author: Covello, J. Borden, J.,

text:
    Chairman, Criminal Justice Commission, et al. v. Freedom of Information Commission et al.
    (13989)
    Peters, C. J., Shea, Covello, Hull and Borden, Js.

      Argued November 8, 1990
    decision released January 22, 1991

      Constance L. Chambers, assistant general counsel, with whom, on the brief, was Mitchell W. Pearlman, general counsel, for the appellant (named defendant).

      Laurie Adler, assistant attorney general, with whom were John A. Connelly, state’s attorney, and, on the brief, Charles A. Overend, assistant attorney general, and Diane D. Duhamel, former assistant attorney general, for the appellees (plaintiffs).
   Covello, J.

This is an administrative appeal from a decision of the defendant Freedom of Information Commission (FOIC) ordering the plaintiff chairman of the criminal justice commission (chairman) to disclose the merit and performance evaluation prepared for the plaintiff Waterbury’s state’s attorney John A. Connelly, by the chief state’s attorney pursuant to General Statutes § 51-280. The dispositive issue is whether a personnel evaluation of a state’s attorney is exempt from the disclosure requirements of the Freedom of Information Act (FOIA) by reason of General Statutes § 1-19 (b) (2). We conclude that § 1-19 (b) (2) exempts the evaluation from disclosure and, therefore, affirm the judgment of the trial court.

On June 23,1988, Rhonda Stearley, Chris Powell and the Journal Inquirer requested that the chairman supply them with a copy of the merit and performance evaluation of Connelly. The chairman denied their request. On July 7, 1988, Stearley, Powell and the Journal Inquirer filed a complaint with the FOIC seeking disclosure of the evaluation report. On August 25,1988, the FOIC conducted a hearing at which the criminal justice commission (commission) presented expert testimony that the evaluation report is considered a sensitive document and is maintained only in a limited access personnel file. On December 8,1988, the FOIC ordered the chairman to disclose Connelly’s evaluation report. The plaintiffs appealed the decision of the FOIC to the Superior Court pursuant to General Statutes § 4-183.

On June 1,1989, the trial court, Allen, J., remanded the matter to the FOIC for an in camera inspection and to perform the balancing test described in Board of Education v. Freedom of Information Commission, 210 Conn. 590, 556 A.2d 592 (1989). On June 20,1989, the FOIC conducted an in camera inspection. Following this inspection, the FOIC found that the evaluation was part of a personnel file within the meaning of § 1-19 (b) (2). The FOIC concluded, however, that as a public official, Connelly had a minimal expectation of privacy in records relating to his official conduct and that his minimal privacy rights were outweighed by the public interest in the information. On July 14,1989, the FOIC issued its second decision again ordering the chairman to release the commission’s evaluation.

On April 16 and 18,1990, the plaintiffs appealed the second FOIC ruling to the Superior Court. The trial court, Leuba, J., sustained their appeal, concluding that disclosure of the evaluation constituted an invasion of privacy within the meaning of § 1-19 (b) (2) as a matter of law. The defendants appealed to the Appellate Court. We thereafter transferred the matter to this court pursuant to Practice Book § 4023.

The FOIA “makes disclosure of public records the statutory norm.” Hartford v. Freedom of Information Commission, 201 Conn. 421, 430, 518 A.2d 49 (1986). Section 1-19 (b) (2), however, provides an exception that prohibits the disclosure of “personnel or medical files and similar files the disclosure of which would constitute an invasion of personal privacy.” “The plaintiffs must meet a twofold burden of proof to establish the applicability of the § 1-19 (b) (2) exclusion. First, they must establish that the files in question are within the categories of files protected by the exemption, that is, personnel, medical or ‘similar’ files. Second, they must show that disclosure of the records ‘would constitute an invasion of personal privacy.’ ” Id., 431-32. The burden of proving the applicability of an exemption rests on the party claiming it. Maher v. Freedom of Information Commission, 192 Conn. 310, 315, 472 A.2d 321 (1984).

In this case, the FOIC determined that the evaluation is a personnel or similar file within the meaning of § 1-19 (b) (2). The FOIC, however, relying upon federal first amendment law, concluded that a state’s attorney, as a public official, has “minimal or nonexistent” privacy rights in information related to his official conduct. See New York Times Co. v. Sullivan, 376 U.S. 254, 270, 84 S. Ct. 710, 11 L. Ed. 2d 686 (1964). The FOIC then balanced the public’s interest in the information contained in the report against Connelly’s limited privacy rights and concluded that the public’s interest in the evaluation report outweighed any privacy rights retained by Connelly. The Superior Court concluded, however, that, based upon the predicate findings of the FOIC, disclosure of the report constituted an invasion of privacy as a matter of law.

What constitutes an invasion of privacy for the purposes of § 1-19 (b) (2) is not articulated in the FOIA. “Although our Freedom of Information Act does not derive from any model act or the federal Freedom of Information Act, other similar acts, because they are in pari materia, are interpretively helpful, especially in understanding the necessary accommodation of the competing interests involved.” Wilson v. Freedom of Information Commission, 181 Conn. 324, 333, 435 A.2d 353 (1980); see also Hartford v. Freedom of Information Commission, supra, 432.

The privacy exemption contained in the federal Freedom of Information Act, 5 U.S.C. § 552 (b) (6), is “nearly identical” to the exemption in § 1-19 (b) (2). Hartford v. Freedom of Information Commission, supra. In construing the federal provision, the United States Supreme Court has determined that the federal privacy exemption was designed to protect individuals from “the injury and embarrassment that can result from the unnecessary disclosure of personal information.^” Department of States. Washington Post Co., 456 U.S. 595, 599, 102 S. Ct. 1957, 72 L. Ed. 2d 358 (1982); Stern v. F.B.I., 737 F.2d 84, 91 (D.C. Cir. 1984); Camp bell v. United States Civil Service Commission, 539 F.2d 58, 61 (10th Cir. 1976). In addition to the potential for embarrassment, another factor federal courts have considered important is whether the individual originally gave the information to the government agency with the reasonable expectation that the material would be considered private. Rural Housing Alliance v. United States Department of Agriculture, 498 F.2d 73, 77-78 (D.C. Cir. 1974); see also Judiciary Committee v. Freedom of Information Commission, 39 Conn. Sup. 176, 188, 473 A.2d 1248 (1983).

In line with the approach taken by the federal courts, Connecticut courts have considered a person’s reasonable expectation of privacy and the potential for embarrassment as significant factors in determining if disclosure would constitute an invasion of privacy. Galvin v. Freedom of Information Commission, 201 Conn. 448, 461, 518 A.2d 64 (1986); Judiciary Committee v. Freedom of Information Commission, supra. The FOIC, however, concluded that, based upon first amendment precepts, a public official such as a state’s attorney has “minimal or nonexistent” rights of privacy. We disagree.

We have recently held that “the FOIA’s general policy favoring public access has strong federal constitutional underpinnings. As the United States Supreme Court has made clear, the first amendment to the federal constitution is not limited to protection of free expression but also embodies the right to receive and gain access to information and ideas.” Lieberman v. Board of Labor Relations, 216 Conn. 253, 267, 579 A.2d 505 (1990). The fact that the FOIA implicates first amendment concerns of access to information, however, does not necessarily imply that first amendment constraints on the personal privacy rights of public figures control the application of statutory privacy exemptions under the FOIA. It cannot be assumed that constitutional precepts that have evolved in the context of civil libel proceedings determine the extent of privacy rights in the entirely different context of the FOIA. Indeed, contrary to the conclusion reached by the FOIC, federal courts interpreting similar federal law have “explicitly rejected the proposition that government officials, by virtue of their positions, forfeit their personal privacy for FOIA purposes.” Fund for Constitutional Government v. National Archives, 656 F.2d 856, 864 (D.C. Cir. 1981). “We [hold] that government officials have a legitimate interest in preserving the secrecy of matters that conceivably could subject them to annoyance or harassment in either their official or private lives.” Baez v. United States Department of Justice, 647 F.2d 1328, 1339 (D.C. Cir. 1980). Thus the FOIC, in determining if an invasion of privacy would result from disclosure, used too strict a standard in evaluating the privacy rights of public officials.

As a predicate to its conclusion, the FOIC found that the requested evaluation did describe such personal matters as the plaintiffs “aptitude, attitude, basic competence . . . trustworthiness, ethics, [and] interpersonal relationships . . . .” This conclusion was based, in part, upon the uncontroverted testimony of John Kelly, the chief state’s attorney, that the report was for the “eyes only” of a limited group and the testimony of James Murphy, the chairman of the criminal justice commission, that the plaintiff had an expectation of privacy in the evaluation and that members of the commission would destroy their copies of such evaluations after meeting. In examining the FOIC’s findings in the light of the federal standards for an invasion of privacy, we agree with the Superior Court that disclosure of the report would carry significant potential for embarrassment and that Connelly entertained a reasonable expectation of privacy in the information contained in the evaluation. We conclude, therefore, that disclosure of the personnel evaluation would constitute an invasion of privacy as a matter of law.

The FOIC, in determining if an invasion of privacy would result from disclosure of the personnel evalution, applied a balancing test. Section § 1-19 (b) (2) does not require such a balancing test. We have held that if the “statutory language ... is clear and unambiguous . . . courts cannot, by construction, read into such statutes provisions which are not clearly stated.” Frazier v. Manson, 176 Conn. 638, 642, 410 A.2d 475 (1979). We note that an exemption under § 1-19 (b) (1), which excludes disclosure of “preliminary drafts or notes provided the public agency has determined that the public interest in withholding such documents clearly outweighs the public interest in disclosure,” expressly requires a balancing test in determining when information may be disclosed. The fact that the legislature specifically declined to include a balancing requirement in § 1-19 (b) (2) is strong evidence that a balancing test is inappropriate when applying § 1-19 (b) (2). Expressio unius est exclusio alterius. “A statute which provides that a thing shall be done in a certain way carries with it an implied prohibition against doing that thing in any other way.” State ex rel. Barlow v. Kaminsky, 144 Conn. 612, 620, 136 A.2d 792 (1957); see Durham v. Parole Board, 382 Mass. 494, 498, 416 N.E.2d 954 (1981); Iannelle v. Fire Commissioner, 331 Mass. 250, 252, 118 N.E.2d 757 (1954). 2A J. Sutherland, Statutory Construction (4th Ed. Sands) § 47.23. We conclude that within the language itself of “the Freedom of Information Act, the legislature has [already balanced] the public’s right to know and the private needs for confidentiality.” State v. Januszewski, 182 Conn. 142, 171, 438 A.2d 679 (1980), cert. denied, 453 U.S. 922, 101 S. Ct. 3159, 69 L. Ed. 2d 1005 (1981). Therefore, neither the FOIC nor the courts are required to engage in a separate balancing procedure beyond the limits of the statute.

The FOIC contends that our decision in Board of Education v. Freedom of Information Commission, 210 Conn. 590, 596, 556 A.2d 592 (1989), approved the application of a balancing test to determine whether disclosure of a job evaluation would constitute an “invasion of personal privacy” under § 1-19 (b) (2). In that case, we rejected the FOIC’s blanket ruling that disclosure of job evaluations of school employees would not be protected as invasive of privacy under that section of the statutes. In so doing, we noted the balancing test used in Hartford v. Freedom of Information Commission, supra, 433 n.14, and derived from State v. Januszewski, supra, 171-72. The Januszewski test was designed only for dealing with the rights of criminal defendants in situations not already covered by the exemptions explicitly set out in the FOIA. Therefore, to the extent that Board of Education suggests that the Januszewski test should be applied to situations already covered by specific statutory provisions of the FOIA, we now hold otherwise.

Finally, we note that federal courts have used a balancing test in applying the parallel exemption under federal law. Aronson v. United States Department of Housing & Urban Development, 822 F.2d 182, 185 (1st Cir. 1987). In this respect, however, the language of the federal statute is significantly different from the Connecticut statute. Title 5 of the United States Code, § 552 (b) (6) provides that records are exempt if they are “personnel . . . files the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.” (Emphasis added.) In Department of Air Force v. Rose, 425 U.S. 352, 372, 96 S. Ct. 1592, 48 L. Ed. 2d 11 (1976), the United States Supreme Court, citing Senate Report No. 813, p. 9, indicated that the federal balancing test was based on the “clearly unwarranted ” language: “ ‘The phrase “clearly unwarranted invasion of personal privacy” enunciates a policy that will involve a balancing of interest between the protection of an individual’s private affairs from unnecessary public scrutiny, and the preservation of the public’s right to governmental information.’ ” Inasmuch as General Statutes § 1-19 (b) (2) does not include a similar expression of a legislative intent to require a balancing test, we decline to interpolate one.

The judgment is affirmed.

In this opinion Peters, C. J., Shea and Hull, Js., concurred.

Borden, J.,

concurring. Ordinarily, I would be loathe to overrule precedent interpreting a statute, particularly where, as in the case of the Freedom of Information Act, the legislature has had numerous occasions to reconsider that interpretation and has failed to do so. In this case, however, I agree that the initial interpretation was phrased too broadly and has been reaffirmed by this court without examination. Thus, it is of greater importance in this case that the interpretation of the act be correct than that it be consistent with past precedent.

The balancing test for interpretation of the exemptions from the act found in General Statutes § 1-19 (b) originated in Wilson v. Freedom of Information Commission, 181 Conn. 324, 328-29, 435 A.2d 353 (1980), and was based on “the act’s provisions and its legislative history.” Id., 328-29 n.2. Wilson, however, was concerned only with the exemption contained in § 1-19 (b) (1), which is the only exemption that specifically incorporates a balancing test. After Wilson, this court reaffirmed that balancing test in the context of other exemptions, including § 1-19 (b) (2). See Board of Education v. Freedom of Information Commission, 210 Conn. 590, 596, 556 A.2d 592 (1989); Commissioner of Consumer Protection v. Freedom of Information Commission, 207 Conn. 698, 701, 542 A.2d 321 (1988); Hartford v. Freedom of Information Commission, 201 Conn. 421, 433 n.14, 518 A.2d 49 (1986); Maher v. Freedom of Information Commission, 192 Conn. 310, 315, 472 A.2d 321 (1984); State v. Januszewski, 182 Conn. 142, 171-72, 438 A.2d 679 (1980), cert. denied, 453 U.S. 922, 101 S. Ct. 3159, 69 L. Ed. 2d 1005 (1981).

The legislative history, however, indicates that the legislature performed the balancing process in drafting the act, and there is no indication therein that, except where specifically provided, a further balancing process was contemplated in the application and interpretation of the exemptions. The legislative balancing process was performed in creating the general policy of disclosure, and in carving out the specific exemptions. See 18 S. Proc., Pt. 5,1975 Sess., pp. 2324, 2326-27, 2329; 18 H.R. Proc., Pt. 8, 1975 Sess., pp. 3902, 3910-11, 3913; Conn. Joint Standing Comittee Hearings, Government Administration and Policy, 1975 Sess., p. 304.

I agree with the majority, therefore, that, except for § 1-19 (b) (1), a balancing test is inappropriate. I also agree with the majority that the federal balancing test for the analogous exemption from the federal Freedom of Information Act is based on the requirement that the invasion of personal privacy be “clearly unwarranted.” Department of Air Force v. Rose, 425 U.S. 352, 378 n.16, 96 S. Ct. 1592, 48 L. Ed. 2d 11 (1976). No such language appears in § 1-19 (b) (2).

I agree with the majority, furthermore, that the reasonable expectation of privacy on the part of the persons giving the information contained in a personnel file must be taken into account in deciding whether disclosure would constitute an invasion of personal privacy. This is true, not only because that expectation necessarily relates to whether the subject of the file would reasonably consider disclosure of the information to be an invasion of personal privacy, but also because of the strong public policy underlying the legislative choice of this exemption, as well as others—the need for full and frank exchange of information relating to the evaluation of public employees.

In this case, therefore, although the freedom of information commission was simply trying to follow our previous case law by applying a balancing test, since we now decide that such a test is inappropriate under § 1-19 (b) (2), the case should be remanded for the commission to apply the proper test, unless the facts make it clear that the commission could have come to only one conclusion as a matter of law. An examination of the evaluation report in question, which has been filed under seal in this case, leads me to conclude that disclosure of it would be, as a matter of law, an invasion of Connelly’s personal privacy.

My examination of the report at issue in this case persuades me that the trial court was correct in its ruling. Although all of the comments therein are phrased in terms of Connelly’s performance as a state’s attorney, under the circumstances of this case they also came within his reasonable expectation of personal privacy, because many of them also relate to what may fairly be regarded as personal characteristics. Furthermore, disclosure of this report could subject him to annoyance,' embarrassment and harassment in both his professional and personal lives. Finally, it is clear from this record that the circumstances surrounding this report were such that it was prepared and given with a strong and reasonable expectation of privacy on the part of both Kelly and the criminal justice commission. Disclosing it would severely undermine the policy of full and frank exchange of information underlying the need for such reports.

       General Statutes § 1-19 (b) (2) provides: “Nothing in sections 1-15, l-18a, 1-19 to l-19b, inclusive, and 1-21 to l-21k, inclusive, shall be construed to require disclosure of . . . (2) personnel or medical files and similar files the disclosure of which would constitute an invasion of personal privacy.”

       Title 5 of the United States Code, § 552 (b) (6) provides: “This section does not apply to matters that are . . . (6) personnel and medical files and similar files the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.”


source: Caselaw Access Project

author:
Borden, J.
      Shea, J., with whom Glass, J.,

license: Public Domain

text:
    Keith D. Dunnigan, Trustee v. First Bank
    (13883)
    Shea, Callahan, Glass, Hull and Borden, Js.
    Argued November 2, 1990
    decision released January 22, 1991

      Ben A. Solnit, with whom was Richard W. Bower-m.an, for the appellant (defendant).

      Michael S. Lynch, for the appellee (plaintiff).
   Borden, J.

In this appeal, we are called upon to define the meaning and scope of General Statutes § 42a-4-403 (3) of the Uniform Commercial Code (code) as applied to the facts of this case. The defendant bank appeals, after a court trial, from the judgment of the trial court in favor of the plaintiff, the trustee in bankruptcy of Cohn Precious Metals, Inc. (Cohn), a customer of the bank. We transferred the appeal to this court pursuant to Practice Book § 4023, and we now reverse the trial court’s judgment.

The plaintiff brought this action against the bank for wrongfully paying a check issued by Cohn over Cohn’s valid stop payment order. The trial court determined that the plaintiff had established a loss within the meaning of § 42a-4-403 (3) as a result of the bank’s payment of the check, and that the subrogation provisions of General Statutes § 42a-4-407 did not defeat the rights of Cohn. The court accordingly rendered judgment for the amount of the check. This appeal followed.

The bank claims that judgment was improperly rendered for the plaintiff because (1) as a matter of law, Cohn did not suffer a loss within the meaning of § 42a-4-403 (3), and (2) the bank was subrogated to the rights of the payee of the check and of the collecting banks, pursuant to § 42a-4-407. We agree with the bank’s first claim and therefore need not reach its second claim. Furthermore, it is not necessary to define the relationship between §§ 42a-4-403 (3) and 42a-4-407.

The parties stipulated to the following facts. On November 8, 1978, pursuant to purchase order 1142, Lamphere Coin, Inc. (Lamphere), a trader in coins and precious metals, delivered to Cohn certain silver dollars with a unit price of $1.71 and with a total value of $27,492.07. Cohn’s bookkeeper incorrectly recorded the unit price of those coins, however, as $17.10, resulting in an erroneous total value of $47,098.93. On November 9,1978, Cohn paid Lamphere $47,098.93 by wire transfer to Lamphere’s bank account, resulting in an overpayment to Lamphere by Cohn of $19,606.86. On November 10,1978, Lamphere delivered three and one-half bags of silver dollars to Cohn pursuant to Cohn’s purchase order 1145. The value of the silver dollars was $21,175. On the same day, Cohn issued two checks drawn on its account at the bank to Lamphere, one in the amount of $12,175 and one in the amount of $9000, totaling $21,175.

Between November 10 and November 15, Cohn discovered its bookkeeper’s error and, on November 14, 1978, directed the bank to stop payment on the two checks totaling $21,175 that had been issued on November 10,1978. The bank stopped payment on the $9000 check, but on or about November 20, 1978, the bank inadvertently honored the $12,175 check over the valid stop payment order. Cohn retained the three and one-half bags of silver dollars, but never recovered its overpayment from Lamphere. As of November 20, 1978, the date of the improper payment of the check by the bank, and at all times thereafter Lamphere owed Cohn in excess of $13,000 as a result of these transactions.

The merits of this controversy revolve around the meaning of § 42a-4-403 (3), which provides that “[t]he burden of establishing the fact and amount of loss resulting from the payment of an item contrary to a binding stop payment order is on the customer.” The bank argues that where there is good consideration for a particular check, or where the check was given as payment on a binding contract, the bank that paid the check over a valid stop payment order is not liable to its customer, because there was no “loss resulting from [its] payment . . . .” General Statutes § 42a-4-403 (3). Thus, in the bank’s view a customer cannot establish a loss under this provision of the code by relying on the loss of credits due the customer from prior unrelated transactions between the customer and the payee of the check. The plaintiff argues, as the trial court concluded, that whether a customer has incurred a “loss” within the meaning of § 42a-4-403 (3) cannot be determined solely by focusing on the transaction underlying the particular check involved, but must be determined by focusing on the entire relationship between the customer and the payee of the check. The plaintiff contends that it is unreasonable to disregard the relative positions of the parties, especially where they have demonstrated a continuing course of business dealings, where there are likely to be such credits. Under such circumstances, the plaintiff claims that focusing on a single transaction is contrary to the intent of the code. Thus, in the plaintiffs view, Cohn would have had a good “defense” to a claim by Lamphere on the check because of the overpayment, and by paying the check the bank caused Cohn a loss within the meaning of § 42a-4-403 (3).

The issue, therefore, is whether, on the facts of this case, the bank customer who sought to establish “the fact and amount of loss resulting from the payment of an item contrary to a binding stop payment order” pursuant to § 42a-4-403 (3) was entitled to do so by resorting to credits from prior transactions unrelated to that for which the check was issued, or whether the customer was limited to the facts of the particular transaction for which the check was issued. We conclude that the customer was limited to the facts of the particular transaction for which the check was issued, and that § 42a-4-403 (3) does not contemplate taking into account a loss by the customer of credits that arose from prior unrelated transactions.

We note first that, contrary to the plaintiffs suggestion, there is nothing in the stipulated facts to indicate that Cohn and Lamphere had a “continual course of business dealings.” Those facts disclose only the two separate transactions occurring on November 8 and 9, 1978, and on November 10, 1978. Furthermore, this is not a case involving a revolving credit, open account or ongoing contractual relationship between the customer of the bank and the payee of the check. Thus, we need not decide whether those facts would yield a different conclusion.

Under § 42a-4-403 (1), a bank customer has the right to order his bank to stop payment on a check, so long as he does so in a timely and reasonable manner, and, under § 42a-4-403 (2), an oral stop payment order is binding on the bank for a limited period of time. See footnote 1, supra. The fact that the bank has paid the check over the customer’s valid stop payment order does not mean, however, that the customer is automatically entitled to repayment of the amount of the check. Under § 42a-4-403 (3), the customer must also establish “the fact and amount of loss resulting from” the bank’s improper payment.

The case law makes clear that “[t]he loss . . . must be more than the mere debiting of his account.” Grego v. South Carolina National Bank, 283 S.C. 546, 549, 324 S.E.2d 94 (1984); accord Kunkel v. First National Bank of Devils Lake, 393 N.W.2d 265 (N.D. 1986), and cases cited therein; see also Delano v. Putnam Trust Co., 33 UCC Reporting Service 635 (Conn. Superior Ct. 1981); Southeast First National Bank of Satellite Beach v. Atlantic Telec, Inc., 389 So. 2d 1032 (Fla. App. 1980); Siegel v. New England Merchants National Bank, 386 Mass. 672, 437 N.E.2d 218 (1982); Best v. Dreyfus Liquid Assets, Inc., 215 N.J. Super. 76, 521 A.2d 352 (1987); Cicci v. Lincoln National Bank, 46 Misc. 2d 465, 260 N.Y.S. 100 (1965); Fisher v. Bankers Trust Co., 14 UCC Reporting Service 466 (N.Y. App. Term. 1974); Mitchell v. Republic Bank & Trust Co., 35 N.C. App. 101, 239 S.E.2d 867 (1978). The commentators agree. See W. Hillman, Basic UCC Skills 1989, Article 3 and Article 4, p. 302; E. Peters, A Negotiable Instruments Primer (1974) p. 79; 1 J. White & R. Summers, Uniform Commercial Code (3d Ed. 1988) § 18-6, pp. 909-10. Otherwise, § 42a-4-403 (3) would be superfluous. Furthermore, whether the customer has suffered such a loss is in the first instance a question of fact. Best v. Dreyfus Liquid Assets, Inc., supra, 81; Kunkel v. First National Bank of Devils Lake, supra, 268; Grego v. South Carolina National Bank, supra.

The cases and commentators also agree that where the check in question was supported by good consideration, or where the payee has enforceable rights against the maker based on the transaction underlying the check, the customer has suffered no loss within the meaning of § 42a-4-403 (3). Siegel v. New England Merchants National Bank, supra, 678-79; Pokras v. National Bank of North America, 30 UCC Reporting Service 1089-90 (N.Y. App. Term. 1981); Fisher v. Bankers Trust Co., supra, 467; Kunkel v. First National Bank of Devils Lake, supra; W. Hillman, supra; E. Peters, supra; 1 J. White & R. Summers, supra. As then Professor Peters explained, it “is implicit in § 4-403 (3) that if a check was issued for good consideration . . . failure to observe a stop payment order does no more than to accelerate the drawer’s inevitable liability, and is therefore a defense to the payor bank.” E. Peters, supra.

Applying these principles to the facts of this case, we conclude that as a matter of law Cohn suffered no “loss” within the meaning of § 42a-4-403 (3). The check was supported by good consideration because it was issued in payment for the silver coins that Lamphere delivered to Cohn. Furthermore, on the basis of that underlying transaction Lamphere had enforceable rights to payment by Cohn for those coins.

The plaintiff argues, however, that, although the particular check was supported by valid consideration and although there were no defenses available to it arising out of that particular transaction, the previous transaction between Cohn and Lamphere had supplied Cohn with a defense to payment of the check based on Cohn’s overpayment to Lamphere. We disagree.

First, the language of § 42a-4-403 (3) suggests a narrower reading than would be required by the plaintiff’s position. Section 42a-4-403 (3) places on the bank’s customer the “burden of establishing the fact and amount of loss resulting from the payment of an item contrary to a binding stop payment order . . . .” (Emphasis added.) By contrast, General Statutes § 42a-4-402, which deals with a bank’s liability to its customer for a wrongful dishonor, as opposed to a wrongful payment, provides as follows: “A payor bank is liable to its customer for damages proximately caused by the wrongful dishonor of an item. When the dishonor occurs through mistake liability is limited to actual damages proved. If so proximately caused and proved damages may include damages for an arrest or prosecution of the customer or other consequential damages. Whether any consequential damages are proximately caused by the wrongful dishonor is a question of fact to be determined in each case.” (Emphasis added.) Thus, pursuant to § 42a-4-402 the wrongfully dishonoring bank may be liable for all consequential damages proximately caused by its wrongful conduct, including damages resulting from arrest or prosecution of the customer, whereas there is a conspicuous absence from § 42a-4-403 (3) of language indicating such a broad scope of liability for wrongful payment.

This difference in the scope of the language used in § 42a-4-403 (3), as compared to that used in § 42a-4-402, is consistent with the notion that § 42a-4-403 (3) is intended to impose a limited, rather than broad, form of liability on banks. “The trade-off for requiring banks to accept stop orders under § 4-403 (1) was the limitation of their liability under §§ 4-403 (3) and 4-407.” E. Peters, supra, p. 79.

The case law and commentary support this more restrictive view of the scope of § 42a-4-403 (3). In determining whether a customer has established a “loss” under this section of the code, they focus on the check itself and on the transaction underlying it, and not on whether there were other prior, unrelated transactions between the maker and payee of the check. “In order to prove a loss under [§ 42a-4-403 (3) of] the Code, a customer must prove he was not liable to the payee on the check. White & Summers, Uniform Commercial Code 560 (2d ed. 1980); Brady, Brady on Bank Checks § 20.20 p. 20-45 (5th ed. 1979); 6 Reitman & Weisblatt, Banking Law § 133.-07(2) (Bender’s Banking Law Service 1981).” (Emphasis added.) Bryan v. Citizens National Bank In Abilene, 628 S.W.2d 761, 763 (Tex. 1982); see also Siegel v. New England Merchants National Bank, supra; Kunkel v. First National Bank of Devils Lake, supra; W. Hillman, supra; E. Peters, supra; 1 J. White & R. Summers, supra. Although Cohn had an offset or counterclaim available to it with respect to Lamphere, it did not have a defense to payment of the check itself.

Finally, we find guidance in Siegel v. New England Merchants National Bank, supra. In that case, the court held that § 42a-4-403 (3) must be read together with the subrogation provisions of § 42a-4-407. Id., 678. Although we need not go that far because on the facts of this case § 42a-4-403 (3) can be read independently of § 42a-4-407, we are persuaded by the holding of Siegel that in order to establish a § 42a-4-403 (3) “loss” the customer must show that he had defenses to payment of the check that were good against a holder or holder in due course under General Statutes §§ 42a-3-305 and 42a-3-306, as the case may be, or that he had a good defense to liability on the underlying transaction. Id., 679. None of these defenses arise from facts outside the confines of the particular check in question or the transaction underlying it.

In this case, the plaintiff seeks more than to establish a loss caused by the bank’s failure to honor Cohn’s stop payment order. That “loss” occurred in fact on November 9, 1978, when Cohn overpaid for the coins it had received. Rather, the plaintiff seeks to recoup a loss resulting from a prior transaction separate from and independent of the stopped check. Thus, the plaintiff’s position would permit the customer to establish a “loss” based on offsets or counterclaims against the payee based on prior unrelated transactions, no matter how remote from the check in question or from the transaction underlying it. We do not believe that the intent of § 42a-4-403 (3) ranges that far.

The dissent reads the commentary of Peters and of White and Summers too broadly. Although both refer to the situation, unlike the case at bar, where a customer seeks to establish a loss resulting from the dishonor of subsequent checks, neither commentator states with any confidence that the customer would prevail under § 42a-4-403 (3). Peters discusses the hypothetical without coming to any conclusion other than “[wjhatever the inferences that may appropriately be drawn ... it can hardly alter the conviction that § 4-403 (3) accomplishes its purpose of severely limiting a drawer’s power to stop payment.” E. Peters, supra, p. 80. White and Summers do venture that they would find the bank liable, but “confess uncertainty about this conclusion, for it leaves little substance to § 4-403 (3).” 1 J. White & R. Summers, supra, p. 912. In any event, that is a case where the purported “loss” follows the wrongful payment and thus could arguably be said to be the result thereof, and not, as in this case, where it precedes that payment. Furthermore, the dissent’s equation of § 42a-4-403 (3) to the law of causation in negligence ignores the difference in statutory language between § 42a-4-402, where that concept is incorporated, and § 42a-4-403 (3), where such language is absent.

A factual finding must be reversed as clearly erroneous if it was based on an incorrect rule of law. Hydro-Hercules Corporation v. Gary Excavating, Inc., 166 Conn. 647, 654, 353 A.2d 714 (1974). The trial court’s finding in this case that the plaintiff had established a loss within the meaning of § 42a-4-403 (3) was so based.

The judgment is reversed and the case is remanded with direction to render judgment for the defendant.

In this opinion Callahan and Hull, Js., concurred.

Shea, J., with whom Glass, J.,

joins, dissenting. In this case it is undisputed that the drawer, Cohn Precious Metals, Inc. (Cohn), complied fully with General Statutes § 42a-4-403 (1) in stopping payment on the checks it had delivered to Lamphere Coin, Inc. (Lamphere), on November 10, 1978, while unaware of the overpayment of $19,606.86 on November 9, 1978. It is also clear that, but for the negligence of the bank in paying the $12,175 check contrary to the stop payment order, Cohn could have offset its overpayment of the previous day against the value of the coins received from Lamphere on November 10,1978. Thus, as the trial court concluded, the plaintiff trustee, on behalf of Cohn, sustained his “burden of establishing the fact and amount of loss resulting from the payment of an item contrary to a binding stop payment order” by the defendant bank, as § 42a-4-403 (3) requires.

The majority opinion does not challenge, as unsupported by the evidence, the trial court’s factual finding that Cohn suffered a loss resulting from the bank’s negligent payment of the $12,175 check to Lamphere, but rejects this straightforward “but for” causation analysis in favor of a narrower view of the “resulting from the payment” provision of § 42a-4-403 (3). The majority would restrict a bank’s liability for paying a check contrary to a stop order to losses arising from the transaction in which the check was issued, such as a failure of consideration. I disagree, because there is nothing in the text of § 42a-4-403 (3) or its history to support such an unjustifiable curtailment of the right of the drawer recognized by § 42a-4-403 (3) to stop payment on a check for any reason, so long as the order is given to the bank in a timely and reasonable manner, as in this case. The right, of course, would be illusory without recourse against the negligent bank.

“The right to stop payment is an established right that was recognized prior to the Code. The right is absolute.” J. Reitman et al., 6 Banking Law § 133.02. “If the drawer has a good defense on a check against a payee or holder, then the drawer suffers a loss when the bank wrongfully pays the check over a stop payment order.” Id. The plaintiff trustee had the burden of proving that Cohn’s loss resulted from noncompliance with the stop payment order, just as any negligence victim must prove causation. Even if the standard of causation applicable to breaches of contract should govern reasonable foreseeability of the damages at the time the drawer and bank enter into this relationship; Neiditz v. Morton S. Fine & Associates, Inc., 199 Conn. 683, 689 n.3, 508 A.2d 438 (1986); 3 Restatement (Second), Contracts § 351 (1); it is evident that a bank must be deemed to foresee that its payment of a check over a valid stop payment order is likely to cause a loss to the drawer in the amount of the payment. There is nothing in § 42a-4-403 (3) that warrants a narrower approach to the issue of causation than that applicable to breaches of contract. In order to prevail against a bank that has ignored a stop payment order, “[t]he customer must show that (i) the account was debited, (ii) some other loss was suffered, if applicable, and (iii) bank’s noncompliance with the stop order was the ‘but for’ cause.” W. Hillman, Basic UCC Skills 1989, Article 3 and Article 4, p. 319. As the trial court found, those criteria were satisfied by the plaintiff trustee in this case.

In adopting its constricted view of the “loss resulting from the payment of an item contrary to a binding stop payment order” provision of § 42a-4-403 (3), the majority cites a plethora of authorities, none of which address the issue of whether a bank is excused from liability for failing to obey a stop payment order simply because the drawer had no defense arising out of the transaction in which the check was issued but only a right of setoff from another transaction. Most of the cases cited involve the principle that, when a bank has paid a check on which payment has been stopped, it becomes subrogated to the rights of the payee on the check. The quotation relied upon from E. Peters, A Negotiable Instruments Primer (1974) p. 79, it “is implicit in § 4-403 (3) that if a check was issued for good consideration . . . failure to observe a stop payment order does no more than to accelerate the drawer’s inevitable liability,” is also based on the right of the bank to assert the rights of the payee on the check as a defense to an action by the drawer. Such a defense would not have been effective in this case, however, because the drawer, Cohn, had no such “inevitable liability,” given its right to set off the previous overpayment to Lamphere against the bank’s claim as subrogee of Lamphere’s rights on the check.

Two of the commentators relied upon by the majority refer to the situation in which a bank has wrongfully debited a customer’s account after a stop payment order and this action has resulted in dishonoring for insufficient funds subsequent checks issued by the drawer with the consequence of impairing his credit. E. Peters, supra; 1 J. White & R. Summers, Uniform Commercial Code (3d Ed. 1988) p. 912. Although they disagree as to how this problem should be resolved under § 42a-4-403 (3), they implicitly recognize that the bank’s liability for failing to obey a stop payment order may well subject it to liability with respect to other transactions resulting in damages to a drawer that have been caused by the bank’s oversight. The narrow concept of causation adopted by the majority cannot be reconciled with the views of these commentators.

The majority stresses the difference between the “resulting from” causation language of § 42a-4-403 (3) and the more elaborate provision of General Statutes § 42a-4-402 that expressly makes the bank liable for consequential damages for wrongfully dishonoring a check, including such damages as may result from the arrest or prosecution of the customer. Such a provision in § 42a-4-402 is probably necessary if liability for such damages is to be imposed because of the contract law limitation of damages to those that are reasonably foreseeable at the time of the contract. 3 Restatement (Second), Contracts § 351 (1). Such a provision in § 42a-4-403 (3) is unnecessary to make a bank liable for the amount of a check it has paid after a stop payment order, however, because it is obvious that such a loss to the drawer from the bank’s oversight is readily foreseeable.

As the majority acknowledges in a footnote, the official commentary in § 42a-4-403 takes the position “that stopping payment is a service which depositors expect and are entitled to receive from banks notwithstanding its difficulty, inconvenience and expense” and that “[t]he inevitable occasional losses through failure to stop should be borne by the banks as a cost of the business of banking.” The view of the majority that a drawer should be made to bear a loss that would have been avoided but for the bank’s neglect, because it did not arise from the transaction in which the check was issued, places a substantial restriction on the right to stop payment that § 42a-4-403 (1) purports to give.

With respect to General Statutes § 42a-4-407 and the defendant’s claim to be a holder in due course, there is nothing in the record to indicate that the collecting bank ever allowed the payee to draw on the check after it was deposited. Since there is no proof that the collecting bank gave value, the defendant’s claim to be subrogated to the status of a holder in due course is without foundation.

Accordingly, I dissent.

       General Statutes § 42a-4-403 provides as follows: “customer’s right to stop payment; burden of proof of loss. (1) A customer may by order to his bank stop payment of any item payable for his account but the order must be received at such time and in such manner as to afford the bank a reasonable opportunity to act on it prior to any action by the bank with respect to the item described in section 42a-4-303.
      “(2) An oral order is binding upon the bank only for fourteen calendar days unless confirmed in writing within that period. A written order is effective for only six months unless renewed in writing.
      “(3) The burden of establishing the fact and amount of loss resulting from the payment of an item contrary to a binding stop payment order is on the customer.”

       General Statutes § 42a-4-407 provides as follows: “payor bank’s right to subrogation on improper payment. If a payor bank has paid an item over the stop payment order of the drawer or maker or otherwise under circumstances giving a basis for objection by the drawer or maker, to prevent unjust enrichment and only to the extent necessary to prevent loss to the bank by reason of its payment of the item, the payor bank shall be subrogated to the rights (a) of any holder in due course on the item against the drawer or maker; and (b) of the payee or any other holder of the item against the drawer or maker either on the item or under the transaction out of which the item arose; and (c) of the drawer or maker against the payee or any other holder of the item with respect to the transaction out of which the item arose.”

       Ordinarily we would look to the official commentary to the code for guidance in interpreting its language. Comment 2 to Connecticut General Statutes Annotated § 42a-4-403 provides: “The position taken by this section is that stopping payment is a service which depositors expect and are entitled to receive from banks notwithstanding its difficulty, inconvenience and expense. The inevitable occasional losses through failure to stop should be borne by the banks as a cost of the business of banking.” This comment does not help in the resolution of the issue in this case, however, because it does not address the question of how to measure the scope of those “occasional losses through failure to stop.”

       General Statutes §§ 42a-3-305 and 42a-3-306 provide as follows: “Sec. 42a-3-305. rights of A HOLDER in due course. To the extent that a holder is a holder in due course he takes the instrument free from (1) all claims to it on the part of any person; and (2) all defenses of any party to the instrument with whom the holder has not dealt except (a) infancy, to the extent that it is a defense to a simple contract; and (b) such other incapacity, or duress, or illegality of the transaction, as renders the obligation of the party a nullity; and (c) such misrepresentation as has induced the party to sign the instrument with neither knowledge nor reasonable opportunity to obtain knowledge of its character or its essential terms; and (d) discharge in insolvency proceedings; and (e) any other discharge of which the holder has notice when he takes the instrument.
      “Sec. 42a-3-306. rights of one not holder in due course. Unless he has the rights of a holder in due course any person takes the instrument subject to (a) all valid claims to it on the part of any person; and (b) all defenses of any party which would be available in an action on a simple contract; and (c) the defenses of want or failure of consideration, nonperformance of any condition precedent, nondelivery, or delivery for a special purpose; and (d) the defense that he or a person through whom he holds the instrument acquired it by theft, or that payment or satisfaction to such holder would be inconsistent with the terms of a restrictive endorsement. The claim of any third person to the instrument is not otherwise available as a defense to any party liable thereon unless the third person himself defends the action for such party.”

       On the basis of the facts before us, the trial court’s award of $12,175 damages may have been excessive. The amount of the overpayment of November 9,1978, was $19,606.86. The value of the silver dollars received by Cohn on November 10,1978 was $21,175. Before the two checks totaling $21,175 were issued for this purchase, Cohn owed Lamphere $1568.14. That debt was discharged by the bank’s erroneous payment of the $12,175 check. Thus Cohn received good consideration of $1568.14 as a result of the bank’s payment and its loss is limited to the balance of the amount paid on the $12,175 check, $10,606.86.
      The defendant bank has not challenged the amount of the award and, since it has fully prevailed on appeal, it is unnecessary to consider the issue further.


author: Borden, J.

text:
    SFA Folio Collections, Inc. v. Timothy F. Bannon, Commissioner of Revenue Services
    (14023)
    Peters, C. J., Shea, Covello, Hull and Borden, Js.

      Argued November 8, 1990
    decision released January 22, 1991

      Richard K. Greenberg, assistant attorney general, with whom were John G. Haines, assistant attorney general, and, on the brief, ClarineNardi Riddle, attorney general, and Jane D. Comerford, assistant attorney general, for the appellant (defendant).

      Maryann B. Gall, with whom were Laura A. Kulwicki and William H. Narwold, for the appellee (plaintiff).
   Borden, J.

In February, 1987, the commissioner informed Folio that it was required to begin collection and remittance of sales and use taxes because it satisfied the definition of “[e]ngaged in business in the state” pursuant to General Statutes § 12-407 (15). Folio had neither applied for a permit to collect such taxes in Connecticut, nor had it ever collected such taxes on its catalog sales to Connecticut residents. In justifying the imposition of the tax liability, the commissioner stated that “[t]he unitary nexus established from [Folio’s] shared corporate name, logo, etc., with Saks Fifth Avenue-Stamford, Inc., is the basis of our position.” The commissioner thereafter requested that Folio register with the department of revenue services and begin to collect the appropriate taxes on its catalog sales to Connecticut customers. Folio contested, as an unconstitutional application of Connecticut law, the imposition of a duty upon it to register pursuant to General Statutes § 12-411 (8).

The commissioner notified Folio that its registration application had been processed and its tax registration number assigned, although Folio had not applied for such a number. The commissioner then informed Folio that it would be issued an assessment of its tax liability. Thereafter, the commissioner imposed on Folio an assessment of $234,450.28, which comprised $163,052.71 in sales and use taxes, $55,072.25 in interest, and $16,305.32 in penalty costs. The commissioner later issued Folio an additional assessment of $20 for a sales and use tax license and permit.

Folio filed a petition for reassessment with the commissioner pursuant to General Statutes § 12-421, asserting that it was not “engaged in business” in Connecticut pursuant to § 12-407 (15), and, therefore, could not constitutionally be required to collect or to pay Connecticut sales and use taxes on its mail order sales to Connecticut residents. The commissioner denied Folio’s appeal, and confirmed the assessment. Folio appealed the decision to the Superior Court pursuant to General Statutes § 12-422. The trial court reversed the decision of the commissioner, concluding that Folio did not have a sufficient nexus to Connecticut to sustain the imposition of a sales and use tax. The commissioner appealed to the Appellate Court, and we transferred the case to ourselves pursuant to Practice Book § 4023.

The facts stipulated by the parties may be summarized as follows. Folio, a wholly owned subsidiary of Saks & Company, conducts a nationwide mail order business. Both Folio and Saks & Company are New York corporations. Folio’s principal place of business is in Yonkers, New York, and Saks & Company’s corporate headquarters are in New York City. The two corporations share a number of common directors and officers, although each corporation maintains separate management for day-to-day operations. Additionally, Folio, with the consent of Saks & Company, maintains as part of its corporate name the “SFA” registered trademark of “Saks Fifth Avenue.” This trademark, which often appears in Folio’s catalogs, characterizes the high quality of merchandise and service traditionally associated with Saks & Company. To the extent that a customer associates “SFA” with Saks Fifth Avenue, Folio is benefited.

Saks & Company, in addition to owning Folio, owns Saks-Stamford, a separate corporation that operates a retail store in Stamford, Connecticut. Folio and all Saks Fifth Avenue retail stores, including Saks-Stamford, share sales and financial data and profit and loss statements. The management groups for Folio and Saks-Stamford, however, are separate and operate autonomously. Although the corporations are independent, Folio does, through its printers, send extra copies of its mail order catalog by common carrier to the Saks-Stamford general manager in order to inform store employees of fashion trends, to be used as reference guides, and to serve as merchandise educational tools. Folio customers may also use Saks-Stamford’s tailoring services for a standard fee, but these services are also available to the public at large regardless of where an item was purchased. Folio sells some of the same items that are available at Saks-Stamford, but many of these items are also available at other retail stores throughout the country.

In conducting its business, Folio distributes mail order catalogs and flyers to Connecticut residents and receives orders either by mail or by telephone. Customers pay for their orders by credit card or check, and Folio fills them in Yonkers, New York. Customers may use their Saks & Company charge card when making purchases from Folio, as well as when buying items at Saks-Stamford. Folio often includes advertising for Folio in the form of “bill inserts” in the charge card bill received by the customer from Saks & Company. Folio does, however, pay for the customer’s return envelope accompanying the billing statement. Folio delivers purchases to Connecticut buyers either through the mails or by common carrier, with the customers paying for the shipping, handling, and transportation of their orders. Folio refers its customers to its Yonkers office for customer assistance, merchandise return or exchange, and other services.

Folio does not operate retail stores, and does not maintain under its corporate name any store, office, distribution house, sales house, sample room, warehouse, or other place of business in Connecticut. Folio does not have any solicitors, canvassers, sales persons, authorized agents, or representatives in Connecticut. Folio is not licensed to do business in Connecticut, and has no inventory or merchandise in the state. Folio does not maintain a phone number in Connecticut; all customer contact is through the use of a toll free “800” number. Folio has no bank accounts in Connecticut, does not retain security interests in any goods sold to Connecticut residents, and does not investigate credit or collect accounts in Connecticut.

The commissioner first claims that the trial court incorrectly determined that there was such an absence of the requisite nexus between Folio and Connecticut that the imposition of the sales and use taxes violated the due process and commerce clauses of the federal constitution. While the commissioner asserts that Folio, independently, has a sufficient nexus to Connecticut, his primary claim in this regard is that, under an enterprise theory, the presence in Connecticut of an affiliated corporation, namely, Saks-Stamford, supplies Folio with a sufficient nexus to sustain the imposition of sales and use taxes. Secondly, the commissioner claims that, in light of the developments in “the judicial analysis of due process and the mail-order industry,” the due process standard applicable to personal jurisdiction claims should be employed so that an “economic presence” in Connecticut satisfies the nexus requirement for state taxation. We disagree.

I

This appeal is governed by the United States Supreme Court decision in National Bellas Hess, Inc. v. Department of Revenue, 386 U.S. 753, 87 S. Ct. 1389, 18 L. Ed. 2d 505 (1967), and our recent decision in Cally Curtis Co. v. Groppo, 214 Conn. 292, 572 A.2d 302, cert. denied, U.S. , 111 S. Ct. 77, 112 L. Ed. 2d 50 (1990). In National Bellas Hess, Inc., the United States Supreme Court determined that constitutional constraints limit the authority of a state to impose sales and use tax liability upon an out-of-state seller. National Bellas Hess, Inc. v. Department of Revenue, supra, 756; Cally Curtis Co. v. Groppo, supra, 297. “Such a collection burden when placed upon an out-of-state seller triggers due process concerns as well as imposes a restraint upon interstate commerce.” Cally Curtis Co. v. Groppo, supra; see also National Bellas Hess, Inc. v. Department of Revenue, supra; L.L. Bean, Inc. v. Department of Revenue, 516 A.2d 820, 824 (Pa. Commw. 1986). In Cally Curtis Co., we reaffirmed the applicability of National Bellas Hess, Inc., to a claim of taxability like that asserted in this case, and held that where the only nexus between Connecticut and the corporation was the in-state presence for three days of video tapes leased by the out-of-state corporation to its in-state customers, an insufficient nexus existed to warrant the imposition of the Connecticut use tax. Cally Curtis Co. v. Groppo, supra, 301.

In determining whether a state tax conforms with constitutional due process requirements, the United States Supreme Court has held that the “ ‘simple but controlling question is whether the state has given anything for which it can ask return.’ ” National Bellas Hess, Inc. v. Department of Revenue, supra, quoting Wisconsin v. J. C. Penney Co., 311 U.S. 435, 444, 61 S. Ct. 246, 85 L. Ed. 267 (1940). Because Congress has the exclusive authority to regulate interstate commerce, “ ‘[sjtate taxation falling on interstate commerce . . . can only be justified as designed to make such commerce bear a fair share of the cost of the local government whose protection it enjoys.’ ” National Bellas Hess, Inc. v. Department of Revenue, supra, 756, quoting Freeman v. Hewit, 329 U.S. 249, 253, 67 S. Ct. 274, 91 L. Ed. 265 (1946); see also Cally Curtis Co. v. Groppo, supra, 298. Therefore, the relevant legal inquiry in reviewing the constitutionality of imposing the duty of collection of such a tax upon an out-of-state seller is whether there exists “ ‘some definite link, some minimum connection, between a state and the person, property or transaction it seeks to tax.’ ” National Bellas Hess, Inc. v. Department of Revenue, supra, quoting Miller Bros. Co. v. Maryland, 347 U.S. 340, 344-45, 74 S. Ct. 535, 98 L. Ed. 744 (1954); see also Cally Curtis Co. v. Groppo, supra. “The existence of such a link or nexus will turn upon the individual facts of each case.” Cally Curtis Co. v. Groppo, supra.

At the outset, the commissioner claims that Folio’s contacts with Connecticut are greater than those of the taxpayers in National Bellas Hess, Inc., and Cally Curtis Co. These alleged contacts consist of the large number of catalogs Folio mails to Connecticut residents, the operation of a toll-free “800” number for customer use, the placement of advertisements in magazines that ultimately reach Connecticut residents, and the extra copies of its catalogs that Folio sends to Saks-Stamford’s general manager for business use. The trial court, in examining this claim of nexus, however, found “the facts of National Bellas Hess, Inc., and Cally Curtis Co. indistinguishable from the facts of this case.”

In reviewing the trial court’s determination, in this context, “the effect of admitted facts is a question of law.” Nelson v. Montgomery Ward & Co., 312 U.S. 373, 376, 61 S. Ct. 593, 85 L. Ed. 897 (1941). Therefore, the relevant inquiry is whether any of the asserted contacts establish some definite link or some minimum connection between Folio and Connecticut. National Bellas Hess, Inc. v. Department of Revenue, supra.

The commissioner’s claim of nexus based upon the catalogs ignores the fact that the catalogs, once delivered to Connecticut residents, are the property of the residents, not Folio. Such activity, therefore, does not establish a taxable link between Folio and the state. The use of a toll-free “800” number for Connecticut residents to place orders likewise does not demonstrate a sufficient link to Connecticut. L.L. Bean, Inc. v. Department of Revenue, supra, 825. Additionally, the advertisements for Folio that appear in magazines are not created or placed in magazines in Connecticut. The fact that the magazines eventually are sold in Connecticut does not establish a nexus between Folio and the state. Finally, the catalogs sent by Folio’s printers to Saks-Stamford do not establish a link to Connecticut because these catalogs are used for employee training and reference purposes, not for the purpose of having the Saks-Stamford employees solicit Folio sales from Connecticut residents. Compare Scripto, Inc. v. Carson, 362 U.S. 207, 80 S. Ct. 619,4 L. Ed. 2d 660 (1960).

On the facts of this case, we can discern no greater nexus between Connecticut and Folio than existed between Connecticut and the out-of-state corporation in Cally Curtis Co. We conclude, therefore, that Folio, viewed independently, does not have a nexus to Connecticut sufficient to support the imposition of sales and use taxes.

We turn, therefore, to the commissioner’s primary claim, namely, that because Folio is part of a larger enterprise of affiliated corporations, Folio should be deemed to share the nexus that Saks-Stamford has with Connecticut. We are not persuaded.

The parties do not contest that Saks-Stamford is a Connecticut corporation responsible for paying Connecticut sales and use taxes because it has local retail stores in the state. Nelson v. Sears, Roebuck & Co., 312 U.S. 359, 61 S. Ct. 586, 85 L. Ed. 888 (1941). The parties disagree, however, about the implications to be drawn from the connections between these affiliated but independent corporations when the issue is the sufficiency of Folio’s nexus to Connecticut for sales and use tax purposes.

Significantly, the commissioner does not assert that we should find a nexus pursuant to a “piercing the corporate veil” or “alter ego” theory. The commissioner does not dispute the trial court’s factual finding that Folio and Saks-Stamford are “distinct corporate entities.” Rather, the commissioner claims that because these separate entities are linked by their common corporate parent, Saks & Company, their separate corporate existence should be disregarded and they should be treated as one enterprise for the purposes of establishing a nexus for taxation.* **** Should such a determination be made, Folio would be subject to sales and use tax liability, despite the lack of an independent nexus with Connecticut, because it would be “plainly accorded the protection and services of the taxing State”; National Bellas Hess, Inc. v. Department of Revenue, supra, 757; as a result of the presence of the Saks-Stamford retail store in Connecticut. Nelson v. Montgomery Ward & Co., supra; Nelson v. Sears, Roebuck & Co., supra.

It is undisputed that in Connecticut a court will disregard the corporate structure and pierce the corporate veil “ ‘only under exceptional circumstances, for example, where the corporation is a mere shell, serving no legitimate purpose, and used primarily as an intermediary to perpetuate fraud or promote injustice.’ ” Angelo Tomasso, Inc. v. Armor Construction & Paving, Inc., 187 Conn. 544, 557, 447 A.2d 406 (1982). Nevertheless, the commissioner seeks to have this court abandon our traditional notions of corporate law and ignore Folio’s separate corporate existence under an enterprise theory. In support of this legal proposition, the commissioner relies on three authorities: (1) the “unitary business” principle articulated in Container Corporation of America v. Franchise Tax Board, 463 U.S. 159, 103 S. Ct. 2933, 77 L. Ed. 2d 545, reh. denied, 464 U.S. 909, 104 S. Ct. 265, 78 L. Ed. 2d 248 (1983); (2) Dean Phillip I. Blumberg’s four volume treatise, The Law of Corporate Groups; and (3) the Connecticut Superior Court case oí Hartford Steam Services Co. v. Sullivan, 26 Conn. Sup. 277, 220 A.2d 772 (1966).

First, the commissioner cites Container Corporation of America v. Franchise Tax Board, supra, as support for the proposition that “[w]here a group of corporations are formed and operated as a unitary enterprise, there is no constitutional barrier to the group being viewed as a unitary enterprise and taxed as such.” The commissioner fails to recognize, however, that the “unitary business principle” is a statutorily created system of calculating corporate income tax “by first defining the scope of the ‘unitary business’ of which the taxed enterprise’s activities in the taxing jurisdiction form one part, and then apportioning the total income of that unitary business between the taxing jurisdiction and the rest of the world on the basis of a formula taking into account objective measures of the corporation’s activities within and without the jurisdiction.” Id., 165. Clearly, there is no statute within the Connecticut sales and use tax chapter; General Statutes § 12-406 et seq.; that allows the commissioner to treat separate corporations as part of one enterprise for the purpose of imposing sales and use tax liability, and the commissioner does not make such a claim. Absent such statutory authority, the line of cases pursuant to the “unitary business principle” are inapplicable.

Second, the commissioner cites as support for the enterprise theory Dean Phillip I. Blumberg’s four volume treatise on The Law of Corporate Groups, supra. Without determining whether the commissioner’s general reference to the multivolume treatise constitutes adequate briefing of the issue, we find no legal support therein for the commissioner’s conclusion that “[sjimply stated, the fact that the Saks-Stamford store and Folio are wholly-owned affiliated corporations rather than divisions of the same corporation is without constitutional significance and not controlling.”

To the contrary, it is a fundamental principle of corporate law that “the parent corporation and its subsidiary are treated as separate and distinct legal persons even though the parent owns all the shares in the subsidiary and the two enterprises have identical directors and officers. Such control, after all, is no more than a normal consequence of controlling share ownership.” H. Henn & J. Alexander, Laws of Corporations (3d Ed. 1983) § 148, p. 355. Furthermore, the separate corporate entities or personalities of affiliated corporations will be recognized, absent illegitimate purposes, unless: “(a) the business transactions, property, employees, bank and other accounts and records are intermingled; (b) the formalities of separate corporate procedures for each corporation are not observed . . . (c) the corporation is inadequately financed as a separate unit from the point of view of meeting its normal obligations . . . (d) the respective enterprises are not held out to the public as separate enterprises; (e) the policies of the corporation are not directed to its own interests primarily but rather to those of the other corporation.” H. Henn & J. Alexander, supra, § 149, pp. 355-56; see also Hammond v. United States, 764 F.2d 88, 100 (2d Cir. 1985).

This is not a situation where the corporate assets have been intermingled, where the formalities of separate corporate procedure have been ignored, or where the corporation is inadequately financed. Additionally, as determined by the trial court, the corporations are not held out to the public as one entity. Because we conclude that the finding of fact that Folio is a separate corporate entity was not clearly erroneous; French v. Clinton, 215 Conn. 197, 205, 575 A.2d 686 (1990); we would not be justified in disregarding Folio’s separate identity for tax purposes. Angelo Tomasso, Inc. v. Armor Construction & Paving, Inc., supra, 557.

In further support of his contention that this court should apply an economic enterprise theory, the commissioner argues that if we recognize a constitutional distinction between affiliated corporations, such as in this case, and divisions of the same company; Nelson v. Sears, Roebuck & Co., supra; the result would be that “any retailer with an out-of-state mail order component could avoid collecting sales and use tax simply by separately incorporating the retail and mail order businesses.” While we agree with the commissioner’s assertion, we conclude that it does not support his claim for rejecting Folio’s corporate entity and applying the enterprise theory.

The commissioner’s argument demonstrates a misunderstanding of a fundamental principle underlying our system of taxation, namely, that “ ‘taxpayers may arrange their affairs to minimize their tax liabilities. Unlike tax evasion, tax avoidance through careful planning of both transactions and corporate structure is a legitimate right of every taxpayer.’ ” Jurinski, “Agency Relationships in Determining Nexus: Groping for a Solution,” 7 Journal of Taxation 321, 321 (1989). Furthermore, the commissioner ignores the fact that a business that is incorporated separately from a parent or affiliated corporation incurs additional burdens by the very fact of its separate corporate existence. Indeed, as Folio argues, because of its separate corporate existence it must register with the secretary of the state, qualify to do business, hold a corporate charter, issue stock, maintain corporate minute books, file corporate income tax returns, and remit payroll and unemployment taxes. Folio is also subject to suit for contractual and other obligations that stem from the conduct of its business. Even as a part of a deliberate tax-avoidance strategy, the fact that Folio is incorporated as an entity separate from Saks-Stamford and Saks & Company does not, standing alone, permit a taxing authority to disregard Folio’s corporate identity.

The commissioner also relies upon the decision of the Superior Court in Hartford Steam Services Co. v. Sullivan, supra, to support the application of the enterprise theory to Folio for state tax purposes. In describing the economic enterprise theory, the court, Parskey, J., stated that “[tjhis is not the negative concept variously described as ‘piercing the corporate veil’ or ‘disregarding the corporate fiction,’ a concept based on equitable principles and designed to frustrate fraud, misrepresentation or illegality. It is, rather, a positive principle, the effect of which is to remove judicial blinders so as to enable the court to see things as they really are.” Id., 281. Thus, “where the economic enterprise is one, the corporate forms being largely paper arrangements that do not reflect the business realities, the court should deal with the realities.” Id. That case is neither controlling on us nor persuasive because here, unlike the facts of that case, the business reality is that Folio is not a paper arrangement but a separate and independently functioning corporation.

II

The commissioner’s second claim is that, in light of developments in due process analysis and in the mail-order industry, the nexus requirement of the due process clause is satisfied where an out-of-state corporation, such as Folio, has an “economic presence” in the state. This argument, at its roots, seeks to adopt the minimum contacts standard of personal jurisdiction analysis for state taxation on an out-of-state mail order company by dispelling the need for the company to have some physical connection with the state beyond the use of the United States mail or a common carrier. We decline to adopt such an analysis.

The commissioner bases his argument on developments in due process case law for personal jurisdiction purposes, claiming that because commercial activity in a state is often sufficient for a state to exert personal jurisdiction over an out-of-state company; Asahi Metal Industry Co. v. Superior Court of California, 480 U.S. 102, 112, 107 S. Ct. 1026, 94 L. Ed. 2d 92 (1987); such contacts should be sufficient to support state taxation on an out-of-state mail order company whose only contacts with the state are through the United States mail and common carriers. The commissioner ignores, however, the general principle that “[i]t is the nature of the state’s action that determines the kind and degree of activity in the state necessary for satisfying the requirements of due process.” Travelers Health Assn. v. Virginia, 339 U.S. 643, 653, 70 S. Ct. 927, 94 L. Ed. 1154 (1949) (Douglas, J., concurring); see also Kulick v. Department of Revenue, 624 P.2d 93, 97 (Or. 1981). The degree of due process required for exercising personal jurisdiction is not necessarily the same as that required to justify a state tax on an out-of-state seller. Kulick v. Department of Revenue, supra.

Indeed, in National Bellas Hess, Inc. v. Department of Revenue, supra, 758, the United States Supreme Court explicitly recognized that a “sharp distinction” exists “between mail order sellers with retail outlets, solicitors, or property within a State, and those who do no more than communicate with customers in the State by mail or common carrier as part of a general interstate business.” The commissioner’s claim ignores the interests of the commerce clause, specifically discussed in National Bellas Hess, Inc. v. Department of Revenue, supra, which provide that “ ‘state taxation falling on interstate commerce . . . can only be justified as designed to make such commerce bear a fair share of the cost of the local government whose protection it enjoys.’ ” Id., 756, quoting Freeman v. Hewit, 329 U.S. 249, 253, 67 S. Ct. 274, 91 L. Ed. 265 (1946). The commissioner’s bald assertion that “Folio has purposely availed itself of the privilege of conducting activities in Connecticut, thus invoking the benefits and protection of its laws,” fails to clarify how Folio is benefited by local government when its contacts to Connecticut are solely through the United States mail and common carriers. Compare D.H. Holmes Co. v. McNamara, 486 U.S. 24, 108 S. Ct. 1619, 100 L. Ed. 2d 21 (1988) (presence of retail stores in state); National Geographic Society v. California Board of Equalization, 430 U.S. 359, 97 S. Ct. 1386, 51 L. Ed. 2d 631 (1977) (presence of two offices that solicited advertisements in state); Scripto, Inc. v. Carson, 362 U.S. 207, 80 S. Ct. 619, 4 L. Ed. 2d 660 (1959) (presence of solicitors in state).

The commissioner’s argument that we should adopt an “economic presence” analysis in essence parallels the reasoning of the dissent in National Bellas Hess, Inc. v. Department of Revenue, supra. Justice Fortas argued that the imposition of the sales and use tax on the mail order company was proper, stating that “large-scale, systematic continuous solicitation and exploitation of the Illinois consumer market is a sufficient ‘nexus’ to require Bellas Hess to collect from Illinois customers . . . .” Id., 761. Furthermore, Justice Fortas would have found sufficient nexus to support the application of a tax where National Bellas Hess, Inc., “regularly and continuously engaged in ‘exploitation of the consumer market’ ... by soliciting residents of Illinois who live and work there and have homes and banking connections there . . . .’’Id., 762. This view, however, has not been adopted by the United States Supreme Court, despite its recent review of the issue in D.H. Holmes Co. v. McNamara, supra. In that case, the United States Supreme Court reaffirmed its adherence to National Bellas Hess, Inc., and to the rule of constitutional law that a state may not collect sales and use taxes from a mail order company where its only contacts are through the mail or common carriers. We therefore reject the commissioner’s claim that would have us dispense with the constitutional safeguards of the commerce clause and the due process clause. Cally Curtis Co. v. Groppo, supra.

The judgment is affirmed.

In this opinion the other justices concurred.

       General Statutes § 12-407 (15) provides: “ ‘Engaged in business in the state’ means selling in this state, or any activity in this state in connection with selling in this state, tangible personal property for use, storage or consumption within the state or engaging in the transfer for a consideration of the occupancy of any room or rooms in a hotel or lodging house for a period of thirty consecutive calendar days or less, or rendering in this state any service described in any of the subdivisions of subsection (2) of this section. The term shall include but shall not be limited to the following acts or methods of transacting business: (a) Maintaining, occupying or using, permanently or temporarily, directly or indirectly, through a subsidiary or agent, by whatever name called, of any office, place of distribution, sales or sample room or place, warehouse or storage point or other place of business or (b) having any representative, agent, salesman, canvasser or solicitor operating in this state for the purpose of selling, delivering or taking orders.”

       Folio’s printers are located outside of Connecticut.

       Folio does not design, prepare, print, publish or mail its catalogs in or from Connecticut.

       Folio does not fill any order that is paid by check until the check has been cleared by the bank, thereby eliminating the need to use the Connecticut court system in order to collect bad debts. Additionally, Folio does not bear the risk of loss for any purchases by credit card, as such risk falls upon the credit card company, further eliminating any claim that Folio derives benefits from the Connecticut court system.

       Folio mailed to Connecticut residents 649,000 catalogs in 1986 and 733,000 catalogs in 1987.

       The commissioner’s argument that Folio derives benefit from Connecticut by virtue of the state disposing of the catalogs as paper trash is likewise without merit. Because the catalogs are the property of the Connecticut residents, it is axiomatic that it is the resident who is deriving the benefit from the state and who must contribute to the cost of the disposal.

         The disregard of a technically correct corporation “in terms of a metaphor, is often called ‘piercing the corporate veil.’ ” H. Henn & J. Alexander, Laws of Corporations (3d Ed. 1983) § 146, p. 344. “The concept [of corporateness] will be sustained only so long as it is invoked and employed for legitimate purposes. Perversion of the concept to improper uses and dishonest ends (e.g., to perpetuate fraud, to evade the law, to escape obligations), on the other hand, will not be countenanced.” Id., § 146, p. 346.

       “A conventional statement of [the ‘alter ego’ doctrine] declares that ‘piercing the veil’ is proper when (1) such unity of ownership and interest exists that the two affiliated corporations have ceased to be separate and the subsidiary has been relegated to the status of the ‘alter ego’ of the parent; and (2) where recognition of them as separate entities would sanction fraud or lead to an inequitable result.” P. Blumberg, The Law of Corporate Groups, Statutory Law-General (1987) § 2.02.2, p. 37.

       “Traditionally, the law has viewed each corporation as a separate legal entity, with separate rights and obligations. For legal purposes, a bright line of distinction was drawn between the corporation and its shareholders.” P. Blumberg, The Law of Corporate Groups, Procedural Law (1983) § 1.01.1, p. 1. The “[e]ntity theory” of corporate law is the premise “that a corporation is a fictitious, artificial, legal person or juristic entity .... [On the other hand,] [t]he ‘enterprise theory’ stresses the underlying commercial enterprise, without emphasis on the entity-aggregate distinction of the components.” H. Henn & J. Alexander, Laws of Corporations (3d Ed. 1983) § 78, pp. 145-46.

       In Hammond v. United States, 764 F.2d 88,100 (2d Cir. 1988), the Court of Appeals for the Second Circuit, in reviewing a decision of the United States District Court for the District of Connecticut, noted that “at times, both state law and the [Internal Revenue Code] abandon the notion of the separate identity of corporations for narrow purposes and in limited situations[;] see, e.g. United States v. Reading Co., 253 U.S. 26, 62-63, 40 S. Ct. 425, 434, 64 L. Ed. 760 (1920) (where subsidiary is mere agent or instrumentality of parent, separate corporate existence of subsidiary may be ignored); Weisser v. Mursam Shoe Corp., 127 F.2d 344, 348 (2d Cir. 1942) (same); N.Y. Bus. Corp. Law § 630 (McKinney 1963) (largest shareholders liable for wage debt of insolvent corporations); IRC § 951(a), 26 U.S.C. § 951(a) (1982) (income of controlled foreign corporation deemed to be income of corporation’s shareholder); IRC § 481, 26 U.S.C. 481 (1982) (authorizing IRS to reallocate income among commonly-held businesses so as to prevent tax evasion). . . .” Similarly, the Court of Appeals for the Tenth Circuit has recently held that “[w]e believe that the separate treatment for tax purposes of parent and wholly-owned subsidiary should not be extended when we can see no business purpose beyond an opportunity to manipulate for tax purposes.” Marathon Oil Co. v. Commissioner of Internal Revenue, 838 F.2d 1114, 1120 (10th Cir. 1987).
      While these decisions are not binding precedent on this court, Hammond, and Marathon Oil Co. lend further support to our conclusion that it is not the place of this court to ignore the separate entity of a corporation absent a fraudulent, evasive, or manipulative purpose in forming or maintaining the corporation. The commissioner has made no claim that Folio was incorporated or maintained for the purpose of evading sales and use taxes, and no such claim would be credible based upon the evidence presented at trial. Compare Hartford Steam Services Co. v. Sullivan, 26 Conn. Sup. 277, 220 A.2d 772 (1966) (subsidiary mere paper corporation).

       The trial court concluded that “[although [Folio and Saks-Stamford] have some common directors and officers, are affiliates of the same parent company, use the same trademarks and logos, sell similar merchandise and share financial and market information, they are distinct corporate entities. Saks-Stamford is not Folio’s retail store, agent instrumentality, or alter ego. The finding of the Commissioner’s unit chief that Folio is engaged in business in Connecticut because a ‘unitary nexus’ was established by its ‘shared corporate name, logo, etc., with Saks Fifth Avenue Stamford Inc.’ has no basis in the evidence or the law.”

       A review of United States Supreme Court case law in the area of state imposition of sales and use taxes demonstrates that some degree of physical presence, whether by the presence of a retail store, offices, local agents, solicitors, or local advertising, is constitutionally required to support such a burden: “ ‘Case law has established that a sufficient nexus is found to exist where local agents of the seller are present in the taxing state. Felt & Tarant Manufacturing Co. v. Gallagher, 306 U.S. 62, 59 S. Ct. 376, 83 L. Ed. 488 (1939); General Trading Co. v. State Tax Commission of the State of Iowa, 322 U.S. 335, 64 S. Ct. 1028, 88 L. Ed. 1309 (1944). A similar result has been reached where the seller has local retail stores which are present in the taxing state. Nelson v. Sears, Roebuck & Co., 312 U.S. 359, 61 S. Ct. 586, 85 L. Ed. 888 (1941) .... And in National Geographic Society [v. California Equalization Board, 430 U.S. 551, 97 S. Ct. 1386, 51 L. Ed. 2d 631 (1977)], the presence in the taxing state of two offices which solicited advertisements and received the benefit of municipal protection (fire, police, etc.) was held a sufficient nexus.’ ” Cally Curtis Co. v. Groppo, 214 Conn. 292, 298-99, 572 A.2d 302 (1990), quoting L.L. Bean, Inc. v. Department of Revenue, 516 A.2d 820, 824-25 (Pa. Commw. 1986).
      “In Miller Brothers Co. v. Maryland, [347 U.S. 340, 74 S. Ct. 535, 98 L. Ed. 744 (1954)], however, the United States Supreme Court held that Maryland ‘could not constitutionally impose upon a Delaware seller an obligation to collect use taxes where the Delaware firm had no retail outlets or sales solicitors in Maryland, despite the presence of advertising in Maryland which resulted in substantial sales and the delivery of goods into Maryland by the seller using its own trucks and drivers.’ L.L. Bean, Inc. v. Department of Revenue, supra, 825. Furthermore, in National Bellas Hess, Inc. v. Department of Revenue, [386 U.S. 753, 87 S. Ct. 1389, 18 L. Ed. 2d 505 (1967)], the United States Supreme Court found an insufficient nexus where the only contacts between the seller and the taxing state were through the United States mail or common carrier.” Cally Curtis Co. v. Groppo, supra, 299.

       The commissioner asserts that more recent case law has focused on the “totality [of circumstances] of the business activities in a particular state” in determining whether a nexus exists to support state taxation. The cases cited, however, do not support the commissioner’s argument that minimum contacts or economic presence alone should be the applicable standard.
      In National Geographic Society v. California Board of Equalization, 430 U.S. 551,97 S. Ct. 1386, 51 L. Ed. 2d 631 (1977), the United States Supreme Court upheld the imposition of sales and use taxes where the corporation had present in the taxing state two offices that solicited advertisements and received the benefit of municipal protection. Likewise, in Reader’s Digest Assn. v. Mahin, 44 Ill. 2d 354, 255 N.E.2d 458 (1970), the Illinois Supreme Court upheld the imposition of sales and use taxes because the corporation used local advertising and resident solicitors. In Cooey-Bentz Co. v. Lindley, 66 Ohio St. 2d 54, 419 N.E.2d 1087 (1981), the court cited advertising directed at Ohio residents, as well as deliveries, installations, and repairs made in Ohio by the defendant West Virginia retailer to justify applying a use tax. Lastly, in Franklin Mint Co. v. Tully, 94 App. Div. 2d 877, 463 N.Y.S.2d 566 (1983), aff d, 61 N.Y.2d 980,463 N.E.2d 621,475 N.Y.S.2d 280 (1984), the corporation engaged in local advertising, as well as delivery, installation, and service of goods located in New York.
      A review of these cases demonstrates that a degree of physical connection to the taxing state, beyond the use of the mails or common carrier, existed in each case. In this case, Folio did not engage in any local advertising or local delivery, servicing or installation as part of its own corporate activities.

       In Kulick v. Department of Revenue, 624 P.2d 93, 97 (Or. 1981), the Oregon Supreme Court analyzed the applicability of the minimum contacts standard to a case involving a challenge to the imposition of a tax on nonresident shareholders of a Subchapter S corporation. That court noted that “[w]hen [the assertion of personal] jurisdiction is challenged, the due process issue concerns not the nonresident’s substantive obligation, which theoretically should be the same in whatever court tries the case, but rather the legitimacy of that state’s putting the nonresident to the inconvenience, the possible procedural drawbacks, and the judgment of what is asserted to be an inappropriate forum. A tax law, by contrast, is addressed to a general class of persons on whom the state means to place the substantive obligation to contribute to its revenues. It is not at all clear that the ‘contacts’ that due process demands for the first purpose are identical with the ‘nexus’ required for the second.”


author: Per Curiam.

text:
    Hillard N. Einbinder et al. v. Board of Tax Review of the Town of Woodbury Joseph R. Pepe, Trustee v. Board of Tax Review of the Town of Woodbury
    (14075)
    (14076)
    (14077)
    Peters, C. J., Shea, Covello, Borden and Santaniello, Js.
    Argued December 12, 1990
    decision released January 22, 1991

      James Wu, with whom, on the brief, was Amy B. Levy, for the appellant (defendant).

      Robert E. Wright, for the appellees (plaintiffs).
   Per Curiam.

The sole issue in these three consolidated tax appeals is the valuation of an improved but privately owned road for property tax purposes. The plaintiffs, Hillard N. Einbinder, Moshe M. Schweky and Joseph R. Pepe, trustee, challenged the validity of tax assessments of Woodlake Road by the defendant, the Woodbury board of tax review (board).

Because Woodlake Road has never been accepted by the town of Woodbury, it is subject to assessment as private property. Woodbury v. Pepe, 6 Conn. App. 330, 331, 505 A.2d 723 (1986). Pepe’s appeals contested the board’s assessments for the tax years 1983 through 1987, when the board determined that the property had a fair market value of $341,100, while the other appeal contested the 1988 and 1989 assessments, when the board determined that the road’s fair market value had become $889,242. The trial court, after an evidentiary hearing, concluded that the fair market value of the road was $15,000 for each of the five earlier tax years and $60,000 for the two later tax years. The board then sought further review of these judgments in the Appellate Court, and we transferred the consolidated appeals to this court pursuant to Practice Book § 4023.

In its appeals, the board maintains that the trial court mistakenly: (1) selected the comparable sales approach as its method of valuation; (2) found that the plaintiffs would not replace the road if it were to be destroyed; and (3) found that the value of the roadway should be allocated principally to the abutting property that has an easement over the roadway, and only nominally to the property consisting of the roadway itself. Our review of discretionary or fact-bound trial court rulings is limited to a determination of whether there has been an abuse of discretion or a clearly erroneous finding of fact. See Practice Book § 4061; Pandolphe’s Auto Parts, Inc. v. Manchester, 181 Conn. 217, 221-22, 435 A.2d 24 (1980).

Our examination of the record on this appeal, and the briefs and arguments of the parties, persuades us that the judgment of the trial court should be affirmed. The trial court’s thoughtful and comprehensive memorandum of decision; Pepe v. Board of Tax Review, 41 Conn. Sup. 457, 585 A.2d 712 (1990); properly resolved the issues underlying the validity of the board’s assessment of the plaintiffs’ road. Because that memorandum of decision fully states and meets each of the arguments raised in the present appeals, we adopt the trial court’s well reasoned decision as a statement of the facts and the applicable law on these issues. It would serve no useful purpose for us to repeat the discussion therein contained.

The judgment is affirmed.

       In 1988, during the pendency of the first two tax appeals, the plaintiff Pepe sold three parcels of property to the plaintiffs Einbinder and Schweky: the road, adjacent acreage in Woodbury and another parcel in Southbury. The total contract price for this purchase was $425,000.

       The parties stipulated that Woodlake Road contains 7.505 acres of land, and that it is 6424 feet in length. The adjacent acreage that the plaintiffs also own contains approximately sixty-three acres. Furthermore, the plaintiffs have a right of way over the road on behalf of their Southbury parcel.
      Woodlake Road is an improved road. It has a storm sewer and fire hydrants. It also has street lights that are serviced by an electric line that runs under the road.

       The trial court ended its memorandum of decision by undertaking to consider reproduction cost as an alternate method of valuation for the plaintiffs’ property. Since we conclude that the trial court did not abuse its discretion in rejecting this method of valuation, we need not review the merits of the court’s alternate assessment based upon this less appropriate methodology. Accordingly, our adoption of the trial court’s opinion excludes the court’s assessment of the plaintiffs’ property according to its reproduction cost.