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New England Petroleum Corp. v. Groppo

Supreme Court of Connecticut

April 3, 1990

John G. GROPPO, Commissioner of Revenue Services.

Argued Jan. 30, 1990.

Kenneth E. Werner, Hartford, for appellant (plaintiff).

Edward T. Blair, Asst. Atty. Gen., with whom, on the brief, was Clarine Nardi Riddle, Atty. Gen., for appellee (defendant).


[214 Conn. 445] HULL, Associate Justice.

The sole issue in this appeal is whether certain sales of petroleum products by the plaintiff, New England Petroleum Corporation, occurred in the state of Connecticut and were therefore subject to the state tax on gross earnings from the sale of petroleum products pursuant to General Statutes § 12-587. [1] The [214 Conn. 446] defendant, the commissioner

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of revenue services, assessed a gross earnings tax, plus interest, against the plaintiff on sales of fuel oil it made to Pfizer, Inc. (Pfizer), during the period October 1, 1982, through September 30, 1983. Claiming that it had not sold petroleum products in the state of Connecticut during the one year period in question, the plaintiff brought this action for return of money paid under protest as a result of the defendant's tax assessment. [2] The trial court affirmed the validity of the assessment and the plaintiff appeals. We find no error.

The underlying facts as found by the trial court are as follows. On August 1, 1980, the plaintiff entered into a written agreement with Pfizer to sell to Pfizer "# 6 [214 Conn. 447] fuel oil." Article 2 of the agreement required the plaintiff to deliver the oil to Pfizer. Pursuant to article 3(A), the delivery was to "be made to Pfizer's shore tank at its plant in Groton, Connecticut (the 'Facility')." Article 3(B) provided that "[t]itle and responsibility for [the] product [would] pass to Pfizer when the product [was] pumped into Pfizer's permanent flanged connection at the facility dock by [the plaintiff's] barge." A provision requiring that Pfizer provide "a sufficient depth of water at the dock at its [f]acility," so that the plaintiff's barges could come in safely was contained in article 3(C). Article 3(D) then provided for a form of damage payment to the plaintiff if the Pfizer facility was unable to receive the oil. Finally, in accordance with article 5(A), the determination of the quantity of the oil delivered was to be determined "by Pfizer's storage tank measurements taken Before and after each delivery" at Groton.

This purchase and sale agreement was to remain in effect for "three years beginning September 1, 1980." By letters signed by both parties, the original agreement was amended effective September 1, 1981, and again effective December 3, 1981. Neither amendment made any change in articles 3 or 5. The plaintiff argued at trial that the agreement had in fact been amended a third time. With respect to this claim, the court acknowledged that in late August, 1982, Pfizer had asked the plaintiff to prepare an "addendum to [the] fuel oil contract" that would change the location at which the title to the oil would pass. Sometime after that date the plaintiff had prepared a draft amendment to article 3. That draft was thereafter severely

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"marked up" in pen and pencil. On April 13, 1983, two unmarked copies of the draft were sent to a Pfizer employee authorized to purchase oil. The day of the month had not been inserted on the copies of the draft sent to Pfizer to indicate the day in August, 1982, when the [214 Conn. 448] proposed agreement was to have become effective. Given this factual scenario, the court found that a third written agreement or amending letter had never been agreed to by both the plaintiff and Pfizer in regard to the sale and delivery of the oil.

The court accepted the plaintiff's claim that the place of the sale of the oil was to be determined by examining the intent of the parties and acknowledged that the intent was "best illustrated by their written agreement[s] and their conduct." The court then concluded that the parties' mutual intention, as expressed in the original written agreement and the two signed amendments thereto, was that delivery and sale of the oil would occur in Connecticut. Although the written agreement provided that it could not be modified or terminated orally, the court held that the parties nevertheless could have changed their original intention by mutual oral agreement. The court concluded, however, that, upon examination of the parties' conduct as evidenced by invoices and purchase orders concerning the oil sold to Pfizer, it could not find that the parties ever had changed their mutual agreement about the delivery and sale of the oil. In addition, the court found that the plaintiff had offered no proof that it had accounted to the states of New York, New Jersey or Pennsylvania under the gross receipts tax laws of those states for sales of portions of the oil sold to Pfizer that the plaintiff claimed had occurred in those states. Accordingly, the court rendered judgment for the defendant.

On appeal, the plaintiff does not dispute that under the original written agreement, title to the oil passed in Connecticut and the tax on the gross earnings from the sales of the petroleum applied. It claims, however, that under the circumstances here presented, the trial court erred in finding the tax applicable after August, 1982, for two reasons: (1) a third amendment to the [214 Conn. 449] original agreement provided that title to the oil would pass in various other states and that a credit would be given to the plaintiff for barging costs from those out-of-state locations to Pfizer's facility at Groton; and (2) the parties acted in accordance with the amended understanding of the parties and thus implemented the new contract. The plaintiff does not mount a successful attack on the court's findings concerning either of these two claims. [3]

We first set forth the often quoted scope of our review. " 'On appeal, it is the function of this court to determine whether the decision of the trial court is clearly erroneous. See Practice Book, 1978, § 3060D [now § 4061]. This involves a two part function: where the legal conclusions of the court are challenged, we must determine whether they are legally and logically correct and whether they find support in the facts set out in the memorandum of decision; where the factual basis of the court's decision is challenged we must determine whether the facts set out in the memorandum of decision are supported by the evidence or whether, in light of the evidence and the pleadings in the whole record, those facts are clearly erroneous. That is the standard and scope of this court's judicial review of decisions of the trial court. Beyond that, we will not go.' Pandolphe's Auto Parts, Inc. v. Manchester, 181 Conn. 217, 221-22, 435 A.2d 24 (1980)." Berlin v. Commissioner, 207 Conn. 289, 292-93, 540 A.2d 1051 (1988).

It is undisputed that the tax imposed is applicable to the plaintiff's sales to Pfizer only if the sales occurred [214 Conn. 450] in Connecticut. The Connecticut Uniform Commercial Code defines a "sale" as "the passing of title from the seller to the buyer for a price...." General ...

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