*1 in- did not that she deed cel terminate the contract indicated of her actions accept plaintiff. All from payment tend to con- attempt to reinstate clearly refuse that she would following termination. its successful tract acceptance amounts imply

Further, will not we deposit case where under circumstances default notice to said her of vendor without to the account of the made not retain deposit. implied where she did Nor can waiver be cir learning under hold that deposit of it. We facts after no defendant there waiver of this case cumstances deed, rights acquired termination the contract for by the she finding order such waiver and erred in and that lower court original ing contract. reinstatment re- the matter the lower court is reversed and decision of judgment with to enter to the lower court instructions manded for defendant.

Reversed and remanded. STEEL v.

UNITED STATES CORPORATION COMMISSIONER OF TAXATION. 2d N. W. 870.

February 21, 1975 No. *2 Hanft, Fride, Tyrone Bujold, O’Brien & Harries and P. for relator. Spannaus, Attorney

Warren General, Luther, Deputy C. H. Attorney General, Glassman, Special and Arthur J. Assistant Attorney General, respondent. Otis, Todd, Kelly, Yetka,

Heard Knutson, JJ., before by considered and decided the court en banc.

Knutson, Justice.* case

This involves of a review certiorari decision of the Court, holding relator, Minnesota Tax United Steel States subject Corporation, purchases to a or sales use tax on certain August 1, 1967, made between and December and on property the rental of during certain period the same under prior entered leases into to the enactment of the Minnesota sales tax, use payments but made after the enact- of such ment tax.

The statute involved is Minn. 1971, 297A.25, 1(h), St. subd. § all which at times relevant to this action read: following exempted “Subdivision 1. The are specifically from imposed by the taxes sections 297A.01 to 297A.44:

[*] # $ ^[*] ^[*] “(h) gross receipts storage, from the use, sale of and the consumption materials, or including of all chemicals, fuels, petroleum products, lubricants, packaging materials, feeds, seeds, fertilizers, electricity, gas steam, used or consumed agricultural production personal or industrial in- property

* acting pursuant Retired Chief Justice to Minn. St. 2.724. ultimately retail, item so tended to or not the be sold at whether ingredient part property an or becomes constituent produced. to, production include, Such not limited shall but is production manufacturing, any tangible personal property, agri- processing (other consumers) than restaurants and products vegetable animal, cultural fish- whether or commercial ing, smelting, brewing, distilling, refining, reducing, printing, mining, quarrying, generating electricty lumbering, and road building. cleaning, painting, production Such not include shall repairing part processing property except or similar original manufacturing Machinery, equipment, imple- process. ments, tools, accessories, appliances, contrivances, furniture and fuel, gas electricity, fixtures used in such space steam heating lighting, used for are not included with- exemption.” (Italics in this supplied.) stipulated. engaged

The facts were Relator is business mining manufacturing cement, steel, iron ore and and related *3 products stipulated operations sale. It is the business meaning of relator production” “industrial constitute within the During period involved, statute. purchased relator cer- tain items and used them in manufacturing the course of steel at its “Duluth Duluth, Minnesota, Works” in and in the course manufacturing in cement its “Universal Atlas Cement Plant” Duluth, mining and in the course of iron ore on the Mesabi Range. stipulation quite lengthy may and be summarized so toas divide the categories various items into as follows:

A. Operating Supplies: immediately totally

1. Items and operations: consumed in (a) tappers open-hearth Jet tap (one used to furnaces

use); (b) O.xygen acetylene welding and used maintenance cars, shovels;

on railroad locomotives and (c) auger” “Leroy Short for a tap shanks used to blast (one use).

furnaces treating, condi- shaping, extracting, 2. Material used retail: tioning property sold at rotating grinding drum Grinding in a (a) used balls crushing “clinkers” in manufac- purpose week); (useful life: 1 ture of cement (use- conditioning Grinding billets (b) used in steel wheels wheel); for a 16" ful 15 hours life: washing sizing iron cloth used for (c) Metal screen weeks); (useful life: 8 ore (useful drilling in rock holes (d) Drill used blast bits tungsten bit); life: for a 130 hours adaptors shovel bucket for (e) used on a Shovel teeth (useful digging purpose teeth rock and ore life: hours; hours). adaptors —36 —720 supplies: Equipment and electrical rivets, Nuts, bushings (a) bolts, pins, cotter used to repair equipment mining maintain and used manufacturing operations (average quantity per used average 10,626; price: month: 24^); lugs (b) Fuses, clamps, batteries, terminal and switches processing used in maintenance electrical product equipment (average 5,514; quantity per used month: average price: 26^); strips

(c) Blasting scrap made of tires cut in mats rubber together and wired and used to confine debris from (useful blasts, average quantity per blast life: 5 24; average price: $277.21); month: filters, (d) wiper blades, Oil and air bulbs used maintain trucks and mobile used in other products (average quantity per the movement of 1,042; average price: $2.99); month: *4 (e) controls, bolts, Fasteners, nuts, gaskets, and washers equipment

used maintain trucks other mobile in used the movement of ore material and other mining per operation (average quantity month: used ‡). average 7,043; price: moving extracting product dur-

4. Materials used ing manufacturing:

(a) transmitting Drill electrical and shovel cable used power used

and mechanical within drills shovels mining ore; (b) Conveyor belting ore within the used to transmit iron

processing plant. tubes, 5. Tires for off-the-road custom-manufactured (useful use on vehicles used to move materials at the ore mines 4,000 6,000 hours). life: “Refractory

B. lining heating materials” used in furnaces: clay 1. lining open-hearth Fire and silica for brick furnaces (useful months); life: 300 heats/3 clay lining

2. open-hearth (useful Fire ladle for brick ladle week); life: 14-19 heats/1 clay lining Fire open-hearth ladle (useful brick for lip ladle days).

life: 10 Ingot C. molds and shape stools—box-like used to containers ingots (useful pours). molten steel into life: 80 Operating D. Maintenance Materials: 1. Duluth Works:

(a) Mobile maintenance materials —small re-

placement engines parts for component and other systems process-tractors, diesels and forklift trucks (average quantity average 234; per price: month: $8.24);

(b) Electrical replacement maintenance material —small

parts approximately 120,000 electrical motors used product processing (average quantity per average 10,530; month: ; price: 96(0 (c) Operating equipment maintenance material —small re-

placement parts pieces machinery used move *5 148 (average quantity used through plant

products average per 55,562; price: month: Operations : 2. Ore re- material —small

(a) equipment maintenance Mine shovels, trucks, production parts used placement stripping cars tractors, graders, and locomotives, average 15,159; per (average quantity used month: price: $7.24); replace- material —small

(b) maintenance Concentrator plant product processing parts for ment washing equipment concentrators, pumps, such average per 9,277; (average quantity used month: $3.75). price: that the mentioned above

It is the contention of relator items personal prop- consumed industrial were erty ultimately and, therefore, at intended to be sold retail commissioner, exempt on the other from our sales use tax. hand, “machinery, equip- contends items involved accessories, ment, implements, appliances, tools, contrivances” production and, therefore, in such from the statu- excluded tory exemption. question,

The Tax that the items in with the Court held sole jet “Leroy exception tappers augers,” and short shanks for exception exemption were within and taxable. No party sought jet tappers has review of the decision that the and short augers Leroy exempt. So, any pay shanks for were need not we further attention to those items. outset,

At the we are confronted with the rule that this court judgment not its as to will substitute of the Tax Court See, Taxation, questions Corp. 295 of fact. Abex v. Commr. of 445, (1973); 2d Tel. Co. Minn. 207 37 Mankato Citizens N. W. Taxation, 107, (1966); 145 2d 313 v. 275 N. Commr. Minn. W. Taxation, Minn. Oliver Iron v. 76 Min. Co. Commr. (1956). N. 2d 107 W. adopt of Northwestern rule suggests

Respondent that we 105 Minn. Co. Fire Ins. Fire & v. Connecticut Marine Ins. Co. pre- (1908) we where said 483, 487, 117 N. W. applies: findings a trial court sumption in fact of favor of “* * * questions fact, only determining disputed undisputed drawing facts.” from but reasonable inferences where, de- application It is that this doubtful rule has “machinery, equipment, termining question the items in *6 contrivances,” accessories, implements, tools, appliances the stipulated interpretation applying statutory Tax Court In- Northwestern facts to determine the ultimate facts. Great 447, Taxation, 2d 267 Minn. N. vestments v. Commr. of 127 W. (1964). 444 hangs Press, largely

The our case on decisions in Midwestern Taxation, 59, Inc. 203 2d 344 v. Commr. of 295 Minn. W.N. (1972), Jaspersen Taxation, and 300 v. Commr. of Minn. (1974). Press, 218 N. W. 2d 463 In Midwestern we the affirmed lithographic plates, print copy Tax Court held and that printing customer, for exempt commercial were from taxation under the argued above statute. The commissioner in that case plates part machinery process were used in the printing they of because printing press. were attached to the The plates evidence only established the par- that were used for a job they ticular for which were re- manufactured and were not usable, they partially extremely fragile subject because were by oxidation, to destruction partially because no other cus- tomer would wish to have the printed. only same material Their possible reuse to run copies additional the of material the original possibility customer and that by was limited the fact that their contents could not they be altered and that only could be preserved period for a short affirming, In time. we said:

“The commissioner’s main contention plates is that once the printing were press attached the they part became ‘machinery’ and therefore were exemption excluded the from the might if tenable This contention the

provided statute. they job were which the one for more than plates usable for were ordered. comprehensive test out time to set are unable at

“We equipment, ‘machinery, im- distinguishing from ‘materials’ for however, case, hold we facts of this plements,’ On the etc. particular job for a plates are lithographic which custom-made impressions, and only run, number of usable a limited only run scrap at conclusion the have value (h).” meaning 295 Minn. machinery within subd. N. 2dW. after the decision of the

Jaspersen was this court decided apparently rela- now us after Tax the case before Court The commissioner’s brief and relator’s brief was written. tor’s were, however, light Jaspersen reply written brief argument during decision, also was cited oral of this which controlling Jaspersen The contends case. commissioner here. Jaspersen, “polishers, cheeks,

In the items involved large rings,” items were attached to a machine small polishing, shaping, finishing drainage purpose tile. days only parts had useful lives weeks and were there- *7 polishers, cheeks, rings replaced. after The and were re- used to during place parts production process, which had worn out the many just of the items involved now the case us. before affirming In the Tax which held that Court the items were not taxes, exempt from and use we said: sales «* * * polishers, cheeks, The the claim of relator that and rings only job they for the prepared were for which were upon completion job rejected by and then discarded the cheeks, the Tax when it that polishers, Court stated one set of rings and would make a substantial amount tile which could amply sup- be to several different sold consumers. The record conclusion, ports accept Furthermore, that we it as a fact. in a parts the fact that the involved were rendered worthless relatively exemption their short is not time determinative purchases. status under the as written at the these statute time of rapidly. Midwestern, lithographic plates In the consumed were However, the thrust the the limited of Midwestern decision was nonrepetitive plates function of the than their useful rather case, placed emphasis In life. we on the fact considerable lithographic plates specially spe- produced the to do job specific cific customer and were after that worthless job completed. case, rings, cheeks, In this the polishers, time, while rendered in a short useless can be to make a large number of field tile which can be sold to several different consumers.” 300 Minn. 218 N. 2dW. contends, among

Relator things, other ap- Tax Court plied ruling construing an erroneous of law the to statute ex- empt only directly those items immediately totally used and process production. consumed in may It be that the Tax proper Court did believe be exemp- construction of the tion, place we but need not decision light on that conclusion in the Jaspersen. Unless are to Jaspersen, we overrule which we de- do, cline to the decision of the Tax in the case Court before now isus correct. There is a vital difference between the Midwestern Press Jaspersen case and one, case in that in the the litho- graphic plates were single job, manufactured and used for a in Jaspersen, parts whereas involved were used to manu- facture purchasers. tile that be would sold to a number of same is true the items involved in this case. The steel and ore produce it cement manufactured relator were sold generally purchasers. number of see no We difference be- Jaspersen tween items involved in the case now before us and except quantity. as to foreign decisions, pointed

Much but, has about been said as we case, accomplished by out the Midwestern Press little can trying to reconcile these cases with own. Most these for- our *8 will Seldom

eign former decisions. in our were considered cases prefer fol- to identical. We or the facts be the same statutes foreign try deci- to to follow low decisions rather than our own case are convinced pro sions or con such decisions. We fall Jaspersen and must Press and controlled Midwestern above, convinced, we have as said within one or the We are other. Jaspersen controls. advantage seeks take of an Relator amendment reads, part: in 1973 which statute “* * * accessories, implements, tools, Machinery, equipment, fixtures, contrivances, appliances, used such furniture and space fuel, gas heat- electricity, or used steam ing however, lighting, exemption; are not included within accessory items, tools, equipment lived which and other short separate producing units a direct effect detachable ordinary upon product, have an useful life such items where months, exemption pro- of less than are included within the 650, XIII, vided herein.” L. c. art. 2.§ argues change Relator that the amendment was not intended to legislative history simply the statute but The clarify it. originally support, act relator. the bill intro- does When question read, duced, proposed amendment to the section part: “* * * exception of the preceding terms sentence [the exemption] basic shall include the machine and all itself component parts, belts, moving pulleys, shafts, its such as parts operating any accessory structures as well as tools or equipment plates such litho other short lived items separate producing detachable units used in effect direct upon product, and shall further include or devices control, regulate operate the machine.” File House V, art. § language bill,

That remained despite attempts in the to amend throughout process it hearings of committee floor con- *9 Rep- Representatives, In House of in the both houses. sideration striking by sought Salisbury to amend the bill Adams resentative referring accessory phrase to above-quoted sentence the from the House, 1973, p. 2743. items. Journal tools and short-lived striking all amend the bill Mel Frederick moved to Senator inserting following language place: in the its of the sentence and “* * * accessory or but shall not include tools sepa- plates such litho and other short lived items which as producing upon the rate in effect detachable units used a direct product.” 1973, p. Senate, Journal of the Both amendments failed. committee, the bill returned lan-

When from conference the guage language finally in the section the dis- was enacted. The having tinction between items useful lives more than 12 or appeared than 12 less months for the first time the conference legis- report. House, 1973, p. committee Journal the 3838. This history original language lative that indicates the bill sought change clarify prior language. By to rather than the the specific plates sought reference to litho legislatively the bill to suggested overrule the Midwestern The Press case. floor amend- ments, votes, close which failed would either have left lan- the guage slight earlier change its form one made That it. suggest does clarify not a unified effort Thus, to the statute. the finally language adopted, particularly provision, the 12-month probably compromise was language between the in the bill as introduced, which imposed would have a much heavier tax liabili- ty industry on previously than case, the position and the taken in the floor amendments either would have left the language old specifically effect exempted would have what sought the new bill to include. The numerous versions of the lan- guage disagreement the exempt as to what should be legislative attempt clarify always indicative of a to it had what say symptoms legis- intended to but are instead that the various just disagreed, lators community the business com- policy question do, of what on the ultimate missioner of revenue language Thus, be exempt. should final items should change clarifying and not a amendment. viewed as pertaining the lease only question that is that to The remains equipment. of certain subject parties stipulated matter in- of the leases equipment;

volved here is administrative pursuant payments question leases the rental were made August prior effect date executed and in effective tax; equip- possession of the Minnesota sales and use August 1, 1967; prior ment transferred and that the term periods rental under leases varies from to months. *10 1966, 2, first, Three leases are involved. The dated November is of a truck. The was 5 Euclid lease for a term of months and granted option relator an to the lease for an. additional renew period purchase to Payments 5-month the ap- vehicle. were parently period 14, July 1967, made over a from June to lease, 1967, early The second into in entered was of a Mack truck. establishing term, provided Instead of a fixed the lease that rela- operate 3,000 hours, tor the vehicle for total would a of awith month, per fixed, hourly of 400 minimum hours at a rental rate. began apparently using Kelator February the vehicle in 1967 and continued to do so until October 1968. The third lease involved Corporation the rental from Xerox copying of a number ma- chines. The lease was entered into in March 1967 and had no term fixed but was from month to month until notice of cancel- parties rely, part, Both Agency, lation. on Hansord Inc. v. Taxation, 198, 294 199 (1972). Commr. Minn. N. W. 2d 823 In taxpayer that case motor vehicles were to prior leased the to the effective date of the sales use tax and the commissioner sought payments to tax made after the effective date of such tax. taxpayer inasmuch as the irrevocably We held bound payments during term, make the a fixed which continued after tax, payments the effective date of sales and use were said: not taxable. We

^55 “* * * rights lessor and les The fact remains irrevocably see were the time the lease was fixed at entered. obligation pay amount had an the entire lessee unconditional rental, payments we re and the time when the due gard expression irrelevant in the to the con absence trary by legislature. July 31, The tax is on made after sales including, things, among a sale is defined as other leasing tangible property. adopt personal To the Tax Court’s argument require a would us hold that new is entered lease each paid, time an installment which is not the situation where specific there is written contract term not revocable party.” (Italics 199, 199 either supplied.) 294 Minn. N. W. 2d 824. correctly that, areWe convinced the Tax Court here held where the leases are not irrevocable may but be terminated at party, payments will either after the effective date of the sales exempt and use tax See, are not from taxation. Crown Iron Taxation, Works Co. v. Commr. Minn. N. 2dW. (1974). That case did not involve a lease but involved a con- delivery goods tract for the future prior entered into delivery effective date of the act or made after the effective date.

Affirmed. Yetka, (dissenting Justice in part concurring part). respectfully I appears dissent. It that, clear to me under the language statute, subject materials are the of this appeal were intended *11 exempt. to be

Minn. 297A.25, 1(h), St. subd. § states as follows: following “Subdivision 1. The specifically exempted imposed from the taxes by sections 297A.01 to 297A.44:

[*] ^[*] ^[*] ^[*] ^[*] “(h) gross receipts from the sale storage, of and the use, consumption or including all materials, chemicals, fuels, petro- of products, leum lubricants, packaging materials, feeds, seeds, fertilizers, electricity, gas steam, and used or agri- consumed in personal property production intended or industrial

cultural retail, or not the item so ultimately whether at to be sold pro- part property ingredient or constituent an becomes to, pro- include, not limited production duced. shall but is Such manufacturing, any tangible personal property, duction of agri- consumers) of processing (other than restaurants and vegetable animal, products whether or commercial fish- cultural brewing, ing, reducing, distilling, printing, refining, smelting, generating electricity mining, quarrying, lumbering, and road building. production painting, cleaning, shall not include Such repairing processing property except part or similar as original manufacturing Machinery, equipment, imple- process. ments, tools, appliances, accessories, contriva/nces, and furniture fuel, gas in such electricity, fixtures space heating lighting, steam used are not included within exemption.” (Italics supplied.) Jaspersen true that it is the case While v. Commr. of Taxation, (1974), 300 Minn. 218 N. 2d 463 W. this court polishers, cheeks, rings held that certain large to a attached purpose polishing, for the shaping, finishing machine drainage statutory tile exemption, within the I think strictly that case should be limited to its facts. compelling

Relator to me is a makes what case that the statute interpreted part should be to treat as fixtures or ma- chinery purposes and use tax for sales those items taxpayer treated and commissioner revenue as items depreciated may purposes for income tax treat expense pur- which are current those items for income tax items poses exempt from the sales tax.

To hold otherwise means that the commissioner and the Tax compelled every appeal Court will be to decide almost on a case- by-case basis. good However, pay

No tax tax to one who tax has it. acceptable palatable taxpayer can be made more if the *12 language imposing precise its it is clear and statute easy interpretation, is to administer. interpretation applicable an

Adopting to the tax act sales language, “expense,” and defined as “fixture” and such inception, enable under the income tax laws since their would taxpayer know the act and the what both the administrator of meant, is to administer. and the tax itself would be easier While majority opinion will amendment referred to arising helpful disputes future, in the it of little aid for the prior passage of that act. holding regard

I majority concur in the to the tax- ability payments equipment. of the rental on the leased

Kelly, (dissenting concurring part part). Justice join I opinion in the Justice Yetka. Mr. EDMONDSON,

HUGH A. JR. BETTY v. J. EDMONDSON.

226 N. W. 2d 615.

February 21, 1975 No.