(specially concurring).
I concur in the result only.
The Commissioner decided and ordered that:
4) The taxpayer’s only place of business is in Gallup, New Mexico, and all of her activities take place in Gallup.
The Commissioner has no authority to transplant the taxpayer from Farmington to Gallup, New Mexico.
The Commissioner decided and ordered that:
2) The taxpayer is a telegraph operator working under contract with Western Union Telegraph Company, ....
The taxpayer is an agent of Western Union.
A. An agent of Western Union is not taxable.
The issue to decide is: Can the Commissioner transform the services of an agent for Western Union, by way of transmogrify, into a 'business engaged in by her, when Western Union transmits and receives interstate messages via an Albuquerque control office? The answer is “No.”
As an agent, the taxpayer agreed: (1) to operate a Western Union teleprinter in her office in Farmington, (2) to accept messages from the public in Farmington for transmission out-of-state through an Albuquerque control office of Western Union, (3) to accept out-of-state messages from the Albuquerque control office and deliver them to the public in Farmington, (4) to provide adequate area and appropriate counter and display space for conduct of Western Union business. For these services, the taxpayer received seventy cents per message sent or received.
The teleprinter acts as the transmitter. The electrically controlled typewriters in Farmington and Albuquerque are connected by an electrical circuit. When a key is struck on one of the typewriters, an electrical connection causes the corresponding key to be struck on the distant machine. The message then comes in typewritten form on a printed tape.
When messages are sent to the Albuquerque control office for interstate transmission, the tape is taken off the Farming-ton-Albuquerque typewriter and placed on another teleprinter connected with an out-of-state point. The same procedure occurs for messages transmitted from out-of-state points to Farmington.
What is the legal relationship between a principal and agent in the conduct of business?
“Agency” is defined in 3 Am.Jur.2d Agency, § 1, as follows:
The term1 “agency,” as it is understood in the law and as used in this article, may be defined as a fiduciary relationship by which a party confides to another the management of some business to be transacted in the former’s name or on his account, and by which such other assumes to do the business and render an account of it. Thus, the term “agency,” in its legal sense, always imports commercial or contractual dealings between two parties by and through the medium of another.
“Unquestionably, insofar as an agent’s acts are within his authority they are in legal contemplation the acts of the principal.” Ronald A. Coco, Inc. v. St. Paul’s Methodist Church, 78 N.M. 97, 99, 428 P.2d 636, 638 (1967). “He is the servant or employee of the principal”. Comer v. State Tax Commission of New Mexico, 4 N.M. at 408, 69 P.2d at 939, infra. “Fundamentally, and according to both the Restatement and the American courts, there is no distinction to be drawn between the liability of a principal for the tortious act of his agent and the liability of a master for the tortious act of his servant.” 3 Am. Jur.2d Agency, § 267.
The taxpayer owned and operated T & L Ceramics as a ceramics shop which made greenware and sold paints for the ceramics. She was engaged in this business. She operated the Western Union business as the medium between the public and Western Union.
She was not engaged in the telegraphic business, nor did she perform such services in New Mexico for the purpose of direct or indirect benefit for herself. She was performing services only for Western Union.
The Commissioner relies on § 72-16A-3 (F). One pertinent paragraph reads:
“Gross receipts”, for the purposes of the business of buying, selling or promoting the purchase, sale ... as agent . . . on a commission or fee basis, of any . . . service, . includes only the total commissions or fees derived from the business; [Emphasis added].
Similar language was interpreted in Comer v. State Tax Commission of New Mexico, 41 N.M. 403, 69 P.2d 936 (1937). Comer was a commission agent for Phillips Petroleum Company. He was not the owner or operator of a business. He was merely an employee acting as manager or agent for the principal who was engaged in business. Comer was, therefore, not taxable. The Court said:
In every instance the tax is levied against the business of an owner or operator, and not against the employee acting as manager or agent for the principal who is “engaged in business.” [Emphasis by Court], [41 N.M. at 406, 69 P.2d at 938].
See, Westland Corporation v. Commissioner of Revenue, 83 N.M. 29, 487 P.2d 1099 (Ct.App.1971) where Comer is distinguished.
The taxpayer in the instant case falls within the Comer doctrine.
The Commissioner relies on Markham Advertising Co. v. Bureau of Revenue, 88 N.M. 176, 538 P.2d 1198 (Ct.App.1975). The taxpayer posted messages for out-of-state advertisers on billboards located only in New Mexico. This Court held:
Taxpayer’s service is simply to post messages on billboards located in this state. It is being taxed for displaying, not for advertising. This service is intrastate in character, and thus subject to the gross receipts tax. [538 P.2d at 1199].
Markham Advertising Co. was not an agent of the national out-of-state advertiser. It was an independent New Mexico business contractor engaged solely in intrastate services.
The Commissioner contends that Spillers v. Commissioner of Revenue, 82 N.M. 41, 475 P.2d 41 (Ct.App.1970), is dispositive of this case.
Spillers was a common carrier engaged in transporting household goods. Spillers performed pursuant to a certificate of convenience and necessity issued by the State of New Mexico. Intrastate transportation and services was its business. Where such transportation and services involved interstate commerce, Spillers acted as a franchised agent under contract with Bekins Van Lines Co. of Hillsdale, Illinois, which is authorized to transport household goods in interstate commerce. Spillers received twenty percent of the transportation proceeds for having initiated an interstate order and a percentage of proceeds for additional services performed in connection with transportation.
Spillers was taxable because he was “engaged in the business” of being an agent under § 72-16A-3(F).
B. The deductible statute is not applicable.
Section 72-16A-14.10, N.M.S.A.1953 (Repl.Vol. 10, pt. 2, 1973 Supp.) reads:
Receipts from transactions in interstate commerce may be deducted from gross receipts to the extent that the imposition of the gross receipts tax would be unlawful under the United States Constitution.
Receipts from transmitting messages or conversations by telegraph, telephone or radio other than from one point in this state to another point in this state may be deducted from gross receipts.
This statute is not applicable in this case. The taxpayer does not transmit messages by telegraph. Western Union does. The Commissioner admits, however, that if the taxpayer were an employee of Western Union, receipts from messages transmitted by her would be deductible under this statute. The taxpayer is an employee. This is another example of where the Commissioner “extorts taxes like a pickpocket.” Co-Con, Inc. v. Bureau of Revenue, 87 N.M. 118, 125, 529 P.2d 1239 (Ct.App.1974) (Sutin, J., dissenting).
C. A taxpayer is entitled to a fair interpretation of the law and the facts.
In Wong Yang Sung v. McGrath, 339 U.S. 33, 70 S.Ct. 445, 94 L.Ed. 616 (1950), Mr. Justice Jackson set the stage for criticism of administrative agencies which conduct hearings not in conformity with the Administrative Procedures Act. He quoted at length from committee reports of administrative management. One of them is requoted.
“A genuinely impartial hearing, conducted with critical detachment, is psychologically improbable if not impossible, when the presiding officer has at once the responsibility of appraising the strength of the case and of seeking to make it as strong as possible. Nor is complete divorce between investigation and hearing possible so long as the presiding inspector has the duty himself of assembling and presenting the results of the investigation. . . .” [339 U.S. at 44, 70 S.Ct. at 451],
Criticism of the Commissioner’s performance of duty has been stated many times. Co-Con, Inc., supra (Sutin, J., dissenting) ; Gathings v. Bureau of Revenue, 87 N.M. 334, 533 P.2d 107 (Ct.App.1975) (Sutin, J., dissenting) ; Cardinal Fence Co., Inc. v. Commissioner, Bureau of Revenue, 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) ; Torridge Corporation v. Commissioner of Revenue, 84 N.M. 610, 506 P.2d 354 (Ct.App.1973) (Sutin, J., dissenting)-
In such cases, the Commissioner’s decisions are affirmed in this Court because it interprets the statute and the evidence against the taxpayers with antagonistic eyes. The taxpayer is entitled to surcease from taxation, free from a partial hearing before the Commissioner, when his case sits outside the “warp and woof” of the statute. For almost two hundred years we have shouted that “the power to tax is the power to destroy.”
The decision of the Commissioner should be reversed.