” contained the same entitled to “Executive construction is X- statute. Northern underlying as the however, im- (“This weight it has been additional where regulation, Ray, at 738 by pliedly legislature, as the statute: indorsed as problems the same presents ”). ‘contractor.’ of the or the of the term the reenactment statute ambiguous use one, definition X-Ray focused on the in a similar the same or passage Northern ” by rule nor terms, defined a term neither .... substantially the same interpre longstanding ato in approvingly Payne This Court cited tation, entirely different a situation a reenacted stat- regarding another case agen in an here which presented the one Comp. ute. v. Workmen’s See Schmutzler of a provides a definition cy’s regulation Bureau, 49 N.W.2d 649 relying on Northern statutory By term. (1951). stated: This Court appeal on framing the issue X-Ray and the en- Following the codification statute, majori interpretation of a statute], and its reenact- actment of [the analysis appropriate oversimplifies the ty Compensation ment ... the Workmen’s validity of an admin determining the when interpretation of Bureau continued the istrative rule. the limita- this Act in accordance with ¶ 10, majority, at acknowl- [¶ 42] in Chapter tions out S.L.1929. set legislature has reenacted edges un- The Bureau treated the statute as since the 57-39.2-02.1 contempo- changed. practical adopted N.D. Admin. Code Commissioner placed upon construction raneous 81-04.1-01-28, but misstates both charged the officers with its statute and the doctrine of reenactment doctrine in may considered de- enforcement be acquiescence as defined meaning of the law. See termining Dakota case law. North Trustees, Payne Board 76 N.D. v. cases set Two North Dakota cited. 553 and cases rule of the reenactment general forth the Id. Bd. Trustees Payne doctrine. precedent Rather than follow the Fund, 76 N.D. Ins. & Ret. the Teachers’ Schmutzler, Payne forth set (1948), ¶ 11, to a treatise on majority, at cites that should discussed the deference Court statutory and cases from of a agency’s interpretation given be jurisdictions proposition for the foreign legislature has subse- statute when does doctrine] reenactment “[the quently reenacted statute. leg- that the apply nothing indicates where agency’s disputed [the It is not its attention directed to islature had has the administra- interpretation] been interpretation upon reen- administrative adoption practice tive since of Statutes and actment.” Section 49:09 legislature time the During law. gen- Statutory sets forth the Construction and made many sessions has met eral doctrine of reenactment: to the law but none several amendments procedure. There is at regard to this doctrine] reenactment is based [The leg- that the strong presumption least theory legislature that the upon the approved the contem- islature knew and contemporaneous inter- familiar with the practical construction poraneous statute, especially when pretation of a by the officers placed upon [statute] body or exec- made an administrative charged with its administration. duty charged officers with utive enforcing that statute.

administering or 2-16 rev.)). adopts and the inter- ed.1984 Johnson other cases impliedly

Therefore Legisla- reciting contemporaneous reenactment. an pretation upon nature of presumed adoption agency’s interpretation require conclusive do not that tive is interpretation contemporaneous reenactments an repeated when follow be be- interpretation.... any practical given notorious fore it-can be consideration. See Further, instances, special importance where id. in least two The rule is of at this rulings interpreta- legislature acquiesced administrative Court has held the constant non-contemporaneous tions are under observation of in a construction of legislature. apply It does not where a statute administrative agency. nothing legislature that N.D. 1 Gray, indicates See Foss v. 70 298 N.W. (1941); directed to the had its attention adminis- Northern States Power Co. v. Comm’rs, interpretation upon reenactment. Board R.R. 71 trative N.D. 298 (1941). N.W. Singer, 2B Norman J. Statutes and Statu- (6th 49:09, tory Construction Voss, pre- [¶ 47] this Court was also rev.). majority’s The ed.2000 reliance agen- sented with the issue whether an upon misplaced. the last sentence cy’s interpretation of what constituted acknowledge Dakota does not North law sale ... phrase tangible under the “sale Schmutzler exception. v. Work- personal contrary was property” legisla- Bureau, Comp. men’s N.D. Gray, tive intent. 70 N.D. Foss v. (1951); Payne v. Bd. Trust- (1941). 1, 2 N.W. transaction at issue Fund, Ins. ees the Teachers’ & Ret. was a photographs photogra- sale of (1948). pher. Id. The Tax Commissioner deter- attempt In a further [¶ 45] discount photographs mined the sale of “result[ed] Schmutzler, precedent Payne personal in a property” sale of ¶ 10, majority, places great at empha at taxpay- and was taxable. Id. 2-3. The “contemporaneous” sis on the nature of er argued photographs were the sale of ¶ 10, interpretations. majority, at services, personal ability “his artistic argues that here the Tax because Commis taxpayer argued, skill.” Id. at 3. The also sioner’s 57- photographs because the sale of was not place until years 39.2-02.1 did not take “54 sale, originally to be a determined taxable applied after first the sales prohibited the Tax was Commissioner [t]angible personal tax to proper taxing photographs. the sale of Id. ty, consisting merchan 4. This Court deferred to ” dise,’ precedent Payne acquiescence and stated: apply. Again Schmutzler does not the ma urges Plaintiff also when the jority on misstates our law ac Act, supra, Sales Tax was first enacted quiescence. the tax commissioner who was contemporaneous enforcement, charged “A construc- ruled that its ‘given special tion of a no tax charge statute is consider- should be made on ac- photographs; ation since it made at a time count of the was when the sale leading up to the in effect in ruling circumstances enactment was 1937 when ” re-enacted; of the statute well known.’ was were John- Sales Tax Act County presumed son v. the legislature Wells Water Resource to have Board, (N.D.1987) ruling and accordingly known (quoting Statutory 2A act with that ruling Sutherland Con- was re-enacted (Sands 49.08, plaintiff struction at 398 mind. contends it 4th So must be and their of the 1935 delivered to customers a that this construction held ruling adopted by by the re-enactment consideration them. This has act was the act in 1937. in that continued since time. effect 1939, in in While it was so effect the in a statute construing

It is true that assembly again give legislative re-enacted meaning a court will of doubtful change the Tax Act and weight practical construction Sales without by charged provided imposed the officers tax placed thereon the should be duty executing applying and with the period “beginning day for the the first statute, con- especially where the 1939, 30th, the July, ending and June 1941.” in a consid- struction has been effect for And in again 1941 the tax was reim- by in acquiesced and those erable time period posed “beginning for the the first by it. And it is likewise true affected 1941, 30, day July, ending and June legislature presumed is to know that the 1943.” that under these We think cir- by its statutes the the construction of be the cumstances cannot said that departments the state. executive legislative no intention was that tax And a statute which has been where charged should be on account sale a given particular practical construction photographs to their customers applica- charged with its officers photographers. re-enacted, is this tion and enforcement added). (emphasis Id. at 4-5 As demon- determining leg- in pertinent fact Voss, contemporaneous in na- strated intent, presumption islative and the interpretation controlling. ture of an is not intent that the was Voss, In this Court held that a thus con- re-enacted statute should be in by change agen- reenactment followed is, all, only But after strued. cy interpretation, subsequent reen- and may be presumption overborne by the in legislature, actment results all the circumstances in connection when legislative acquiescence agreement with matter are taken into consider- in the intent embodied the more recent appears ation. In the case it instant interpretation. Id. 5. agency at Tax that when the Sales Act was first in States Similarly, Northern put the Tax Commis- into effect Comm’rs, R.R. Power v. Board Co. did rule that no sales tax sioner’s office acquiesced legislature had Court held charged by pho- and collected should be statutory in a admin- tographers photographs made and had agency even when the istrative Act, chapter sold. The Sales prior interpretation. its reversed only tax imposed Session Laws Board of Railroad Commissioners was re- day period “beginning for the the first quired properties set fair value of May 1,1937.” May, ending electric, provide gas, used to and steam with but 1937 this act was re-enacted establishing the rate heat when services slight changes and the tax was reim- base for those services. 71 period “beginning posed for first (1941). Beginning N.W. 30th, day May, ending June of Railroad Commissioners de- Board Immediately 1939.” its re-enact- after “prudent using termined “fair value” ment tax amended commissioner “original cost” method investment” prior ruling his as to the tax effect of Then, setting Id. when rates. respect photographers, and ruled the Board of Railroad Commis- charge in the they should collect precedent began to follow federal photographs the tax on made sioners amount of “fair value” using recently, and determine the “val- More in [¶ 50] v. N.D. Effertz Bureau, ... Comp. ue of as of the time of the Workers 525 N.W.2d (N.D.1994), inquiry” or “reconstruction value” method challenge we reviewed a Compensation Id. at 430. setting rates. The second Workers Bureau’s inter- pretation interpretation by phrase “weekly the Board of Railroad benefit.” consistently legislature We concluded the Commissioners was followed had ac- quiesced by failing judicial approval and “received to amend the statute: after 1923 City in the case of Grand Forks v. Red legislature The presumed to know the Co., appealed River Power which was construction by of its statutes the execu- the District Id. This Court.” Court stated: departments tive of the State and the failure to amend the statute indicates twenty years Thus for almost [the legislative acquiescence in that construc- by construed statute] has been tion. Board of Railroad Commissioners as a Id.; Eklund, see also Eklund v. statutory adoption of the rule of valua- (N.D.1995) (legislature is by tion laid down the Federal Courts presumed to know the construction of its commencing Smyth with the decision in acquiesces statutes in that construc- Legislative

v. Ames. Ten Assemblies if any amendments); tion it fails to offer met since the Commission’s deci- have Capital Coop., Electric Inc. v. Public Ser- Co., sion in re Electric Western no Comm’n, (N.D. vice amendment has made of been the stat- 1995) (same). Nuessle, by Judge ute. As was said in Contrary majority’s [¶ 51] to the con- v. Equitable State Assurance Soci- Life clusion, legislature’s chosen action of 641, 653, ety, 68 N.D. 282 N.W. 416: reenacting § N.D.C.C. 57-39.2-02.1 with- pertinent determining “This is in out amendment is legisla- evidence of the legislative intent. ‘Legislature acquiescence ture’s in giv- the construction presumed to know the construction of its by en the statute the Tax Commissioner. by departments statutes the executive ” See, e.g., Effertz, 525 at 693. Even the state.’ if adopt we were to interpretation (citations omitted). Id. at 430 This Court the reenactment upon by doctrine relied “ by ‘in stating, construing summarized majority, apply would not to this meaning statute of doubtful the court will case because the legislature’s attention give weight long-continued practical was directed to the amendment made to placed construction thereon officers § N.D. Admin. Code 81-04.1-01-28. charged duty with the of executing and applying judicial the statute’ to the con- II struction of such statute an inferior ¶ 11, Although [¶ the majority, 52] court, legislative acquiescence and to the nothing states “there is judicial departmental both the con- history § of N.D.C.C. 57-39.2-02.1 or (citations omitted). struction.” Id. at 430 the record before this Court to indicate the As Voss and Northern States considered the 1989 amend- demonstrate, Power “non-contemporane- ments to N.D. Admin. Code 81-04.1-01- ous” during any an administrative of the reenactments of may 57-39.2-02.1,” is entitled to deference and the Administra- also be used in- as evidence of tive adop- Rules Committee reviewed the tent. tion and each amendment of Admin. N.D. 1, 1989, Minutes July 81-04.1-01-28. amendments Code Rules Comm. Admin. 81-04.1-01-28 were Administrative Code the Minutes Admin- (March 1990); 11, 1989, July at meeting the of reviewed of 1989); (July Rules Comm. istrative Rules Committee. the Administrative Rules the Administrative Minutes Rules Minutes Administrative of of Minutes (March 1988); 1989). Comm. Comm. (July The Committee of (October Rules Administrative Comm. Ad- challenge changes did N.D. 14,1986). § 81-04.1-01-28. Id. The min. Code infor- provided by mation Office of State Administrative Rules Com- 53] The [¶ Tax Commissioner to the Administrative for in 54- provided mittee is July 11, meeting Rules Committee’s 54-35-02.6, N.D.C.C., sets 35-02.5. Section the full text of rule included and and provides, duties forth Committee’s description subject matter part: changes: rules committee The administrative administrative rules

shall review and Tax These Sales Use Rules: rules chapter com- adopted under 28-32. The and exempt define activities oral and written mittee shall consider tax, and from the sales use and the concerning adminis- comments received procedure calculating reporting shall rules. The committee trative sales and use taxes.

study rules and review administrative Id. appendix K. wheth- and related statutes to determine Report of the 56] The 1991 North [¶ er: Legislative Dakota Council contains agencies prop- 1. are Administrative from Rules report the Administrative legislative pur- erly implementing rules Committee’s review administrative pose and intent. changed 1988 and between October Octo- ad- 2. There is dissatisfaction with Legis. the N.D. Report Coun- 1990. ber or with statutes ministrative rules (1991). cil report 11-15 Table A of the relating to administrative rules. the Administrative Rules Commit- shows ambiguous 3. There unclear amendments, creations, or reviewed 64 tee relating statutes to administrative Tax adopted by the repeals of rules Com- rules. Id. at 15. during period. missioner change may The committee make rule adopting agen- recommendations to Code 81- 57] When N.D. Admin. cy may make recommendations enacted, originally 04.1-01-28 was legislative council for amend- amended, time was Com- each relating repeal ment or statutes representative or a the Of- missioner administrative rules. provid- of the State Tax Commissioner fice any changes 81-04.1-01-28, explaining ed information Ad- [¶ 54] Section any questions answering the rules and Code, min. first became effective October Rules 1, 1986, posed the Administrative Com- it has amended three been the Administra- 81- mittee. See Minutes times since. See N.D. Admin. Code (March 29, 1990); Rules (effective tive Comm. 1, 1986; 10-11 amend- 04.1-01-28 Oct. Rules 1989; the Administrative 1988; Minutes July March ed effective 1990). 11, 1989); Minutes language regarding Comm. (July March (March 24, Rules Comm. Administrative appeared the taxation of Administrative 1988); Id. Minutes July amendments effective (October 1986). If its outermost limits. the review Rules Comm. pur- did not created for the Rules Committee committee Administrative object adoption reviewing of N.D. Admin. administrative pose subsequent or it consistency 81-04.1-01-28 in- Code action for Minutes the Admin- amendments. See evidence to show the tent is not sufficient (March 29, istrative Rules Comm. legislature’s attention was directed to the 1990); the Administrative Minutes action, administrative what is? 11, 1989); Minutes (July Rules Comm. 8 Accordingly, majority’s Rules Comm. 9 Administrative the ¶ statement, 11, nothing “there (March 24, 1988); Minutes the Admin- ... to indicate the considered (October 14, 12 Rules Comm. istrative the 1989 amendments to N.D. Admin. 1986). aware of its The Committee was during any § of the Code 81-04.1-01-28 ability object any to rule deemed it ig- reenactments” is incorrect because “unreasonable, capricious, or arbitrary, be- the Administrative Rules Commit- nores yond authority” agency, of the because the § review of N.D. Admin. Code 81- tee’s reveal reports Council ob- Legislative the important, majority’s 04.1-01-28. More the by the Rules Committee jections made ignores prior North Dakota law conclusion N.D. Report during this time. See to the creation of the Administrative Rules (1987); Re- Legis. 12-16 see also Council § 54- Committee 1979. See N.D.C.C. 11-15 port Legis. the N.D. Council Schmutzler, Payne, In Northern 35-02.6. (1991); Legis. N.D. Council Report Power, Foss, this Court con- States (1989). 11-15 legislature acquiesced cluded the had 3, majority ar- In footnote [¶ 58] agency’s interpretation of a statute without members of gues, “the fact the eleven any legislature’s evidence the attention pres- the Administrative Rules Committee agency’s interpre- had directed to the been 11, 1989, meeting did not July ent at the Here, only legisla- tation. we have not object to the 1989 amendments N.D. ture’s four-time reenactment of N.D.C.C. § 81-04.1-01-28 is not evi- Admin. Code adoption § 57-39.2-02.1 since the of N.D. Assembly Legislative dence that the 81-04.1-01-28, § Admin. Code we also The approved whole of the amendments.” have the Administrative Rules Commit- review majority apparently concludes adoption tee’s review of the of N.D. Ad- can Rules Committee the Administrative § min. 81-04.1-01-28. Code intent, never be evidence reaching In its conclusion that charged though even the Committee legislature’s specifi- attention was determining “whether administrative cally directed to the Tax Commissioner’s implementing legis- agencies properly are 57-39.2-02.1, interpretation of N.D.C.C. conclu- purpose lative and intent” and the majority has created a standard for presented sions of the Committee legislative acquiescence in an administra- Legislative and the entire Council agency’s interpretation tive that differs Legislative Assembly through Legisla- legislative acquies- from the standard for Report Legislature. tive to the Council’s judicial see, interpretation. cence nu- 54-35-02.6; e.g., Re- See N.D.C.C. decisions, Council, has concluded merous Court Legis. 11-15 port the N.D. (1991). legislature acquiesced judicial in a in- majority’s conclusion effec- terpretation by failing of a statute tively objective main destroys the statute, phrase by using amend the the same or strains Committee language, by reenacting attention” to similar “brought legislature’s to the

221 contrary to North Dakota law. Under statute, mention of whether without law, to the legislature’s was directed attention North Dakota reen- legislature’s See, e.g., Western judicial interpretation. actment of N.D.C.C. 57-39.2-02.1 after University v. North Mut. Co. Nat’l Ins. adoption of N.D. Admin. Code 81- Dakota, 4; Clar 63, 643 2002 ND N.W.2d as an regarded ap- must be 04.1-01-28 Co., 72, ys v. Ford Motor ND 592 1999 of the Tax proval of Palmer, 40, v. 573; 1999 ND State N.W.2d Payne v. Bd. Trust- Commissioner. Martineau, v. State 923; 592 N.W.2d Fund, Ret. ees the Teachers’ Ins. & v. 923; Lawrence Del ND (1948); 557-58 N.D. 35 N.W.2d 515; kamp, ND 584 N.W.2d v. Northern States Power Co. Board of Brooks, Hassan v. 1997 ND Comm’rs, R.R. 298 N.W. City Hovland v. Grand 822; v. Gray, Voss (1941); 430-31 70 N.D. Forks, 1997 ND 384; 563 N.W.2d (1941). legislature, N.W. (N.D. Moore, Krehlik through Administrative Rules Commit- Uhden, Bismarck v. 1996); City of tee, object was aware of did not B.G., (N.D.1994); In re 477 N.W.2d 373 adoption Tax Commissioner’s N.D. Ad- (N.D.1991); Property Midwest 819 N.W.2d The legisla- min. Code 81-04.1-01-28. N.D., 475 Recovery, Inc. v. Job Serv. of ture’s to amend N.D.C.C. 57- failure v. (N.D.1991); Wiederholt 918 N.W.2d object to N.D. Admin. 39.2-02.1 or Code Dir., Dep’t Transp., N.D. 462 N.W.2d its acquies- 81-04.1-01-28 demonstrates Gefroh, State (N.D.1990); v. 458 445 interpre- Tax cence Commissioner’s Dorgan, (N.D.1990); Erdle v. 479 N.W.2d are taxable under tation that (N.D.1980); Skinner v. N.W.2d 834 300 v. 57-32.9-02.1. See Effertz Bank, 189 N.W.2d 665 American State Bureau, Comp. N.D. Workers 525 N.W.2d Unke, v. Lembke (N.D.1971); 171 N.W.2d (N.D.1994); Payne v. 691, Bd. of 693 City Fargo, Blair v. (N.D.1969); 171 837 Ins. & the Teachers’ Ret. Trustees (N.D.1969); Portland Credit 236 Fund, 278, 553, N.D. 35 N.W.2d 557-58 76 (N.D. Hauge, v. Union 169 106 Power v. (1948); Northern States Co. City v. 1969); Public Serv. Comm’n Comm’rs, Board R.R. 1, 71 N.D. 298 Williston, (N.D.1968); 160 N.W.2d 534 Gray, Voss v. (1941); Landeis, (N.D. 70 N.W. 430-31 v. Kline 897 147 N.W.2d (1941). Stearns, 1966); N.D. 298 N.W. Lapland v. 79 N.D. 54 (1952); McIntyre v. State Bd. N.W.2d 748 I affirm the order of the would [¶ Educ., Higher 71 N.D. North Dakota State Commissioner (1942); Village v. Marion C.A. 463 holding liable American West Co., Finch Lumber 52 201 N.D. N.W. $20,883.51 in sales tax. Poindexter, v. (1924); State 48 837 N.D. ex State rel. (1921); N.W. Dale Y. Sandstrom Robinson, Linde v. N.D. N.W. Packard, ex rel. State Linde (1916); (1916); State v.

35 N.D. 160 N.W. 150

Stockwell, 70, 134 (1911); N.D. N.W.

Minneapolis & N. Elevator Co. v. Traill (1900).

County, N.W. 727

Ill and misstate- 61] The omissions majority to a conclusion

ments lead

Case Details

Case Name: State Ex Rel. Clayburgh v. American West Community Promotions, Inc.

Court Name: North Dakota Supreme Court

Date Published: Jun 4, 2002

Citation: 645 N.W.2d 196

Docket Number: 20010223

Court Abbreviation: N.D.