Summary 2011 WY 76

Summary of Decision May 3, 2011


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Case Name: Maverick Motorsports Group, LLC V. Department of Revenue

Citation: 2011 WY 76

Docket Number: S-10-0220

URL: http://wyomcases.courts.state.wy.us/applications/oscn/DeliverDocument.asp?CiteID=462107

Appeal from the District Court of Laramie County, Honorable Michael K. Davis, Judge

Representing Appellant (Petitioner): John M. Kuker and James M. Peterson of Romsa & Kuker, Cheyenne, Wyoming.

Representing Appellee (Respondent): Bruce A. Salzburg, Wyoming Attorney General; Michael L. Hubbard, Deputy Attorney General; Martin L. Hardsocg, Senior Assistant Attorney General; and William F. Russell, Senior Assistant Attorney General

Date of Decision: May 3, 2011

Facts: Appellant challenges a decision of the State Board of Equalization that certain sales to nonresident buyers were subject to Wyoming sales tax. The vehicles were transferred in three ways: most were picked up by the purchaser at one of the stores, some were delivered by a common carrier selected by the purchaser, and some were delivered by Appellant. Appellant would mail any documents necessary to title or register the vehicle to the buyer a few weeks after the sale. The SBOE agreed that Appellant had provided adequate proof and ruled that most of the sales where Appellant actually delivered the vehicles were “destination sales” where transfer of title or possession took place outside Wyoming and no sales tax was due. However, the majority of the sales involved customers who came to one of the stores, picked up the vehicle and then returned to their home state with the purchase. The SBOE found that possession of these vehicles, as well as those involving delivery by use of a common carrier selected by the buyer, were transferred to the buyer in Wyoming and therefore, Wyoming sales tax was due.

Issues: Whether sales of recreational vehicles were taxable in Wyoming because possession was transferred in Wyoming. Whether enforcement and collection of Wyoming sales taxes violate the Commerce Clause, Art. 1, § 8, of the United States Constitution.

Holdings: Prior to January 1, 2008, and during the time at issue here, Wyo. Stat. 39-15-101(a)(vii) (2005) defined a “sale” as “any transfer of title or possession in this state for consideration.” Pursuant to Wyo. Stat. 39-15-103(a)(i)(A) sales tax is imposed on the sales price of every retail sale of tangible personal property within the state. Wyo. Stat. 39-15-107(a)(i) and (b)(viii) requires sellers to collect and remit to the state the taxes imposed on sales of motorcycles and off-road vehicles. The Wyoming Sales and Use Tax Regulations in effect at the relevant time, provided that the point at which title or possession of tangible personal property passes to the purchaser would determine the location of the sale.

Appellant argues that the sales in question were nontaxable destination sales because neither title nor possession was transferred in Wyoming. Appellant contends that the sale documents show that the parties intended for change of possession to happen in the buyer’s home state and the buyer had only constructive possession until the vehicle actually arrived at the buyer’s residence.

The general rule is that title passes at the point of shipment controls unless the circumstances clearly demonstrate a contrary intent. The SBOE relied upon Wyo. Stat. Ann. § 34.1-2-401 (the U.C.C.) to determine that title passed to the buyer when the vehicle was physically delivered to the buyer or the buyer’s agent. Appellant argues that it was improper for the SBOE to rely on the Wyoming U.C.C. statute because the comment to this section precludes reliance on the U.C.C. for regulatory purposes However, it was appropriate for the SBOE to rely on the U.C.C. as an objective test to determine when title passed. There is no reason why, when a question arises under regulations as to contract interpretation, a court should not employ the U.C.C. as its frame of reference.

Appellant then asserts that even if the SBOE could use the U.C.C., the SBOE decision was still wrong because the parties had an express agreement that title would pass when the vehicle reached the buyer’s home state. The SBOE found that the sale documents did not determine the point of transfer. The statement on the invoices, “delivered out of state,” is not sufficient to overcome the fact that actual possession was transferred in Wyoming at the time of pick-up. The parties could have but did not use other language in the invoice to suggest that the transfer of possession would occur in another location, such as clauses dealing with risk of loss or responsibility for selection of carriers; this wording was missing from the invoices. An objective analysis indicates that transfer of possession occurred in Wyoming.

Additionally, Appellant contends that title was transferred to the buyer when the certificate of title or the manufacturer’s statement of origin (MSO) was mailed to the buyer or the buyer’s lender some weeks after the sale. Appellant uses the term “title” to mean the written documents that prove ownership. However, Wyoming has long recognized that “title” has a broader definition. The statutory use of the term “title” means “‘the union of all elements (as ownership, possession, and custody) constituting the legal right to control and dispose of property.” “Title” to a vehicle may be transferred, or passed, even though there is a failure to comply with code provisions concerning the certificate of title. The question is not when the buyer received his paperwork, but when he became the owner of the vehicle.

Appellant also argues that those customers who picked up their vehicles were acting as their own agent and only had constructive possession for delivery purposes; therefore, possession did not transfer from the seller to the buyer until the buyer arrived home. Appellant forwards the interesting argument that a person can be his own agent and have only constructive possession of an item that he controls. The contention that a person can act as his own agent presents several practical problems and is contrary to established law. A relationship of agency is established when two parties agree that one, the agent, shall act on behalf of and subject to the control of the other, the principal. Agency is the fiduciary relationship that arises when one person manifests assent to another person that the agent shall act on the principal’s behalf and subject to the principal’s control, and the agent manifests assent or otherwise consents so to act. This contemplates different entities for agent and principal. Furthermore, there is no logic to the assertion that a person in actual control of an object has only “constructive possession.”

The remaining transactions are those where delivery was made by a third-party carrier. The evidence was that Appellant might recommend a carrier; however, the customer ultimately chooses the carrier, and the contract is between the carrier and the customer. Under these facts, the carrier would be the agent of the buyer; and when possession was transferred to the carrier in Wyoming, sales tax was due.

Appellant argues that collection of a sales tax on these vehicle transactions also violates the Commerce Clause, Art. 1, § 8, of the United States Constitution. First, Appellant asserts that a Wyoming tax discriminates against or unduly burdens interstate commerce; and, second, unless Appellant is allowed a credit for sales or use taxes paid in other states, there is an unconstitutional multiple taxation of a single transaction. Appellant falls short with its argument since he fails to recognize that this is not an issue of an imposition of a tax; rather, the issue is a question of whether a sales tax, properly imposed, may be enforced and collected. Appellant had the obligation to collect the tax at the time of the sale. Tax credit provisions create a national system under which the first state of purchase imposes the tax. Wyoming is the first state of purchase, so it is entitled to impose the tax, and other states should allow a credit for the Wyoming tax. Appellant had a statutory obligation to collect the sales tax; and if it had done so, there would be a strong argument that the buyer’s home state would be required to grant a credit for the sales tax.

Substantial evidence supports the SBOE’s finding that transfer of possession and title of these vehicles occurred in Wyoming, and the levy of a sales tax on these transactions is appropriate. The actions of the SBOE in determining that the purchase of the various recreational vehicles at issue in this case constitutes a taxable event in Wyoming is affirmed. Additionally, the collection of sales taxes on these vehicles does not violate the U.S. Constitution, Art. 1, § 8, (the Commerce Clause).

D.J. Park delivered the opinion for the court.