PAUL WENNER AND CITY OF PHOENIX V. DAYTON-HUDSON CORPORATION, Court of Appeals of AZ, 1979. 123 Ariz. 203, 598 P.2d 1022 by JohnMValentine


PAUL WENNER AND CITY OF PHOENIX V. DAYTON-HUDSON CORPORATION, Court of Appeals of AZ, 1979. 123 Ariz. 203, 598 P.2d 1022. History: Wenner and Phoenix—appellants; Dayton-Hudson—appellee; appeal by defendants/appellants from an adverse decision by the Sup. Ct. of Maricopa County holding that the income received by Plaintiff/appellee from certain agreement w/retailers was not taxable under the Phoenix City Code; Appellee paid 1% privilege tax under protest and was granted a hearing by appellants; Appellant Warner found tax was proper and upheld it; Appellee, after using all administrative remedies provided, bourght action in the Superior Court challenging the tax; trial court granted Appellee’s motion for summary judgment and entered judgment for Appellee for $20,364.22 plus interest and costs; Wenner and Phoenix appeal Facts: Appellee Dayton-Hudson operates dept stores w/in city limits of Phoenix called “Diamonds”; Appellee makes agreements w/retailers to maintain certain departments w/in its stores like the beauty salon, the shoe department, the fur salon, and the furniture department; the agreement gives the retailer the excusive right to operate a type of dept w/in store and is only allowed to conduct that business w/in the store; Appellee furnishes certain services and retailer pays a percentage of his gross receipts w/a minimum monthly payment designated; agreements are for a definite term and automatically renew, unless there is a notice of termination, and Appellee can terminate agreement any time the retailer is in default Issue(s): Is the agreement between Appellee Dayton-Hudson and the retailer a lease or a license? License Is the City Ordinance 14-2(a)(12) broad enough to tax a license agreement? No Holding: Judgment for Appellee Dayton-Hudson for $20,364.22 plus interest and costs affirmed Analysis: Appellants contend that the agreement between Appellee and the retailer is a lease and not a license; language w/in agreement says “license”; Court says it was more than just a non-assignability clause in City of Paris that made it a lease; there was no attempt in agreement between Appellee and Lessee for exclusive possession or interesting property over and above a personal right, or a landlord/tenant relationship— Lessee wasn’t even allowed in the store unless it was usual business hours; the nonassignment clause was more that of a license then a lease; agreement does not, as the Owl Drug Co. case, include a provision for lost rent as if the agreement was a lease Court says the city ordinance is not broad enough to tax a license agreement; AZ Supreme Court has said many times that statues should be construed liberally in favor of taxpayer and strictly against the State

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