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Sharper Image Corp. v. Department of Treasury

Court of Appeals of Michigan

February 21, 1996, Submitted ; May 21, 1996, Decided

No. 173733

Opinion

 [*699]   [**597]  NEFF, P.J.

Plaintiff instituted this cause of action against defendants challenging the applicability of a tax imposed pursuant to the Michigan Use Tax Act (UTA), MCL 205.91 et seq.; MSA 7.555(1) et seq., on [*700]  certain of plaintiff's business activities. 2 Plaintiff appeals as of right from an order of the Court of Claims granting summary disposition for [***2]  defendants pursuant to MCR 2.116(I)(2), and we affirm in part, reverse in part, and remand for proceedings consistent with this opinion.

The essential facts of this case are not in dispute. In addition to owning two stores operating in Michigan, plaintiff, a foreign corporation, conducts business in Michigan through mail-order catalogs. Plaintiff's catalogs are produced by a printer in Lincoln, Nebraska, and shipped through the mail from the printer's place of business. The catalogs are sent by third-class mail, and plaintiff retains no control over them once they are delivered to the postal service. Undelivered catalogs are destroyed by the postal service.

From 1986 through 1990, plaintiff timely filed its tax returns. Defendants, however, assessed a use tax deficiency of $ 63,440 plus interest, claiming plaintiff failed to pay the use taxes [***3]  on (1) the use of the catalogs in Michigan, and (2) for transportation charges plaintiff requires its customers to pay on merchandise purchased by mail order. Ultimately, plaintiff paid the amount due under protest and initiated this suit for a refund.

Plaintiff then moved for summary disposition pursuant to MCR 2.116(C)(10), claiming that (1) "use" under the UTA did not include distribution of catalogs  [*701]  from an out-of-state source, (2) the use tax on catalogs violated the Commerce Clause of the United States Constitution, and (3) because the UTA taxes the "price" of the goods, the separately stated transportation charges may not be taxed.

The trial court disagreed with plaintiff's arguments, denied its motion, and in turn, granted summary disposition for defendants pursuant to MCR 2.116(I)(2). It is from this order that plaintiff appeals.

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216 Mich. App. 698 *; 550 N.W.2d 596 **; 1996 Mich. App. LEXIS 149 ***

SHARPER IMAGE CORPORATION, Plaintiff-Appellant, v DEPARTMENT OF TREASURY, STATE TREASURER, and REVENUE COMMISSIONER, Defendants-Appellees, and SERVICE MERCHANDISE COMPANY, and MILLER BREWING COMPANY, Amicus-Curiae.

Prior History:  [***1]  LC No. 92-014443-CM.

Disposition: Affirmed in part, reversed in part, and remanded.

CORE TERMS

catalogs, use tax, transportation charge, summary disposition, consumer, taxed

Tax Law, State & Local Taxes, Use Taxes, General Overview, Civil Procedure, Appeals, Standards of Review, De Novo Review, Summary Judgment Review, Standards of Review, Summary Judgment, Opposing Materials, Entitlement as Matter of Law, Contracts Law, Personal Property, Personal Property Taxes, Tangible Personal Property, Governments, Legislation, Interpretation, Administration & Procedure, Use Tax Definitions, Business & Corporate Compliance, Sales of Goods, Performance