STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
SILVER SAND COMPANY OF )
LEESBURG, INC., )
)
Petitioner, )
)
vs. ) CASE NO. 75-1876
)
DEPARTMENT OF REVENUE, )
)
Respondent. )
)
FINDINGS OF FACT, CONCLUSIONS OF LAW, AND RECOMMENDED ORDER
Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, G. Steven Pfeiffer, held a public hearing in this case on November 8 and 9, 1976, in Tavares, Florida.
The following appearances were entered: Charles Davis and Julian K. Dominick, of the firm FISHBACK, DAVIS, DOMINICK & SIMONET, Orlando, Florida, for the Petitioner, Silver Sand Company of Leesburg, Inc.; and Patricia S. Turner and Larry Levy, Department of Legal Affairs, Tallahassee, Florida, for the Respondent, Florida Department of Revenue.
On October 28, 1975, the Petitioner, Silver Sand Company of Leesburg, Inc., filed a Petition for Formal Proceeding with the Division of Administrative Hearings. The petition was received in evidence at the formal hearing as Hearing Officer's Exhibit 1.
The Respondent, Department of Revenue, filed its answer on November 10, 1975 (Hearing Officer's Exhibit 2). The final hearing was originally scheduled to be conducted on March 25 and
26 by notice dated January 26, 1976 (Hearing Officer's Exhibit 3). The parties filed a Joint Motion for Continuance of the hearing which was granted by order entered March 12, 1976 (Hearing Officer's Exhibits 4 and 5). The hearing was rescheduled to be conducted on May 17 and 18, 1976 (Hearing Officer's Exhibit 6).
On May 6, 1976 the Respondent filed a Motion for Continuance which was granted by order entered May 11, 1976 (Hearing Officer's Exhibits 7 and 8). The final hearing was scheduled for November 8
and 9 by notice dated August 6, 1976 (Hearing Officer's Exhibit 9). By order entered October 13, 1976, the parties were directed to file a prehearing stipulation (Hearing Officer's Exhibit 10). The stipulation, including lists of witnesses and exhibits, was received in evidence as Hearing Officer's Exhibits 11 and 12.
At the final hearing the Department of Revenue called the following witnesses: Jeremiah J. Kelly, Jr., a former employee of the Petitioner; Joseph Capitano, the President of NCJ Investment Company, Inc.; Glenn M. Williamson, a tax examiner supervisor with the Department of Revenue's Motor Fuel Tax Bureau; L. N. Thomas, the Chief of the Department of Revenue's Motor Fuel Tax Bureau; and Howard R. Steinhauser, a tax examiner with the Department of Revenue's Motor Fuel Tax Bureau. Silver Sand Company called the following witnesses: Hal Johns, the former General Manager of Keystone Trucking; Elizabeth Brown, Silver Sand's head bookkeeper; Michael R. Kane, an employee of Silver Sand Company; Billy J. Ferguson, a Department of Revenue investigator; and L. N. Thomas. Hearing Officer's Exhibits 1-12, Petitioner's Exhibits 1-8, and Respondent's Exhibits 1, 3, 4, 5, and 8 were received into evidence at the hearing. Respondent's Exhibits 2, 6, and 7 were offered into evidence, but were not received.
This case arises out of an assessment for special fuel tax in the amount of $154,644.50, which has been imposed against Silver Sand Company of Leesburg, Inc. by the Department of Revenue. The assessment is based upon the invoices of NCJ Investment Company, Inc. concerning 1,753,027 gallons of diesel fuel picked up by Handy Haul-It Truck Rentals during the months of April through December, 1973. The Department of Revenue states its case as follows: (Hearing Officer's Exhibit 12)
"Silver Sand is liable for taxes in the amount of $154,644.50 for purchases of special fuels in the amount of 1,753,027 gallons. Silver Sand authorized Handy Haul-It to act as its agent in purchasing fuel from whatever source Handy Haul-It could obtain fuel for Silver Sand. In
pursuance of such agency, Silver Sand issued a purchaser's blanket resale and exemption certificate dated January 1, 1973, with Silver Sand's license number on it to its agent, Handy Haul-It, who then used said exemption certificate to obtain fuel from NCJ Investment Company. NCJ Investment Company, billing Silver Sand by invoices for the
purchased fuel, did not charge Silver Sand tax and did not receive tax from Silver Sand or its agent, Handy Haul-It, for the fuel purchases because of the exemption certificate containing Silver Sand's license number. Therefore, Silver Sand, the buyer, using fuel in both a taxable and nontaxable situation, was responsible for all fuel purchased under its license number and was responsible for accruing and remitting tax directly to the Department of Revenue of the State of Florida.
In the alternative, if Handy Haul-It is not found to be the agent of Silver Sand, Silver Sand is liable for the purchase of 882,264 gallons of special fuel because of the following reasons:
Silver Sand has no invoices stating the tax separately from the price of the product and did not mail monthly reports to the Department of Revenue showing receipt of disposition of special fuels or payment of tax on special fuels.
Silver Sand has not shown that it resold the fuel, collected tax and remitted said tax to the Department of Revenue, and has not shown that Silver Sand used the fuel in a nontaxable situation."
Silver Sand states its case as follows: (Hearing Officer's Exhibit 11)
"The invoices [NCJ Investment Company's invoices] bear the name `Silver Sand' however they were never delivered to the Petitioner and, the records of Silver Sand indicate that it neither purchased nor received any diesel fuel from NCJ during such period. Moreover, Silver Sand had no knowledge that its name was being placed upon the NCJ invoices. All of the 1,753,027 gallons of fuel which NCJ invoiced to Silver Sand during this period was picked up and paid for by Handy Haul-It Truck Rentals, Inc., a company owned by Bobby Carruthers, or by its employee, a truck
driver named Lex Croft. Handy Haul-It paid for each load as it was picked up at NCJ by check. Silver Sand neither paid NCJ for the fuel nor picked up the fuel from NCJ and none of the NCJ invoices were signed by anyone connected in any manner with Silver Sand.
The records of Silver Sand and the audit of Silver Sand performed by Heyward Steinhauser, an auditor for the Department of Revenue, indicate that Silver Sand purchased approximately 882,264 gallons of diesel fuel during the relevant time period of April through December, 1973, from Handy Haul-It Truck Rentals, Inc. Audits performed by the Department of Revenue of the records of Montgomery Hauling, Montgomery Trucking, Keys of the Coast, Dirt Haulers, Inc., Florida Bulk Transport, Mid Florida Hauling, and Keystone Trucking Company indicate that such companies purchased a total of approximately 1,100,000 gallons of diesel fuel from Handy Haul-It Truck Rentals, Inc. during the period of April through December, 1973. Each of the companies listed above, including Silver Sand, understood that the price per gallon which they were paying to Handy Haul-It Truck
Rentals, Inc. during this time period included all fuel taxes, both state and federal.
Silver Sand asserts that NCJ did not have in its files a certificate of resale issued by Silver Sand, and, therefore, NCJ was responsible for collecting the tax and remitting such tax to the Department of Revenue.
With respect to the fuel which it did not receive, Silver Sand maintains that it is not responsible for the tax.
With respect to the fuel which it did receive,
it claims to have paid the tax to Handy Haul-It."
Several corporate entities are involved in this case. For convenience the entities will be referred to as follows: Silver Sand Company of Leesburg, Inc. will be referred to as "Silver
Sand." Handy Haul-It Truck Rentals, Inc., will be referred to as "Handy Haul-It." NCJ Investment Company, Inc. will be referred to as "NCJ." Radiant Oil Company will be referred to as "Radiant Oil."
FINDINGS OF FACT
Silver Sand is in the aggregate business. A major portion of this business involves the trucking of sand, rock, and shell. Diesel fuel, a special fuel, is used in these trucking operations. Approximately fifteen percent of the trucking takes place off of highways and roads. Fuel utilized for off-road operations is not subject to the Florida excise tax on special fuel. To facilitate its trucking operations, Silver Sand purchases diesel fuel in bulk, and uses it in its own trucks and sells it to lease operators who are under contract to Silver Sand. Silver Sand holds a Florida Department of Revenue license which entitles it to purchase diesel fuel in bulk without paying the excise tax.
The assessment period involved in this case is April, 1973 through December, 1973. During that period the United States was in the middle of a fuel crisis, and motor fuels, including diesel fuel, was difficult to obtain.
During the relevant period Jeremiah J. Kelly, Jr., was Silver Sand's lease operations manager. He was responsible for obtaining diesel fuel. In April, 1973, a Mr. Carruthers, representing Handy Haul-It, approached Kelly and told him that Handy Haul-It could provide Silver Sand with diesel fuel. Kelly had the authority to negotiate diesel fuel purchases on behalf of Silver Sand. Kelly did not know where Carruthers or Handy Haul-It could get diesel fuel, and he assumed that Handy Haul-It was a fuel distributor. Carruthers told Kelly that he would need to have a "Purchaser's Blanket Resale and Exemption Certificate" issued by Silver Sand in order to obtain the fuel. Carruthers presented Kelly with such a certificate. The certificate was addressed to Radiant Oil. Kelly went to his superior, Kenneth Surbaugh, and asked whether he should issue the certificate. Surbaugh authorized Kelly to sign the certificate. Kelly signed the certificate that day, and left it on his desk. When he returned the following day the certificate was gone. Kelly did not write the name "Silver Sand Company" on the certificate, and did not date it. The name "Silver Sand Company" and the date were placed on the certificate after Kelly signed it. The certificate came into Carruthers' possession. The evidence did not reveal whether the certificate was delivered to Carruthers by anyone at
Silver Sand, but Kelly did intend to deliver the certificate to Carruthers. A copy of the certificate was received in evidence as Respondent's Exhibit 1. The name Silver Sand Company is inserted as the purchaser, and it is dated January 1, 1973. The document was predated. It was actually signed during April, 1973.
NCJ is in the business of distributing motor fuels, including diesel fuel. Joseph Capitano is the President and Chief Executive Officer of NCJ. During April through December, 1973, NCJ had a relative abundance of diesel fuel. In April, 1973, Bill Simms, a friend of Capitano who is also in the fuel distribution business, told Capitano that he had a customer who desired to purchase substantial quantities of diesel fuel. This customer was Carruthers. Simms introduced Carruthers to Capitano. Capitano told Carruthers that he would need a Purchaser's Blanket Resale and Exemption Certificate in order to sell him diesel fuel. Capitano gave Carruthers a certificate to be executed which would fulfill this function. This is the certificate that was signed by Kelly, and received in evidence as Respondent's Exhibit 1. Carruthers ultimately returned the form to Capitano. The form is addressed to Radiant Oil, not to NCJ.
NCJ and Radiant Oil are separate entities. NCJ and Radiant Oil are separately registered with the Department of Revenue as motor fuel dealers. The corporations are somewhat related. Joseph Capitano's father owns Radiant Oil. NCJ leases office space from Radiant Oil, and the two corporations share clerical help. The companies use common gas tanks. The companies also utilize many of the same business forms. NCJ had on occasion utilized Radiant Oil's "Purchaser's Blanket Resale and Exemption Certificate" form for its use. NCJ was a new company, and did not have its own forms. Respondent's Exhibit 3 is a compilation of such forms which were used by NCJ during the relevant period.
Some of these were Radiant Oil's forms. In utilizing Radiant Oil's forms, the name Radiant Oil Company was marked off and NCJ Investment Company was inserted. That was not done on the form signed by Kelly on behalf of Silver Sand.
After Carruthers delivered the exemption certificate to Capitano Handy Haul-It proceeded to purchase fuel from NCJ and resell it to Silver Sand. The fuel was generally picked up at NCJ's tanks by Handy Haul-It's truck. Occasionally Handy Haul-It hired trucks from another common carrier to pick up the fuel. Handy Haul-It paid for the fuel by check made out on the account of Handy Haul-It. NCJ invoices reflected, however, that the purchaser was Silver Sand. Copies of these invoices were not mailed to Silver Sand, and never came into the possession of
Silver Sand. No one at Silver Sand was aware of the existence of NCJ. Handy Haul-It purchased 1,753,027 gallons of special fuel from NCJ in this manner. Handy Haul-It did not pay the special fuel tax on any of the purchases. While NCJ was selling tax free based upon the Purchaser's Blanket Resale Exemption Certificate (Respondent's Exhibit 1) it did not place Silver Sand's dealer or distributor license number on many of the invoices. NCJ never made any inquiry of anyone at Silver Sand as to Carruthers' or Handy Haul-It's authority to purchase fuel on Silver Sand's behalf.
882,264 gallons of the special fuel purchased by Handy Haul-It from NCJ was delivered to Silver Sand. This fuel was delivered either in Handy Haul-It's own truck, or in a truck hired by Handy Haul-It. Silver Sand paid Handy Haul-It directly by check when it received each of the deliveries. Handy Haul-It delivered invoices to Silver Sand. The invoices do not reflect a separate itemization showing that motor fuel taxes were paid. The price paid for the fuel would indicate that the price included the tax. Carruthers represented to officials at Silver Sand that the price included the tax, and that he would pay the taxes.
In its monthly reports to the Department of Revenue, Silver Sand did not report the purchases because it believed that it was not required to report purchases upon which taxes had been paid.
The evidence at the hearing was insufficient to establish the ultimate destination of the fuel which Handy Haul- It purchased from NCJ but did not sell to Silver Sand. Handy Haul-It did make sales to several other trucking companies, including Keystone Trucking Company, Montgomery Trucking, Montgomery Hauling, Keys of the Coast, Florida Bulk Transport, Dirt Haulers, Inc., and Mid Florida Hauling. Handy Haul-It had purchased some fuel from sources other than NCJ, and it cannot be gleaned from the evidence whether the fuel purchased from NCJ was ultimately delivered to these other companies. It is clear from the evidence that the remaining fuel was not delivered to Silver Sand, and that Silver Sand was not aware that Handy Haul-It had purchased such additional quantities from NCJ in Silver Sand's name.
Handy Haul-It was not licensed as a distributor or dealer of motor fuels by the Florida Department of Revenue.
By agreeing to purchase diesel fuel from Handy Haul-It, Silver Sand authorized Handy Haul-It to obtain diesel fuel on behalf of Silver Sand. Handy Haul-It was therefore Silver Sand's
agent for the purpose of obtaining fuel for Silver Sand. When Kelly signed the Purchaser's Blanket Resale and Exemption Certificate, he authorized Handy Haul-It to use Silver Sand's special fuel dealer's license to obtain diesel fuel tax free from Radiant Oil Company of Tampa, the addressee on the certificate.
Silver Sand thus clothed Handy Haul-It and Carruthers with the apparent authority to purchase diesel fuel tax free utilizing Silver Sand's special fuel dealer license number from Radiant Oil Company of Tampa.
NCJ knew, or should have known, that in making sales to Carruthers and Handy Haul-It, it was not dealing directly with Silver Sand. Although the exemption certificate had the name Silver Sand on it, and NCJ chose to address its invoices to Silver Sand, all of the purchases were made by Handy Haul-It and Carruthers. There was no evidence that Carruthers ever represented to NCJ that he had authority to speak for Silver Sand. NCJ took no action to inform itself as to Carruthers' authority to act on Silver Sand's behalf, other than to obtain the exemption certificate. The exemption certificate, however, was not made out to NCJ. The only authority of Handy Haul-It to act on Silver Sand's behalf that NCJ was entitled to rely upon was the authority to purchase fuel from Radiant Oil Company of Tampa. The authorization is very specific in this regard, and although it may be that Silver" Sand would gladly have executed an exemption certificate addressed to NCJ, it did not do that. The fact that the certificate was back-dated, and was issued to the wrong entity, should have caused NCJ to take action to contact Silver Sand. If NCJ had done that, Handy Haul-It would never have been in a position to purchase fuel from NCJ and to deliver it to someone other than Silver Sand. Indeed, it is possible that Handy Haul-It would never have been placed in the position of buying fuel under Silver Sand's license number at all. Knowing that it was dealing with an agent, NCJ should have sent copies of the invoices to the principal, Silver Sand. If NCJ had done that, Silver Sand would have been on notice that Handy Haul-It was purchasing considerable fuel in its name, and delivering it elsewhere.
Silver Sand did not give Handy Haul-It the authority to obtain fuel for any purpose except delivery to Silver Sand. When Handy Haul-It utilized the exemption certificate to purchase fuel for purposes other than delivery to Silver Sand, it exceeded the scope of its authority.
NCJ did not obtain special fuel taxes from Handy Haul-It on the sales which NCJ made to Handy Haul-It. NCJ did report the
sales to the Department of Revenue. Silver Sand believed that it was paying special fuel taxes to Handy Haul-It. The fact that the price which Silver Sand paid to Handy Haul-It included the tax was not, however, placed on the invoices. Handy Haul-It did not pay any special fuel taxes.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties to this action, and over the subject matter.
The State of Florida imposes an excise tax upon special fuel sold or used within the state under the provisions of Florida Statutes, Chapter 206, Part II. Special fuels are defined to include diesel fuel. Florida Statutes, 206.86(1). Florida Statutes, 206.87(1) provides:
"An excise tax of 8 cents per gallon is hereby imposed upon every gallon of special fuel used or sold in this state for use. Unless expressly provided to the contrary in this part, every sale shall be deemed to be for use in this state. This levy of tax is upon the consumer
but shall be paid upon the first sale or transfer of title within the state by a dealer, except as expressly provided in this part, who shall act
as agent for the state in the collection of said tax whether he be the ultimate seller or not."
A "dealer" is defined as "any person who holds a valid dealer of special fuel license issued by the Department [Department of Revenue]" and who deals in special fuels in certain specified manners including the purchase of special fuels in bulk quantities for resale to other dealers. Florida Statutes, 206.86(8). Dealers are permitted to purchase special fuel without paying the tax, even though they are the first purchaser within the state.
Florida Statutes, 206.87(2). Under these circumstances the purchasing dealer becomes the state's agent for the purpose of collecting and paying the tax. Florida Statutes, 206.87(2),(3). The Rules of the Department of Revenue impose upon a selling dealer the responsibility of either collecting the tax, or establishing the exempt status of the transaction. Rule 12A- 2.03(1) provides in pertinent part:
". . . The exempt status of the transaction must be established by the distributor or dealer. Unless the distributor or dealer has
obtained from the purchaser a resale or exemption certificate, the sales invoice, with respect to any sale for which exemption is claimed, must show the exempt purpose for which the special fuel was purchased and that the special fuel was not placed into the receptacle connected to the fuel supply system of a motor vehicle. Any dealer of special fuel . . . who obtains from his purchaser a resale or exemption certificate and, in good faith, sells special fuel to such purchaser tax free shall not be required to collect from the purchaser any tax levied by Chapter 206 . . ."
A purchasing dealer is required to deliver a resale certificate to the selling dealer. Otherwise the selling dealer is required to collect the tax. Rule 12A-2.03(2). The purchasing dealer's' Department of Revenue license number must be set out on the resale certificate. Rule 12A-2.03(4). Suggested forms for resale certificates, or blanket resale certificates are set out in Rule 12A-2.03(7). The blanket resale certificate obtained by NCJ from Carruthers and Handy Haul-It in this case (Respondent's Exhibit 1) is nearly identical to the form suggested in Rule 12A- 2.03(7)(a).
18. Florida Statutes, 206.23, 206.49, and 206.87(3) establish a requirement that a selling dealer plainly state on its invoice to a purchasing dealer whether the tax will be reported and paid by the selling dealer. Sections 206.23 and 206.49 appear in Part I of Chapter 206, but they expressly apply to Part II. Florida Statutes, 206.97. Section 206.23 provides:
"Distributors shall add the amount of the gas tax to the price of the motor fuel sold by them and shall state the rate of the tax separately from the price of the motor fuel on all invoices . . ."
Section 206.49 provides:
"Each distributor [dealer], when selling to any other distributor [dealer] any of the products taxed under this part, shall render an invoice of such sale to the purchaser, and upon such invoice the distributor [dealer] rendering such invoice
shall plainly state thereon whether or not the tax required will be reported and paid by him, and the purchaser buying and receiving such products may fully rely upon the satement made in such invoice."
Section 206.87(3) provides that when a purchasing dealer pays the tax, the amount of the tax paid shall be added to the sale price of the product sold by him, and the tax stated separately from the price on all subsequent bills.
The Department of Revenue contends that Handy Haul-It purchased all of the subject diesel fuel from NCJ as Silver Sand's agent. The burden of proving an agency relationship rests with the party who asserts the relationship. Miller v. Chase & Company, 88 Fla. 500, 102 So. 553 (1924); Bernstein v. Dwork, 320 So.2d 472 (3 D.C.A. Fla. 1975). An agency relationship can be conferred by a written document, by parole, or it may be inferred by inference from facts and circumstances and conduct of the parties involved in a particular case. Thompkin Corp. v. Miller,
156 Fla. 388, 24 So.2d 48 (1945); Lan-Chile Airlines, Inc. v. Rodriguez, 296 So.2d 498 (3 D.C.A. Fla. 1974). Authority must be granted to an agent by his principal. The burden of establishing the agency relationship cannot be met by proving extra judicial declarations made by the alleged agent, unless the declarations are made in the presence of the alleged principal. Paige-Detroit Motor Car Company v. Pintado, 82 Fla. 210, 89 So. 549 (1921), Aerovias Panama, S.A. v. Air Carrier Service, Inc., 195 So.2d 230 (3 D.C.A. Fla. 1967). Once the agent's authority is established, the principal is bound by actions of the agent while acting in the scope of his or her authority. Taco Bell of California v. Zappone, 324 So.2d 121 (2 D.C.A. Fla. 1976).
The authority of an agent to bind a principal may be real, or it may be apparent only. Stiles v. Gordon Land Co., 44 So.2d 417 (Fla. 195); Taco Bell of California v. Zappone, supra; Tampa Sand & Material Company v. Davis, 125 So.2d 126 (2 D.C.A. Fla. 1960). Real authority is the authority actually conferred by the principal through written or parole statements, or by inference drawn from the facts of a particular case. In Stiles v. Gordon Land Co., supra, the court defined apparent authority as follows:
"By apparent authority is meant, such authority as the principal wrongfully permits the agent to assume or which the principal by his actions or words holds the agent out as
possessing . . . Apparent authority rests on the doctrine of estoppel and arises from the fact of representations or actions by the principal and a change of position by a third person who in good faith relies on such representations or actions." (At page 421, 442; citations omitted).
In Taco Bell of California v. Zappone, supra, the court stated:
"[T]o bind his principal, an agent's actions must be within the scope of his express or implied, i.e., his `actual or real' authority, or be of such a nature as third parties would be entitled to rely upon as being within his `apparent' authority . . .
Apparent or ostensible authority arises where a principal allows or causes others to believe the agent possesses such authority, as where the principal knowingly permits the agent to assume such authority or where the principal by his actions or words holds the agent out as possessing it . . . but . . . the doctrine rests on appearances created by the principal and not by agents who often ingenuously create an appearance of
authority by their own acts." (At pp 123, 124, citations omitted).
There was no evidence offered in the instant case to establish that Silver sand expressly appointed Handy Haul-It to serve as its agent for any purpose. Silver Sand agreed expressly to do no more than purchase special fuel from Handy Haul-It. The facts and circumstances of the transaction, however, lead to the conclusion that an agency relationship was created by inference. Jeremiah Kelly, Silver Sand's representative who negotiated with Carruthers and Handy Haul-It, stated that he believed Handy Haul- It to be a special fuel dealer. Silver Sand took no steps to assure itself that this was the case, and should have known that it was not. If Handy Haul-It had been a dealer, Handy Haul-It would not have needed the exemption certificate which Carruthers asked Kelly to execute. By agreeing to purchase special fuel from an entity which it should have known was not a dealer, and by executing the exemption certificate, Silver Sand impliedly gave Handy Haul-It the authority to purchase special fuel on Silver
Sand's behalf. Silver Sand did not, either expressly or impliedly, give Handy Haul-It the authority to purchase special fuel using Silver Sand's exemption certificate, for delivery to entities other than Silver Sand.
The exemption certificate executed by Kelly clothed Handy Haul-It with authority which in some respects was less than Handy Haul-It's real authority, but in other respects was greater. The certificate evidenced less than Handy Haul-It's real authority in that it limited purchases to one entity--Radiant Oil. The certificate displayed more authority than Handy Haul-It was impliedly given because it would have enabled Handy Haul-It to purchase fuel tax free from Radiant Oil, and to deliver it to some entity other than Silver Sand.
Under the facts of this case NCJ was not justified in accepting the Purchaser's Blanket Resale and Exemotion Certificate (Respondent's Exhibit 1). In the first place the certificate is not addressed to NCJ. Nothing in Florida Statutes Chapter 206, or in the Department of Revenue's rules respecting -- motor fuel taxes permits one special fuel dealer to utilize an exemption certificate addressed to another dealer no matter how closely related the dealers might be. Although Radiant Oil and NCJ are closely related, they are not the same entity. In addition to the fact that the certificate was not addressed to NCJ, NCJ should have recognized that the certificate had been predated. NCJ did not give the certificate to Handy Haul-It until April, 1973, yet the certificate is dated January 1, 1973. Even a casual examination of the document clearly shows that the purchaser's name, Silver Sand Company, and the date set out on the document were not written by the same hand and pen as the signature. Although the name of the purchaser is set out on the certificate, no address is given. Furthermore, NCJ knew that it was dealing with an agent because its payments came from Handy Haul-It, not from the putative purchaser, Silver Sand.
NCJ was in a position to prevent Handy Haul-It from accomplishing a fraud in this case. If NCJ had made an inquiry of Silver Sand respecting Handy Haul-It's authority, or had requested that an exemption certificate be issued to NCJ, or had forwarded copies of invoices to Silver Sand, Silver Sand would have been in a position to realize that Handy Haul-It was using the exemption certificate to purchase fuel for entities other than Silver Sand. NCJ's assertion that it did not forward copies of invoices to Silver Sand because payment was made at the time of delivery is not adequate in view of the fact that NCJ knew or should have
known that it was dealing with Handy Haul-It as an agent of Silver Sand.
It should be additionally pointed out that a selling dealer is only entitled under the Department of Revenue rules to utilize an exemption certificate as its authorization to sell tax free if the purchaser's dealer's license number is set out on each subsequent invoice or evidence of sale. Rule 12A-2.03(6). Many of NCJ's invoices which are directed to Silver Sand do not contain Silver Sand's dealer's license number.
Silver Sand believed that the price it paid to Handy Haul-It for the special fuel included the special fuel tax. This belief was based upon Carruthers' representations, and upon a price comparison. Silver Sand believed, according to Kelly, that Handy Haul-It was a special fuel dealer. The law permits a purchaser such as Silver Sand to assure itself that the taxes are included in the price by demanding that the amount of taxes be separately stated on all invoices as is required by Florida Statutes 206.49. Silver Sand took no steps to assure itself of Handy Haul-It's, or Carruthers' veracity or status. Silver Sand was not justified in relying upon Carruthers' statements that the price included taxes because it took no steps to assure itself as to Carruthers and Handy Haul-It's status, and because the easy remedy set out in 206.49 was not utilized.
Silver Sand is liable for special fuel taxes on the 882,264 gallons of special fuel which it impliedly authorized Handy Haul-It to obtain on its behalf, and which it purchased from Handy Haul-It. Silver Sand is not responsible for the special fuel tax on fuel purchased by Handy Haul-It from NCJ which Handy Haul-It did not deliver to Silver Sand. Handy Haul-It did not have the real authority to make such purchases, and Silver Sand gave Handy Haul-It only the apparent authority to make such purchases from Radiant Oil Company, not from NCJ.
RECOMMENDED ORDER
Based upon the foregoing Findings of Fact and Conclusions of Law, it is,
That the Florida Department of Revenue enter an order withdrawing the assessment for special fuel taxes previously assessed or proposed to be assessed against Silver Sand Company of Leesburg, Inc. and imposing special fuel taxes upon Silver Sand
Company on the 882,264 gallons of special fuel which Silver Sand Company of Leesburg, Inc. purchased from Handy Haul-It Truck Rentals, Inc. between April and December, 1973.
RECOMMENDED this 31st day of January, 1977 in Tallahassee, Florida.
G. STEVEN PFEIFFER Hearing Officer
Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 31st day of January, 1977.
COPIES FURNISHED:
Charles Davis, Esquire Julian K. Dominick, Esquire
FISHBACK, DAVIS, DOMINICK & SIMONET
170 East Washington Street Orlando, Florida 32801
Patricia S. Turner, Esquire Larry Levy, Esquire Department of Legal Affairs The Capitol
Tallahassee, Florida 32304
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AGENCY FINAL ORDER
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STATE OF FLORIDA DEPARTMENT OF REVENUE
SILVER SAND COMPANY OF LEESBURG, INC.,
Petitioner,
vs. CASE NO. 75-1876
DEPARTMENT OF REVENUE,
Respondent.
/
FINAL ORDER
Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, G. Steven Pfeiffer, held a public hearing in this case on November 8 and 9, 1976, in Tavares, Florida.
The following appearances were entered: Charles Davis and Julian K. Dominick, of the firm FISHBACK, DAVIS, DOMINICK & SIMONET, Orlando, Florida, for the Petitioner, Silver Sand Company of Leesburg, Inc.; and Patricia S. Turner and Larry Levy, Department of Legal Affairs, Tallahassee, Florida, for the Respondent, Florida Department of Revenue.
On October 28, 1975, the Petitioner, Silver Sand Company of Leesburg, Inc., filed a Petition for Formal Proceeding with the Division of Administrative Hearings. The Petition was received in evidence at the formal hearing as Hearing Officer's Exhibit 1.
The Respondent, Department of Revenue, filed its Answer on November 10, 1975 (Hearing Officer's Exhibit 2). The final hearing was originally scheduled to be conducted on March 25 and 26, 1976, by notice dated January 26, 1976 (Hearing Officer's Exhibit 3). The parties filed a Joint Motion for Continuance of the hearing which was granted by Order entered March 12, 1976 (Hearing Officer's Exhibits 4 and 5). The hearing was rescheduled
to be conducted on May 17 and 18, 1976 (Hearing Officer's Exhibit 6). On May 6, 1976, the Respondent filed a Motion for Continuance which was granted by Order entered May 11, 1976 (Hearing Officer's Exhibits 7 and 8). The final hearing was scheduled for November 8 and 9, 1976, by notice dated August 6, 1976 (Hearing Officer's Exhibit 9). By Order entered October 13, 1976, the parties were directed to file a prehearing stipulation (Hearing Officer's Exhibit 10). The stipulation, including lists of witnesses and exhibits, was received into evidence as Hearing Officer's Exhibits
11 and 12.
At the final hearing, the Department of Revenue called the following witnesses: Jeremiah J. Kelly, Jr., a former employee of the Petitioner; Joseph Capitano, the President of NCJ Investment Company, Inc.; Glenn M. Williamson, a tax examiner supervisor with the Department of Revenue's Motor Fuel Tax Bureau; L. N. Thomas, the Chief of the Department of Revenue's Motor Fuel Tax Bureau; and Howard R. Steinhauser, a tax examiner with the Department of Revenue's Motor Fuel Tax Bureau. Silver Sand Company called the following witnesses: Hal Johns, the former General Manager of Keystone Trucking; Elizabeth Brown, Silver Sand's head bookkeeper; Michael R. Kane, an employee of Silver Sand Company; Billy J. Ferguson, a Department of Revenue investigator; and L. N. Thomas. Hearing Officer's Exhibits 1, 3, 4, 5, and 8 were received into evidence at the hearing. Respondent's Exhibits 2, 6, and 7 were offered into evidence, but were not received.
This case arises out of an assessment for Special Fuel Tax in the amount of $154,644.50, which has been imposed against Silver Sand Company of Leesburg, Inc., by the Department of Revenue. The assessment is based upon the invoices of NCJ Investment Company, Inc., involving 1,753,027 gallons of special fuel picked up by Handy Haul-It Truck Rentals during the months of April through December, 1973. The Department of Revenue states its case as follows: (Hearing Officer's Exhibit 12)
Silver Sand is liable for taxes in the amount of $154,644.50 for purchases of special fuels in the amount of 1,753,027 gallons. Silver Sand authorized Handy Haul-It to act as its agent in purchasing fuel from whatever source Handy Haul-It could obtain fuel for Silver Sand. In pursuance of such agency, Silver Sand issued a purchaser's blanket resale and exemption certificate dated January 1, 1973, with Silver Sand's license number
1973, from Handy Haul-It Truck Rentals, Inc. Audits, performed by the Department of Revenue of the records of Montgomery Hauling, Montgomery Trucking, Keys of the Coast, Dirt Haulers, Inc., Florida Bulk Transport, Mid Florida Hauling, and Keystone Trucking Company indicate that such companies purchased a total of approximately 1,100,000 gallons of diesel fuel from Handy Haul-It Truck Rentals, Inc. during the period of April through December, 1973. Each of the companies listed above, including Silver Sand, understood that the price per gallon which they were paying to Handy Haul-It Truck Rentals, Inc. during this time period included all fuel taxes, both state and federal.
Silver Sand asserts that NCJ did not have in its files a certificate of resale issued by Silver Sand and therefore NCJ was responsible for collecting the tax and remitting such tax to the Department of Revenue.
With respect to the fuel which it did not receive, Silver Sand maintains that it is not responsible for the tax.
With respect to the fuel which it did receive, it claims to have paid the tax to Handy Haul-It."
Several corporate entities are involved in this case. For convenience, the entities will be referred to as follows: Silver Sand Company of Leesburg, Inc., will be referred to as "Silver Sand;" Handy Haul-It Truck Rentals, Inc., will be referred to as "Handy Haul-It;" NCJ Investment Company, Inc., will be referred to as "NCJ;" and Radiant Oil Company will be referred to as "Radiant Oil."
FINDINGS OF FACT
Silver Sand is in the aggregate business. A major portion of this business involves the trucking of sand, rock, and shell. Diesel fuel, a special fuel, is used in these trucking operations. Approximately fifteen percent of the trucking takes
place off of highways and roads. Fuel utilized for off-road operations is not subject to the Florida excise tax on special fuel. To facilitate its trucking operations, Silver Sand purchases special fuel in bulk, and uses it in its own trucks and sells it to lease operators who are under contract with Silver Sand. Silver Sand holds a Florida Department of Revenue license which entitles it to purchase special fuel in bulk without paying the excise tax.
The assessment period involved in this case is April, 1973, through December, 1973. During this period, the United States was in the middle of a fuel crisis, and motor fuels, including special fuel, was difficult to obtain.
During the relevant period, Jeremiah J. Kelly, Jr., was Silver Sand's lease operations manager. He was responsible for obtaining special fuel. In April, 1973, a Mr. Carruthers, representing Handy Haul-It, approached Kelly and told him that Handy Haul-It could provide Silver Sand with special fuel. Kelly had the authority to negotiate special fuel purchases on behalf of Silver Sand. Kelly did not know where Carruthers or Handy Haul-It could get special fuel, and he assumed that Handy Haul-It was a fuel distributor. Carruthers told Kelly that he would need to have a "Purchaser's Blanket Resale and Exemption Certificate" issued by Silver Sand in order to obtain the fuel. Carruthers presented Kelly with such a Certificate. The Certificate was addressed to Radiant Oil. Kelly went to his superior, Kenneth Surbaugh, and asked whether he should issue the Certificate. Surbaugh authorized Kelly to sign the Certificate. Kelly signed the Certificate that day, and left it on his desk. When he returned the following day, the Certificate was gone. Kelly did not write the name, "Silver Sand Company" on the Certificate and did not date it. The name, "Silver Sand Company," and the date were placed on the Certificate after Kelly signed it. The Certificate came into Carruther's possession. The evidence did not reveal whether the Certificate was delivered to Carruthers by anyone at Silver Sand, but Kelly did intend to deliver the Certificate to Carruthers. A copy of the Certificate was received into evidence as Respondent's Exhibit 1. The name, Silver Sand Company, is inserted as the purchaser and it is dated January 1, 1973. The document was predated. It was actually signed during April, 1973.
NCJ is in the business of distributing motor fuels, including special fuel. Joseph Capitano is the President and Chief Executive Officer of NCJ. During April through December, 1973, NCJ had a relative abundance of special fuel. In April,
1973, Bill Simms, a friend of Capitano who is also in the fuel distribution business, told Capitano that he had a customer who desired to purchase substantial quantities of special fuel. This customer was Carruthers. Simms introduced Carruthers to Capitano. Capitano told Carruthers that he would need a Purchaser's Blanket Resale and Exemption Certificate in order to sell him special fuel. Capitano gave Carruthers a certificate to be executed which would fulfill this function. This is the Certificate that was signed by Kelly and received into evidence as Respondent's Exhibit
Carruthers ultimately returned the form to Capitano. The form is addressed to Radiant Oil, not to NCJ.
NCJ and Radiant Oil are separate entities. NCJ and Radiant Oil are separately registered with the Department of Revenue as motor fuel dealers. The corporations are somewhat related. Joseph Capitano's father owns Radiant Oil. NCJ leases office space from Radiant Oil, and the two corporations share clerical help. The companies use common gas tanks. The companies also utilize many of the same business forms. NCJ had, on occasion, utilized Radiant Oil's Purchaser's Blanket Resale and Exemption Certificate form for its use. NCJ was a new company, and did not have its own forms. Respondent's Exhibit 3 is a compilation of such forms which were used by NCJ during the relevant period. Some of these were Radiant Oil's forms. In utilizing Radiant Oil's forms, the name Radiant Oil Company was marked off and NCJ Investment Company was inserted. That was not done on the form signed by Kelly on behalf of Silver Sand.
After Carruthers delivered the Exemption Certificate to Capitano, Handy Haul-It proceeded to purchase fuel from NCJ and deliver it to Silver Sand. The fuel was generally picked up at NCJ's tanks by Handy Haul-It's truck. Occasionally, Handy Haul-It hired trucks from another common carrier to pick up the fuel. Handy Haul-It paid for the fuel by check made out on the account of Handy Haul-It. NCJ invoices reflected, however, that the purchaser was Silver Sand. Copies of these invoices were not mailed to Silver Sand, and never came into the possession of Silver Sand. No one at Silver Sand was aware of the existence of NCJ. Handy Haul-It Purchased 1,753,027 gallons of Special fuel from NCJ in this manner. Handy Haul-It did not pay the Special Fuel Tax on any of the purchases. While NCJ was selling tax free based upon the Purchaser's Blanket Resale and Exemption Certificate (Respondent's Exhibit 1), it did not place Silver Sand's dealer or distributor license number on many of the invoices. NCJ never made any inquiry of anyone at Silver Sand as to Carruthers' or Handy Haul-It's authority to purchase fuel on Silver Sand's behalf.
882,264 gallons of special fuel purchased by Handy Haul- It from NCJ were delivered to Silver Sand. This fuel was delivered either in Handy Haul-It's own truck, or in a truck hired by Handy Haul-It. Silver Sand paid Handy Haul-It directly by check when it received each of the deliveries. Handy Haul-It delivered invoices to Silver Sand. The invoices do not reflect a separate itemization showing that Special Fuel Taxes were paid. The price paid for the fuel would indicate that the price included the tax. Carruthers represented to officials at Silver Sand that the price included the tax, and that he would pay the taxes.
In its monthly reports to the Department of Revenue, Silver Sand did not report the purchases because it believed that it was not required to report purchases upon which taxes had been paid.
The evidence at the hearing was insufficient to establish the ultimate destination of the fuel which Handy Haul-It purchased from NCJ but did not deliver to Silver Sand. Handy Haul-It did make sales to several other trucking companies, including Keystone Trucking Company, Montgomery Trucking, Montgomery Hauling, Keys of the Coast, Florida Bulk Transport, Dirt Haulers, Inc., and Mid Florida Hauling. Handy Haul-It had purchased some fuel from sources other than NCJ, and it cannot be gleaned from the evidence whether the fuel purchased from NCJ was ultimately delivered to these other companies. It is clear from the evidence that the remaining fuel was not delivered to Silver Sand and that Silver Sand was not aware that Handy Haul-It had purchased such additional quantities from NCJ in Silver Sand's name.
Handy Haul-It was not licensed as a distributor or dealer of motor fuels by the Florida Department of Revenue.
NCJ knew, or should have known, that in making sales to Carruthers and Handy Haul-It, it was not dealing directly with Silver Sand. Although the exemption certificate had the name Silver Sand on it, and NCJ chose to address its invoices to Silver Sand, all of the special fuel was picked up by Handy Haul-It and Carruthers. NCJ took no action to inform itself as to Carruthers' authority to act on Silver Sand's behalf, other than to obtain the Exemption Certificate.
NCJ did not obtain special fuel taxes from Handy Haul- It on the sales which NCJ made to Handy Haul-It. NCJ did report the sales to the Department of Revenue. Silver Sand believed that it was paying Special Fuel Taxes to Handy Haul-It. The fact that
the price which Silver Sand paid to Handy Haul-It included the tax was not, however, placed on the invoices. Handy Haul-It did not pay any Special Fuel Taxes.
Paragraph 7, Page 8, and a portion of Paragraph 8, Pages
8 and 9, specifically included under Findings of Fact in the Hearing Officer's Findings of Fact, Conclusions of Law, and Recommended Order have been deleted because it is the Department of Revenue's recommendation that these statements are not findings of fact, but conclusions of law dealing directly with the instant issue of whether Handy Haul-It was the agent of Silver Sand:
Paragraph 7, Page 8, of the Hearing Officer's Findings of Fact, Conclusions of Law, and Recommended Order state:
By agreeing to purchase special fuel from Handy Haul-It, Silver Sand authorized Handy Haul-It to obtain special fuel on behalf of Silver Sand. Handy Haul-It was therefore Silver Sand's agent for the purpose of obtaining fuel for Silver Sand. When Kelly signed the Purchaser's Blanket Resale and Exemption Certificate, he authorized Handy Haul-It to use Silver Sand's special fuel dealer's license to obtain special fuel
tax-free from Radiant Oil Company of Tampa, the addressee on the certificate. Silver Sand thus clothed Handy Haul-It and Carruthers with the apparent authority to purchase special fuel tax-free utilizing Silver Sand's special fuel dealer license number from Radiant Oil Company of Tampa.
That portion of Paragraph 8, Pages 8 and 9, of the Hearing Officer's Findings of Fact, Conclusions of Law, and Recommended Order state:
There was no evidence that Carruthers ever represented to NCJ that he had authority to speak for Silver Sand . . . .
The only authority of Handy Haul-It to act on Silver Sand's behalf that NCJ was entitled to rely upon was the authority to purchase fuel from Radiant Oil Company of Tampa. The authorization is very specific in this regard, and although it may be that Silver
Sand would gladly have executed an exemption certificate addressed to NCJ, it did not do that. The fact that the certificate was back dated, and was issued to the wrong entity, should have caused NCJ to take action to contact Silver Sand. If NCJ had done that, Handy Haul-It would never have been in a position to purchase fuel from NCJ and to deliver it to someone other than Silver Sand. Indeed, it is possible that Handy Haul-It would never have been placed in the position of buying fuel under Silver Sand's license number at all. Knowing that it was dealing with an agent, NCJ should have sent copies of the invoices to the principal, Silver Sand.
If NCJ had done that, Silver Sand would have been on notice that Handy Haul-It was purchasing considerable fuel in its name, and delivering it elsewhere.
Silver Sand did not give Handy Haul-It the authority to obtain fuel for any purpose except delivery to Silver Sand. When Handy Haul-It utilized the exemption certificate to purchase fuel for purposes other than delivery to Silver Sand, it exceeded the scope of its authority.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties to this action, and over the subject matter.
The State of Florida imposes an excise tax upon Special fuel sold or used within the state under the provisions of Florida Statutes, Chapter 206, Part II. Special Fuels are defined to include diesel fuel. Florida Statutes, 206.86(1). Florida Statutes, 206.87(1), provide:
"An excise tax of 8 cents per gallon is hereby imposed upon every gallon of special fuel used or sold in this state for use.
Unless expressly provided to the contrary in this part, every sale shall be deemed to be for use in this state. This levy of tax is upon the consumer but shall be paid upon the first sale or transfer of title within the
state by a dealer, except as expressly provided in this part, who shall act as agent for the state in the collection of said tax whether he be the ultimate seller or not."
A "dealer" is defined as "any person who holds a valid dealer of special fuel license issued by the Department [Department of Revenue]" and who deals in special fuels in certain specified manners including the purchase of special fuels in bulk quantities for resale to other dealers. Florida Statutes, 206.86(8). Dealers are permitted to purchase special fuel without paying the tax, even though they are the first purchaser within the state. Florida Statutes, 206.87(2). Under these circumstances, the purchasing dealer becomes the state's agent for the purpose of collecting and paying the tax. Florida Statutes, 206.87(2), (3). The Rules of the Department of Revenue impose upon a selling dealer the responsibility of either collecting the tax, or establishing the exempt status of the transaction. Rule 12A-2.03(1) provides in pertinent part:
". . . The exempt status of the transaction must be established by the distributor or dealer. Unless the distributor or dealer has obtained from the purchaser a resale or exemption certificate, the sales invoice, with respect to any sale for which exemption is claimed, must show the exempt purpose for which the special fuel was not placed into the receptacle connected to the fuel supply system of a motor vehicle. Any dealer of special fuel . . . who obtains from his purchaser a resale or exemption certificate and, in good faith, sells special fuel to such purchaser tax free shall not be required to collect from the purchaser any tax levied by Chapter 206 "
A purchasing dealer is required to deliver a resale certificate to the selling dealer. Otherwise, the selling dealer is required to collect the tax. Rule 12A-2.03(2). The purchasing dealer's Department of Revenue license number must be set out on the resale certificate. Rule 12A-2.03(4). Suggested forms for resale certificates, or blanket resale certificates are set out in Rule 12A-2.03 (7). The blanket resale certificate obtained by NCJ from Carruthers and Handy Haul-It in this case (Respondent's Exhibit 1) is nearly identical to the form suggested in Rule 12A-2.03(7)(a).
16. Florida Statutes, 206.23, 206.49, and 206.87(3), establish a requirement that a selling dealer plainly state on its invoice to a purchasing dealer whether the tax will be reported and paid by the selling dealer. Sections 206.23 and 206.49 appear in Part I of Chapter 206, but they expressly apply to Part II. Florida Statutes, 206.97. Section 206.23 provides:
"Distributors shall add the amount of the gas tax to the price of the motor fuel sold by them and shall state the rate of the tax separately from the price of the motor fuel on all invoices. Section 206.49 provides:
"Each distributor [dealer], when selling to any other distributor [dealer] any of the products taxed under this part, shall render an invoice of such sale to the purchaser, and upon such invoice the
distributor [dealer] rendering such invoice shall plainly state thereon whether or not the tax required will be reported and paid by him, and the purchaser buying and receiving such products may fully rely upon the statement made in such invoice."
Section 206.87(3) provides that when a purchasing dealer pays the tax, the amount of the tax paid shall be added to the sale price of the product sold by him, and the tax stated Separately from the price on all subsequent bills.
The Department of Revenue contends that Handy Haul-It purchased all of the subject diesel fuel from NCJ as Silver Sand's agent. The burden of proving an agency relationship rests with the party who asserts the relationship. Miller v. Chase & Company, 88 Fla. 500, 102 So. 553 (1924); Bernstein v. Dwork, 320 So.2d 472 (3 D.C.A. Fla. 1975). An agency relationship can be conferred by a written document, by parole, or it may be inferred by inference from facts and circumstances and conduct of the parties involved in a particular case. Thompkin Corp. v. Miller, 156 Fla. 388, 24 So.2d 48 (1945); Lan-Chile Airlines, Inc., v. Rodriguez, 296 So.2d
498 (3 D.C.A. Fla. 1974). Authority must be granted to an agent by his principal. The burden of establishing the agency relationship cannot be met by proving extra judicial declarations made by the alleged agent, unless the declarations are made in the presence of the alleged principal. Paige-Detroit Motor Car Company
v. Pintado, 82 Fla. 210, 89 So. 549 (1921); Aerovias Panama, S.A.
v. Air Carrier Service, Inc., 195 So.2d 230 (3 D.C.A. Fla. 1967).
Once the agent's authority is established, the principal is bound by actions of the agent while acting in the scope of his or her authority. Taco Bell of California v. Zappone, 324 So.2d 121 (2
D.C.A. Fla. 1976).
The authority of an agent to bind a principal may be real, or it may be apparent only. Stiles v. Gordon Land Co., 44 So.2d 417 (Fla. 1950); Taco Bell of California v. Zappone, supra; Tampa Sand & Material Company v. Davis, 125 So.2d 126 (2 D.C.A. Fla. 1960). Real authority is the authority actually conferred by the principal through written or parole statements, or by inference drawn from the facts of a particular case. In Stiles v. Gordon Land Co., supra, the court defined apparent authority as follows:
"By apparent authority is meant, such authority as the principal wrongfully permits the agent to assume or which the principal
by his actions or words holds the agent out as possessing . . . . Apparent authority rests on the doctrine of estoppel and arises from the fact of representations or actions by the principal and a change of position by a third person who in good faith relies
on such representations or actions." (At Page 421, 442; citations omitted.)
In Taco Bell of California v. Zappone, supra, the court stated:
"[T]o bind his principal, an agent's actions must be within the scope of his express or implied, i.e., his `actual or real' authority, or be of such a nature as third parties would be entitled to rely upon as being within his 'apparent' authority . . . .
Apparent or ostensible authority arises where a principal allows or causes others to believe the agent possesses such authority, as where the principal knowingly permits the agent to assume such authority or where the principal by his actions or words holds the agent out as possessing it . . . but . . .
the doctrine rests on appearances created by the principal and not by agents who often ingenuously create an appearance of
authority by their own acts." (At pp. 123, 124; citations omitted.)
In the instant case, it is evident from the testimony produced at the hearing that Handy Haul-It not only possessed apparent authority, but also possessed actual authority to act as the agent of Silver Sand.
Jeremiah J. Kelly, Jr., Lease Operations Manager and Operations Manager of Silver Sand, had authority to negotiate diesel fuel purchases on behalf of Silver Sand. Kenneth Surbaugh, Mr. Kelly's supervisor, authorized Mr. Kelly to sign and issue the Purchaser's Blanket Resale and Exemption Certificate. Although the evidence did not reveal whether the certificate was delivered to Carruthers by any employee at Silver Sand, Mr. Kelly did intend to deliver the Certificate to Carruthers.
By executing the Purchaser's Blanket Resale and Exemption Certificate, Silver Sand gave Handy Haul-It the actual authority to purchase diesel fuels on behalf of Silver Sand.
Although the evidence at the hearing was insufficient to establish the ultimate destination of the fuel which Handy Haul-It purchased from NCJ but did not deliver to Silver Sand, Silver Sand gave Handy Haul-It actual authority to make these purchases and is therefore responsible for any purchases delivered to other entities.
The Certificate upon which NCJ Investment relied placed no restrictions upon NCJ Investment, the selling dealer, and contained nothing to put NCJ Investment on notice that it was to sell only those special fuels which were to be delivered to and consumed by Silver Sand.
Assuming arguendo that actual authority is lacking, by executing the Certificate, Silver Sand gave Handy Haul-It the apparent authority to purchase diesel fuels. It was upon this Certificate that NCJ Investment relied. Since Handy Haul-It's authority as an agent was established, Silver Sand, principal, is bound by the actions of Handy Haul-It while acting in the scope of this authority.
The facts of this case are analogous to those in Humble Oil and Refining Company v. Waters, supra, where a credit card owner allowed another individual to use her credit card to make certain purchases. On receipt of a renewal card, the credit card owner refused to deliver the renewal card to the other individual
or to authorize him to make purchases upon the credit card owner's account. Through various means, this individual received an additional card issued in the owner's name and used the card without the owner's knowledge or consent. The Court held that a principal-agent relationship existed in reference to the use of the first card since delivery of the credit card by the owner constituted an authorization to charge her account purchases made through use of the credit card.
Since Jeremiah J. Kelly knowingly signed the Certificate and knowingly delivered the Certificate to Bobby Carruthers, Bobby Carruthers (Handy Haul-It) possessed the actual and/or apparent authority to purchase special fuels from NCJ based upon the above- quoted case authority.
RELIANCE
Under the facts of this case, NCJ Investment was justified in accepting the Purchaser's Blanket Resale and Exemption Certificate even though the Certificate was addressed to Radiant Oil and not to NCJ Investment. Joseph Capitano, President and Chief Executive Officer of NCJ, told Carruthers that he needed a Purchaser's Blanket Resale and Exemption Certificate in order to sell diesel fuels. In fact, Capitano gave Carruthers the Certificate to be executed which would fulfill this function.
This is the Certificate which was signed by Kelly and returned to Capitano by Carruthers.
Although NCJ and Radiant Oil are separate entities and are separately registered with the Department of Revenue as motor fuel dealers, the corporations are somewhat related. Joseph Capitano's father owns Radiant Oil; NCJ Investment leases office space from Radiant Oil; the two corporations share clerical help; the companies use common gas tanks; and the companies utilize many of the same business forms.
NCJ Investment had on occasion utilized Radiant Oil's "Purchaser's Blanket Resale and Exemption Certificate" form for its own use, since NCJ was a new company and did not have its own forms.
Additionally, Department of Revenue Rule 12A-2.03(1) and (3), Florida Administrative Code, states that the dealer can establish the exempt status of a sale by accepting a resale certificate covering all sales of special fuel in situations where the purchaser has both taxable and nontaxable consumption of special fuel.
The special fuel used by Silver Sand was used for dual purposes--for both on-highway purposes (a taxable use) and for off-highway purposes (a nontaxable use)--with approximately 10 to
15 percent used for off-highway purposes. Additionally, to facilitate its trucking operations, Silver Sand purchased diesel fuel in bulk, used it in its own trucks, and sold it to lease operators who were under contract to Silver Sand.
Since Silver Sand used special fuel for both taxable and nontaxable consumption, not only was NCJ justified in relying upon the Purchaser's Blanket Resale and Exemption Certificate, but Department of Revenue Rule 12A-2.03(3), Florida Administrative Code, makes it mandatory that such a purchaser furnish a certificate covering all purchases of special fuel, in that portion which states:
. . . the purchaser shall furnish the dealer with a resale certificate covering all purchases of special fuel.
The Purchaser's Blanket Resale and Exemption Certificate which was accepted by NCJ to make sales without collecting the Special Fuels Tax was checked "Special Fuels purchased for combination taxable use and nontaxable consumptions," was signed by Jeremiah J. Kelly, Jr., Lease Operations Manager and Operations Manager of Silver Sand, and contained the Special Fuel License Number of Silver Sand.
Because NCJ relied on the Purchaser's Blanket Resale and Exemption Certificate, NCJ did not collect and did not receive- Special Fuels Tax from Silver Sand. Instead, NCJ reported the facts that sales had been made to Silver Sand and that tax had not been paid on sales to Silver Sand to the Department of Revenue via its monthly reports.
The facts of the instant case are analogous to those contained in Motorola, Inc., v. Green, 130 So.2d 65 (Fla. 1961). In Motorola, Inc., v. Green, supra, Florida distributors purchased commodities from Motorola, which was located out of state. With the exception of two dealers, each of the distributors filed a resale certificate with Motorola. Motorola subsequently obtained resale certificates from the other two dealers, and it was ascertained that the method of operation followed by these two was the same as that employed by the distributors who had previously obtained resale certificates. Florida then attempted to impose Florida Use Tax on Motorola.
Rule 38, promulgated by the Comptroller, provided that "[a] sale is taxable unless the dealer takes from the purchaser a certificate for resale." The same Rule further provided that a resale certificate is required of every purchaser who purchases personal property for resale and if such purchaser does not obtain a resale certificate, the dealer is required to collect the tax.
Additionally, the Rule requires the dealer to refuse to accept the resale certificate and to collect the tax "unless the purchaser shall have obtained a dealer's certificate of registration from the Comptroller." Note that the above-stated Rule is identical to the rules covering resale and exemption certificates in the Motor Fuel Tax area.
The Supreme Court of Florida specifically held that if a dealer is delivered a resale certificate properly identified by the Comptroller's registration number, and he receives it in good faith, he can proceed to deal with the purchaser. In accepting the resale certificate, the dealer can safely rely on the Comptroller's designation of the purchaser who executes such a certificate as the one authorized to collect the tax for the State. This relieves the manufacturer who sells the commodity under the assurances of the resale certificate." Motorola, Inc.,
v. Green, supra, at p. 68.
Therefore, by giving the Certificate to Carruthers to be executed by Silver Sand and by receiving the Certificate signed by Kelly with Silver Sand's license number on it, Joseph Capitano justifiably relied on Silver Sand as the entity required to collect and to remit the tax to the Department of Revenue.
Although many of NCJ's invoices directed to Silver Sand do not contain Silver Sand's license number, this fact does not control the instant matter. Department of Revenue Rule 12A- 2.03(6), Florida Administrative Code, states:
In cases where all of the purchases made by a person from a particular dealer or distributor are for resale, the dealer or distributor is authorized to accept a blanket certificate of resale from the purchaser stating that all of the purchases for a definite period will be purchased for resale, provided each subsequent invoice or other evidence of sale contains the purchaser's, distributor's or dealer's license number.
The instant situation does not involve a case where "all purchases were for resale," but a case where special fuel was "purchased for combination taxable use and nontaxable consumption." Therefore, the above-quoted rule does not apply in the instant case.
Additionally, this rule is not mandatory, but is merely directory. When a particular provision of a rule relates to some immaterial matter where compliance is a matter of convenience rather than substance, or where the directions of the statute are given with the view to be the proper, orderly, and prompt conduct of business merely, the provision may generally be regarded as directory. Reid v. Southeast Development Co., 42 So.206 (Fla. 1906); AGO 075-79. Usually, noncompliance with a directory provision does not void the proceeding to which the provision relates. See 73 Am.Jur.2d, Statutes, 15 and 16.
In determining whether a provision in a rule is designed to be mandatory or merely directory, regard will be had to terms of the rule in relation to its scope, its history, its subject matter, and the general object sought to be accomplished. See 73 Am.Jur.2d, Statutes, 22.
The language in Department of Revenue Rule 12A-2.03(b), Florida Administrative Code, is directory in nature, allowing the Department of Revenue to properly, orderly, and promptly conduct its business, i.e., to determine whether the purchaser or the seller must collect the Special Fuels Tax. There is no express intent in the Rule that the language therein is to be mandatorily construed.
Since the purchaser is required to provide a blanket certificate of resale to the dealer or distributor, the provision that subsequent invoices should contain the purchaser's, distributor's, or dealer's license number is for convenience in order to properly identify the purchase as one for resale. The general object sought to be accomplished is relieving the seller of the obligation to collect the Special Fuels Tax on sales to a purchaser for the purpose of resale. This object can be accomplished when the purchaser executes a certificate of resale. The additional provisions merely provide a convenient way to supervise such sales. If the license number is not included on the invoice, the seller is not liable for collecting the tax when the purchaser has executed a certificate of resale. Therefore, the fact that each and every invoice from NCJ to Silver Sand did not contain Silver Sand's Special Fuel License Number does not relieve Silver Sand of liability for payment of the Special Fuels
Tax on the instant purchases because NCJ possessed a Purchaser's Blanket Resale and Exemption Certificate stating that all purchases were made for taxable and nontaxable consumption covering each sale made during the period in question.
Additionally, it should be emphasized that although Silver Sand believed the price it paid for special fuel included the Special Fuels Tax and that Handy Haul-It was a special fuel dealer, the law permits a purchaser such as Silver Sand to assure itself that tax is included in the price by demanding that the amount of tax be separately stated on the invoice as required by Section 206.49, Florida Statutes.
Therefore, since Silver Sand took no steps to assure itself of Handy Haul-It's or Carruthers' veracity or status, and since the easy remedy outlined in Section 206.49, Florida Statutes, was not utilized, it was not justified in relying upon Carruthers' statements that the price included tax.
RECOMMENDATION
Based upon the foregoing findings of fact and conclusions of
law,
IT IS THEREFORE RECOMMENDED:
That the assessment for Special Fuel Tax in the amount of
$154,644.50 imposed against Silver Sand Company of Leesburg, Inc., by the Department of Revenue be upheld.
CERTIFICATION
I certify that the foregoing is the Final Order of the Department of Revenue adopted by the Governor and Cabinet on the 19th day of April, 1977.
Harry L. Coe, Jr., Executive Director State of Florida, Department of Revenue
Room 102, Carlton Building Tallahassee, Florida 32304
Dated this 20th day of April, 1977.
| Issue Date | Proceedings |
|---|---|
| Apr. 25, 1977 | Final Order filed. |
| Jan. 31, 1977 | Recommended Order sent out. CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Apr. 19, 1977 | Agency Final Order | |
| Jan. 31, 1977 | Recommended Order | Respondent didn't show agency relationship between Petitioner and hauling company. Petitioner owes for fuel it authotized company to buy for it. |
BARKETT OIL COMPANY vs. DEPARTMENT OF REVENUE, 75-001876 (1975)
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MIAMI TIRESOLES, INC. vs. DEPARTMENT OF REVENUE, 75-001876 (1975)
