author: SANDSTROM, Justice.

text:
    2003 ND 115
    Troy W. COONS, Plaintiff and Appellant, v. Susan K. COONS, Defendant and Appellee.
    No. 20020169.
    Supreme Court of North Dakota.
    July 16, 2003.

      Tom P. Slorby, Minot, N.D., for plaintiff and appellant.
    Susan K. Coons, pro se (no appearance), Sheridan, WY, defendant and appellee.
   SANDSTROM, Justice.

[¶ 1] Troy Coons appeals a Northwest District Court judgment granting Susan Coons custody of their two minor children. He argues the district court erred in granting custody to Susan Coons, because of her disregard for the children’s education and well-being, and argues the court prejudged the case before all of the evidence was entered. We affirm.

I

[¶ 2] The parties married in California in June 1993 and moved to Donnybrook, North Dakota, in 1995. In April 2000, Susan Coons moved to Wyoming. On February 20, 2001, Troy Coons filed for divorce. On February 21, 2001, the district court awarded Troy Coons interim custody of the two minor children. The divorce trial began on December 5, 2001. On December 7, the district court declared time was running out and asked Troy Coons whether he would prefer the court make its decision on the record up to that point or postpone the rest of the trial and make its decision after hearing all of the evidence. Troy Coons chose postponement. At that point, the district court reversed its previous order and gave interim custody of the children to Susan Coons. The trial continued on May 23-24, 2002. The district court granted Susan Coons legal and physical custody of their children.

[¶ 3] The couple’s son has had psychological problems ever since he was attacked by a dog when he was two years old. His kindergarten teacher recommended he repeat his kindergarten year. Troy Coons agreed, but Susan Coons objected. While Troy Coons had interim custody, their son started his second year of kindergarten, but after interim custody was reversed to Susan Coons in December of 2001, she moved the children to Wyoming and entered their son into the second semester of first grade.

[¶ 4] The district court had jurisdiction under N.D. Const. art. VI, § 8, and N.D.C.C. § 27-05-06. This Court has jurisdiction under N.D. Const, art. VI, § 6, and N.D.C.C. §§ 28-27-01 and 28-27-02.

II

[¶ 5] Troy Coons argues the district court erred in granting Susan Coons custody of the children, because she does not view their education as a priority.

[¶ 6] We have “summarized our process of limited review of a trial court’s custody award under N.D.R.Civ.P. 52(a)”:

“In a divorce proceeding, the trial court must award custody of the minor children based upon a determination of the best interests and welfare of the children. The trial court is vested with substantial discretion in matters of custody and in the determination of what is in the best interests of the children. A trial court’s custody determination is a finding of fact that will not be set aside on appeal unless it is clearly erroneous. A trial court’s findings of fact are presumptively correct. The complaining party bears the burden of demonstrating on appeal that a finding of fact is clearly erroneous. In reviewing findings of fact, we must view the evidence in the light most favorable to the findings. A choice between two permissible views of the evidence is not clearly erroneous. Simply because we might view the evidence differently does not entitle us to reverse the trial court. A finding of fact is clearly erroneous only if the reviewing court on the entire evidence is left with a definite and firm conviction that a mistake has been made.”

Schmaltz v. Schmaltz, 1998 ND 212, ¶ 6, 586 N.W.2d 852 (quoting Reimche v. Reimche, 1997 ND 138, ¶ 12, 566 N.W.2d 790 (citations omitted)).

[¶ 7] “By statute, the trial court is vested with the authority to award custody to the parent who will promote the best interests and welfare of the child.” Schmaltz, 1998 ND 212, ¶ 9, 586 N.W.2d 852 (citing N.D.C.C. § 14-09-06.1; Schneider v. Livingston, 543 N.W.2d 228, 233 (N.D.1996)). Section 14-09-06.2(1), N.D.C.C., sets out the guidelines for the best interests of the child:

For the purpose of custody, the best interests and welfare of the child is determined by the court’s consideration' and evaluation of all factors affecting the best interests and welfare of the child. These factors include all of the following when applicable:
a. The love, affection, and other emotional ties existing between the parents and child.
b. The capacity and disposition of the parents to give the child love, affection, and guidance and to continue the education of the child.
c. The disposition of the parents to provide the child with food, clothing, medical care, or other remedial care recognized and permitted under the laws of this state in lieu of medical care, and other material needs.
d. The length of time the child has lived in a stable satisfactory environment and the desirability of maintaining continuity.
e. The permanence, as a family unit, of the existing or proposed custodial home.
f. The moral fitness of the parents.
g. The mental and physical health of the parents.
h. The home, school, and community record of the child.
i. The reasonable preference of the child, if the court deems the child to be of sufficient intelligence, understanding, and experience to express a preference.
j. Evidence of domestic violence. In awarding custody or granting rights of visitation, the court shall consider evidence of domestic violence. If the court finds credible evidence that domestic violence has occurred, and there exists one incident of domestic violence which resulted in serious bodily injury or involved the use of a dangerous weapon or there exists a pattern of domestic violence within a reasonable time proximate to the proceeding, this combination creates a rebuttable presumption that a parent who has perpetrated domestic violence may not be awarded sole or joint custody of a child. This presumption may be overcome only by clear and convincing evidence that the best interests of the child require that parent’s participation as a custodial parent. The court shall cite specific findings of fact to show that the custody or visitation arrangement best protects the child and the parent or other family or household member who is the victim of domestic violence. If necessary to protect the welfare of the child, custody may be awarded to a suitable third person, provided that the person would not allow access to a violent parent except as ordered by the court. If the court awards custody to a third person, the court shall give priority to the child’s nearest suitable adult relative. The fact that the abused parent suffers from the effects of the abuse may not be grounds for denying that parent custody. As used in this subdivision, “domestic violence” means domestic violence as defined in section 14-07.1-01. A court may consider, but is not bound by, a finding of domestic violence in another proceeding under chapter 14-07.1.
k.The interaction and interrelationship, or the potential for interaction and interrelationship, of the child with any person who resides in, is present, or frequents the household of a parent and who may significantly affect the child’s best interests. The court shall consider that person’s history of inflicting, or tendency to inflict, physical harm, bodily injury, assault, or the fear of physical harm, bodily injury, or assault, on other persons.
l. The making of false allegations not made in good faith, by one parent against the other, of harm to a child as defined in section 50-25.1-02.
m. Any other factors considered by the court to be relevant to a particular child custody dispute.

[¶ 8] Upon considering the relevant factors for awarding custody under N.D.C.C. § 14-09-06.2(1), the district court stated this was a tough decision, and concluded it would be in the children’s best interests to award custody to Susan Coons.

[¶ 9] Troy Coons argues that during the time he had interim custody, Susan Coons’ visitation requests resulted in their son missing school days during his kindergarten year. He argues that when Susan Coons moved the children to Wyoming, she entered their son into the second semester of first grade without first consulting his former kindergarten teacher. He argues Susan Coons should have discussed their son’s educational needs with the child’s kindergarten teacher-or counselor. In weighing the statutory factors, the district court stated:

As to education, there was a disagreement as to starting [their son] in the first grade, but it appears to have been correct, and given his age, second grade would seem to be the better place for him.
[Their son’s] schooling was the subject of a great deal of testimony by the parties and his former teacher.
If a child is not ready for school, it is quite often better to hold them back early rather than have them fail a grade later on and then be separated from friends. But as [their son] is already age seven, it is good that he was tested and was able to make it. Otherwise, there will be a two-year gap between him and his classmates. This is also something that can cause problems later on.
Overall, [their son] seems to be doing well. The move might have actually benefitted him, as it is pretty clear from the Plaintiffs testimony and that of his former teacher that he would have remained in kindergarten if he had remained in North Dakota. So this factor slightly favors [Susan Coons].

[¶ 10] On the subject of education, the district court noted: “However, [Troy Coons] was active in [their son’s] schooling and was an involved parent when [their son] was in North Dakota, and he kept informed even when [their son] was in Wyoming. This speaks well for [Troy Coons].”

[¶ 11] Troy Coons argues that Susan Coons’ bringing two dogs into her home in light of their son’s emotional problems with dogs proves her disregard for the children’s well-being. After weighing this issue under the statutory guidelines, the district court stated it was a concern, but it was also a symptom of the lack of communication between the parties, which the court seemed to find more disturbing. The - district court found this factor to be equal, if not slightly in favor of Troy Coons.

[¶ 12] The district court found that the parties had a lack of trust and communication, that often one party was not telling the truth about a given situation, and that it was hard to decipher which party was being truthful when testifying.

[¶ 13] Troy Coons argues that his evidence at trial proves he did not physically abuse Susan Coons or the children, and that Susan provided no evidence to the contrary. This issue appears to have been carefully weighed by the district court:

After the first two days of testimony, I was convinced that the domestic abuse factor would tip the balance in favor of custody to [Susan Coons]. After the second two days, I questioned my earlier conclusions. So I have reviewed the transcripts and portions of the taped testimony. After review, I was again impressed with the sincerity of [Susan Coons], My notes reflect that when she testified about the abuse, her normal stoic demeanor became very emotional. It was as if she were reliving the events. It showed in her voice, her eyes, and total body language.
I And that there was a pattern of abuse that raises the presumption in favor of custody for [Susan Coons].

[¶ 14] Section 14 — 09—06.2(l)(j), N.D.C.C., states there is “a rebuttable presumption that a parent who has perpetrated domestic violence may not be awarded sole or joint custody of a child” and “[t]his presumption may be overcome only by clear and convincing evidence that the best interests of the child require that parent’s participation as a custodial parent.” See also Heck v. Reed, 529 N.W.2d 155, 158 (N.D.1995). Troy Coons does not argue that the presumption has been overcome.

[¶ 15] In viewing the evidence in the light most favorable to the findings, we conclude the district court was not clearly erroneous. The findings of fact demonstrate that the district court carefully weighed every fact under N.D.C.C. § 14-09-06.2(1) in determining custody. The record does not establish that a mistake has been made.

Ill

[¶ 16] Troy Coons also argues the district court erred in prejudging the case, by rendering a decision before having heard all of the evidence, when it gave him an ultimatum to choose between the court’s deciding the case on the record or continuing the trial after December 7, 2001, in which case the interim custody would be reversed until the final judgment. Troy Coons argues the district court erred in reversing the interim custody order without first having found a change in circumstances.

[¶ 17] Under North Dakota law, it is not necessary to find a change of circumstances to modify an interim custody order. However, because this Court has held “that custody, once granted, should not be changed for light or transient reasons, since children should not be bandied about, subject as they are to psychological damage in case of frequent changes of custody,” we recognize that “temporary-custody orders have a tendency to become permanent-custody orders.” Odegard v. Odegard, 259 N.W.2d 484, 485 (N.D.1977). That phenomenon exists largely because of the court’s concern for the physical and psychological stability of the child. One parent’s custody of the child while the divorce is pending may result in the creation of emotional bonds and security in one’s surroundings that are desirable to perpetuate in the permanent custody order. Catlin v. Catlin, 494 N.W.2d 581, 585 (N.D.1992).

[1118] The district court ran out of time on December 7, 2001, to hear all of the evidence, but the court did not make its final judgment until after all of the evidence had been presented in May of 2002. During testimony presented by Susan Coons on December 5-7, 2001, the district court heard evidence of physical abuse by Troy Coons. The district court stated in its final order that after the first two days of testimony, Susan Coons had met her burden of proof under N.D.C.C. § 14-09-06.2(l)(j) in proving the allegations by credible evidence. Because of the time problem, the permanent custody order would be postponed for five months, until Troy Coons could present his evidence.

[¶ 19] After the district court found the presumption of abuse existed, it did not err in finding a change in interim custody was required until the presumption could be, if possible, rebutted by Troy Coons. The district court found Troy Coons did not rebut the presumption; thus, custody was granted to Susan Coons. Troy Coons did not cite to any authority for this issue on appeal. We conclude there is no evidence that the district court prejudged the case merely because it reversed interim custody.

IV

[¶ 20] We conclude the district court did not err in its determination of child custody and did not prejudge the case. We affirm.

[¶ 21] GERALD W. VANDE WALLE, C.J., WILLIAM A. NEUMANN, MARY MUEHLEN MARING, and CAROL RONNING KAPSNER, JJ., concur.


source: Caselaw Access Project

author: MARING, Justice. KAPSNER, Justice,

license: Public Domain

text:
    2003 ND 114
    In the Interest of K.P. N.C. Trinidad, M.D., Petitioner and Appellee, v. K.P., Respondent and Appellant.
    No. 20030175.
    Supreme Court of North Dakota.
    July 16, 2003.

      Thomas E. Merrick, Jamestown, ND, for respondent and appellant.
    Leo A. Ryan, Special Assistant Attorney General, Jamestown, ND, for petitioner and appellee.
   MARING, Justice.

[¶ 1] K.P. appeals from the May 16, 2003, order terminating the April 3, 2003, order for alternative treatment and directing K.P. be hospitalized until March 20, 2004. We affirm.

I

[¶ 2] On January 13, 2003, the district court ordered that K.P. be hospitalized and treated at the North Dakota State Hospital for 90 days. On March 18, 2003, a petition for continuing treatment was filed stating KP.’s behavior had improved with current medications, K.P. was compliant with taking her medications, and K.P. was attending group therapy. The petition requested K.P. be released from the state hospital and, instead, undergo outpatient treatment with the Southeast Human Service Center (“SEHSC”). K.P. waived the right to a continuing treatment hearing, and on March 24, 2003, the district court ordered alternative treatment requiring that K.P. undergo outpatient treatment at the SEHSC rather than hospitalization. The outpatient treatment at the SEHSC included medication monitoring, case management, psychiatric appointments, and vocational rehabilitation.

[¶ 3] On March 28, 2003, K.P. was readmitted to the state hospital after the SEHSC filed an application for emergency admission. In the application, the SEHSC stated K.P. had not been medication compliant since March 24, 2003, and had missed two appointments at the SEHSC. The application also described how KP.’s family had called the SEHSC several times reporting that K.P. was isolating herself, was making phone calls at inappropriate times, and was paranoid and blaming. The application concluded that due to KP.’s history, K.P. was considered to be a danger to herself or others.

[¶4] A hearing was held on April 2, 2003, to determine if the alternative treatment order required modification. On April 2, 2003, the district court entered an order requiring that K.P. be hospitalized until March 20, 2004. On April 3, 2003, the order was amended to correct the end date of the hospitalization to be until May 2, 2003. After that date, K.P. was to continue alternative outpatient treatment with the SEHSC until March 20, 2004. The alternative outpatient treatment was to consist of medication monitoring, psychiatric appointments, case management, and vocational rehabilitation.

[¶ 5] Another application to modify the alternative treatment order was filed on April 24, 2003. K.P. moved to dismiss the application because the same issues had been litigated at the April 2, 2003, hearing. After a hearing on April 29, 2003, the district court dismissed the application for modification.

[¶ 6] K.P. was released from the state hospital on Friday, May 2, 2003. K.P. was taken to the SEHSC and was given a two-day supply of medicine to get through the weekend. K.P. was then taken to her apartment. Arrangements were made for a SEHSC staff member to pick up K.P. at her apartment on Monday morning, May 5, 2003, and to transport K.P. to the SEHSC for her daily medication. When the SEHSC staff member arrived on Monday morning, K.P. would not come out of her apartment and refused to let the staff member inside. K.P. called the police indicating there was an intruder trying to break into her apartment. When the police arrived, K.P. would still not let anyone inside her apartment.

[¶ 7] SEHSC staff members decided to file an emergency application to get K.P. re-hospitalized because of KP.’s non-compliance with the alternative treatment order and because she was a risk to herself or others. After being called by the SEHSC, the sheriff arrived and entered KP.’s apartment. K.P. was found in the bathroom with a steak knife sitting on the sink next to her. K.P. threatened the SEHSC staff members and law enforcement officers who were present. K.P. was removed from the apartment and placed in the sheriffs vehicle for transport to the emergency room. While in the back seat, K.P. lit a match that had been in her coat pocket, burning a small hole in the seat. The emergency room records indicate K.P. also threatened the emergency room staff. K.P. was medicated and taken to the state hospital.

[¶ 8] A modification hearing was held on May 15, 2003. The district court found K.P. had not complied with the alternative treatment order and the alternative treatment order was not sufficient to prevent K.P. from harming herself or others. On May 16, 2003, the district court ordered the alternative treatment order terminated and K.P. hospitalized until March 20, 2004. K.P. appeals.

II

[¶ 9] On appeal, KP. argues that to modify an alternative treatment order due to lack of compliance with the order, the district court must find willful non-compliance. Because the district court did not find that K.P. was willful in her non-compliance with the alternative treatment order, K.P. asserts the district court erred by modifying the alternative treatment order. K.P. also argues that to modify an alternative treatment order on the basis of harm to the patient or another person, actual harm must be shown. K.P. asserts that because she did not actually harm or injure either herself or another person, the district court erred by modifying the alternative treatment order. We disagree with KP.’s arguments.

III

[¶ 10] Section 25-03.1-21(3), N.D.C.C., sets forth the procedure to be followed when the emergency detention of a patient is required. Neither party disputes the district court’s finding of clear and convincing evidence to support KP.’s emergency detention under N.D.C.C. § 25-03.1-21(3). Rather, K.P. challenges the modification of her alternative treatment order under N.D.C.C. § 25-03.1-21(2) which provides:

If the respondent is not complying with the alternative treatment order or the alternative treatment has not been sufficient to prevent harm or injuries that the individual may be inflicting upon the individual or others, the department, a representative of the treatment program involved in the alternative treatment order, the petitioner’s retained attorney, or the state’s attorney may apply to the court or to the district court of a different judicial district in which the respondent is located to modify the alternative treatment order. The court shall hold a hearing within seven days after the application is filed. Based upon the evidence presented at hearing and other available information, the court may:
a. Continue the alternative treatment order;
b. Consider other alternatives to hospitalization, modify the court’s original order, and direct the individual to undergo another program of alternative treatment for the remainder of the ninety-day period; or
c. Enter a new order directing that the individual be hospitalized until discharged from the hospital under section 25-03.1-30. If the individual refuses to comply with this hospitalization order, the court may direct a peace officer to take the individual into protective custody and transport the respondent to a treatment facility.

[¶ 11] Under N.D.C.C. § 25-03.1-21(2), before the district court can modify K.P.’s alternative treatment order and require hospitalization, it must find either: (1) K.P. is not complying with the terms of the alternative treatment order; or (2) the alternative treatment order has not been sufficient to prevent harm or injuries that K.P. may be inflicting upon herself or others. See In re R.N., 492 N.W.2d 582, 584 (N.D.1992). The district court’s findings must be based upon clear and convincing evidence. See id. “The trial court’s determination is a finding of fact and will not be set aside on appeal unless it is clearly erroneous.” Id. (citing N.D.R.Civ.P. 52(a)). A finding of fact is clearly erroneous if it is induced by an erroneous view of the law, if there is some evidence to support it, or if, although there is some evidence to support it, on the entire evidence, this Court is left with a definite and firm conviction a mistake has been made. See In re H.G., 2001 ND 142, ¶ 3, 632 N.W.2d 458. We conclude the district court’s findings that K.P. was not complying with the alternative treatment order and that the alternative treatment order was not sufficient to prevent K.P. from harming herself or others are supported by sufficient evidence and are not clearly erroneous.

A

[¶ 12] K.P. argues that to modify an alternative treatment order on the basis of non-compliance, there must be a finding of willfulness. We disagree. Section 25-03.1-21(2), N.D.C.C., authorizes the modification of an alternative treatment order when “the respondent is not complying with the alternative treatment order.” The plain language of the statute does not require someone to have a specific level of intent when not acting in accordance with an alternative treatment order. Even in the context of criminal offenses, we have previously declined to read a requirement of willfulness into a statute that does not specifically call for it. See State v. Eldred, 1997 ND 112, ¶ 31, 564 N.W.2d 283 (“the willful culpability level will not be read into other chapters unless the legislature specifically states as such”); In re E.B., 287 N.W.2d 462, 465 (N.D.1980).

[¶ 13] At the May 15, 2003, hearing, Amy Axtmann, a social worker and case manager at the SEHSC, testified that she met with K.P. on May 2, 2003, after K.P. was released from the state hospital. According to Axtmann, K.P. had already taken her medication for that day and was given a two-day supply of medication to take home with her for the weekend. Ax-tmann and K.P. also worked out arrangements for the weekdays, where someone from the SEHSC would pick up K.P. at her apartment, transport K.P. to the SEHSC for her daily medication, and then transport K.P. back to her apartment. Axtmann testified that she wrote down a two-week schedule for K.P., listing the times K.P. would be picked up and the names of the SEHSC staff member that would be picking up K.P. each day beginning on Monday, May 5, 2003.

[¶ 14] On Monday, May 5, 2003, the first day K.P. was to start her medication monitoring appointments at the SEHSC, Axtmann arrived at K.P.’s apartment to take her to the SEHSC. Axtmann testified that K.P. had locked herself in her apartment, was refusing to come out, and was refusing to let anyone in.

[¶ 15] At the time of this incident, the alternative treatment order that was in effect required K.P. to undergo medication monitoring, psychiatric appointments, case management, and vocational rehabilitation. Axtmann’s testimony clearly indicates K.P. was not complying with the medication monitoring and case management portions of the alternative treatment order. See R.N., 492 N.W.2d at 584.

[¶ 16] In addition, K.P. made it clear in her testimony that she will not cooperate with the SEHSC in receiving outpatient treatment. The alternative treatment order required that K.P. cooperate with SEHSC for medication monitoring and case management.

[¶ 17] At the modification hearing on May 15, 2003, the cross-examination of K.P. went as follows:

Q. [K.P.], are you familiar with the Alternative Treatment Order in place?
A. I do not want to be a client with Southeast Human Services with all the violence and abuse I received from that center. Pm intending to move back to my home where I’m treated fairly. In North Dakota I can’t get anything fair. They are trying to take away my apartment by making me move into a residential treatment—
Q. Are you familiar with the Alternative Treatment Order that’s in place?
A. I no longer want to be a client at Southeast Human Services. It was Dr. Pryatel that got me on a good medical regimen—
Q. Are you familiar with the Alternative Treatment Order that’s in place right now?
A. I’m not familiar with it totally because Dr. Pryatel doesn’t explain anything to me.
Q. Are you aware that the current order that’s in place requires you to receive treatment through Southeast Human Services Center?
A. I’m aware of it but I’ve been very unhappy how I’ve been treated as a client, as a patient, as a person who’s been harassed and forced out of my home four different times in the last seven months because they think they know so much about mental health—
Q. Are you aware that part of that order requires you to receive treatment through the Southeast Human Service Center to include medication monitoring?
A. I would be very happy to have medication monitoring at the Lakeland Mental Health Center in south Moorhead. I will not be associated at Southeast Human Service Center any longer. I’m not going to have North Dakota be my permanent place of residence after the treatment I’ve received in the last seven months.
Q. And is it true that you indicated to the Court at a previous hearing it wasn’t your plan to cooperate with the Southeast Human Services?
A. Not after what they put me through, no, when they put me in four point restraints.
Q. Just so we’re clear, you, even before this incident, you testified at a hearing that it wasn’t your plan to cooperate with Southeast Human Services?
A. Not after — not when they’ve been abusive toward me. They’ve been abusive to me as a patient, a client. They’ve been condescending. They’ve been subjecting me to—
Q. And don’t let me put words in your mouth, if my recollection is incorrect, was your testimony previous to this, to your release from the hospital, was it your testimony that you might cooperate with the Human Service Center if they acted on your terms?
A. Now I will no longer cooperate with them after what they put me through.

[¶ 18] We conclude there is sufficient evidence to support the district court’s finding that K.P. was not following the alternative treatment order. The district court’s decision to modify the alternative treatment order was not clearly erroneous.

B

[¶ 19] Additionally, the testimony at the May 15, 2003, hearing indicates the alternative treatment order was not sufficient to prevent K.P. from harming herself or others.

[¶ 20] We reject KP.’s interpretation that N.D.C.C. § 25-03.1-21(2) requires actual harm before an alternative treatment order can be modified. In the context of issuing an initial involuntary treatment order, we have stated overt violent action is not a prerequisite to finding that a person poses a serious risk of harm to himself or others. See In re D.Z., 2002 ND 132, ¶ 9, 649 N.W.2d 231. If actual harm is not needed to hospitalize someone initially, it should not be needed to re-hospitalize someone after unsuccessful alternative treatment. To hold otherwise would result in a situation where hospitals would be reluctant to release patients for alternative treatment. This would be contrary to the legislative intent of N.D.C.C, § 25-03.1-21, which is written to ensure that less restrictive forms of treatment are considered as alternatives to hospitalization. See D.Z., at ¶ 10.

[¶ 21] Axtmann described KP.’s condition upon entering KP.’s apartment on May 5, 2003:

When I did finally see her face-to-face she was sitting in the bathroom with a knife on the sink next to her. She was screaming and belligerent and was threatening to hurt myself, the other people in the room, threatening to hurt the police officer, very agitated, very upset, border line incoherent.
... She was threatening to take out a hit on me. She was going to kill me. She was going to kill everyone around her. She was going to press charges. We were raping her. We were taking away her civil rights. She wasn’t sick. She wasn’t mentally ill. We were making her sick. She didn’t need medication. Threatening to hurt the people at the Southeast Human Service Center, the police officers.

[¶ 22] These threats to harm others, especially those made while she had a steak knife next to her on the bathroom sink, support the district court’s conclusion that the alternative treatment order has not been sufficient to prevent harm K.P. may be inflicting upon others.

[¶ 23] Axtmann also testified that after K.P. was placed in the sheriffs vehicle for transport to the emergency room, K.P. lit a match that was in her coat pocket, burning a small hole in the back seat of the vehicle. This fact also supports the conclusion that the alternative treatment has not been sufficient to prevent harm to K.P. and others. See In re Nyflot, 340 N.W.2d 178, 184 (N.D.1983) (concluding that even if she did not intend to cause harm to herself or others, a patient who set two fires in the women’s bathroom to protest against being institutionalized presented a serious risk of harm to herself and to others).

[¶ 24] Finally, at the May 15, 2003, hearing, Dr. William Pryatell, a psychiatrist at the state hospital, and Axtmann both testified that in their opinion, the alternative treatment order is not sufficient to prevent K.P. from inflicting harm on herself or others. According to Dr. Pryatell, the alternative treatment order is not sufficient to prevent harm because:

[K.P.] just doesn’t get it, she doesn’t, really, and accept the fact that she has mental illness and needs to take medication, so it’s the same pattern repeated again and again. She’ll go out in the community and not take the medication, relapse really quickly and so the same thing here. She’s very oppositional towards authority figures, doesn’t want to do whatever the authority figure will tell her.

[¶ 25] We conclude the district court’s decision to modify the alternative treatment order was not clearly erroneous. We affirm the district court’s May 16, 2003, order.

[¶ 26] GERALD W. VANDE WALLE, C.J., WILLIAM A. NEUMANN, DALE V. SANDSTROM, and CAROL RONNING KAPSNER, JJ., concur.

KAPSNER, Justice,

concurring.

[¶ 27] I concur. I write separately to note an inconsistency with the applicable statute, an issue not raised or argued by the respondent and, therefore, not addressed in the majority opinion.

[¶ 28] The Hospitalization Order Following Alternative Treatment Order entered on May 16, 2003, provided “the above named Order for Alternative Treatment shall terminate, and the Respondent shall be hospitalized in the North Dakota State Hospital at Jamestown, North Dakota, until March 20, 2004 the remainder of the statutory one year period, or until further order of the Court.” The applicable statute, when a patient is not compliant and a modification of an alternative treatment order is sought, provides the court may “[e]nter a new order directing that the individual be hospitalized until discharged from the hospital under section 25-03.1-30.” N.D.C.C. § 25-03.1-21(2)(c).

[¶ 29] The May 16, 2003, order indicates K.P. shall be hospitalized to a date certain, unless the court enters a further order. Section 25-03.1-30(2), N.D.C.C., however, states the director of a treatment facility “shall discharge a patient hospitalized by court order when the patient’s mental condition is such that the patient no longer is a person requiring treatment.” The section also provides that when a patient is hospitalized and the director determines “a less restrictive form of treatment would be more appropriate for a patient hospitalized by court order,” the director may petition the court to modify its prior order for hospitalization. N.D.C.C. § 25-03.1-30(6). Neither the statutory discretion to seek an order for alternative treatment when hospitalization appears not to be needed nor the statutory obligation to discharge a patient who is no longer a person requiring treatment is superseded by the language of the order entered in this case. Either action could be taken before the termination date stated in the order, should appropriate circumstances develop.


author: KONENKAMP, Justice (on reassignment). MILLER, Retired Justice

text:
    2003 SD 68
    WESTERN WIRELESS CORPORATION, License No. 73-001-911638901E-ST-001, and Sioux Falls Cellular Communications Corporation, License No. 51-001-133413748E-ST-001, Plaintiffs and Appellants, v. DEPARTMENT OF REVENUE, Defendant and Appellee.
    No. 22373.
    Supreme Court of South Dakota.
    Argued on Nov. 19, 2002.
    Reassigned March 4, 2003.
    Decided June 4, 2003.
    Rehearing Denied July 11, 2003.

      Steven W. Sanford of Cadwell, Sanford, Deibert & Garry, LLP, Sioux Falls, South Dakota, Attorneys for plaintiffs and appellants.
    Lawrence E. Long, Attorney General, Jack C. Magee, Assistant Attorney General, Department of Revenue, Pierre, South Dakota, Attorneys for defendant and ap-pellee.
   KONENKAMP, Justice (on reassignment).

[¶ 1.] South Dakota imposes a use tax on tangible personal property and services purchased out of state for in-state use. The question here is whether the Department of Revenue properly levied use tax on out-of-state billing services purchased by a South Dakota cellular phone company to bill and collect fees from its South Dakota subscribers. Both the hearing examiner and the circuit court concluded that the use tax was properly collectible. Because this billing service applies to activities of the purchaser in this state and the amount of tax is apportioned to the billing service applicable to South Dakota customers, our statutes authorize use tax on this service and they are constitutional. We affirm.

A.

Background

[¶ 2.] Western Wireless operates a cellular telephone business in South Dakota. Although its principal office is in the State of Washington, it has physical facilities in both Sioux Falls and Rapid City. To provide its South Dakota customers a monthly billing statement for cellular services, Western contracts with Computer Sciences Corporation (CSC) in Champaign, Illinois, to obtain “subscriber billing services.” For these services, Western pays an undisclosed fee. Western records the cellular activity of its South Dakota customers on its equipment in South Dakota. Western then sends the recorded information to CSC in Illinois. Using its proprietary software, CSC runs the raw data on these tapes through a “call rating process” to generate electronic bills.

[¶ 3.] The electronic bills are then sent to a Western office in Washington for approval. Once approved, CSC sends them to a subcontractor in California, where invoices are printed. The invoices are placed in the United States mail in California, eventually reaching Western’s South Dakota customers. All payments made on bills are remitted to Phoenix, Arizona. Customer questions about the bills are handled in Washington or New Mexico. In short, the essential information necessary to complete the bills originates from Western Wireless in South Dakota, and, after processing by the billing service contractor, the bills are mailed to South Dakota subscribers.

[¶ 4.] Upon a tax audit of Western’s operations, the Department sought to collect $232,408.12 for use tax on the billing services applicable to Western’s billings in South Dakota from 1994 to 1997. Western challenged the assessment. The hearing examiner ruled that the tax was proper. On appeal to the circuit court, it initially reversed the decision. Later, following a remand for further evidentiary findings, the court ruled that the billing services were subject to use tax and that the imposition of the tax was constitutional. On appeal before us, Western asserts that South Dakota’s legislative framework does not impose use tax on the billing services and that if it did, such tax would be unconstitutional.

B.

Standard of Review

[¶ 5.] This is an administrative appeal. We reconfirmed the proper standard of review for administrative appeals in Sopko v. C & R Transfer Co., Inc., 1998 SD 8, ¶¶ 6-7, 575 N.W.2d 225, 228-29. SDCL 1-26-36 requires us to give great weight to administrative findings and inferences on factual questions. Id. ¶ 6. Agency findings are examined “in the same manner as the circuit court to decide whether they were clearly erroneous in light of all the evidence. If after careful review of the entire record we are definitely and firmly convinced a mistake has been committed, only then will we reverse.” Id. An agency’s conclusions of law, however, are fully reviewable. Id. Tax statutes are construed liberally in favor of the taxpayer, as are ambiguities in those statutes. Nash Finch Co. v. South Dakota Dep’t of Revenue, 312 N.W.2d 470, 472 (S.D.1981). Because the questions here are primarily legal ones, our review in this case is de novo.

C.

Use Tax on Out-of-State Billing Services

[¶ 6.] Sales tax is a transaction tax on certain sales and services occurring in South Dakota. Use tax serves as a sales tax substitute imposed on those who buy out of state and do not pay sales tax. The levy of the use tax attaches after the use of a tangible item or service occurs in South Dakota. See generally Billings v. United States, 232 U.S. 261, 34 S.Ct. 421, 58 L.Ed. 596 (1914). The two taxes are mutually compensating, one supplementing the other, but both cannot be equally applicable to the same transaction. The rate of tax is the same. See generally SDCL ch 10-45, 10-46.

[¶ 7.] Use taxes accommodate two vital concerns: (1) the state may lose tax revenue if taxpayers purchase out-of-state goods or services for in-state use, and (2) local providers will lose business if taxpayers purchase out-of-state goods or services to avoid sales tax liability. Northwestern Nat’l Bank of Sioux Falls v. Gillis, 82 S.D. 457, 467, 148 N.W.2d 293, 298 (1967); see generally Jerome R. Hellerstein & Walter Hellerstein, 2 State Taxation § 16.01[2] (3d ed 2000). Thus, the Legislature imposes a sales tax on purchases of goods and services within the state and a complementary use tax on goods and services purchased outside' the state for use within the state. By itself, a use tax may appear to be discriminatory because it applies only to goods and services acquired out of state. Halliburton Oil Well Cementing Co. v. Reily, 373 U.S. 64, 69, 83 S.Ct. 1201, 1203, 10 L.Ed.2d 202 (1963). Nonetheless, because use taxes are paired with complementary sales taxes, the United States Supreme Court has upheld them: in the context of the overall tax structure, such statutes may properly impose on the out-of-state purchase of goods an equivalent burden to that imposed on an in-state purchase. Henneford v. Silas Mason Co., 300 U.S. 577, 57 S.Ct. 524, 81 L.Ed. 814 (1937).

[¶ 8.] To support imposing use tax on the billing services Western purchases, the Department relies on SDCL 10-46-1(13) and 10-46-2.1 (use tax on services). Under SDCL 10-46-1(13), the term “use” “also includes the úse of the types of services, the gross receipts from the sale of which are to be included in the measure of the tax imposed by chapter 10-45.... ” Turning to chapter 10-45, we see that the term “service” means “all activities engaged in for other persons for a fee, retainer, commission, or other monetary charge, which activities involve predominantly the performance of a service as distinguished from selling property.” SDCL 10 — 45—4.1.

[¶ 9.] Western contends that no use tax is payable because of our decision in Modern Merchandising, Inc. v. Department of Revenue, 397 N.W.2d 470, 471 (S.D.1986). In that case, this Court reversed the imposition of use tax on the cost of LaBelle’s catalogs and flyers mailed to South Dakota residents. LaBelle’s sold goods by mail order and through its local stores. The materials were delivered to South Dakota by mail or by common carrier. They were sent by out-of-state printers who contract with LaBelle’s to produce these flyers and catalogs. LaBelle’s provided South Dakota addresses where the materials were to be delivered.

[¶ 10.] In Modern Merchandising, the Department argued that LaBelle’s used “the flyers and catalogs to generate sales in South Dakota and to operate its catalog business.” In rejecting this argument as a basis for levying use tax, we found that LaBelle’s had no in-state contract for the services and all control over the flyers and catalogs in South Dakota vested in either the post office or the recipients. We held that the Department’s focus on whether the materials generated sales to support a use tax was erroneous; instead, the inquiry should turn on whether the language of the taxing statutes applied.

[¶ 11.] Western asserts that, as in Modem Merchandising, no use tax applies here because it “has contracted for the printing of [its] bills by a third party, and as a result Western does not generate, print, or mail the bills to in-state residents; the bill preparer/printer controls all of these functions and the bills themselves.” Western equates these “tangible itemized written bills” with the advertising materials sent to South Dakota residents. Moreover, Western points out that even the amended language in SDCL 10-46-1(13), added in response to the Modem Merchandising decision, will not encompass these transactions because the invoices do not “advertise products or services or promote or facilitate sales to South Dakota residents.” Western believes that there is an insufficient nexus between the cost of producing the billing statements and South Dakota to justify use tax and, therefore, the billing service is outside the statutory reach of the tax.

[¶ 12.] Modem Merchandising dealt with whether a merchandiser had sufficient right or power incidental to ownership of advertising materials sent from out of state to qualify as a use in this state of tangible personal property. 397 N.W.2d at 472-73; see SDCL 10-46-1(2) and 2. On the other hand, our decision in Thermoset Plastics, Inc. v. Department of Revenue, 473 N.W.2d 136 (S.D.1991) addressed the in-state use of out-of-state services. The service in that case was provided by an out-of-state accounting firm to a South Dakota business. Before commencing operations in South Dakota, Thermoset incurred $8,000 in fees for the preparation of a cash flow statement by the Arthur Andersen accounting firm in Phoenix, Arizona. In holding that the cost of the cash flow statement was subject to use tax in South Dakota, we wrote: “Thermoset used these accounting services in South Dakota to conduct its business and is therefore subject to use tax on these services.” Id. at 139. In sum, the out-of-state accounting service directly applied to Thermoset’s activities in this state and thus use tax was properly assessed.

[¶ 13.] The relevant definition of “use” in SDCL 10-46-1(13) states that “Use also includes the use of the types of services, the gross receipts from the sale of which are to be included in the measure of the tax imposed by chapter 10-45.... ” (Emphasis added.) See SDCL 10-46-2.1. Here, the Department is not seeking to tax the purchase and use of tangible personal property. Yet, Western wishes us to view the billing service as simply the printing and mailing of tangible invoices, apart from the essential service it purchases. Western reasons that no use tax applies because it does not “generate, print or mail the bills,” and the bills “do not generate sales,” do not contain “advertising materials,” and have no “information to facilitate sales.” That analysis, from Modem Merchandising, applies to the out-of-state purchase of tangible personal property, i.e., advertising materials, for use in South Dakota. If the same analysis applies to services, then Thermoset Plastics was wrongly decided. There, the out-of-state accounting bill for services that we held was subject to use tax did “not generate sales,” did not contain “advertising materials,” and had no “information to facilitate sales,” and moreover, Thermoset did “not generate, print or mail the bills” for the out-of-state accounting services.

[¶ 14.] Our analysis in Thermoset applies to these circumstances. As in Thermoset, Western uses the billing service “in South Dakota to conduct its business and is therefore subject to use tax on these services.” Thermoset, 473 N.W.2d at 139. What is involved here is more than merely the arranging for paper invoices to be mailed to South Dakota residents. This activity is predominantly the performance of a service. SDCL 10-45-4.1. As the circuit court aptly phrased it, “there can be no dispute that billing customers is a necessary part of conducting a cellular telephone business.” Unquestionably, if this billing service were provided by a South Dakota based company, it would be required to collect sales tax on its fees. See SDCL 10-45-4.1. Union Pacific R.R. Co. v. Auditing Div. of Utah State Tax Comm’n, 842 P.2d 876 (Utah 1992). Use tax is compensatory or complementary to sales tax. Western uses an out-of-state billing service to collect its fees from its South Dakota subscribers. Only those billing services specifically attributable to South Dakota customers are subject to the tax. This service is an integral part of Western’s business in South Dakota. Indeed, there would be no business without it. We uphold the imposition of use tax.

D.

Constitutionality of Use Tax

[¶ 15.] Western next contends that because this billing service is rendered by an out-of-state contractor, South Dakota’s imposition of use tax here is a burden on interstate commerce. To determine if this tax is unconstitutional, we look to the Supreme Court’s decision in Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 97 S.Ct. 1076, 51 L.Ed.2d 326 (1977). A tax is not an unconstitutional burden on interstate commerce if the taxed activity is sufficiently connected to the state to justify the tax, the tax is fairly related to benefits provided to the taxpayer, the tax does not discriminate against interstate commerce, and the tax is fairly apportioned. The use tax here passes these tests. Id. at 287, 97 S.Ct. at 1083.

[¶ 16.] South Dakota has a substantial nexus with the taxed activity. Western provides cellular telephone service to its South Dakota subscribers. It owns communications equipment and conducts business in South Dakota. It employs personnel in South Dakota to install and maintain the equipment. Electronic statistics on subscriber usage are transferred from South Dakota, where it originates, to Western’s billing service contractor who, in turn, arranges for the South Dakota customers to receive bills for their usage.

[¶ 17.] Equal treatment for instate and out-of-state transactions similarly situated is a prerequisite to a valid use tax on goods and services imported from out-of-state. Halliburton, 373 U.S. at 70, 83 S.Ct. at 1204. South Dakota’s use tax on services will apply to the use of a taxable service purchased inside or outside this state when the primary benefit of the service is used or consumed in this state and, at the time of purchase, sales tax was not imposed. This use tax is fairly related to state-provided services because Western has the right and benefit of selling its services to South Dakota residents. The use tax does not discriminate against interstate commerce because the tax compensates the state for sales tax imposed on similar in-state transactions. D.H. Holmes Co., Ltd. v. McNamara, 486 U.S. 24, 108 S.Ct. 1619, 100 L.Ed.2d 21 (1988). Finally, the tax is fairly apportioned because (1) the services taxed are only those attributable to the billing of South Dakota subscribers, and (2) our law provides a credit against use tax for transactions in which a sales tax was paid in other states. SDCL 10-46-6.1.

[¶ 18.] The fair-apportionment analysis was employed by the Supreme Court in Goldberg v. Sweet, 488 U.S. 252, 109 S.Ct. 582, 102 L.Ed.2d 607 (1989). There, the Court held that the tax must be internally and externally consistent. To be externally consistent under Goldberg, a state may tax “only that portion of the revenues from the interstate activity which reasonably reflects the in-state component of the activity being taxed.” Id. at 262, 109 S.Ct. at 589. South Dakota’s use tax reasonably reflects the way that Western uses this service. It receives the service in South Dakota when its South Dakota customers are billed for their cellular usage. The primary benefit of the service is used or consumed here. “To be internally consistent, a tax must be structured so that if every State were to impose an identical tax, no multiple taxation would result.” Id. at 261, 109 S.Ct. at 589. Here, if every state taxed the billing service attributable only to that state’s customers, as South Dakota does, only one state, the state where that service was provided, would tax the transaction. Further, as mentioned above, South Dakota allows a credit for sales taxes paid to other states. Under Goldberg, this credit provision avoids actual multiple taxation, and, thus, the tax does not threaten interstate commerce.

[¶ 19.] It is true that, as Western points out, our law allows no credit for taxes paid in another state where that state “does not reciprocally grant a credit for taxes paid on similar tangible personal property.” SDCL 10-46-6.1. Assuming this statute applies to services the same as it does to tangible personal property, then this conditional reciprocity could present a problem in the future. It is critical, as the Supreme Court acknowledges, that these statutory “credit provisions create a national system under which the first state of purchase or use imposes the tax. Thereafter, no other state taxes the transaction unless there has been no prior tax imposed ... or if the tax rate of the prior taxing state is less, in which case the subsequent taxing state imposes a tax measured only by the differential rate.” Oklahoma Tax Comm’n v. Jefferson Lines, Inc., 514 U.S. 175, 194, 115 S.Ct. 1331, 1343, 131 L.Ed.2d 261 (1995) (quoting KSS Transportation Corp. v. Baldwin, 9 N.J.Tax 273, 285 (1987)). However, Western does not assert that any sales or use taxes have been paid on all or part of these services in any other state nor has it sought any credit for payment of such taxes. Under these circumstances, therefore, the point is moot.

[¶ 20.] Affirmed.

[¶ 21.] GILBERTSON, Chief Justice, and SABERS, Justice, concur.

[¶ 22.] MILLER and AMUNDSON, Retired Justices, dissent.

[¶ 23.] MILLER, Retired Justice, sitting for ZINTER, Justice, disqualified.

[¶ 24.] MEIERHENRY, Justice, not having been a member of the Court at the time this action was submitted to the Court, did not participate.

MILLER, Retired Justice

(dissenting).

[¶ 25.] The majority opinion misconstrues the definition of “use” as that term has been legislatively defined and interpreted by the prior precedent of this Court. I agree with the majority opinion’s recognition that the use tax is aimed to remedy concerns that the state may lose tax revenue if taxpayers purchase out-of-state goods or services for in-state use and that local providers will lose business if those out of state purchases avoid tax liability. However, those concerns cannot justify the imposition of a tax unless that tax is clearly articulated in the statutory framework. As the following discussion demonstrates, the state’s remedy is legislative and not judicial.

[¶ 26.] The imposition of a use tax on the billing services is legally and factually unsupported.

[¶ 27.] In support of its assertion supporting imposition of the use tax Department relies upon the following statutory provisions:

10-4,6-2.1. Use tax — Tax imposed on use of services — Exemptions—“Related corporation” defined. For the privilege of using services in South Dakota, except those types of services exempted by § 10-46-17.3, there is imposed on the person using the service an excise tax equal to four percent of the value of the services at the time they are rendered. However, this tax may not be imposed on any service rendered by a related corporation as defined in subdivision (11) of § 10-43-1 for use by a financial institution as defined in subdivision (4) of § 10-43-1 or on any service rendered by a financial institution as defined in subdivision (4) of § 10-43-1 for use by a related corporation as defined in subdivision (11) of § 10-43-1. For the purposes of this section, the term related corporation includes a corporation which together with the financial institution is part of a controlled group of corporations as defined in 26 USC § 1563 as in effect on January 1, 1989, except that the eighty percent ownership requirements set forth in 26 USC § 1563(a)(2)(A) for a brother-sister controlled group are reduced to fifty-one percent. For the purpose of this chapter, services rendered by an employee for the use of his employer are not taxable.
SDCL 10-46-1(13) Use, the exercise of right or power over tangible personal property incidental to the ownership of that property, except that it does not include the sale of that property in the regular course of business. Use also includes the use of the types of services, the gross receipts from the sale of which are to be included in the measure of the tax imposed by chapter 10-45, and any amendments thereto and the delivery or causing delivery into this state of tangible personal property intended to advertise products or services or promote or facilitate sales to South Dakota residents.

[¶ 28.] Western counters asserting that the use tax law contains an inherent limitation requiring the use of the billing services to occur in the State of South Dakota. Western also argues that the billing services and the statements produced constitute personal property and not services for tax purposes. On these facts, Western argues that there is an insufficient nexus between the cost of producing the billing statements and the State of South Dakota to justify use tax. Both parties assert that prior use tax decisions of this Court are dispositive.

[IT 29.] In Thermoset Plastics, Inc. v. Department of Revenue, 473 N.W.2d 136 (S.D.1991), this Court addressed a use tax assessment for services provided by an out-of-state accounting firm to a South Dakota corporation. Prior to commencing operations in South Dakota, Thermoset incurred $8,000 in fees for the preparation of a cash flow statement by the Arthur Anderson accounting firm in Phoenix, Arizona. In holding that the cash flow statement was subject to use tax in South Dakota, the Court stated:

Thermoset’s transaction with Arthur Anderson is subject to tax under SDCL 10-46-2.1. Although some of Arthur Anderson’s services may have become obsolete when the designs of various plates were changed, some of the machinery included in the study is still being used in South Dakota. Further even if these plate designs are obsolete now, they were not obsolete at the time the services were rendered. Thermoset used these accounting services in South Dakota to conduct its business and is therefore subject to use tax on these services.

Id. at 139.

[¶ 30.] In that case, the record revealed that items of equipment examined in the cash flow statement were a product line being used in South Dakota. Therefore, there was a link between the out-of-state service and the sale of products with a resulting use in South Dakota by Thermo-set. Department therefore claims that because billing services are a necessary part of Western’s business in South Dakota this rationale is applicable to support a use tax on the cost of those services provided outside South Dakota.

[¶ 31.] To the contrary, Western relies upon our decision in Modern Merchandising, Inc. v. Department, 397 N.W.2d 470 (S.D.1986), to assert the inapplicability of the use tax. In Modern Merchandising, this Court reversed the imposition of use tax for the cost of catalogs and flyers mailed to South Dakota residents by LaBelle’s Corporation. LaBelle’s retailed consumer goods by mail order and through stores located in Minnesota, North Dakota and South Dakota. The materials were printed in Minnesota and delivered to South Dakota by mail or through a common carrier by out-of-state printers contracted by LaBelle’s to provide these flyers and catalogs. LaBelle’s only involvement was providing the South Dakota addresses of where the literature was to be delivered. Id. The issue on appeal was whether “LaBelle’s had sufficient right or power incidental to the ownership of the catalogs and flyers once in South Dakota to qualify as a use in this State under SDCL 10-46-1(2) and 2.”

[¶ 32.] In Modem Merchandising, Department argued that Labelle’s used “the flyers and catalogs to generate sales in South Dakota and to operate its catalog business” to justify imposition of the use tax. Id. at 471. Rejecting this argument, the Court recognized that LaBelle’s had no in-state contract for these services and all control over the flyers and catalogs in South Dakota vested in either the post office or item recipients. (“Department concentrated more on the material’s generation of in-state sales for LaBelle’s than on whether LaBelle’s activities fit the language of the tax statutes.”) Furthermore, the Court rejected Department’s policy argument that use tax was applicable if by not imposing the tax our in-state retailers would be at a disadvantage when compared to out-of-state competitors and that if a local entity must pay a tax then so should the outside entity providing the same services. We have recognized “that not only was the use tax intended to raise money but it was also intended to help the retailers in this state, who are subject to the sales tax, compete on an equal footing with out-of-state competitors.” Northwestern Nat’l Bank of Sioux Falls v. Gillis, 82 S.D. 457, 467, 148 N.W.2d 293, 298 (1967). We must remember, however, that despite the legislative intent, this Court cannot rewrite a taxing statute based on arguments of a competitive disadvantage that purportedly occurs as a result of the statutory framework or a perceived unfairness. The Court in Modem Merchandising observed: ‘While we agree with Department’s interpretation of our legislature’s intent, we cannot apply the statute to activity which is plainly alien to its language. We must honor the rule that statutes imposing a tax are to be construed liberally in favor of the taxpayer.” Modem Merchandising, supra at 472. Though Department’s concerns may have been valid, “this contention is more appropriately directed to the legislature.”

[¶ 33.] Following the decision in Modem Merchandising, the legislature altered the definition of “use” to state that “the delivery or causing delivery into this state of tangible personal property intended to advertise products or services or promote or facilitate sales to South Dakota residents” constitutes a “use” within the meaning of the legislative framework, (emphasis added). 1987 SD Sess.L. ch. 108, § 1. This change is now codified at SDCL 10-46-1(13). While the Modem Merchandising holding has thus been abrogated by the legislature, the holding’s reasoning is still valid: Department cannot exceed its statutory grant of authority.

[¶34.] The majority opinion’s flaw is best demonstrated by comparing this situation to another case where use tax was found to be proper, Quotron Systems, Inc. v. Limbach, 62 Ohio St.3d 447, 584 N.E.2d 658 (1992). In Quotron, the Ohio Supreme Court determined that use tax was appropriately imposed on a computer service that provided access to computer equipment enabling subscribers in Ohio to examine or acquire data stored by that system out of state. Id. at 659. However, the relevant Ohio taxing authority specifically imposed tax upon automatic data processing and computer services. Id. Furthermore, the Ohio court quotes the following from the Ohio legislative pronouncements:

R.C. 5739.01 defined automatic data processing and computer services, until January 10, 1985, to include “providing direct access to computer equipment by remote or proximate access for the purpose of processing data or examining or acquiring data stored in or accessible to such computer equipment,” and after this date, to include “providing access to computer equipment for the purpose of processing data or examining or acquiring data stored in or accessible to such computer equipment.”

Consequently, the Ohio court determined the taxing statutes applied to the data processing services and that use tax was properly imposed. Id. In comparing that taxing authority with the statutes relied upon by Department the Ohio statutory authorization for imposing the use tax on data processing and computer services is clearly more sophisticated and direct than that relied upon by the Department here. This is fatal to Department’s argument. The statutory authorization for collection of use tax is to be construed liberally in favor of the taxpayer, however, the majority opinion misconstrues the taxing authority liberally in favor of the Department.

[¶ 35.] Under our system the predicate for use tax under SDCL HM6-2.1 is “using services in South Dakota” that are non-exempt. Western has contracted for billing services with an out-of-state third party. Western itself does not generate, print or mail the bills to South Dakota residents. When the bills arrive in South Dakota they are controlled by the United States mail or the customers receiving the bills. While Western’s bills serve the purpose of providing its customers with information concerning their account, the billing services do not themselves generate sales. There are no facts establishing that these billing statements contain advertising materials or information to facilitate sales as part of the billing service. In this situation, the sale of cellular service is already complete when the billing statements arrive to the South Dakota customer. A billing statement for services previously rendered clearly is not something delivered “to advertise products or services or promote or facilitate sales.” Comparing the billing services with the catalogs and flyers at issue in Modem Merchandising and the accounting services in Thermoset, the billing services more closely resemble the catalogs and flyers in Modem Merchandising.

ll 36.] The circuit court attempted to distinguish the Modem Merchandising, holding by asserting its result was controlled by SDCL 10-46-2 and not SDCL 10-46-2.1, upon which Department now relies. However, both statutory provisions are governed by the definition of “use” provided in SDCL 10-^6 — 1(13). The circuit court determined that “although each individual component of that billing service was produced in other states, the completed billing service was acquired for ‘use’ in South Dakota to bill [Western’s] South Dakota customers and to conduct [Western’s] South Dakota cellular telephone business.” While Department urged, and the circuit court found, the billing services as a whole constituted a “use” in South Dakota, this expansive view of Department’s taxing authority is contrary to the dictate that we narrowly construe the taxing authority. Clearly, the circuit court characterized the “complete billing service” as a taxable event because the bills inevitably entered the state through the mail and arrived where Western directed. However, this is contrary to the rationale set forth in Modem Merchandising, which determined the use tax did not apply in such limited circumstances. See Modern Merchandising, 397 N.W.2d at 472.

[¶ 37.] When viewing the billing process as a whole, the facts do not establish a “use” in the state to support taxation. While it cannot be disputed that the South Dakota bills are a product of Western’s business in South Dakota, that is not the test to determine if the billing services are “used” within South Dakota to support the tax. The legislative change to the definition of “use” does not apply in this situation. It is significant that the legislature chose to exclusively incorporate advertising materials to promote or facilitate sales that are sent to the State as part of the definition of “use.” Though the result in Modem Merchandising has been altered by legislative action, the analytical method remains intact. The legislative modification to the definition of use does not apply and the rationale of Modem Merchandising is controlling. Applying these facts to the rationale of Modem Merchandising, and even considering the legislative change, the record does not establish the billing services were “used” in the State of South Dakota within the definition of the term as it now exists.

[¶ 38.] Therefore, I dissent.

[¶ 39.] AMUNDSON, Retired Justice, joins this dissent.

      . Western declined the Department’s request for information to determine what Western pays for this service. Therefore, the Department obtained outside information to calculate the per customer rate for the billing service.

        . The audit also resulted in additional use tax on certain equipment owned by Western. Western did not dispute that tax.

      . SDCL 10-46-2.1:
      For the privilege of using services in South Dakota, except those types of services exempted by § 10-46-17.3, there is imposed on the person using the service an excise tax equal to four percent of the value of the services at the time they are rendered....
      SDCL 10-46-1(13):
      "Use,” the exercise of right or power over tangible personal property incidental to the ownership of that property, except that it does not include the sale of that property in the regular course of business. Use also includes the use of the types of services, the gross receipts from the sale of which are to be included in the measure of the tax imposed by chapter 10-45, and any amendments thereto and the delivery or causing delivery into this state of tangible personal property intended to advertise products or services or promote or facilitate sales to South Dakota residents.

      . Following the decision in Modem Merchandising, the Legislature altered the definition of "use” to include "the delivery or causing delivery into this state of tangible personal property intended to advertise products or services or promote or facilitate sales to South Dakota residents.” 1987 SDSessL ch 108, § 1. This change is now codified in SDCL 10-46-1(13).


author: /s/ David Gilbertson, Chief Justice

text:
    2003 SD 49
    In the Interest of D.M., R.M. III, and T.B.C., Minor Children, and concerning R.M., Jr., and S.C.B.C.M., Respondent and Appellant. In the Interest of B.B.C., Minor Child, and concerning L.P.L. and S.C.B.C.M., Respondent and Appellant.
    Nos. 22563, 22564 and 22656.
    Supreme Court of South Dakota.
    June 9, 2003.
   ORDER GRANTING REHEARING AND REMANDING

Appellant having served and filed a petition for rehearing of the above-entitled cause, and appellee having served and filed a response thereto, and the petition having been considered by the Court, and a majority of the Justices having filed a statement requesting that a limited rehearing be granted, now, therefore, in accordance with the rehearing rule of the Court, it is

ORDERED that the petition for rehearing, as herein limited, is granted.

IT IS FURTHER ORDERED that this matter is remanded to the trial court for the limited purposes of holding a hearing, and for reconsideration of, the motion to transfer to tribal court, with instructions to effectuate proper notice to the Indian Tribe of the hearing to be scheduled on the motion to transfer.

IT IS FURTHER ORDERED that upon conclusion of the transfer hearing, the trial court shall enter an order on the motion to transfer accompanied by its findings of fact and conclusions of law. # 22563, # 22564, # 22565, Order

IT IS FURTHER ORDERED that this Court’s per curiam opinion, 2003 SD 49, 661 N.W.2d 768, filed April 30, 2003, is hereby stayed until further consideration by this Court pending a final determination by the trial court on remand.

BY THE COURT:

/s/ David Gilbertson, Chief Justice

PARTICIPATING: Chief Justice DAVID GILBERTSON, Justices RICHARD W. SABERS, JOHN K. KONENKAMP, STEVEN L. ZINTER and JUDITH K. MEIERHENRY, JJ.


author: SABERS, Justice.

text:
    2003 SD 70
    VAN DE WALLE & ASSOCIATES, L.L.C., formerly known as John Van De Walle d/b/a John Van De Walle & Associates, Plaintiff and Appellee, v. Edith BUSEMAN, Defendant and Appellant.
    No. 22535.
    Supreme Court of South Dakota.
    Considered on Briefs April 28, 2003.
    Decided June 11, 2003.

      Gary L. Pashby, Lisa Hansen Marso of Boyce, Greenfield, Pashby & Welk, L.L.P., Sioux Falls, South DAkota, Attorneys for plaintiff and appellee.
    Rick Johnson, Sandy Steffen of Johnson, Eklund, Nicholson, & Peterson, Gregory, South Dakota, Attorneys for defendant and appellant.
   SABERS, Justice.

[¶ 1.] Van De Walle & Associates, L.L.C. (Van De Walle) brought suit against Edith Buseman seeking payment for architectural services. Van De Walle later brought a summary judgment motion which was granted on July 10, 2002. Buseman filed a notice of appeal claiming there were genuine issues of material fact whether: 1) Van De Walle should recover its entire claim under an implied contract theory; and 2) what agreement, if any, the parties had for payment.

FACTS

[¶ 2.] In 1996 Buseman contacted Van De Walle requesting architectural services for a project known as “Hilda’s Heritage Home and Silver Threads Apartments.” The assisted living facility was to be constructed in Gregory, South Dakota, on land owned by Buseman and her husband. After meeting to discuss the Gregory project, Van De Walle sent Buseman a proposal letter outlining the architectural and other services he would provide. He then began providing those services. In July 1996, Van De Walle sent Buseman a standard agreement contract for her signature, but Buseman never signed. Despite the lack of a formal written contract, Van De Walle provided architectural services beginning in April 1996 and continuing through the fall of 1998. During that time, Van De Walle submitted drawings and did other architectural and engineering work. Buseman used Van De Walle’s drawings in her efforts to apply for a HUD guaranteed bank loan to finance the project.

[¶ 3.] In December 1996, Van De Walle sent two bills to Buseman totaling approximately $16,000. The bills together covered services provided by Van De Walle from mid April 1996 through November 1996. Thereafter, Van De Walle sent numerous invoices to Buseman detailing the services he was providing. Van De Walle billed Buseman for services provided through June 23, 1998. The total billed to Buseman was $21,149.16. Buseman never paid any of Van De Walle’s bills, nor did she contest any of the bills. Buseman never indicated that she did not believe she owed the money nor did she ever inform Van De Walle that he needed to submit the bill to another party. Buseman did, however, pay the invoices that Van De Walle sent her for work done on the project by ATS Engineering and RF Sayer Surveying. She stated in her deposition that she paid those bills in accordance with her agreement with the shareholders in the Gregory Assisted Living LLC that she would be reimbursed with an interest in the LLC.

[¶ 4.] When Buseman could not get a loan guarantee through HUD, the plans done by Van De Walle were scrapped, financing was obtained through community efforts and the project was scaled down significantly. Today, there is a 30-unit assisted living facility named Silver Threads Residential Home. The architectural work on the existing building was not performed by Van De Walle.

[¶ 5.] Throughout her brief, Buseman argues facts that are unsupported by the record. First, she argues that “HUD financing was a pre-requisite for the project.” Second she argues that Van De Walle “at all times knew that the assisted living project in Gregory was premised upon approval of HUD financing.” She uses these factual statements as the underlying premise for her argument that Van De Walle agreed to perform the services with the knowledge that he would be paid only in the event that HUD guaranteed the financing. Because the record does not support these assertions, we will disregard them in accordance with SDCL 15-26A-60(5).

[¶ 6.] When he did not receive payment for his services, Van De Walle commenced this suit against Buseman on May 4, 2001. The trial court granted Van De Walle’s motion for summary judgment and judgment was entered in his favor in the amount of $21,149.16. Buseman appeals. We affirm.

STANDARD OF REVIEW

[¶7.] Our standard of review for the grant of summary judgment is well settled:

In reviewing a grant or a denial of summary judgment under SDCL 15-6-56(c), we must determine whether the moving party demonstrated the absence of any genuine issue of material fact and [established] entitlement to judgment on the merits as a matter of law. The evidence must be viewed most favorably to the nonmoving party[,] and reasonable doubts should be resolved against the moving party.... Our task on appeal is to determine only whether a genuine issue of material fact exists and whether the law was correctly applied.

Hasse v. Fraternal Order of Eagles, 2003 SD 23, ¶ 7, 658 N.W.2d 410, 412 (citing Braun v. New Hope Township, 2002 SD 67, ¶ 8, 646 N.W.2d 737, 739 (quoting South Dakota State Cement Plant Commission v. Wausau Underwriters Ins. Co., 2000 SD 116, ¶ 9, 616 N.W.2d 397, 400-01)) (bracketed portions in original).

[¶ 8.] 1. WHETHER THERE ARE GENUINE ISSUES OF MATERIAL FACT WHETHER VAN DE WALLE MAY RECOVER ITS ENTIRE CLAIM ON THE BASIS OF IMPLIED CONTRACT.

[¶ 9.] An implied contract “is one, the existence and terms of which are manifested by conduct.” SDCL 53-1-3. With regard to implied contracts, we have stated:

[w]hen a party confers a benefit upon another party who accepts or acquiesces in that benefit and it is inequitable to receive that benefit without paying therefore, a contract will be implied between the parties.

Randall Stanley Architects, Inc. v. All Saints Community Corp., 1996 SD 138, ¶ 20, 555 N.W.2d 802, 805 (quoting Amert Construction Co. v. Spielman, 331 N.W.2d 307, 310 (S.D.1983)). Typically, when a person provides services or materials to another and those services or materials are voluntarily accepted, it is inferred that the services or materials “were given and received in the expectation of being paid for, and a promise to pay their reasonable worth implied.” Id. (quoting St. John’s First Lutheran v. Storsteen, 77 S.D. 33, 84 N.W.2d 725, 728 (1957)).

[¶ 10.] Buseman argues first that whether there was an implied contract is inappropriate for summary judgment because the question must be decided by the trier of fact. Generally, this assertion is true. As we noted in Lien v. McGladrey & Pullen, under South Dakota law, the existence of an implied contract between parties creates a genuine issue of material fact to be decided by the jury. 509 N.W.2d 421, 424 (S.D.1993) (citations omitted). However, we have held that an implied contract question may be resolved by summary judgment in some instances:

[although ... whether particular conduct is sufficient to support a finding that an implied contract exists is generally submitted to a trier of fact, the question may be resolved by summary judgment if reasonable minds could not differ.

Weller v. Spring Creek Resort, Inc., 477 N.W.2d 839, 841 (S.D.1991) (citing Continental Ins. v. Page Engineering Co., 783 P.2d 641, 651 (Wyo.1989)).

[¶ 11.] To determine whether reasonable minds could differ, we look to each element necessary to support an implied contract. Buseman argues first that she received no benefit from Van De Walle. The question is whether there is a genuine issue of material fact whether Buseman received a benefit. Buseman contends that because the project designed by Van De Walle was never built, Buseman did not benefit from Van De Walle’s services. The evidence submitted at her deposition refutes this argument. The evidence indicates that the architectural work done by Van De Walle was necessary in order for Buseman to apply for HUD approval. She did apply for that approval using Van De Walle’s drawings. Furthermore, at the time Buseman was commencing the process to apply for a HUD guarantee, Van De Walle had already provided and billed her for $16,000 worth of services. The fact that her plan for financing did not go through as expected, and the fact that the subsequent project differed from that originally planned by her and designed by Van De Walle does not mean that she received no benefit. She had the benefit of his expertise, his drawings and his input on the survey and environmental study which were required for HUD approval. In short, if it was her plan from the beginning to apply for HUD approval, she was aware that she would need the architectural services done before approval, and she utilized and benefited from the services provided by Van De Walle.

[¶ 12.] We next inquire whether Buseman accepted or acquiesced in the benefit provided by Van De Walle. It appears undisputed that Buseman accepted or acquiesced in these services. She accepted all of the drawings submitted to her by Van De Walle and passed them on to her financing institution. She also utilized those drawings to apply for HUD approval. Despite the fact that Van De Walle submitted 21 invoices to Buseman for payment beginning in December 1996, she never told him that she was not going to pay, that she was not responsible for the bills or that payment was contingent on HUD financing. She continued to receive bills through 1998. Her failure to 1) contest the bills; 2) instruct Van De Walle to cease performance; or 3) inform Van De Walle that someone else was responsible for the bills and have him forward them elsewhere eliminates any question whether Buseman “acquiesced” in the services provided.

[¶ 13.] The next question is whether it would be inequitable for Buse-man to retain the benefit conferred by Van De Walle without payment. Buseman’s own deposition indicates that this element does not create a genuine issue of material fact. Buseman indicates therein that she believes John Van De Walle is honest and that the bills he sent her represented the correct charges for the work. Moreover, Buseman never objected to being personally billed for Van De Walle’s services. There is nothing in the record to indicate that Van De Walle agreed to work on a contingency basis or that he volunteered his substantial services to Buseman. On this record, there is no genuine issue of material fact whether it is inequitable to allow Buseman to retain this benefit without payment.

[¶ 14.] 2. WHETHER THERE IS A GENUINE ISSUE OF MATERIAL FACT AS TO THE AGREEMENT, IF ANY, THE PARTIES HAD REGARDING PAYMENT.

[¶ 15.] Buseman contends that there is a genuine issue of material fact whether Van De Walle was aware that payment of his fees was contingent on HUD financing of the project. The record does not support this assertion. First, HUD does not finance projects such as these; HUD guarantees loans made by financing institutions in order to fund the projects. Van De Walle was aware of this fact and did not believe it would be receiving payment from HUD. Second, there is no indication in the record that Van De Walle was providing these services with knowledge and acceptance of the fact that it might never be paid. Buseman argues that a term in the standard agreement Van De Walle sent her in 1996, indicated that it did not anticipate payment for the work. That term stated:

The Owner shall compensate the Architect as follows:
11.2. AN INITIAL PAYMENT of zero Dollars ($0.00) shall be made upon execution of this Agreement and credited to the Owner’s account at final payment.

As the trial court noted, this was simply a provision regarding fees due upon execution of the agreement. The “zero dollars” refers only to the fact that had she signed the agreement, Buseman was not liable for any payment “up front” or before the work began. This was not a concession by Van De Walle that it did not expect compensation from her for its work.

[¶ 16.] Third, there is no indication in the record that the assisted living project was premised upon approval of HUD financing. On the contrary, despite the fact that HUD did not agree to guarantee the loan, the assisted living center was built, albeit in a “scaled down” version from the original proposal. Our review of the record reveals that Buseman’s repeated assertions that Van De Walle knew his payment was contingent on HUD financing are nothing more than bare assertions with no real support in the record. In fact, Van De Walle testified at his deposition that his notes from his April 24, 1996 meeting with Buseman indicated that she would be seeking conventional funding with Home Federal Bank. Buseman’s mere allegations that payment was contingent on HUD financing are insufficient to preclude summary judgment. Weiszhaar Farms, Inc. v. Live Stock State Bank, 467 N.W.2d 752, 754 (S.D.1991) (citing Laber v. Koch, 383 N.W.2d 490 (S.D.1986)).

[¶ 17.] The record in this case supports the trial court’s grant of summary judgment. Reasonable minds could not believe that Van De Walle agreed to be paid only in the event that HUD guaranteed the financing. Nor could reasonable minds believe that Buseman received no benefit from the services Van De Walle provided. Because there are no genuine issues of material fact, the trial court is affirmed.

[¶ 18.] GILBERTSON, Chief Justice, and KONENKAMP, ZINTER, and MEIERHENRY, Justices, concur.

      . Buseman testified at her deposition that this was the second time she had worked with Van De Walle. Buseman hired Van De Walle for a similar project called Hilda’s Heritage Home that she had constructed in Lennox, South Dakota. Buseman paid Van De Walle for his work on the Lennox project.

      . In 1999, the Busemans sold the land on which the facility is located to Gregory Assisted Living, LLC in exchange for an ownership interest in the LLC that owns and operates the facility. Gregory Assisted Living, L.L.C. has since been replaced by Silver Threads Residence, L.L.C.

      .SDCL 15-26A-60(5) provides the requirements for an appellant's brief, it states in part that, "[t]he facts must be stated fairly, with complete candor, and as concisely as possible.” The statute further provides, "[ejach statement of a material fact shall be accompanied by a reference to the record where such fact appears.”

      . For example, at pages 33 and 34 of her deposition, which was not taken until November 13, 2001, Buseman states,
      we discussed — I remember we discussed payment, and he was told that the HUD— when the project was completed, he would be paid from the HUD monies. So up until that time, I did not — I figured he knew that he was going to be paid by HUD, and apparently he did because he would have had me sign — from the very beginning he would have had me sign something saying in June I want to be paid so much, in August I want to be paid so much, and we would sign an agreement that he would be paid accordingly as he — as he worked with the project. He did not do that.
      Despite this assertion that Van De Walle knew it would be paid "by HUD,” there is no record support for the proposition. First, the argument ignores the reality that Van De Walle executed and sent Buseman a standard agreement contract when he commenced work and it ignores over twenty invoices sent to Buseman by Van De Walle over a two-year period. Furthermore, Buseman is unable to point to any meeting or communication between the parties to support the assertion that there was such an oral understanding.
      Assuming the above assertions by Buseman to be correct, as we are required to do on summary judgment, they do not establish, as Buseman now claims, that Van De Walle agreed that payment was contingent on HUD approval. Her assertions, at best, only go to the timing and source of payment.


author: MEIERHENRY, Justice.

text:
    2003 SD 72
    MATHIS IMPLEMENT COMPANY, Plaintiff and Appellee, v. James Eric HEATH and Rebekah L. Heath, Defendants and Appellants.
    No. 22571.
    Supreme Court of South Dakota.
    Considered on Briefs on March 24, 2003.
    Decided June 11, 2003.

      Wally Eklund of Johnson, Eklund, Nicholson, Peterson & Fox, Gregory, South Dakota, Attorneys for plaintiff and appel-lee.
    J.M. Grossenburg, Winner, South Dakota, Attorney for defendants and appellants.
   MEIERHENRY, Justice.

[¶ 1.] James and Rebekah Heath (Heath) contracted with Mathis Implement Company (Mathis) to install concrete for a shed floor and for footings and walls for a basement for Heath’s pre-built home. Mathis sought $28,033.02 for the completed work. After nonpayment by Heath, Mathis brought an action to foreclose its mechanic’s lien. As a defense, Heath claimed breach of contract. Heath also counterclaimed for breach of contract and breach of warranty. The trial court ruled in favor of Mathis on all issues. We affirm.

FACTS

[¶2.] In May 2001, Heath purchased property on which to construct a home. Heath contacted Mathis for a bid proposal on concrete work. Mathis submitted three separate bid proposals each of which included plans for a 32 x 54 concrete basement and alternatively priced foam forms for the concrete basement walls. Heath agreed to hire Mathis but rejected the forms recommended in the bids substituting plywood forms instead. Also, Heath wanted to use plastic form liners to achieve a brick like appearance on the basement walls.

[¶ 3.] Prior to using the plastic form liners, Mathis’ concrete manager Larry Scholz (Scholz) contacted the supplier of the plastic forms. The supplier advised Scholz that it did not recommend the use of the plastic form liners in this type of application. Scholz claims that he told James that the liners were not recommended and that he would not guarantee the appearance of the walls. James did not recall Scholz’s warning or refusal to guarantee the work if the liners were used. Ultimately, the plastic form liners were utilized.

[¶ 4.] Throughout the project, Heath was involved in the construction process. After the footings were formed but before the basement walls were poured, Heath altered the plans and design of the basement from a garage to a walk-out basement which required tearing out and reinstalling the plumbing. Before the concrete was poured, Heath spent three hours moving forms, cutting screws and pulling stakes. After the footings were poured, Heath insisted that an additional concrete pier be poured in the center of the basement. Heath also added and installed pipe through the forms to allow drainage.

[¶ 5.] When the walls were ready to be poured, Mathis delivered the concrete to the site in its ready-mix trucks. Mathis had hired a pump truck from a Fort Pierre, South Dakota company to pump the concrete into the forms. The discharge tube on the pump truck plugged several times during the process causing the operator of the truck to discontinue the job and return to Fort Pierre. At that point, Mathis brought three tractors with front-end loaders to the site in order to build ramps sufficient to allow its ready-mix trucks to access the forms and finish pouring the walls.

[¶ 6.] Heath claimed that the repeated clogging of the tube on the pump truck demonstrated that the concrete mix was defective and as a result the defective mix caused poor consolidation and weakness of the concrete walls. Consolidation, as explained by Heath’s expert Richard Haan (Haan), is “the uniform mixing of and the releasing of the entrapped air within the concrete.” When the forms were removed from the basement walls some defects were apparent. On the inside and outside of the walls there were areas with a “honeycomb” appearance. A gap between the ground and the windowsill existed underneath one window on the walkout side. Mathis offered to repair the defects; however, Heath instructed Mathis to leave and not to return.

[¶ 7.] Subsequently, Heath hired Haan, an engineer, for advice regarding the quality of Mathis’ work. Based on a visual inspection of the basement walls, Haan concluded that the concrete had a consolidation problem with large voids of entrapped air in the surface and in the interface of the footings and foundation walls causing weakness in the walls. Haan advised Heath not to build on the foundation. As a result, Heath demolished the footings and the basement walls and had them replaced by another contractor. Mathis disputed that there was a problem with the strength of the basement walls and presented expert testimony at trial that the strength of the concrete exceeded the requirements of the Building Code and that it would have been economically feasible to fix the problems instead of demolishing and reconstructing the walls.

[¶ 8.] After a two-day trial to the court, the trial judge found in favor of Mathis and awarded the full contract price of $28,033.02. Heath raises the following issues on appeal:

1.Whether the trial court’s decision in favor of Mathis is clearly erroneous based upon the evidence presented at trial.
2. Whether the trial court’s finding that the defects were repairable is clearly erroneous.
3. Whether the trial court’s finding that Mathis did not breach the warranty of fitness for a particular purpose is clearly erroneous.

STANDARD OF REVIEW

[¶ 9.] We review a trial court’s findings of fact under a clearly erroneous standard.

Clear error is shown only when, after a review of all the evidence, we are left with a definite and firm conviction that a mistake has been made. The trial court’s findings of fact are presumed correct and we defer to those findings unless the evidence clearly preponderates against them.

A.P. & Sons Const. v. Johnson, 2003 SD 13, ¶ 9, 657 N.W.2d 292, 294 (internal citations omitted). “[T]he question is not whether this court would have made the same findings that the trial court did, but whether on the entire evidence this court is left with a definite and firm conviction that a mistake has been committed.” Fall River County v. South Dakota Dept. of Revenue, 1999 SD 139, ¶ 15, 601 N.W.2d 816, 821.

DECISION

1. Whether the trial court’s decision in favor of Mathis is clearly erroneous based upon the evidence presented at trial.

2. Whether the trial court’s finding that the defects were repairable are clearly erroneous.

[¶ 10.] Heath’s first two issues will be addressed together. Both issues deal with the trial court findings as they relate to Mathis’ substantial performance of the contract and the court’s award of the full contract price to Mathis. Mathis’ cause of action to enforce its mechanic’s lien is based on the doctrine of substantial performance. In response to Mathis’ claim, Heath asserted breach of contract as a defense and, in addition, counterclaimed for breach of contract and breach of implied warranty of fitness for a particular purpose and sought damages. Heath claimed that Mathis failed to substantially perform the contract.

[¶ 11.] The doctrine of substantial performance in construction contracts has long been recognized by this Court.

We have long recognized the rule of substantial performance of building contracts. We first stated the rule in Aldrich v. Wilmarth, 3 S.D. 523, 54 N.W. 811 (1893): “But where the builders have in good faith Intended to and Have substantially complied with their contract, although there may be Slight defects caused by inadvertence or unintentional omissions, they may recover the contract price, less the damages sustained on account of such defects.” (Emphasis supplied). The other cases recognizing this doctrine are collected in Dixon v. Nelson, 79 S.D. 44, 48, 107 N.W.2d 505, 507 (1961).

Van Den Hoek v. Bradwisch, 273 N.W.2d 152, 154 (S.D.1978). In applying the doctrine, the trial court found that despite minor cosmetic defects, Mathis had substantially performed the contract. The trial court found that the testimony of Mathis’ expert was more credible than Heath’s expert and was based upon test results which established that the concrete was of good quality. Additional testimony from the person who demolished the basement walls indicated he found the concrete strong. Conflicting evidence was presented to the trial court regarding the structural integrity of the footings and walls from both lay and expert testimony. The trial court as the trier of fact and the sole judge of credibility entered findings of fact and conclusions of law in favor of Mathis.

[¶ 12.] Additionally, the trial court dismissed Heath’s counterclaim and awarded Mathis the full contract price without any reduction for the cost of the defects. Implicit in the trial court’s findings of substantial performance is a breach of contract analysis. Substantial performance is not full performance and the party relying on the doctrine admits breaching the contract. Ahlers Building Supply, Inc. v. Larsen, 535 N.W.2d 431, 435 (S.D.1995). With a finding of substantial performance, the proper measure of damage is the contract price less the cost of the defect. Id.

[¶ 13.] The trial court specified the defects in Finding of Fact 17 as follows:

After removal of the plywood forms on or about August 31, 2001 defects were observed in the walls as follows:
a. Photos taken show a number of areas of “honeycomb” appearance.
b. Beneath one window on the “walkout” side of the basement (East) there is an area where the concrete did not fill the form.
c. There are a number of areas where the plastic form liners failed and the “brick pattern” appearance failed due to the tearing of the forms.

Mathis presented evidence that the defects could have been repaired at no additional cost to Heath. Heath based the claim for damages on the theory that the only way to cure the defects was to demolish the concrete walls and rebuild them. The court rejected Heath’s claim. The court determined that the only defects were the “honeycomb” appearance, the gap under the window and areas of pattern failure. The court awarded Mathis the full contract price. In awarding damages, the court should have deducted the damages sustained on account of such defects from the contract price. However, since the court rejected Heath’s evidence of the damages sustained, she was left with Mathis’ evidence of the cost to repair. Mathis’ evidence was that the defects could be repaired at no additional cost. Therefore, the trial court’s award of the full contract price is not clearly erroneous.

3. Whether the trial court’s finding that Mathis did not breach the warranty of fitness for a particular purpose was clearly erroneous.

[¶ 14.] Heath asserts that the trial court erred in finding no breach of warranty for a particular purpose. In dismissing Heath’s claim, the trial court determined that Heath was involved with the design and specifications of the project and did not totally rely on Mathis’ experience and skill in doing the work. Heath contends that the trial court erroneously made these conclusions. Evidence presented at trial, however, supports the trial court’s determination. Heath actively participated in the decisions, performed some of the labor, worked several hours measuring, bracing and straightening forms before the concrete was poured, installed additional re-enforcement bars and insisted on a concrete center pier, and chose to use plywood forms instead of the recommended styro-foam forms. Additionally, Heath directed the use of plastic form liners despite being advised against it.

[¶ 15.] The trial court’s findings on the breach of warranty claim are not clearly erroneous. We affirm on all issues.

[¶ 16.] GILBERTSON, Chief Justice, and SABERS, KONENKAMP, and ZINTER, Justices, concur.