(dissenting).
I dissent for all of the following reasons. LaBelle’s argues that it had insufficient “right or power ... incidental to the ownership” of the catalog and flyer shipments once in South Dakota to qualify as a “use” under SDCL §§ 10-46-1(2) and -2. For LaBelle’s to succeed on this theory, it must distinguish K-Mart Corp. v. Dept. of Revenue, 345 N.W.2d 55 (S.D.1984). The retailer in K-Mart published advertisements to be distributed as part of South Dakota newspapers. The supplements were printed in Michigan and sent to a publisher also located outside of South Dakota. The publisher received a distribution list from K-Mart setting forth the South Dakota newspapers to which the publisher then sent the supplements. K-Mart made basically the same arguments that LaBelle’s does here, contending that SDCL §§ 10-46-1(2) and -2 were not met because K-Mart did not use the advertisements within South Dakota and that K-Mart exercised no “right or power” over the newspaper supplements from the time the supplements were printed out of state. This court disagreed. Instead, we adopted
... Department’s position that K-Mart uses’ the supplements within the state within the meaning of SDCL 10-46-2 by virtue of its ownership of the supplements and its power to determine the date of distribution and the numbers of copies to be distributed.
345 N.W.2d at 58, citing Wisconsin Dept. of Revenue v. J.C. Penney Co., 108 Wis.2d 662, 323 N.W.2d 168 (1982).
Unlike the retailer in K-Mart, LaBelle’s contends that it did not own nor have control over the catalogs and flyers once in South Dakota. It cites no authority for this proposition. LaBelle’s contrasts its situation with K-Mart where the retailer owned the supplements after they were received by the South Dakota newspapers. LaBelle’s argues that once delivered, the catalogs and flyers belonged to the residents. LaBelle’s further argues that K-Mart had more power over its advertisements than did LaBelle’s because K-Mart had the power to “ ‘determine the date of distribution and the number of copies to be distributed,’ after the [K-Mart] supplements were delivered in South Dakota.” Id., (emphasis added).
Department claims the cases are essentially identical except that LaBelle’s catalogs were shipped directly to the in-state residents instead of to newspapers. Department argues that K-Mart had less instate control than does LaBelle’s because the newspapers in K-Mart had the power to edit the advertisements, and their personnel handled the supplements.
Both sides cite considerable authority for their respective positions. Apart from J. C. Penney, supra, which this court relied on in K-Mart, these cases are not extremely helpful. The J. C. Penney case ruled on the taxability of both (1) catalogs sent directly to consumers from out of state (this case), and (2) out-of-state shipments of advertisements to in-state newspapers for insertion {K-Mart). The case holds per K-Mart that shipments to newspapers fall within the use tax. However, J.C. Penney also holds that mailings directly to the consumers are not taxable.
In J. C. Penney, the court held that catalogs printed in Indiana and mailed to Wisconsin were not taxable in Wisconsin, but that newspaper supplements printed out-of-state, but delivered by local newspapers, were subject to tax. 323 N.W.2d at 171-172. The court determined that J.C. Penney “used” the newspaper supplements, but did not “use” the catalogs. This appears illogical and honors form over substance. A catalog is similar to a newspaper supplement. They both contain pictures of items for sale with prices and descriptions. In actual practice, J.C. Penney got more use out of the catalogs than *474they did the supplements. A supplement is only an advertisement. If a sale is made to a person who uses a supplement, J.C. Penney must still use its local store to make the sale. Although some customers use the catalog in the same manner, many customers use the catalog to order merchandise. In addition to pictures and descriptions, the catalog contains order blanks and ordering and shipping instructions. The supplements are an inducement to buy. The catalogs are used not only to induce sales, but to make sales. If the supplements are used in the state of receipt, so are the catalogs.
The use tax is not a property tax or a tax on consumption of property. In InterState Nurseries, Inc. v. Iowa Department of Revenue, 164 N.W.2d 858 (Iowa 1969), the court held that an Iowa nursery company was “using” its catalogs “... as a means of advertising and promoting the sale of its products ...” even though they were received, read, or discarded by others. Id. at 863.
Under cases such as Philco Corporation v. Department of Revenue, 40 Ill.2d 312, 239 N.E.2d 805 (1968), physical manipulation of property is not a necessary incident to use of the property for use tax purposes. In construing a definition of “use” similar to South Dakota’s, the court quotes with approval from Kessling, Conflicting Conceptions of Ownership in Taxation, 44 Cal.L.Rev. 886, 867 (1956): “When a person buys property in one state for the purpose of leasing it and transporting it to a person in another state where a use tax law is in effect, the lessor is considered as using the property in the second state for the production of income and hence is subject to such state’s use tax even though he personally makes no physical use of the property in such state.” One of the appellants in Philco, supra, Rental Equipment Company, Inc., signed its leases in Missouri, the lessees picked up the equipment in Missouri, and the lessor never had representatives in Illinois, but the court nevertheless upheld Illinois’ assessment of use tax on the rental equipment even though one of the items was in Illinois for only nine days. Id. at 809. Although renting equipment may seem different from mailing catalogs at first glance, all of the important elements are the same. In both cases, tangible personal property is brought into the state by an unrelated third party and use tax liability arises even though the taxpayer is not the person who physically possesses the property within the taxing state.
LaBelle’s asserts that tax liability should be avoided because it did not use the catalogs in South Dakota. However, LaBelle’s has stores in South Dakota, the catalogs are in South Dakota, and the recipients of the catalogs are in South Dakota. La-Belle’s furnishes and controls the mailing list for the catalogs and also pays for them. The reason the catalogs are in this state is to generate sales for LaBelle’s. This constitutes the same use that K-Mart made of its advertising supplements. The method of delivery should be irrelevant.
This court’s decision in Northwestern National Bank of Sioux Falls v. Gillis, 82 S.D. 457, 148 N.W.2d 293 (1967), is helpful in discerning the legislative intent behind SDCL §§ 10-46-1(2) and -2. This case states that the purpose of the use tax is not only to raise money but also to help “the retailers in this state, who are subject to the sales tax, compete on an equal footing with out-of-state competitors.” 82 S.D. at 467, 148 N.W.2d at 298. It seems plain that the use tax is designed to prevent avoidance of the sales tax. See: e.g., Woods v. M.J. Kelley Co., 592 S.W.2d 567, 570 (Tenn.1980). Department reasons that since a local printer selling flyers or catalogs (or its purchaser) would be liable for the sales tax, LaBelle’s should pay a use tax on the literature. Department further reasons that local retailers are put at a competitive disadvantage if LaBelle’s does not pay tax on the catalogs. LaBelle’s does not argue that our legislature did not intend to impose a tax on LaBelle’s for these activities. It merely repeats its argument that the language of the statutes clearly excludes this activity.
*475In my view, LaBelle’s arguments simply miss the controlling point. LaBelle’s used the catalogs in South Dakota. They even stored those catalogs not delivered until returned. It is not necessary that La-Belle’s employees physically ride on the mail truck — the use of the catalogs by South Dakota residents was LaBelle’s use under the statute. LaBelle’s exercised power and control through its agents in South Dakota even though its own employees may not have physically entered the state. The evidence shows that LaBelle’s exercised power and control over the catalogs through the printing, the number of catalogs distributed, the timing of the delivery of the catalogs in South Dakota, and even the return of undelivered catalogs, all to the same or greater extent than in the K-Mart case. As stated by the trial court, '‘LaBelle’s has raised a number of distinctions between (K-Mart) and this case, however, I am of the opinion that they are distinctions without difference.” So am I. This c.ourt should discern substance over form and affirm the use tax.