*1 Christopher Chaput, Minneapolis, J. PACKAGING, respondent. COLOR-AD INC., Respondent, OF

COMMISSIONER REVENUE, Relator. COYNE, Justice. No. C8-87-2103. presented capi- The issue is whether the Minnesota. Supreme Court of program tal tax reduction goods chapter applies 297A to future or-

Sept. prior dered to the statute’s effective date placed into delivered or after that The date. Commissioner of Revenue concluded it did not denied respondent Packaging’s Color-Ad claim appealed a refund. Color-Ad Tax refund, holding Court allowed the un- program der the both of future at the sale occurs time of delivery. We affirm. parties submitted the have case

stipulated Respondent facts. Color-Ad Packaging engaged Company, Inc. is in the Park, printing business in St. Louis Minne- sota. December Color-Ad ordered a slitter rewinder from a firm United Kingdom telephone. The order was by a purchase order in confirmed written later, February 1984. Two months gravure coating Color-Ad ordered a company Bay, from a station Green Wis- consin.

The slitter was manufactured rewinder shipped, after June and was as- placed into service at sembled Color- August place of Ad’s business gravure coating station was manufac- later, and was tured after June 1985, delivered, assembled, August place into service at Color-Ad’s business. Law,

The Minnesota Sales Tax General through 297A.01 §§ system comprehensive cre- embodies sale, impose tax on an excise ated use, storage, consumption within Minne- tangible property and cer- personal sota and services. The tain other commodities taxes, use, III, Atty. provide sales and Humphrey, H. statutes two Hubert State exclusive, Gen., Schultz, Atty. mutually comple- Sp. T. are David Asst. which Paul, designed to exact Gen., mentary, and which are for relator. St.

807 percentage The contends that equal on a of the Commissioner the re- tax based an capital equipment duction in the on tax rate property question. of the purchase price “encourage in capi- was new investment essence, that, in a tax sales It has been said equipment” tal and that Color-Ad should purchase, a tax freedom of is a on the its capi-' not be entitled to a rebate because enjoyment tax tax on the of use is a equipment placed prior tal orders were Berrie & Wallace purchased. which was effective for the refund. Equalization, 40 Cal.3d v. Bd. Co. State however, concluded, Tax Court that a 142, Cal.Rptr. 219 707 P.2d place- not occur on the does (1985). 147 goods of an upon ment order for future “Except reads: The sales tax completed goods. of the Color-Ad chapter, provided in this there as otherwise telephone confirmed order of a slitter percent imposed excise tax of six is King- rewinder from a firm in the United - gross from sales at retail made receipts February dom 1984 written any person in this state.” Minn.Stat. order, in April 1984 Color-Ad ordered (1986). 297A.02, pro- 1 The section subd. § gravure coating station from a firm in viding imposition of a use tax for the Bay, piece Green Neither Wisconsin. states: however, capital equipment, was manufac- 1,1984, July tured before the effective date using, storing or privilege For the refund, for the and then neither tangible person- consuming in Minnesota shipped delivered, assembled, or or property, al tickets or admissions place placed at Color-Ad’s service events, places and athletic of amusement August business before 1985. Since both exchange tele- electricity, gas, and local were items delivered use, storage phone purchased 30, date, effective after state, a is consumption or in this use tax Tax Court ruled that Color-Ad was entitled imposed every person in this at state percent provided the two refund sec- percent price of the sales the rate of six 297A.15, tion subd. imposed the tax retail unless sales at tax liability That for the sales accrues at paid on the sales section 297A.02 was * * * only apparent time of is not the sale price. 297A.02, language from the of section (1986). Minn.Stat. 297A.14 Lei- recognized in such cases has been pro Both 297A.02 297A.14 sections Brewing Dynamics, Inc. v. sure Falstaff notwithstanding that, foregoing vide (Minn.1980), 33, 37 Corp., 298 N.W.2d the excise im provisions, the rate of tax Crown Iron disputed here. is upon imposed and the use tax posed sales Taxation, Co. v. Comm’r Works capital price equipment is (in 213, Minn. 214 N.W.2d 462 which 297A.02, percent. four Minn.Stat. subd. §§ the converse of the were faced with we (1986). The tax on 2 and 297A.14 situation), held that a sale oc- present is so structured that the tax is curs, pro- the definition with accordance paid percent at six and the the rate of 297A.01, 3, subd. vided Minn.Stat. § equal purchaser applies for a refund to the possession, title or when transfer of percent reduction as result of two occurs, both, property tangible personal capital equipment. payable on lower rate the Uniform Commercial and we looked to Minn.Stat. adopted in this state clarifica- Code rate became effective reduction in the tax of title.” “transfer We tion of term 30, respect “sales made after June identification to point out that went on * n necessary prerequisite and also the contract is a tooling title, after special 336.2-401 passing of are service until future but not and that where case, involved, they Act of are 1984.” the contract VI, goods to appropriation Minn. something more than selection must Laws previously liability right choose noted that for use by a seller who retains the triggered by any privilege exercise of specific supplied to the “the article to be using, storing, consuming desig- of in Minneso- 336.2-501 purchaser. Minn.Stat. § tangible personal ta property.” Miller manner identification nates the which *3 Revenue, 620, 359 N.W.2d Moreover, Comm’r accomplished. of (Minn.1985). exer- Color-Ad could neither 336.2-401(2) that unless provides right any power enjoy any privi- cise or nor passes title at explicitly agreed, otherwise using, storing consuming tangi- lege of at the seller com- place time which the and personal property property ble before that respect to the pletes performance his In light came into existence. the of the delivery goods. of Id. at 216- physical the “use,” statutory provisions definition of the Thus, 17, in at 464-65. Crown N.W.2d of Minn.Stat. 336.2-401 and our Works, this court held that the sale Works, in decision Crown Iron the Tax prior the goods, were ordered to which properly liability Court determined for the tax statutes but effective date of sales 1, July use tax did not accrue until after the date of the delivered after effective passed tax, place title on took when sales goods. According- physical contends, the however, The State imposed. properly Id. ly, “purchases,” the sales tax was and as those “sales” terms 218-19, 214 N.W.2d at 466. in the are used section the session law providing for effective the re- the date of In the case orders present the applicable in the rate of tax duction gra- slitter and the for both the rewinder 25,1984, equipment, Act of capital goods coating station for future vure were 502, VI, 11, 492, 1984 Minn.Laws did not come into existence until which 564, meaning have different than that 30,1984. fact, they not after June were provided definition at sec- year more after the delivered until than 297A.01, tion subd. 3. While it is true that of the reduction in the effective date rate the definition is exclusive and applicable capital equipment. tax portion while it is also true that the the Had the sellers the slitter rewinder setting effective date of the tax the gravure coating and the station been phrased, inartfully is somewhat reduction the sales Minnesota retailers and nothing provision justifies in that substitut- state, thereby triggering imposi- this “purchase,” ing “purchase con- order” (section 297A.02), tion of the sales tax “purchase” in struing “sale” such a and holding in would be Crown Iron Works they occur other than simulta- way that can dispositive: the sale occurred transfer departing neously, any or in other manner purchaser, of title an event which judicial statutory and from the established goods could not have occurred before the “purchase.” A definition came into existence. Since did construction of the ef- perfectly reasonable after not come into existence until June provision can achieved date fective purchaser should be entitled to according “purchas- “sales” the terms 297A.15, provided the refund at section customary accepted mean- es” their subd. 5. ings. however, question, were not any applicable to reduced rate is is, made Minnesota. The one manufacturer sale made June Kingdom United located has a transfer after June when there been pursuant Color-Ad 30, other the State Wisconsin. either of title thé was, therefore, required Code, pay adopted a use tax as Uniform Commercial using, storing, Minnesota, privilege possession. or con- The effective or of suming tangible personal reduced rate in Minnesota states that the apply property. 297A.14 Section also shall if May equipment “use” includ- made after defines as place power purchaser has elected right over the exercise equipment service until after tangible property, and have personal we words, language pro- directing delivery this state and of the In other exception operation. for a transaction which to its new base of vides ineligible legislative for the tax The enough, otherwise be intention is broad assume, encouragement if the is not reduction: include of a n re- until after business to remain in unit long the transfer applies rate Accordingly, duced Minnesota. affirmance of the pursuant to the Uniform either of title Tax Court’s decision in the case enacted in Minnesota Code as Commercial promotes legislature’s intention as well subsequent possession occurred or of preserves uniformity in the construction course, is, purchas- 1984. It application terms “sale” *4 the election whether to must make er who “purchase.” equipment in service—a placing the delay The Tax Court’s allowance of Color-Ad’s judgment which re- of business matter claim for a refund is affirmed. weigh the economic purchaser quires the to. gained from utilization benefit KELLEY, POPOVICH, YETKA and to be derived equipment against the benefit JJ., dissent. Moreover, it is the the tax deduction. from KELLEY, (dissenting): Justice applica- must declare in its purchaser who statute, construing When a court’s though the refund that even tion for tax 1, leg- function is to ascertain effectuate May occurred between purchase 1984, pursuit goal islative intention. In 30, equipment was not that and June 30, disregard free 1984. court letter placed in service until after June wording eligibility for the the law when the of the statute is one considers that When ambiguity. depends purchaser’s on the clear and free from all How- reduced rate rule, conduct, “pur- ever, corollary the shift from “sale” to as a to that when the explainable provi- explicit, of the law are not or where chase” becomes words exists, unambiguous. attempt ambiguity sion is courts must legislature by ascertain the intention of the its manufactured The State buttresses application of certain criteria. by ambiguity in the effective date Likewise, (1986). 645.16 legislature’s to the intention to reference employ certain courts are authorized for, an incentive or to remove create ascertaining that intention. presumptions to, impediment acquisition capital equip- (1) are: that Among presumptions those employment in ment business units for legislature not intend a result that did plants. disagree We do not with unreasonable; (2) that is absurd legislative the State’s articulation of inten- certain; effective and entire statute is to be only its conclusion that the tion but legislature intends to favor that the legisla- Tax Court’s decision frustrates the against any private public interest as pur- purpose. In the case the tive See, e.g., Minn.Stat. 645.17 interest. capital equipment for the chase order April of Act of My examination was, indeed, question long before the 6, 11, 1984 Minn.Laws art. ch. appli- legislative decision to reduce the tax (the Tax Refund Sales and Use capital equipment. Neither item cable to Amendment), me conclude the stat- leads delivered, however, clear nor certain. utory wording is neither effective date year more than one after the Therefore, must resort I believe may be the of the reduction. Whatever legislative intent refer- ascertainment it validity of contention Color-Ad’s of construction and rules ence to could have cancelled the order because statutory presumptions. application timely, it is equipment was not delivered done, me appears clear to it When that period of apparent that at time for a an un- legislature did not intend year after the effective date about one in favor of those rebate warranted windfall reduction, could have the tax Color-Ad placed orders who had imposition Minnesota’s use avoided date enactment or effective long before the another by removing its business to “purchase” any reliance words “sale” and as and without used of the statute from the rebate statute should be their result which ensues accorded it —the today “customary accepted” meanings. affirmed opinion tax court’s Therefore, I feel constrained to majority.1 only To me the statute is not “somewhat respectfully dissent. wording inartfully phrased,” face its on its ambiguous. well context is When The Act of employed “pur- codified words 1984 Minn.Laws chase,” autho- what did the intend? Minn.Stat. § tax re- percent sales and use Was intent was to be rized two equip- synonymous to be con- construed with our bate on certain Crown engendering the act struction of the word sale portion ment. The agree legis- Works? available to would that had the dispute made the rebate this simply provided and also lature in the 1984 refund “sales made * * amendment that a sale or con- purchases of 1,1984, specified after a en- tooling made after summated special rebate, purchaser percent title the a two placed in service until after but not *5 25, 1984, holding Crown Iron Works that our in Act of 1984.” might dispositive. legislature 564. be Had the 1984 Minn.Laws. provided, significant no language the used so distinction The court concluded tax unambiguous. justify application dif- precise arriving In would exist to of a was conclusion, it relied this ferent definition “sale” at that determining in a Crown Iron when the time sale of court’s definition of Taxation, tax- Co. v. Comm’r 298 to be delivered the future becomes Works (1974), able, maturity construing Minn. 462 the than when the N.W.2d giving 297A.01 date rise to a refund No word used in Minn.Stat. claim. is exist, and, held, opinion, purpose ambiguity my would We there the incorporate to determining inappropriate the on which the obli- it would not be date arose, judicial gation pay by by the definition arrived at refer- to sales tax (the ence to Uniform defi- reference to Minn.Stat. 336.2-401 the Commercial Code However, Code) nition Crown Iron Works. Uniform a “sale” oc- Commercial me, the completes perform- the that scenario is not this case. To curred when seller goods. legisla- physical delivery ambiguity the here arises from the ance “sales “sale” in that con- ture’s limitation the refund on Because we had defined * * *' text, to legislature had made and also and because the not after * * of “sale” thereafter altered the definition statute, 1,May in service in the the tax court after used tax language 1984.” This concluded that the same definition to construing uncertainty ambiguity be into the when raises an read statute therefore, being and, tax construed exemption, that is an when construing stat- Crown Iron Works. ambiguity done existed. it concluded no court, utes, ignore a permitted are not to majority of this while acknowl- particular or to define edging statutory definition is not exclu- the the sive, the context of admitting statute is words out of and while the language they appear. Minn.Stat. inartfully phrased” proceeds, in which “somewhat But, me, 645.17(2).2 nonetheless, appears it the the conclusion Mr. Mitchell stated in the in- where Justice amount the claimed rebate However, $11,362.58. only rule: stant case in the tax indicates that more than record court way construing always an It unsafe pending it, claims are $2 million rebate by process of or contract to divide statute etymological words, dissection, of this case. separate outcome into each, separated apply from thus and then context, given particular Loan some definition Int'l Trust Co. v. American & See also Co., by lexicographers, then reconstruct N.W. Trust Minn. apply contemporaneous legis- construction Reference to the Croton Works in the context of this re- of “sale” would history lative me with no leaves doubt that just that: fund amendment do would capital program represent- the 1984 refund ignoring only result in not the effective legislature public- ed one reaction of the clause, superfluous. also render it ly aired contentions in 1983and 1984that a superfluous It would because “date of be “poor business climate” existed controlling, delivery” thus mak- state, which, asserted, some had contribut- clause itself redundant. I remain ed, part, at least in to the exodus of some majority’s attempt to unpersuaded business firms to other states. One real nothing that conclusion. find avoid economic disadvantage to businesses locat- legislative hearings record or the either the ed in Minnesota arose from a use support majority’s assertion that the tax on and certain contemplated by refund amendment was imposed higher tools which had been legislation to the to inure benefit rates than were in adjoining similar taxes Ad, who, long person had before Color disparity, states. To eradicate this and as to the enactment of the statute committed part larger program of its attempt capital goods for use in Minne- development stimulate economic and result- attempt Finally, sota. to reconcile ing employment, legislature sought 645.17(4)(the presumption in Minn.Stat. § provide an incentive to businesses either to presumption that when the uses locate or to remain in the state.3 previously a word defined the court it In this case both Color-Ad meaning) that found intends the same (the 645.17(2) acknowledge court presumption purpose the incentive Minn.Stat. § *6 underlying the entire statute be effective and the refund amendment. Color- certain) contributing not, it, only results to the Ad does nor could claim that the uncertainty ambiguity meaning and of the placed by capital equip- orders it the statutory language in of the the refund degree any ment were motivated in the amendment. course, which, program, incentive of hadn’t proposed even been at the time the orders Having language concluded the of the does, question placed. It how- had been ambiguous, refund amendment is in order ever, it assert that an allowance to of the responsibility to exercise our overall to con comport with what it asserts rebate would strue statutes to effectuate the intention of legislative intent to encour- to be a broader legislature, proper the it is to refer to con plant productive age investment in new temporaneous legislative history relative to reject that assertion equipment. would statute, necessity the the occasion First, as we have re- for two reasons. enactment, prompting the circumstances held, peatedly exemptions in tax statutes objective. and its 645.16 therefore, are, exceptions to be (1986); Haule, 160, are 304 Minn. Peterson v. (1975). strictly construed.4 The refund aménd- 230 N.W.2d 51 well as to remove a deterrence to other instrument the basis of these defini- Hearings always locating tions. An instrument must be con- in the state. concerns from whole, meaning particular strued as a and the House Committee on on H.F. 2016 before the phrase Taxes, to be attached to word or is usual- Minn.Leg., April Similar 73rd context, ly to be ascertained from the the purpose on the same declarations of were made of, subject pur- nature of the treated the representatives on the tax other occasion pose parties who executed or intention of the Eventually provision was incor- committee. the contract, body or of the which enacted or porated Tax Bill S.F. 1969 enti- in the Omnibus framed the or constitution. Development.” tled “Economic purpose engender- explaining 3. In of the bill Paul, See, Ramaley City e.g., St. 226 Minn. v. (H.F. 2016), chairperson the final statute 406, 412, (1948); County 22-23 committee, 33 N.W.2d of the house tax who also was one Inc., Honeywell, Hennepin Minn. authors, v. many of the bill’s asserted that states (1973); Corp. Comm’r Abex v. 210 N.W.2d percent at 4 taxed sales on 445, 451-52, Taxation, Minn. 207 N.W.2d purpose the bill was to make and that the existing (1973). competitive, 41-42 firms Minnesota business ment, grant com- chase" never consummated until though purporting to possession goods, of sales and plete exemption from taxation as the commis- capital goods, asserts, does constitute purchase of largely sioner would frustrate the ultimately of tax limitation on the amount designed legislative purpose pro- obvious to more, nothing than a thus is payable and producers an incentive to Minnesota to vide See, e.g., exemption. restricted form tax new to uti- invest be Paul, City Ramaley St. Minn. plants. in operating lized Minnesota Addi- 22-23 Sec- 33 N.W.2d construction, tionally, such a limited it history contemporaneous óf the ondly, the me, quan- result very seems leg- legislation demonstrates that while legislators tum revenue loss about which comparative narrow islature meant expressed debating concern when the re- payable by taxes discrepancy between debates, fund amendment in 1984. Those payable by and those producers me, clearly it seems to indicate the con- states, surrounding it units business legislators pro- no cerned had intention of very simultaneously much aware of was viding a expense windfall loss occur potential revenue that would those, like public revenues to who Color- accordingly a result of rebate Ad, in sense be deemed have no can strictly it its incentive sought limit made investments in reliance on purpose. example, For House Commit- program. incentive considered, rejected, a on Taxation tee When the refund percent. proposal the rebate at three to set “purchases capital equip- available on ad- proposal rejected This because * 4 * ment made after percent likely would not con- ditional one placed in 1984” sought to the ends accom- tribute something specific by including intended plished anticipated sufficient to offset the provision, and For this effective date of revenue the state. similar likewise loss reasons, rejected “gap” period. providing the committee likewise for a The tax effect, would, which, proposal way court construed the effective rebate, grant exemption complete from tooling apply special *7 capital equipment. and use tax on required ship- and/or that “customization Hearings Commit- on H.F. House ment,” not to Taxation, Minn.Leg., April on 73rd tee If the time Ordered. I inter- existence at Therefore, that I contend neither correctly, opinion reach- pret majority statutory rules of construction applicable essentially It es the same conclusion. legislative history contemporary nor lend plausible and to me seems more reasonable support Color-Ad’s assertion that structuring by of the effective date that legislature in 1984 that harbored intent legislature making lim- provision, the a position firms Color-Ad were to ited other instances where allowance part be entitled to tax rebates as period “gap” exists between order date providing for economic broader scheme delivery goods, future orders for —such development. goods, may take customized time, shipment while simul- some extended out, majority points As the while the taneously limiting anticipated loss revenue 297A.01, wording literal of Minn.Stat. § excluding of windfall possibility (1986) 3 subd. demonstrates that words conceivably who could not claims those taxing “purchase” as used in the plac- upon the refund statute have relied may statute include the transaction involv- Undoubtedly, desired re- title, ing orders. ing a the definition transfer accomplished by uti- hold, have been To sult could nonexclusive.5 court does, precise language. more None- lization of majority in the context theless, corn- such construction “pur- a “sale” or I believe of the refund amendment * * 297A.01, tangible (1986) possession title or subd. reads transfer of 5. Minn.Stat. 3 ** pertinent part: ‘purchase’ supplied.) (Emphasis ‘sale’ personal property "A * * * (a) any includes but is not limited to

813 only (1977) the aims but also the 361 ports (specific with not N.E.2d 1346 legisla- apprehensions by concerned voiced wording); Community Telecast- during appropriate tax committee Johnson, tors Serv. v. 220 A.2d 503-04 hearings. (Me.1966) (sales specifically defined in tax Club, statute); Country Aurora Inc. v. 3, does not Dep’t Revenue, Ill.App.3d 7 Ill. “pur of the word limit the construction Dec. 365 N.E.2d Indeed, chase” to that of the word “sale.” (tax specifically “sale”). defined only Crown Iron Works we focused “sale” as used in the definition of the word meaning Because of Minn.Stat. imposing the context of a statute a tax— 297A.15, (1986) appears equivocal subd. 5 granting exception. an In that connec ambiguous; legisla- and because the tion, occasion, explicitly neither and on that history clearly tive pur- demonstrates the attempt impliedly nor did we to define the pose provide of the statute was to an incen- “purchase” as used in that statute. word acquisition tive for capital equipment by statutory interpretation “pur In the word by doing businesses so without necessarily synonymous chase” is not unduly revenues; jeopardizing state meaning “sale.” The of a word rely because Color-Ad did not on the statu- of the text word derives from context tory ordering capital equip- incentive in appears. in which it other contexts the ment; and because allowance of the statu- appear and “sale” words tory refund in these circumstances would inconsistently For have been defined. ex- frustrate both concerns the had amplé, “purchase,” in tax law to entitle a enacting program, mind when the refund refund, taxpayer to a needs to demolition opinion I would reverse the of the tax court accompanied payment be neither of con and reinstate the decision of the commis- See, e.g., First delivery. sideration nor sioner. Nat’l Bank & Trust Co. Chickasha v. States, (10th United 462 F.2d Cir. YETKA, (dissenting). Justice 1972) (though involving a real estate trans “purchase,” action as used tax statute join Kelley. I in the dissent of Justice binding agreement pay defined as a Likewise, agreed price). security law a POPOVICH, (dissenting). Justice liability pay purchase occurs at a time Kelley. join in the dissent of Justice fixed actual is unessential. Burress, Industries, Inc., J. Inc. v. JLG W. (W.D.Va.1980). F.Supp. On the

other hand “sale” has been defined or con

strued consistent with the construction we Crown Works

provided with re See, e.g.,

spect to time of tax assessment.

Copeland Corp. Lindley, 50 Ohio St.2d