{ "id": 1557126, "name": "CARTER & SONS, INC., Appellant, v. NEW MEXICO BUREAU OF REVENUE, Appellee", "name_abbreviation": "Carter & Sons, Inc. v. New Mexico Bureau of Revenue", "decision_date": "1979-02-20", "docket_number": "No. 3392", "first_page": "591", "last_page": "595", "citations": [ { "type": "official", "cite": "92 N.M. 591" }, { "type": "parallel", "cite": "592 P.2d 191" } ], "court": { "name_abbreviation": "N.M. Ct. App.", "id": 9025, "name": "Court of Appeals of New Mexico" }, "jurisdiction": { "id": 52, "name_long": "New Mexico", "name": "N.M." }, "cites_to": [ { "cite": "68 N.M. 381", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 2717312 ], "weight": 2, "year": 1961, "pin_cites": [ { "page": "388" }, { "page": "776" } ], "opinion_index": 0, "case_paths": [ "/nm/68/0381-01" ] }, { "cite": "86 N.M. 355", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 2822767 ], "weight": 2, "opinion_index": 1, "case_paths": [ "/nm/86/0355-01" ] }, { "cite": "90 N.M. 164", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 2867988 ], "weight": 2, "opinion_index": 1, "case_paths": [ "/nm/90/0164-01" ] }, { "cite": "89 N.M. 160", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 2862662 ], "weight": 2, "year": 1976, "opinion_index": 1, "case_paths": [ "/nm/89/0160-01" ] }, { "cite": "89 N.M. 174", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 2866278 ], "weight": 2, "opinion_index": 1, "case_paths": [ "/nm/89/0174-01" ] }, { "cite": "89 N.M. 79", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 2861003 ], "weight": 2, "year": 1976, "opinion_index": 1, "case_paths": [ "/nm/89/0079-01" ] }, { "cite": "89 N.M. 133", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 2864838 ], "weight": 2, "opinion_index": 1, "case_paths": [ "/nm/89/0133-01" ] }, { "cite": "87 N.M. 334", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 2833762 ], "weight": 2, "opinion_index": 1, "case_paths": [ "/nm/87/0334-01" ] }, { "cite": "87 N.M. 118", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 2830275 ], "weight": 2, "opinion_index": 1, "case_paths": [ "/nm/87/0118-01" ] }, { "cite": "86 N.M. 128", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 2822394 ], "weight": 2, "opinion_index": 1, "case_paths": [ "/nm/86/0128-01" ] }, { "cite": "84 N.M. 314", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 2763891 ], "weight": 2, "opinion_index": 1, "case_paths": [ "/nm/84/0314-01" ] } ], "analysis": { "cardinality": 682, "char_count": 13407, "ocr_confidence": 0.81, "pagerank": { "raw": 4.856319230494445e-08, "percentile": 0.3047177653986777 }, "sha256": "c1682745a701179282102ce4c23d5a91ec5d914d53f4f4c759d3a5f64faae2a6", "simhash": "1:01a97063eb8e51d3", "word_count": 2196 }, "last_updated": "2023-07-14T17:06:13.817562+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "SUTIN, J., specially concurring.", "LOPEZ, J., concurs." ], "parties": [ "CARTER & SONS, INC., Appellant, v. NEW MEXICO BUREAU OF REVENUE, Appellee." ], "opinions": [ { "text": "OPINION\nHERNANDEZ, Judge.\nThis is an appeal from the decision and order of the Commissioner of Revenue assessing gross receipts tax on two, hauling and road maintenance, of several operations performed by the taxpayer under its contract with Duke City Lumber Company, Inc. (Duke) for a period from January 1, 1974 through September 30, 1976.\nMost of the pertinent facts are set forth in the findings of the Commissioner:\n\u201c3. This taxpayer has been engaged in the logging business in New Mexico for a number of years. During 1975 and 1976, the taxpayer had contracts with Duke City Lumber Company, Inc., (Duke) which provided that the taxpayer was to cut, limb, skid, and load timber located on Federal land and haul it to Duke\u2019s sawmill in Espa\u00f1ola, New Mexico. Duke had previously entered into agreements with the United States Forest Service which enabled Duke to cut and remove designated timber and Duke had contracted with the taxpayer to perform specified functions.\n\u201c4. From time to time the Forest Service advertises the proposed sale of specified timber located in the National Forests and sets a minimum price at which the timber will be sold. Lumber companies, such as Duke, bid on these sales and the successful bidder must comply with the rules of the Forest Service; this includes the building of temporary roads, and maintenance of present roads, the disposal of slash and exercising erosion control. When Duke contracts with the taxpayer, the taxpayer is required to perform these functions.\n\u201c5. When Duke contracts with the taxpayer, Duke agrees to pay the taxpayer a specified amount of money \u2014 based on per M, (1,000 feet) Gross, Less Culls,\u2014 for all logs cut, skidded, loaded and hauled to the Espa\u00f1ola mill. The taxpayer gets paid only if the timber is delivered to the mill.\n\u201c6. There is no breakdown in the contract of the money paid for each function performed by the taxpayer; neither Duke\u2019s records nor the taxpayer\u2019s records segregate payments made or received for the several functions performed under the contract.\u201d\nSection 7-9-4, N.M.S.A.1978 (formerly \u00a7 72-16A-4, N.M.S.A.1953 (Supp.1975)) of the Gross Receipts and Compensating Tax Act provides in pertinent part:\n\u201cA. For the privilege of engaging in business, an excise tax equal to four percent of gross receipts is imposed on any person engaging in business in New Mexico.\n\u201cB. The .tax imposed by this section shall be referred to as the \u2018gross receipts tax.\u2019 \u201d\nSection 7-9-35, N.M.S.A.1978 (formerly \u00a7 72-16A-12.23, N.M.S.A.1953 (Supp.1975)) of the Act provides:\n\u201cWhen a privilege tax is imposed by the Resources Excise Tax Act * * *, the provisions of the act shall apply and determine the full measure of tax liability for the privilege of engaging in the business stated in the act and no provision of the Gross Receipts and Compensating Tax Act shall apply to or create a tax liability for such privilege * * *.\u201d\nThe following are the pertinent parts of the Resources Excise Tax Act necessary to the discussion of taxpayer\u2019s points of error.\nSection 7 -25- 3, N.M.S.A.1978 (formerly \u00a7 72 -16A-22, N.M.S.A.1953 (Supp.1975)):\n\u201cB. \u2018natural resources\u2019 means timber and any product thereof and any metalliferous or nonmetalliferous mineral product, combination or compound thereof, but does not include oil, natural gas, liquid hydrocarbon individually or any combination thereof or carbon dioxide;\n* * * * * *\n\u201cF. \u2018service charge\u2019 means the total amount of money or the reasonable value of other consideration received for severing or processing any natural resources by any person who is not the owner of the natural resource. However, if the money received does not represent the value of the severing or processing performed, \u2018service charge\u2019 means the reasonable value of the severing or processing performed;\n\u201cG. \u2018severer\u2019 means any person engaging in the business of severing natural resources that he owns, or any person who is the owner of natural resources and who has another person perform the severing of such natural resources;\n\u201cH. \u2018severing\u2019 means mining, quarrying, extracting, felling or producing any natural resource in New Mexico for sale, profit or commercial use; and\n\u201cI. \u2018taxable value\u2019 means the value after severing or processing, without deduction of any kind other than specified in this subsection, of any natural resource severed or processed in New Mexico. \u2021 % \u2021\nSection 7-25 -4, N.M.S.A.1978 (formerly \u00a7 72-16A-23, N.M.S.A.1953 (Supp.1975)):\n\u201cA. For the privilege of severing natural resources, there is imposed on any severer of natural resources in New Mexico an excise tax at the following rates on the taxable value of the natural resources:\n(1) All natural resources except potash and molybdenum \u2014 three-quarters of one percent;\n(2) potash \u2014 one-half of one percent; and\n(3) molybdenum \u2014 one-eighth of one percent.\u201d\nSection 7 -25 -6, N.M.S.A.1978 (formerly \u00a7 72 -16A-25, N.M.S.A.1953 (Supp.1975)):\n\u201cA. For the privilege of severing or processing in New Mexico natural resources that are owned by another person, and are not otherwise taxed by Sections 4 and 5 [7-25-4, 7-25-5 NMSA 1978] of the Resources Excise Tax Act, there is imposed on the service charge of any person severing or processing natural resources that are owned by another person an excise tax at the same rate that would be imposed on an owner of natural resources for performing the same function.\n\u201cB. The tax imposed by this section shall be referred to as the \u2018service tax.\u2019 \u201d\nTaxpayer alleges two points of error. The first being that all of the services performed by it are either \u201csevering\u201d or \u201cprocessing\u201d subject to the service tax. The second point is that all of the receipts received by it are exempt from the gross receipts tax.\nEssentially, the Bureau\u2019s argument is that the taxpayer\u2019s activities should be separated into two parts for purposes of taxation. Stated differently, the \u201croad maintenance\u201d and \u201chauling\u201d activities of the taxpayer are not an integral part of \u201csevering\u201d as contemplated by \u00a7 7-25-6A, supra. Why just into two parts? Why not into five parts (felling, building of temporary roads, maintenance of present roads, disposal of slash and erosion control); it would be just as logical or illogical. We do not believe that this is what the legislature intended. Looking again at \u00a7 7-25-3(H), supra, it states in pertinent part that: \u201c \u2018severing\u2019 means * * * felling * * * for sale, profit or commercial use * * A tree at the location where it was felled would have very little value in comparison with its value at a lumber mill. The cost of felling a tree is just a small part of what makes up the total cost of preparation for sale or commercial use. All of these five activities are integral parts of \u201csevering\u201d in this situation.\nThe primary purpose of the Resources Excise Tax Act is obviously to encourage the development of the extractive industries of the state because the rates imposed are a fraction of the Gross Receipts Tax. To adopt the narrow interpretation advocated by the Bureau would not be consonant with the basic purpose of the Act. \u201cThe chief aim of statutory construction is to arrive at true legislative intent.\u201d Montoya v. McManus, 68 N.M. 381, 388, 362 P.2d 771, 776 (1961). The Forest Service dictated the terms and conditions for severing the timber in question. None of the several activities prescribed could be eliminated. The Forest Service had roughly estimated the cost of each activity solely for the purpose of setting the minimum bid figure. It is our decision that \u201croad maintenance\u201d and \u201chauling\u201d were an integral and indispensable part of taxpayer\u2019s activity of severing and as such were exempt from the Gross Receipts Tax by the provisions of \u00a7 7-9-35, supra.\nThe decision and order of the Commissioner is reversed and the Bureau\u2019s interpretive regulation G.R. Regulation 12.23:3 is declared void, insofar as it applies to the facts herein.\nIT IS SO ORDERED.\nSUTIN, J., specially concurring.\nLOPEZ, J., concurs.", "type": "majority", "author": "HERNANDEZ, Judge." }, { "text": "SUTIN, Judge\n(specially concurring).\nI concur.\nAlthough the record in this case is lengthy, the pertinent facts are simple. Taxpayer contracted with Duke City Lumber Co. to cut, limb, skid, load and haul timber from United States Forest Service lands to Duke City\u2019s mill, and it had to blade Forest Service roads leading to timber sites where trees were cut. This was called \u201croad maintenance.\u201d\nThe Bureau seeks to tax for gross receipts obtained from (1) hauling timber from the landing to the mill and (2) road maintenance. Taxpayer argues that these two types of gross receipts are exempt from the gross receipts tax. I agree. Section 7-9-35, N.M.S.A.1978 reads in pertinent part:\nWhen a privilege tax is imposed by the Resources Excise Tax Act * * * no provisions of the Gross Receipts * * * Tax Act shall apply to or create a tax liability for such privilege * * *. [Emphasis added.]\nUnder the Resources Act, a tax is levied on the privilege of severing and processing natural resources. Section 7-25-2, N.M.S. A.1978. Timber is a natural resource, and \u201csevering\u201d includes felling timber for commercial use. Section 7-25-3(D) and (H). Taxpayer was the person who severed timber for Duke City Lumber Co. Section 7-25-3(G). The tax imposed is a \u201cservice tax.\u201d\nThe dispositive question is the nature and extent of the \u201cprivilege\u201d referred to in \u00a7 7-9-35. The Bureau says that the \u201cprivilege\u201d covers only the felling of timber, not hauling or road maintenance. I disagree.\nMany views of mine have been expressed in Cardinal Fence Co., Inc. v. Commissioner, Bur. of Rev., 84 N.M. 314, 502 P.2d 1004 (Ct.App.1972), Sutin, J. dissenting; Title Services, Inc. v. Commissioner of Revenue, 86 N.M. 128, 520 P.2d 284 (Ct.App.1974), Sutin, J. dissenting; Co-Con, Inc. v. Bureau of Revenue, 87 N.M. 118, 529 P.2d 1239 (Ct.App.1974), Sutin, J. dissenting; Gathings v. Bureau of Revenue, 87 N.M. 334, 533 P.2d 107 (Ct.App.1975), Sutin, J. dissenting; Advance Schools, Inc. v. Bureau of Revenue, 89 N.M. 133, 548 P.2d 95 (Ct.App.1975), Sutin, J. dissenting, rev\u2019d 89 N.M. 79, 547 P.2d 562 (1976); Ealey v. Bureau of Revenue, 89 N.M. 174, 548 P.2d 454 (Ct.App.1975), Sutin, J. specially concurring, rev\u2019d 89 N.M. 160, 548 P.2d 440 (1976); Western Elec. Co. v. N. M. Bureau of Rev., 90 N.M. 164, 561 P.2d 26 (Ct.App.1976), Sutin, J. specially concurring. I adhere to those views which are:\n1. Tax statutes have definitions that create ambiguities which create a battle of the dictionaries. The purpose of the statute should not be accomplished by \u201csemantic niggling.\u201d If there is ambiguity or doubt, it is not the fault of the taxpayer.\n2. Where an exemption is claimed, the statute should be liberally construed in favor of the taxpayer because the exemption is granted for a beneficent purpose. We should protect the taxpayer by judicial construction.\n3. The Commissioner should not play with the statute like a chess game. He sits in a quasi-judicial position and should seek to do justice and avoid injustice to taxpayers. He is both the judge and attorney for the Bureau. His qualifications are not fixed by law. He must not rely only on the evidence presented by his attorney, nor favor the State over the taxpayer. He must try to be objective in nature.\n4. We do not view the evidence in the light most favorable to the decision. Our duty is to look at the whole record.\n5. The statute does not delegate authority to the Commissioner to enact legislation by regulation which directly taxes a specific segment of business.\n6. All doubts as to the meaning and intent of a tax statute must be construed in favor of the taxpayer.\n7. Every taxpayer is entitled to a fair and impartial hearing.\nMy disagreement with the Bureau centers around the narrow and strict interpretation of the words \u201cfelling timber for commercial use.\u201d The Bureau concedes that \u201cskidding\u201d constitutes \u201csevering.\u201d To \u201cskid\u201d is \u201cto drag (logs) from the stump to a landing, skidway, or mill.\u201d Webster\u2019s Third New International Dictionary, p. 2133 (1966). An expert witness testified that \u201cto haul\u201d and to \u201cskid\u201d were quite similar. \u201cThey are the same in that they are a hauling function.\u201d \u201cThere\u2019s very little difference between skidding and hauling logs, other than the fact you\u2019ve got a different piece of equipment.\u201d\n\u201cFelling timber for commercial use\u201d means \u201chauling timber from the stump to the mill.\u201d In order to do so, taxpayer of necessity must blade Forest Service roads leading to timber sites.\nThe Bureau tried to burden a person engaged in mining activities with the gross receipts tax instead of the service tax. It contended the taxpayer\u2019s work was a construction service instead of \u201cmining\u201d a natural resource. This court said \u201cno.\u201d Patten v. Bureau of Revenue, 86 N.M. 355, 524 P.2d 527 (Ct.App.1974).\nMy criticism of the Commissioner\u2019s attitude toward taxpayers, heretofore expressed, continues to the instant case. His attitude is: \u201cLet the courts decide.\u201d Although not a financial burden on the Bureau, it is fractious and a conniption to the taxpayer to try and appeal such cases.", "type": "concurrence", "author": "SUTIN, Judge" } ], "attorneys": [ "Joe R. G. Fulcher, Jeffrey W. Loubet, Modrall, Sperling, Roehl, Harris & Sisk, Albuquerque, for appellant.", "Jeff Bingaman, Atty. Gen., Jan E. Unna, Special Asst. Atty. Gen., Dept, of Taxation & Revenue, Santa Fe, for appellee." ], "corrections": "", "head_matter": "592 P.2d 191\nCARTER & SONS, INC., Appellant, v. NEW MEXICO BUREAU OF REVENUE, Appellee.\nNo. 3392.\nCourt of Appeals of New Mexico.\nFeb. 20, 1979.\nJoe R. G. Fulcher, Jeffrey W. Loubet, Modrall, Sperling, Roehl, Harris & Sisk, Albuquerque, for appellant.\nJeff Bingaman, Atty. Gen., Jan E. Unna, Special Asst. Atty. Gen., Dept, of Taxation & Revenue, Santa Fe, for appellee." }, "file_name": "0591-01", "first_page_order": 627, "last_page_order": 631 }