The Issue This concerns the issue of whether wooden stakes utilized in the growing of tomatoes in the State of Florida are exempt from the Florida State sales tax under Florida Statute 212.08(5)(a). At the formal hearing, the Petitioner called as witnesses James Felix Price and George Marlowe, Jr. The Respondent called no witnesses. The Petitioner offered and had admitted three exhibits and the Respondent offered and had admitted into evidence two exhibits. Counsel for the Petitioner and counsel for the Respondent submitted proposed findings of fact and conclusions of law for consideration by the Hearing Officer. To the extent that those proposed findings of fact are consistent with the findings herein they were adopted by the Hearing Officer. To the extent that those proposed findings of fact and conclusions of law are inconsistent with the findings and conclusions in this Order, they were considered by the Hearing Officer and rejected as being not supported by the evidence or unnecessary to the resolution of this cause.
Findings Of Fact The Petitioner, Pitch Pine Lumber Company, sells tomato stakes to tomato growers in Florida. As a result of these sales, the Petitioner was assessed and ordered by the Department of Revenue to pay sales tax due on the sales of tomato stakes. It was stipulated by and between Petitioner and Respondent that the amount in controversy is $11,723.26 and that if the exemption under Florida Statute 212.08(5)(a) does not apply then the Petitioner shall owe that amount plus interest and penalties if applicable from October 3, 1980. Tomato stakes are used in almost every area of Florida today which produces tomatoes. Approximately two- thirds of the 44,000 acres used to grow tomatoes in Florida utilize tomato stakes. The only area which does not utilize these stakes is the Dade County area and this is due to the coral rock soil conditions. The stakes which are used are wooden stakes. These stakes are driven into the ground and used to hold the tomato plants upright or vertical. This prevents the fruit of the tomato plants from resting directly on the soil. Tomato stakes and cotton cloth are both natural plant materials and contain cellulose. One of the benefits of using tomato stakes is that by holding the plant upright, the plant will form a natural canopy which then shades the fruit and prevents sun scalding and sunburning of the fruit. This shade is provided by the leaf canopy of the plant and the stakes themselves provide no shade. Another benefit of utilizing tomato stakes is increased insect control and decreased fruit loss. This is the result of the fruit of the plant being held up off the ground by the plant which is being held upright by the tomato stakes. Tomato stakes were used for this purpose in Florida as early as 1947 and 1948. By 1960, tomato stakes were being used extensively in Florida.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That the Department of Revenue enter a final order requiring the Petitioner to pay $11,723.26, plus interest and penalties, if applicable from October 3, 1980. DONE and ENTERED this 23rd day of September 1983, in Tallahassee, Florida. MARVIN E. CHAVIS, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 23rd day of September, 1983. COPIES FURNISHED: Roderick K. Shaw, Jr., Esquire Post Office Box 2111 Tampa, Florida 33601 Linda Lettera, Esquire Department of Legal Affairs The Capitol, LLO4 Tallahassee, Florida 32301 Larry Levy, Esquire General Counsel Department of Revenue 104 Carlton Building Tallahassee, Florida 32301 Randy Miller Executive Director Department of Revenue 102 Carlton Building Tallahassee, Florida 32301
Findings Of Fact The area of dispute involves an alleged insufficiency of payment of documentary stamp tax and documentary surtax, and associated penalties for the insufficiencies, in transactions which are reflected in the Exhibit "C" to the Petition. The parties did not dispute the accuracy of the computation found in the Exhibit "C" to the petition, which was prepared by an investigator of the Respondent. The Petitioner contends that he is only responsible for paying the amount of documentary stamp tax and documentary surtax on the value of the real estate which was conveyed to the several grantees shown in Exhibit "C", as opposed to paying documentary stamp tax and documentary surtax on the value of the real estate, together with the value of the home which was built on that real estate. The facts show that the Petitioner has only paid documentary stamp tax and documentary surtax on the value of the real estate which he conveyed to the several grantees in Exhibit "C". In describing the arrangement between the Petitioner and his wife with the several grantees, The Petitioner and Respondent stipulated that Petitioner's Exhibit #1 accurately represents the documents involved in the initial contact between the Petitioner and the grantee. The Petitioner's Exhibit #1 is a composite exhibit which shows a blank sales contract and installment contract prepared by the Petitioner, together with a copy of an executed sales contract and installment contract in behalf of one of the several grantees. This document has as its function providing a rough estimate in behalf of the parties on the question of the cost of a lot and home, together with the attendant tangible property items that go with the sale. This document is subject to the special conditions of the Farmers Home Administration of the United States Department of Agriculture and is not binding on the grantee. The parties stipulated that Petitioner's Exhibit #2, a composite exhibit, was utilized in the case of the several grantees in this matter. The Petitioner's Exhibit #2 is a construction contract in blank form and a form as executed in behalf of one of the grantees. This construction contract is prepared by the Farmers Home Administration, United States Department of Agriculture. This construction contract identifies the price and contains a general description of the lot which was sold by the Petitioner, and is executed after the grantee has met with the Farmers Home Administration and been approved for a loan. Prior to the execution of the construction contract, the grantees came to the place of business of the Petitioner, which is an office in the back of his home. This meeting was not pursuant to any advertising other than communication by other parties who had sought the services of Jerry W. Thomas, who is a general contractor, certified by the Farmers Home Administration to build homes which the Farmers Home Administration is financing. The grantee would come to Mr. Thomas's office and discuss the construction of a home, and, in the case of the grantees in Petitioner's Exhibit "C", it is contemplated that that home would be built on a lot which Mr. Thomas and his wife owned and would convey to the grantee. In fact, in every instance reflected in Exhibit "C" the home was constructed by Mr. Thomas and was constructed on a lot which Mr. Thomas and his wife sold to the grantee. Before the construction contract was signed, it was necessary for the grantee to be approved for financing by the Farmers Home Administration. It was also necessary under the system that was utilized in financing the matters set forth in the Exhibit "C", that the Petitioner sign an irrevocable option to purchase realty, which was executed in favor of the several grantees. A replica of this form is made a part of the record as Petitioner's Exhibit #4. The meaning of the option to purchase real property, was that the Petitioner stated a price for his real estate and he was bound by that price and must sell the real estate to the grantee, whether or not the Petitioner ever built a home on the real estate. This option to purchase real property was a precondition to the overall financing scheme which was utilized by the Farmers Home Administration. This particular method was identified as a contract method. Should the appraisal of the property as conducted by the Farmers Home Administration indicate that the asking price stated in the option to purchase real property was in excess of the appraised value, then the Petitioner could have refused to sell. In the case of all the grantees found in Exhibit "C", the price stated for the real property was acceptable and the contract was consummated. The technique for executing the contract conditions once the option to purchase real property had been completed and accepted was as follows: A closing was held at which point a warranty deed was executed by the Petitioner and his wife in favor of the several grantees. Payment for the real estate was made from a supervised account in behalf of the several grantees. The warranty deed, which form is shown in Petitioner's Exhibit #3 and is stipulated as being the form utilized in all conveyances alluded to in Petitioner's Exhibit "C" was then recorded. At the moment of recording, documentary stamp tax and documentary surtax was paid on the amount of the real property only. On the day that the warranty deed was recorded, a mortgage and note was also recorded in favor of the Farmers Home Administration for the amount financed by the grantees. Subsequent to the closing alluded to in paragraph one and two of this explanation, the grantee, at his option, had the home constructed. The option referred to, pertains to the ability to hire any contractor that he desired to construct the home on the property which had been conveyed to him. The Petitioner would not have had the right to oppose the grantees' choice of contractor. Had the several grantees desired to choose other contractors, then the Petitioner would have been required to sell his real estate at the option price and that would have concluded the contract. In all cases shown in the Exhibit "C" to the petition, Mr. Thomas not only conveyed the property but constructed the homes on the property as the chosen contractor and was paid out of the supervised account through scheduled payments and a final disbursement made at the 100 percent completion point. Subsequent to the time that the warranty deed conveying the lot, together with the mortgage and note, were recorded, an audit was performed by the Respondent and an assessment placed for the additional value reflected in the the cost of constructing the home. This assessment was for the unpaid documentary stamp tax, documentary surtax and penalties associated with those deficiency assessments.
The Issue Whether the Petitioner's complaint that Respondent is indebted to Petitioner in the amount of $4,149.40 for two loads of melons, shipped on June 22, 1977, is valid. Respondent appeared at the hearing without counsel. After being advised of his rights in an administrative proceeding under Chapter 120, Florida Statutes, he acknowledged that he understood such rights and did not desire representation by legal counsel.
Findings Of Fact Petitioner Malvin Ford of Labelle, Florida and Respondent Charles L. Warren, Adel, Georgia are dealers in agricultural products. Pursuant to a telephonic agreement, Petitioner sold two truck loads of watermelons to Respondent which were shipped from Branford, Florida to Baltimore, Maryland on June 22, 1977. One load consisted of 43,680 pounds of melons and was shipped for cost plus freight in the total amount of $2,009.28. The other load weighed 45,220 pounds and was billed at $2,140.12, which included a charge of $60.00 for four "drops" along the way. Petitioner paid the grower of the melons, Hal Walker, and also the carrier. On June 27, 1977, he invoiced Respondent in the above amounts. The invoice stated "terms: net 10 days." (Testimony of Ford, Petitioner's Composite Exhibits 1, 5, 6) Petitioner did not receive payment for the produce from the Respondent and therefore proceeded to file a complaint with the Department of Agriculture and Consumer Services on December 8, 1977. Respondent thereafter issued a check to Petitioner on February 24, 1978, in the amount of $890.10. A statement attached to the check reflected that the amount represented the sum owing to Petitioner in the amount of $4,149.40, less $3,259.30 which apparently represented a setoff of sums owed Respondent by Petitioner for two transactions in the amounts of $1,625.30 and $1,634.00. Petitioner returned the check to Respondent by letter of March 1, 1978, in which he stated that he did not owe any outstanding indebtedness to Respondent. (Petitioner's Exhibits 2 - 4) Although Respondent conceded in his testimony at the hearing that he was indebted to Petitioner for the two loads of melons shipped on June 22, 1977, he claimed that in two separate 1974 transactions involving another two truck loads of melons Petitioner had not paid him in the total amount of $3,259.30. However, Respondent produced no documentary evidence concerning these transactions other than an unsworn statement of Frank Koza of Oliver, Pennsylvania, stating that he had received a load of watermelons weighing 47,803 pounds on August 13, 1974, from Petitioner and that he had paid Petitioner for the load. Petitioner testified that this dispute arose at a time when he and Respondent both had offices in Virginia and Respondent asked him how to get rid of a load of melons that he had been unable to sell on the Pennsylvania Turnpike. Petitioner says that he told him to contact Koza who had two fruit stands in Pennsylvania, and that that was his only connection with the transaction. He denied receiving any payment from Koza for the load. Respondent, on the other hand, testified that Petitioner had promised to sell the load for him and make arrangements for the driver hired by the Respondent to reach Koza's place of business. Respondent further testified that he turned over the delivery tickets from the load to Petitioner, but did not send an invoice for the amount because he had dealt many times with Petitioner in the past and that it was a question of trusting him to account for the proceeds from the load. He further testified that he talked to Petitioner several days after the transaction and Ford told him that he had never received a settlement for the load from Koza. Respondent testified that the other transaction occurred on June 28, 1974, when, pursuant to a telephonic agreement with Petitioner, Respondent shipped a load of melons from Georgia to a firm in Baltimore, Maryland and that thereafter Respondent provided Petitioner with delivery tickets on the load signed by the receiver of the goods. No documentary evidence was submitted in connection with this alleged transaction and Petitioner denied any knowledge of it. In view of the above conflicting evidence and the lack of writings to support the claimed oral agreements, it is found that Respondent has failed to establish by preponderance of the evidence that Petitioner is indebted to him on either of the purported 1974 transactions. The Koza statement which was purportedly signed on March 22, 1978, is hearsay and insufficient alone to support a finding that the facts contained therein are true and correct. It cannot serve as supplementary evidence to Respondent's testimony concerning the transaction because Respondent has no personal knowledge that payment for the goods was made by Koza to Petitioner. (Testimony of Ford, Warren, Respondent's Exhibit 1)
Recommendation That the Department of Agriculture and Consumer Services enter a Final Order requiring Respondent to pay Petitioner the sum of $4,149.40, as claimed. DONE and ENTERED this 12th day of June, 1978, in Tallahassee, Florida. THOMAS C. OLDHAM Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: George L. Harrell, II, Esquire Post Office Box 865 Labelle, Florida 33935 Charles L. Warren Warren Produce Farms 801 South Gordon Post Office Box 305 Adel, Georgia 31620 Robert A. Chastain General Counsel Department of Agriculture and Consumer Services Mayo Building Tallahassee, Florida 32304
Findings Of Fact Robert J. Walsh and Company, Inc. has been in the business of selling agricultural products since 1962. It is a "dealer in agricultural products" as defined in s. 604.15(1), Florida Statutes (1985). It is not a "producer" as defined in s. 604.15(5), Florida Statutes (1985). Walsh's modus operandi which it has used for many years is to have its salesmen call on landscapers, nurseries and other customers for trees, plants and other agricultural products to determine their needs. These salesmen have the prices of products and their availability from producers and the salesmen take orders from these purchasers. This order is sent to the producer who delivers the product to the purchaser and sends Walsh a copy of the delivery ticket. Walsh bills the customer for the product delivered and the producer bills Walsh for the consumer-cost of the product less a 20-25 percent discount from which Walsh derives its profit from the sale. The producer relies solely on Walsh for payment for the product it produces and delivers to the customer. Walsh has no authority to sell the product at a price other than that set by the producer. In any event, the producer bills Walsh for the product delivered at the producer's established price less the discount it gives Walsh for acting as intermediary in the sale. If products are damaged in transit, the producer's driver will make any necessary adjustment with the customer or return the damaged plant for replacement by the producer. Walsh does not represent the grower if such a situation develops. Similarly, if the product is rejected by the purchaser for not meeting quality standards, that issue is resolved between the grower and the customer without input from Walsh. Whatever agreement is reached between the grower and the customer is reflected on the invoice signed by the customer and forwarded to Walsh who has the responsibility of collecting from the customer. The grower bills Walsh for the cost of the product less Walsh's commission. The sales forming the bases for the complaints filed by Walsh with Respondent involve sales to Paul Pent, d/b/a Paul Pent Landscape Company, Dean Pent and J & W Landscape. On January 31, 1985, Walsh sold Pent three laurel oaks grown by Stewart Tree Service for a total price of $467.46 including sales tax (Ex. 2). On March 27, 1985, Walsh sold various trees and plants grown by Goochland Nurseries to J & W Landscape for a total price of $403.98 (Ex. 3). On April 22, 1985, Walsh sold two live oaks grown by Stewart Tree Service to Pent Landscape Company for a total price of $336.00 (Ex. 4). On July 3, 1985, Walsh sold various plants grown by Goochland Nurseries to J & W Landscape for a total price of $564.96 (Ex. 5). On all of these sales the producers billed Walsh for the product and were paid by Walsh. Walsh billed the customers who did not pay and Walsh filed the complaints (Ex. 8, 9 and 10), denied by Respondent on grounds Walsh was not an agent or representative of the producers. In 1976, Petitioner filed a complaint against the bond of the Ernest Corporation, a licensed dealer in agricultural products and received $5,589.20 from Respondent who recovered from the bonding company. In the complaint Walsh alleged that it was agent for Southeast Growers, Inc., selling their nursery stock throughout Florida. Respondent's witnesses could not recall what additional evidence they saw to conclude that Walsh was, in fact, an agent for the producer. However, these witnesses all testified that had they then believed Walsh was solely responsible to the producer for payment for the products sold they would not have concluded Walsh was the agent or representative of the producer. The bond on which Petitioner is attempting to recover provides that if the principal "shall faithfully and truly account for and make payment to producers, their agents or representatives, as required by Sections 604.15 - 604.30, Florida Statutes, that this obligation to be void, otherwise to remain in full force and effect." (Ex. 11 and 12)
Conclusions The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of these proceedings. Section 604.21, Florida Statutes (1985) provides in pertinent part: Any person claiming himself to be damaged by any breach of the conditions of a bond or certificate of deposit, assignment or agreement given by a licensed dealer in agricultural products as herein before provided may enter complaints thereof against the dealer and against the surety, if any, to the department, which complaint shall be a written statement of the facts constituting the complaint. Section 604.15(1) , Florida Statutes (1985) provides: "Dealers in agricultural products" means any person, whether itinerant or domiciled within this state, engaged within this state in the business of purchasing, receiving, or soliciting agricultural products from the producer or his agent or representative for resale or processing for sale; acting as an agent for such producer in the sale of agricultural products for the account of the producer on a net return basis; or acting as a negotiating broker between the producer or his agent or representative and the buyer. (emphasis supplied) One of the complexities of this case which leads to some confusion is the fact that both Pent and Walsh were dealers in agricultural products as above defined. Walsh fits into the category of a person claiming himself to be damaged by a breach of any condition of the bond of Pent. However, he has the burden of showing that he is a person covered by the bond. According to the terms of the bond, coverage is provided only for "producers, their agents or representatives." Walsh is clearly not a producer in this case but claims coverage as an agent or representative. In construing "agent" or "representative" the legislative intent should be considered. The purpose of these provisions of the statute requiring licensing and bonding of dealers in agricultural products, as expressed in Section 604.151, Florida Statutes, is to protect producers from economic harm. Economic harm sustained by an agent or representative is imputed back to the principals, which in this case are the producers. An agency may be defined as a contract either expressed or implied upon a consideration, or a gratuitous undertaking, by which one of the parties confides to the other the management of some business to be transacted in the former's name or on his account, and by which the latter assumes to do the business and render an account of it. 2 Fl. Jur. 2d "Agency," Section 1. Here, Walsh was selling agricultural products on its own account, which products it was purchasing from the producers. The producer sold its product to Walsh and delivered it to the address Walsh indicated. The customer receipted for the product and the producer billed Walsh for the total cost, including transportation, to the ultimate buyer, less the 20-25 percent commission Walsh received. Walsh paid the producer and billed the customer. Whether or not Walsh collected from the customer had no bearing on the debt Walsh owed the producer for the product. It could be said that the producer was the agent for Walsh in delivering the product to the user. Even though Walsh never had actual possession of the product the sale to Walsh was complete when the producer delivered the product to the user. The entire transaction clearly is a buy-and-sell operation by Walsh and not Walsh acting as an agent for the producer. The fact that Walsh sells the producer's product does not make Walsh the agent or representative of the producer, when the producer holds only Walsh responsible to pay for the product. Nor was Walsh a representative of the producers. Representative is defined in Webster's New Collegiate Dictionary (1977 Ed.) as: "standing or acting for another esp. through delegated authority." Walsh had no delegation of authority to act for the producer. Walsh had no authority to modify the price, settle disputes, or any other function normally performed by a representative. The above interpretation of those having standing to file a complaint against a dealer in agricultural products is the same interpretation of the applicable statutory provisions that is made by Respondent. As stated in Natelson v. Dept. of Insurance, 454 So.2d 31 (Fl 1st DCA 1984): Agencies are afforded a wide discretion in the interpretation of a statute which it [sic] administers and will not be overturned on appeal unless clearly erroneous. The reviewing court will defer to any interpretation within the range of possible interpretations. (citations omitted). This interpretation limiting recovery on an agricultural bond to producers and their agents or representatives is certainly within the range of possible interpretations, especially considering the purpose of these statutory provisions to be the protection of the economic well being of the producer. From the foregoing, it is concluded that Robert J. Walsh & Company, Inc. was not the agent or representative of Goochland Nurseries and Stewart Tree Service and does not have standing to file a complaint against Dean Pent, d/b/a Pent Landscape Company, and Paul Pent, d/b/a Paul Pent Landscape Company, and their surety, Transamerica Insurance Company.
Recommendation It is recommended that a Final Order be entered dismissing the petition as contained in Petitioner's letter dated March 24, 1986. ENTERED this 14th day of July 1986 in Tallahassee, Leon County, Florida. K. N. AYERS Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 14th day of July 1986. COPIES FURNISHED: Honorable Doyle Conner Commissioner of Agriculture The Capitol Tallahassee, Florida 32301 Robert Chastain, Esquire General Counsel Mayo Building, Room 513 Tallahassee, Florida 32301 Thomas M. Egan, Esquire Phillip Kuhn, Esquire Post Office Box 7323 Winter Haven, Florida 33883 Ronnie H. Weaver, Esquire Mayo Building, Room 513 Tallahassee, Florida 32301 Mr. Joe W. Right Bureau of Licensing & Bond Department of Agriculture Mayo Building Tallahassee, Florida 32301
Conclusions THIS CAUSE, arising under Florida’s “Agricultural License and Bond Law” (Sections 604.15-604.34), Florida Statutes, came before the Commissioner of Agriculture of the State of Florida for consideration and final agency action. On October 21, 2008, the Petitioner, Ricky A. Branch, III, a producer of agricultural products as defined by Section 604.15(9), Florida Statutes, timely filed an administrative claim pursuant to Section 604.21, Florida Statutes, to collect $31,296.18 for eggplants they sold to Respondent, a licensed dealer in agricultural products. Respondent’s license for the time in question was supported by a surety bond required by Section 604.20, Florida Statutes, written by Fidelity and Deposit Company of Maryland in the amount of $100,000. On January 7, 2009, a Notice of Filing of ‘an Amended Claim was mailed to Respondent and Co-Respondent. On January 27, 2009, the Respondent filed an ANSWER OF RESPONDENT with attachments wherein they denied the claim as being valid, admitted no indebtedness and requested a hearing. Therefore, this matter was referred to the Division of Administrative Hearings (DOAH) for an administrative hearing in accordance with the provisions of Section 120.57(1), Florida Statutes. An administrative hearing was scheduled in this matter for April 17, 2009. Attached to the NOTICE OF HEARING was an ORDER OF PRE-HEARING INSTRUCTIONS with instructions for the parties to follow prior to and at the hearing. On March 30, 2009, the Respondent filed a ' MOTION TO CONTINUE FINAL HEARING. The Administrative Law Judge (“Judge”) issued an ORDER GRANTING CONTINUANCE (“Order”) on April 3, 2009. In the Judge’s Order, he asked the parties to confer and advise him on the status of the matter among other things. An ORDER RE-SCHEDULING. HEARING was issued on April 16, 2009 and a new hearing date was set for June 9, 2009. Prior to the hearing, on June 5, 2009, the Respondent filed a RESPONDENT’S MOTION TO DISMISS claiming their efforts to contact the Claimant have been futile. Additionally, Respondent asserts that Claimant failed to comply with the ORDER GRANTING CONTINUANCE, the ORDER RE-SCHEDULING HEARING and the ORDER OF PRE-HEARING INSTRUCTIONS issued by DOAH. For the aforesaid reasons, the Respondent feels the Claimant’s claim should be denied and the claim dismissed with prejudice. On June 16, 2009, the Judge issued a RECOMMENDED ORDER OF DISMISSAL, a copy of which is attached hereto as EXHIBIT “A”, to which neither party filed written exceptions with this Department. . Upon the consideration of the foregoing and being otherwise fully advised in the premises, it is ORDERED: Based on the fact that the Claimant failed to appear at the final hearing with DOAH on June 9, 2009 and failed to meet his burden of proof in presenting evidence in support of his claim, the Department adopts the Judge’s RECOMMENDED ORDER OF DISMISSAL. The Department hereby dismisses the captioned claim and the file is closed without further action. Any party to these proceedings adversely affected by this Final Order is entitled to seek review of this Final Order pursuant to Section 120.68, Florida Statutes (2002) and Rule 9.110, Florida Rules of Appellate Procedure (2003). Review proceedings must be instituted by filing a petition or notice of appeal with the Agency Clerk, 5" Floor, Mayo Building, Tallahassee, FL 32399-0800. A copy of the petition for review or notice of appeal, accompanied by the filing fees prescribed by law must also be filed with the appropriate District Court of Appeal within thirty (30) days of the date this Final Ondet yas filed with the Agency Clerk. DONE AND ORDERED this77_ day of , 2009. ES H. BRONSON TERRY/L. RHODES Assi Commissioner of Agriculture Ke Filed with Agency Clerk this? _ day of , 2009. (pL Vb AM Agency Clerk COPIES FURNISHED TO: Judge Daniel Manry Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (Certified Receipt No. 7160 3901 9848 2604 4626) Mr. Gary Wishnatzki, Registered Agent Wishnatzki, Inc., d/b/a Wishnatzki Farms 100 Stearn Avenue Plant City, FL 33566 (Certified Receipt No. 7160 3901 9848 2605 1259) Mr. Ricky A. Branch, IIT Post Office Box 42 Webster, FL 33597 (Certified Receipt No. 7160 3901 9848 2605 1266) Ms. Kathy Alves, Claims Specialist Fidelity & Deposit Company of Maryland Post Office Box 87 , Baltimore, MD 21203-0087 (Certified Receipt No. 7160 3901 9848 2605 1273) (Claim No. 6380046897) Thomas F. Munro, Esquire FOLEY & LARDNER LLP 100 North Tampa Street, Suite 2700 Tampa, FL 33602 (Certified Receipt No. 7160 3901 9848 2605 1280) . Mr. Bedford Wilder General Counsel Staff Mayo Building, M-11 Tallahassee, Florida 32399-0800 Ms. Stephenie Butscher and Mr. Mark Moritz, Field Representatives
Findings Of Fact St. Petersburg Steel Corporation is a Florida corporation which manufactures and sells steel products in Florida and to out-of-state purchasers. During the three-year audit period ending May 31, 1981, some $1.9 million was billed by Petitioner for sales made. In conducting the audit for the period from June 1, 1978, through May 31, 1981, Respondent was provided all invoices and records of Petitioner. Due to the large volume of invoices involved, the auditor prepared the assessments by using Petitioner's sales register and did not check the entries therein with the source documents (invoices, bills of lading, sales slips, etc.). Some of the vendees were out of state, some were no longer in business, and the names of some could have been misread by the auditor since they were handwritten. Unless Petitioner was able to present a resale certificate for a vendee or the sales register did not show the sales tax paid, that sale was included in the assessment. Some of those vendees were no longer in business and could not be located by Petitioner to obtain their resale certificate numbers. Purchases for which Petitioner was assessed a use tax included some equipment such as fans and file cabinets and rent paid to its lessor on which Petitioner could not show a sales tax had been paid. Petitioner contended that the audit was improperly conducted because the source documents were not used as the basis for the assessment. The only evidence presented to support this contention was the testimony of Esposito, who did not qualify as an expert witness able to credibly present such opinion testimony. Petitioner further contended that he had remitted to Respondent some $1,900 in sales taxes improperly collected by him on out-of-state sales for which no tax was due. No claim for a refund of those taxes was made in these proceedings and no documentary evidence to support this contention was submitted by Petitioner.
Findings Of Fact On August 6, 1986, an indemnity bond was executed between RAINMAKER as principal and FIDELITY as surety. The effective dates of the bond were from October 21, 1986, to October 20, 1987. The bond was required under Sections 604.15-604.30, Florida Statutes, in order for RAINMAKER to become licensed as a dealer in agricultural products in Florida. The purpose of the bond is to secure the faithful accounting for a payment to producers or their agents or representatives of the proceeds of all agricultural products handled or purchased by RAINMAKER. The Petitioner, SHAN-RON, is a corporation whose address is 276 Cypress Street, La Belle, Florida. Its purpose is to conduct business by finding buyers for sod located on acreage owned by various cattle ranchers in Lee County, Florida. This practice is commonly known as "bird dogging" in the agricultural trade. The way the business is conducted is as follows: SHAN-RON is contracted by sod installers to whom it sells sod in specific quantities for a fixed price. Once the oral agreement is made, SHAN-RON tells the sod installer where a sod field is located. At this point in the business transaction, the sod installer sends independent truck drivers to the designated sod field. If the sod installer is unable to locate truckers, he telephones a SHAN-RON field foreman. The foreman, as a courtesy, will check to see if any of the independent truckers currently as the sod field can haul a load for the sod installer. Once a trucker is located, employees from SHAN-RON mow the grass, cut the sod, and load it onto pallets owned by SHAN-RON. The truck is loaded with pallets by SHAN-RON employees and the driver is given two copies of the load ticket, one for him and one for the sod installer. The driver delivers the sod and pallets to the address placed upon the load tickets. Upon delivery, the driver has the responsibility to deliver the load ticket to the business office of the sod installer. If he does not deliver the ticket, he does not get paid for hauling the sod. Employees of the sod installer are usually at the delivery site. The sod is laid and the empty pallets are returned to the sod field by the truckers. Every Friday, a representative of SHAN-RON personally delivers a weekly bill to the sod installer in order to collect is owed. When the money is collected, the funds are divided between the rancher whose sod was sold and SHAN-RON. The accountability system used within the sod industry leaves room for a high margin of error at various stages. The SHAN-RON employees occasionally short pallet loads or two layers of sod. The truck drivers occasionally misnamed the sod installer to whom the sod is to be delivered. The truck drivers also occasionally do not take empty pallets under their control back to SHAN-RON. They sell the pallets and pocket the money. The sod installer is financially responsible for the pallet costs. RAINMAKER is a corporation whose address is Post Office Box 7385, Ft. Myers, Florida. The company is primarily in the business of installing sod. It transacted business with SHAN-RON between November 11, 1986, and January 8, 1987. At the time of these transactions, RAINMAKER was licensed as a dealer in agricultural products supported by surety bond number 974 52 23 in the amount of $13,500.00. SHAN-RON, through testimony and the introduction of its business records, proved a prima facie case that RAINMAKER owes $12,964.00 for the purchase of sod between November 11, 1986, and January 8, 1987. Both parties Stipulated that $4,000.00 has been paid on the balance of the account which should be deducted from the balance owed SHAN-RON. In rebuttal to SHAN-RON's presentation, RAINMAKER presented testimony and a business record summary which revealed that six invoices were improperly charged, against its account in the amount of $1,260.00. The record summary was based upon a comparison of load tickets against production records during the time period involved. In addition, RAINMAKER's records reveal that the two drivers, Stormy and Fred Bower, were not paid for delivering the sod to RAINMAKER under the load ticket presentation to the sod installer which was previously described as an accounting method within the business. Because RAINMAKER set forth the issue of delivery discrepancies in its answer to the complaint and competent evidence was presented, $1,260.00 should be deducted from the `balance owed. SHAN-RON presented testimony that it is customary for the company to spray the sod for pest control. RAINMAKER received defective sod from SHAN-RON which contained "Creeping Charlie" weeds during the time of the deliveries in dispute. SHAN-RON was timely notified of the problem, and toad RAINMAKER to have the sod sprayed. A copy of the invoice for $300.00 was sent to SHAN-RON and has not been paid. Although the issue was not raised in RAINMAKER's answer to the complaint, it is properly before the Hearing Officer because of RAINMAKER's timely notification and cure of the defect in the product. The $300.00 should be deducted from the amount owed. Testimony relating to possible sod shortages was rejected as no evidence was presented that shortages occurred in the orders for which SHAN-RON seeks payment. The customary procedure In the sod business for handling credits for shortages requires the buyer to notify the seller within a responsible length of time of the shortages. Such notification did not take place as to the orders in dispute. The amount owed to SHAN-RON by RAINMAKER is $7,404.00. It is officially noticed that SHAN-RON's complaint was originally filed with the department on June 19, 1987, within nine months from the date of sale.
Recommendation Based upon the foregoing, it is RECOMMENDED: That the Department of Agriculture enter a final order requiring the Respondent RAINMAKER to make payment to the petitioner SHAN-RON in the amount of $7,404.00. In the event that RAINMAKER does not comply with the department's order within fifteen days from the date it final, FIDELITY should be ordered to provide payment and the conditions and provisions of the bond furnished to RAINMAKER. DONE and ENTERED this 12th day of April, 1988, in Tallahassee, Florida. VERONICA E. DONNELLY Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 12th day of April, 1987. COPIES FURNISHED: Clinton H. Coutler, JR., Esquire Department of Agriculture Mayo Building Tallahassee, Florida 32399-0800 Ben Pridgeon, Chief Bureau of License and Bond Department of Agriculture Lab Complex Tallahassee, Florida 32399-1650 Shan Ron Sod, Inc. 276 Cypress Street LaBELLE, FLORIDA 33935 Rainmaker Sod, Inc. 2290 Bruner Lane, South East Fort Myers, Florida 33912 Fidelity & Deposit Company of Maryland Post Office Box 1227 Baltimore, Maryland 21203 Honorable Doyle Conner Commissioner of Agriculture The Capitol Tallahassee, Florida 32399-0810 Robert Chastain General Counsel Department of Agriculture Mayo Building, Room 513 Tallahassee, Florida 32399-0800
The Issue The issue presented is whether the $5.00 per gallon tax on perchloroethylene provided for in Section 376.75, Florida Statutes, is subject to Florida sales and use tax pursuant to Chapter 212, Florida Statutes. STIPULATED FACTS Petitioner is a for-profit Florida corporation that sells perchloroethylene and other dry-cleaning supplies to the dry-cleaning industry. It is a "wholesale supply facility" as that term is defined in Section 376.301(17), Florida Statutes. Petitioner is a member of the Florida Drycleaners' Coalition, a state-wide trade association whose members consist of the owners/operators of dry-cleaning facilities and wholesale supply facilities. In 1993 and prior to and during the 1994 Florida legislative session, the Florida Drycleaners' Coalition employed lawyers-lobbyists to suggest and seek passage of amendments to Chapter 376, Florida Statutes, commonly known as the Florida Dry-Cleaning Solvents Cleanup Program. In 1994, the Florida Legislature enacted Chapter 94- 355, Laws of Florida, which amended Chapter 376, Florida Statutes. Chapter 94-355 created Section 376.3078(2)(a), Florida Statutes, which provides that: All penalties, judgments, recoveries, reimbursements, loans, and other fees and charges related to the implementation of this section and the tax revenues levied, collected, and credited pursuant to ss. 376.70 and 376.75, and registration fees collected pursuant to s. 376.303(1)(d), shall be deposited into the Water Quality Assurance Trust Fund, to be used upon appropriation as provided in this section. Charges against the funds for dry-cleaning facility or wholesale supply site rehabilitation shall be made in accordance with the provisions of this section. Chapter 94-355, Laws of Florida, also created Section 376.75, Florida Statutes, which provides, in part, as follows: Beginning October 1, 1994, a tax is levied on the privilege of producing in, importing into, or causing to be imported into the state perchloroethylene (tetrachloroethylene). A tax of $5.00 per gallon is levied on each gallon of perchloroethylene when first imported into or produced in the state. The tax is imposed when transfer of title or possession, or both, of the product occurs in this state or when the product commingles with the general mass of this state. Petitioner's corporate secretary and 50 percent shareholder is David J. Pilger. He contributed financially to the employment by the Florida Drycleaners' Coalition of lawyers- lobbyists charged with seeking passage of amendments to Chapter 376, Florida Statutes, and met several times with those lawyers- lobbyists in Tallahassee. He was assured during those meetings that it was the opinion of those lawyers-lobbyists that there was no danger of Florida sales tax being applied to the $5.00 per gallon tax on perchloroethylene. The Department conducted an audit of Petitioner for the period of January 1, 1993, through January 31, 1998. At no time prior to the Department's audit of Petitioner's financial records did Petitioner receive from the Department materials of any kind indicating that Florida sales and use tax would apply to the $5.00 per gallon tax on perchloroethylene. The Department had, however, adopted emergency Rule 12BER94-2, effective October 1, 1994, and Rule 12B-12.003(2)(b), Florida Administrative Code, effective February 19, 1995. The 1998 Florida Legislature amended Section 376.75, Florida Statutes, by enacting Chapter 98-189, Laws of Florida, effective July 1, 1998, which added a sentence regarding the $5.00 per gallon tax, as follows: "This tax is not subject to sales and use tax pursuant to ch. 212." The Department has assessed and/or collected from certain taxpayers Florida sales and use tax on the sales price of perchloroethylene and the $5.00 per gallon tax on perchloroethylene. The sales and use taxes are deposited into the general revenue fund pursuant to Section 212.20(1), Florida Statutes. The $5.00 per gallon tax on perchloroethylene is deposited into the Water Quality Assurance Trust Fund, pursuant to Section 376.3078(2)(a), Florida Statutes. The Department issued its Notice of Proposed Assessment to Petitioner on October 22, 1998, assessing sales and use tax of $39,098.66, penalties of $19,549.64, and interest of $11,184.10 through October 22, 1998, with interest of $12.85 to accrue per day. The Department issued its Notice of Proposed Assessment to Petitioner on October 22, 1998, assessing indigent care surtax of $2,128.98, penalties of $1,064.48, and interest of $611.97 through October 22, 1998, and interest of $.70 to accrue per day. Petitioner charged its customers and remitted to the Department the $5.00 per gallon tax on perchloroethylene provided for in Section 376.75, Florida Statutes, but neither collected from the customer nor remitted to the Department sales and use tax on this $5.00 per gallon tax. The $5.00 per gallon tax collected by Petitioner from its customers was reflected at the bottom of Petitioner's invoices as "the ENVRN TAX." Petitioner charged its customers and remitted to the Department the excise tax provided for in Section 206.9935(2), Florida Statutes, but neither collected from its customers nor remitted to the Department sales and use taxes or indigent care surtax on this excise tax. This tax was reflected at the bottom of Petitioner's invoices as "PERC TAX." Petitioner does not contest the Department's assessment of sales and use taxes and indigent care surtax on the water quality tax provided for in Section 206.9935(2), Florida Statutes. Petitioner does not dispute that its sales to its customers during the audit period were paid for by its customers.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered sustaining the assessment against Petitioner, together with interest, but compromising the entire penalty amount. DONE AND ENTERED this 22nd day of November, 1999, in Tallahassee, Leon County, Florida. LINDA M. RIGOT Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 22nd day of November, 1999. COPIES FURNISHED: Jarrell L. Murchison, Esquire John Mika, Esquire Department of Legal Affairs The Capitol, Tax Section Tallahassee, Florida 32399-1050 Fred McCormack, Esquire Landers & Parsons, P.A. 310 West College Avenue Tallahassee, Florida 32301 Linda Lettera, General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32314-6668 Joseph C. Mellichamp, III, Esquire Office of the Attorney General Department of Legal Affairs The Capitol, Tax Section Tallahassee, Florida 32399-1050 Larry Fuchs, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100
