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State Tax Commission v. Graybar Elec. Co.

Supreme Court of Arizona

October 14, 1959

STATE TAX COMMISSION of the State of Arizona, Appellant,
v.
GRAYBAR ELECTRIC COMPANY, Inc., a corporation, Appellee.

Page 1009

Page 1010

[86 Ariz. 255] Robert Morrison, Atty. Gen., of Arizona, Melvin J. Mirkin, Asst. Atty. Gen., for appellant.

Evans, Hull, Kitchel & Jenckes, L. Ray Haire, Phoenix, for appellee.

STRUCKMEYER, Justice.

Pursuant to A.R.S. § 42-1339, appellee Graybar Electric Company brought suit to recover certain taxes paid under protest. The trial court entered judgment in its favor for the sum of $6,457.87, together with costs. From this judgment the Arizona Tax Commission has appealed.

In the year 1952, Grand Central Aircraft Company entered into a contract with the United States Air Force, designated as Facilities Contract AF33(600)9371. The contract provided for the construction and operation by Grand Central of certain electronic facilities near Tucson, Arizona. In the year of 1953, Grand Central purchased from Graybar, a New York corporation engaged in the national distribution of electrical equipment and related products primarily at wholesale, certain trailer-mounted [86 Ariz. 256] generator sets which were used in an electronics laboratory constructed pursuant to the Facilities Contract. At the time the generators were purchased by Grand Central, there was stamped upon the purchase order the following:

'This is to certify that the item requested on this purchase order is covered by USAF Facilities letter Contract No. AF 33(600)9371 dated 11 Feb. 1952 and will become the property of the U. S. Air Force upon delivery by the vendor.'

The Facilities Contract was not offered in evidence in the court below, but two portions, and only these two portions, appear in a stipulation of facts in the case. They are:

'Title to all work under this contract, completed or in the course of manufacture by you, shall be in the Government. Title to all items of facilities, materials, parts and equipment for which you will be entitled to be reimbursed under this contract is vested in the Government [i] upon delivery to you at any point within the continental limits of the United States or [ii] at any place or time directed by the Contracting Officer and all such property shall remain personalty although it may be affixed to realty not belonging to the Government.' [Emphasis supplied.]

* * *

* * *

Page 1011

'The Government will pay to the contractor upon inspection and acceptance by the contracting officer all the items for the work specified * * *.'

The Commission assessed a 2% tax under the claimed authority of the Excise Revenue Act of 1935, § 73-1301 et seq., A.C.A.1939, now A.R.S. § 42-1301 et seq., against appellee on the theory that the transactions constituted retail sales within the scope of the Act.

It has been appellee's position from the start that the sales of generators made by it to Grand Central were either (1) made to Grand Central as agent for the United States Government and, as such, exempt from taxation by the express provisions of § 73-1308, A.C.A.1939, now repealed, or (2) were not made at retail, being for resale by Grand Central to the Government, and thus not within the operations of the Excise Revenue Act. The court below, without making any finding of fact as to the precise basis of its determination, entered judgment in favor of Graybar. The Commission argues that neither theory of the case finds support in the evidence. Both parties have extensively argued the status of this transaction; however, like the trial court, we do not think it necessary to determine in which category it falls. Admittedly, if in either, appellee is entitled to recover in some amount.

[86 Ariz. 257] There is a suggestion in the Commission's argument before this court that as a third possible alternative, Grand Central might have purchased the generators for its own use. This arises because there is no direct testimony as to the specific use made of the generators. It is argued that while the certification of title by Grand Central on its purchase order might be conclusive as between the Government and Grand Central, such cannot be binding on the right of the State of Arizona to levy and collect taxes. Roane-Anderson Company v. Evans,200 Tenn. 373, 292 S.W.2d 398. From an evidentiary standpoint, except possibly between the parties to the Facilities Contract, the declarations of Grand Central as to the title of the property are not conclusive. Nonetheless, the certifications are some evidence of the fact, and since they stand unimpeached, they are entitled to consideration as part of the evidence in the case. The trial court could believe that Grand Central ...


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