(dissenting).
I dissent. I would reverse.
This case should be decided on the merits. A remand to the Commissioner will result in a second appeal upon which the same issues will be determined.
The parties stipulated:
Taxpayer is engaged in the business of providing abstracting and similar services. In title insurance matters, the customer may designate an attorney whom he desires to examine the title. In the event of non-designation of an attorney by the customer, the matter is referred to a practicing, independent attorney who is chosen by the taxpayer and the customer is always informed of the identity of the attorney examining the title. The taxpayer bills the customer for the attorney fee. The customer pays the attorney fee, and the taxpayer remits the amount of the fee to the attorney.
The attorney examines the title to property selected by the customer and sends the taxpayer a written opinion.
The taxpayer contends “ . . . that the attorney’s services are performed for taxpayer’s customers and not for the taxpayer . . . .” The Bureau of Revenue contends “ . . . that the attorney’s services are performed for the taxpayer .” This is the sole issue to decide.
The Decision and Order of the Commissioner is:
2. The amounts upon which tax was assessed constitute “gross receipts” of the taxpayer within the meaning of Section 72-16A-3(F), N.M.S.A. 1953 (Supp.1969 and Supp.1971).
This section reads in part:
F. “gross receipts” means the total amount of money or the value of other consideration received * * * from performing services in New Mexico
Section 72-16A-3(K), supra, provides in part:
K. “service” means all activities engaged in for other persons for a consideration, which activities involve primarily the performance of a service as distinguished from selling property.
Section 72-16A-5, supra, provides in part:
To prevent evasion of the gross receipts tax and to aid in its administration, it is presumed that all receipts of a person engaging in business are subject to the gross receipts tax.
This presumption is met by the record of operations. Westland Corporation v. Commissioner of Revenue, 83 N.M. 29, 34, 487 P.2d 1099 (Ct.App.1971).
The sole issue under the stipulation is: Were the attorney’s services performed for the taxpayer or for the customer ?
In re Barth, 26 N.M. 93, 126, 189 P. 499, 510 (1920), said:
The relation of attorney and client is one of the highest trust and confidence, requiring the attorney to observe the utmost good faith towards his client, and not to allow his private interests to conflict with those of his client.
An attorney is disqualified from representing adverse interests in the sense that they are in conflict with each other. 7 C.J.S. Attorney and Client.§ 47. He has a duty to make a clear, complete, and accurate disclosure of all material information or facts concerning the subject matter of the employment. 7 C.J.S. Attorney and Client § 125, p. 959; In re Barth, supra.
There is no impropriety in representing two parties if it is clearly understood by them. Richards v. Wright, 45 N.M. 538, 542, 119 P.2d 102 (1941). But in the present case, the taxpayer does not employ the attorney. It refers the examination of title evidence to an attorney who represents the customer the same as though the customer designated the attorney.
In this case, the customer had to pay the attorney fee. The relationship of attorney and client existed. Therefore, the attorney’s services were performed for the customer, not the taxpayer. The customer wants to know if the title insurance policy is valid. The attorney had a duty to disclose to the customer all of the details of his examination of the title evidence and the title insurance policy. That this information may be of benefit to the taxpayer is irrelevant. It would be unconscionable for an attorney to benefit the taxpayer at the expense of the customer.
The attorney fees are not received by the taxpayer from the customer for services the attorney performed for the taxpayer. The taxpayer receives the money for the attorney fee and pays the money to the attorney as an accommodation to the customer and the attorney. If the Commissioner’s decision were upheld, the customer would be required to issue two checks, one to the taxpayer and one to the attorney. It must be confessed by the Commissioner that this method of operation would not constitute a gross receipt of the taxpayer.
The Commissioner plays with the statutes like a chess game. It contends (1) that “amounts paid to attorneys for title examination are merely overhead expenses or costs of doing business, . . . ” (2) Payments to attorneys in this situation are payments for services consumed by this taxpayer and utilized by it.” (3) “Again, it is Title Services, Inc., which receives the benefit of the attorney’s title examination.” [All emphasis by Commissioner].
In chess, “the same elements, as double attacks, fixations, obstructions, etc., occur again and again in more or less complicated association. The more one sees of them, the easier it becomes to conceive and follow through such combinations themselves.” Reti, Masters of The Chessboard, VI (1932). [Emphasis by author].
The Gross Receipts Statute, and the issue before this court, do not directly or indirectly encompass the arguments of the Commissioner. The taxpayer did not engage in any activity for the customer “for a consideration” which included payment to the taxpayer of an attorney fee. The attorney was performing services to the customer for a fee. “The total amount of money received . . . from performing services” to the customer, was the cost and expense of “providing abstracting and similar services.”
The majority voting to remand, I dissent.