author:
MARING, Justice.
      VANDE WALLE, Chief Justice,

text:
    2005 ND 155
    AMERADA HESS CORPORATION; Tioga Gas Plant, Inc.; Solar Gas, Inc.; and AH 1980 Program, Inc., Appellants v. STATE of North Dakota, by and through its TAX COMMISSIONER, Cory Fong, Appellee.
    No. 20040378.
    Supreme Court of North Dakota.
    Aug. 31, 2005.

      John W. Morrison (argued), Fleck, Mather & Strutz, Bismarck, N.D., and Joseph M. Aspray (appeared), Senior Tax Counselor, Woodbridge, N.J., for appellants.
    Robert W. Wirtz (argued) and Donnita A. Wald (appeared), Special Assistant Attorneys General, Bismarck, N.D., for ap-pellee.
   MARING, Justice.

[¶ 1] Amerada Hess Corporation (“Am-erada”), Tioga Gas Plant, Inc. (“Tioga”), Solar Gas, Inc. (“Solar”), and AH 1980 Program, Inc. (“AH”) appealed from a judgment affirming an order of the State Tax Commissioner assessing them more than $3,000,000 in additional back taxes, penalty and interest. We conclude the Commissioner did not err in his interpretation of the applicable tax statutes in assessing the additional taxes, penalty and interest. We affirm.

I

[¶ 2] Amerada and its wholly-owned subsidiaries, Tioga, Solar and AH, each conducted business in North Dakota during tax years ending December 31, 1994, through December 31, 1998. Amerada was part of a unitary business group during those tax years that elected to apportion its income under the water’s edge method allowed by N.D.C.C. ch. 57-38.4. The Commissioner audited Amerada’s 1994 through 1998 tax returns and issued a notice of determination on November 13, 2000, that assessed additional tax, penalty and interest in the amount of $2,385,604, $119,280, and $756,184, respectively. Am-erada protested the determination and, after an informal conference held in June 2001 to attempt to resolve the parties’ differences concerning the audit, the Commissioner issued a notice of reconsideration and assessment. Amerada filed an administrative complaint on November 26, 2001, challenging the Commissioner’s stance on two issues the parties failed to resolve. Amerada claimed the Commissioner incorrectly concluded that the amount of foreign taxes it paid, which is treated under federal law as a dividend, may be included as a dividend for purposes of North Dakota apportionable income but may not be treated as a dividend and partially excluded under N.D.C.C. § 57-38.4-02(2), which allows a partial exclusion for “foreign dividends.” Amerada also claimed the Commissioner incorrectly concluded that a taxpayer who has elected to apportion its income under the water’s edge method must include both the income of an 80/20 subsidiary corporation and dividends distributed from that income in its North Dakota apportionable income because this allegedly results in improper double taxation.

[¶ 3] A hearing was held before an administrative law judge (“ALJ”) on February 10, 2004. In recommended findings of fact, conclusions of law, and order, the ALJ ruled in favor of the Commissioner. The Commissioner adopted the ALJ’s recommendations and assessed Amerada additional income tax of $2,298,737, penalty of .$114,937, and interest of $1,001,947. Amerada and its subsidiaries appealed to the district court, which affirmed the Commissioner’s decision. This appeal followed.

II

[¶ 4] Amerada and its subsidiaries argue the Commissioner erred as a matter of law in assessing additional taxes, penalty and interest for the tax years in question.

[¶ 5] Our review of a decision by an administrative agency is governed by N.D.C.C. ch. 28-32. State ex rel. Clayburgh v. American West Community Promotions, Inc., 2002 ND 98, ¶ 5, 645 N.W.2d 196. As we said in Vogel v. Workforce Safety and Ins., 2005 ND 43, ¶ 5, 693 N.W.2d 8 (quoting Elshaug v. Workforce Safety & Ins., 2003 ND 177, ¶12, 671 N.W.2d 784), this Court has a limited role in appeals from administrative agency decisions:

Under N.D.C.C. §§ 28-32-46 and 28-32-49, the district court, and this Court on further appeal, must affirm an administrative agency decision unless one of the following is present:
1. The order is not in accordance with the law.
2. The order is in violation of the constitutional rights of the appellant.
3. The provisions of this chapter have not been complied with in the proceedings before the agency.
4. The rules or procedure of the agency have not afforded the appellant a fair hearing.
5. The findings of fact made by the agency are not supported by a preponderance of the evidence.
6. The conclusions of law and order of the agency are not supported by its findings of fact.
7. The findings of fact made by the agency do not sufficiently address the evidence presented to the agency by the appellant.
8. The conclusions of law and order of the agency do not sufficiently explain the agency’s rationale for not adopting any contrary recommendations by a hearing officer or an administrative law judge. the entire record.” Id. “Questions of law, including the interpretation of a statute, are fully reviewable on appeal from an administrative decision.” Id.
We exercise restraint in deciding whether an agency’s findings of fact are supported by a preponderance of the evidence, and we do not make independent findings or substitute our judgment for that of the agency. Barnes v. Workforce Safety and Ins., 2003 ND 141, ¶ 9, 668 N.W.2d 290. ‘We decide only whether a reasoning mind reasonably could have decided the agency’s findings were proven by the weight of the evidence from

A

[¶ 6] Amerada and its wholly-owned subsidiaries, Tioga, Solar and AH (collectively “Amerada”), contend the Commissioner erred in refusing to allow partial exclusion of I.R.C. § 78 dividends they received because they assert those dividends constitute “foreign dividends” for purposes of N.D.C.C. § 57-38.4-02(2). Some background is helpful to understand the parties’ positions.

[¶ 7] Because Amerada conducted business both within and without North Dakota during the pertinent tax years, it must apportion its business income under a three-factor formula set forth in the Uniform Division of Income for Tax Purposes Act (“UDITPA”), N.D.C.C. ch. 57-38.1. Under this formula, to determine the portion of business income attributed to North Dakota, a corporate taxpayer’s “income is multiplied by a fraction representing the arithmetic average of the ratios of sales, payroll, and property values within the state to those of the corporation as a whole.” Minnesota Mining and Mfg. Co. v. Conrad, 418 N.W.2d 276, 277 (N.D.1987). An interrelated part of UDITPA formula apportionment is the unitary business principle, which is applied to “ ‘a group of functionally integrated corporate units which are so interrelated and interdependent that it becomes relatively impossible for one State to determine the net income generated by a particular corporation’s activities within the State and therefore allocable to that State for purposes of taxation.’ ” Id. at 277 (quoting Caterpillar Tractor Co. v. Lenchos, 84 Ill.2d 102, 49 Ill.Dec. 329, 417 N.E.2d 1343, 1351 (1981)). The unitary business method takes the combined overall worldwide income of the corporate taxpayer and all of its foreign and domestic subsidiaries and “apportions it among the states in which the enterprise carries on its business on the theory that activities in each of the states where an enterprise operates contribute to its overall profit.” Minnesota Mining, 418 N.W.2d at 277. After eliminating intercorporate dividends or other transfers of funds among the members of the worldwide unitary business group, the adjusted amount is multiplied by the UDITPA apportionment formula to reflect the income that is taxable in North Dakota. Id. See also N.D.C.C. § 57-38.4-01(9) (defining worldwide combined report as “a combined report with respect to a unitary affiliated group irrespective of the country or countries in which any member of the affiliated group is incorporated or conducts business activity”).

[¶ 8] Although the Commissioner since 1973 has required worldwide unitary apportionment, the legislature in 1987 enacted N.D.C.C. ch. 57-38.4, which allows a corporation required to file a worldwide unitary combined report to elect to apportion its income using the “water’s edge” method. Minnesota Mining, 418 N.W.2d at 278 n. 2. In general, the water’s edge method attempts to limit the reach of unitary income taxation to the borders of the United States. Id. Under the water’s edge method, the water’s edge group is limited to a list of entities described in N.D.C.C. § 57-38.4-01(8).

[¶ 9] Amerada’s federal taxable income is relevant in calculating its state tax liability because, under North Dakota law, federal taxable income is the simplified starting point for computing state income tax. Hamich, Inc. v. State, 1997 ND 110, ¶ 16, 564 N.W.2d 640. The relevant federal tax laws concerning Amerada’s first issue involve the foreign dividend “gross-up.” In International Minerals and Chem. Corp. v. Heitkamp, 417 N.W.2d 791, 794 (N.D. 1987), this Court explained the foreign dividend gross-up rules:

In computing its federal income tax liability, a corporate taxpayer which pays income tax to a foreign country may either deduct the tax paid to the foreign country under I.R.C. § 164(a)(3) or credit that amount under I.R.C. § 901 against its tax liability. While § 901 provides a credit for foreign taxes a corporation actually paid, I.R.C. § 902 additionally allows a domestic corporation, owning at least ten percent of the voting stock of a foreign subsidiary from which it receives a dividend, a derivative credit for the foreign income taxes paid by its foreign subsidiary on its accumulated profits. In effect, under § 902 the domestic corporation is “deemed” to have paid a portion of the foreign taxes actually paid or accrued by the foreign subsidiary. See B. Bittker and J. Eus-tice, Federal Income Taxation of Corporations and Shareholders ¶ 17.11 (4th ed.1979); 34 Am.Jur.2d Federal Taxation ¶ 8412 (1987).
If a corporate taxpayer elects to take the § 902 “deemed paid” foreign tax credit rather than the deduction, I.R.C. § 78 requires that the domestic corporation add to its gross income the amount of the “deemed paid” foreign taxes. This amount, commonly referred to as “gross-up,” is treated under § 78 as a “dividend” received by the domestic corporation from the foreign subsidiary. See B. Bittker and J. Eustice, supra. [I]t generally remains more advantageous for a domestic corporation to elect the “deemed paid” foreign tax credit than to take a deduction since a deduction from income serves only to cut taxable income while the credit reduces dollar for dollar the actual federal tax due. See 34 Am.Jur.2d Federal Taxation ¶ 8419 (1987).

[¶ 10] In International Minerals, 417 N.W.2d at 795, the taxpayer excluded the gross-up amount from its state tax returns and the Commissioner disallowed the exclusion because North Dakota’s income tax statutes did not expressly allow corporations a deduction for taxes paid to a foreign country. The taxpayer argued that if North Dakota taxed gross-up income, an “offsetting adjustment” was necessary to correct an “ ‘unconstitutional distortion’ ” caused by the fictitious nature of the gross-up amount. Id. at 796. This Court rejected the taxpayer’s argument that inclusion of the gross-up amount, without recognizing an offsetting adjustment for state tax purposes, violated the taxpayer’s due process rights:

Having elected the benefit of the § 902 “deemed paid” foreign tax credit, IMC in effect chose not to deduct the foreign taxes paid by its foreign subsidiaries but to instead treat them as “dividends” and therefore “gross income” for purposes of the Internal Revenue Code. We do not believe due process requires that IMC be freed from this choice for state tax purposes. “The propriety of a deduction does not turn upon general equitable considerations ... [but] ‘depends upon legislative grace; and only as there is clear provision therefor can any particular deduction be allowed.’ ” Commissioner v. National Alfalfa Dehydrating & Milling Co., 417 U.S. 134, 149, 94 S.Ct. 2129, 2137, 40 L.Ed.2d 717 (1974)[quoting New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440, 54 S.Ct. 788, 790, 78 L.Ed. 1348 (1934)]. Because North Dakota does not statutorily recognize a deduction for § 78 “gross-up” income, IMC may not exclude the “gross-up” from the amount of federal taxable income reported on its state income tax return.

Id.

[¶ 11] International Minerals was decided after N.D.C.C. ch. 57-38.4 had been enacted, but before the legislation became effective. During the tax years in question in this case, Amerada’s foreign subsidiaries paid foreign taxes. Amerada elected to take the federal “deemed paid” foreign tax credit and was required to include the gross-up amount in its income for federal tax purposes. Amerada also elected to file its state tax return using the water’s edge method. Section 57-38.4-02(2), N.D.C.C., provides

2. All corporations electing the water’s edge method must include the income and apportionment factors of the water’s edge group. Foreign dividends and income from 80/20 corporations must be included as follows:
a. An existing corporation must include fifty percent of foreign dividends and sixty percent of income from 80/20 corporations. However, an existing corporation that increases and maintains a threshold activity by twenty-five percent or more, but not ■ by business reorganization or acquisition, is only required to include thirty percent of foreign dividends and thirty percent of income from 80/20 corporations.
b. A new corporation must include thirty percent of foreign dividends and thirty percent of income from 80/20 corporations.
c. For taxable years beginning after December 31, 1994, all corporations making the water’s edge election may reduce the inclusion to include thirty percent of foreign dividends and thirty percent of income from 80/20 corporations.

“Foreign dividends” are defined in N.D.C.C. § 57-38.4-01(4) as:

any dividend received by a member of the water’s edge group from any affiliated corporation incorporated outside the fifty states and District of Columbia, including amounts included in income computed under sections 951 through 954 of the Internal Revenue Code.

Amerada contends that the I.R.C. § 78 gross-up amounts included in its federal tax returns qualify as a “foreign dividend” for purposes of partial exclusion under state law. In effect, Amerada argues N.D.C.C. ch. 57-38.4 is currently the statutory “offsetting adjustment” that was missing when International Minerals was decided.

[¶ 12] Amerada’s argument that gross-up amounts constitute foreign dividends requires that we interpret the meaning of N.D.C.C. §§ 57-38.4-01(4) and 57-38.4-02(2). In Harter v. North Dakota Dep’t of Transp., 2005 ND 70, ¶ 7, 694 N.W.2d 677 (quoting Phipps v. North Dakota Dep’t of Tramp., 2002 ND 112, ¶ 7, 646 N.W.2d 704 (citations omitted)), we said:

Our primary objective in the interpretation of a statute is to ascertain the intent of the legislature. We look first to the language of the statute. If the language of a statute is clear and unambiguous, the letter of the statute cannot be disregarded under the pretext of pursuing its spirit. If a statute’s language is ambiguous or of doubtful meaning, we may consider extrinsic aids, including legislative history, along with the language of the statute, to ascertain legislative intent. quences,” and “construe[s] statutes in a practical manner and give[s] consideration to the context of the statutes and the purposes for which they were enacted.”

“A statute is ambiguous if it is susceptible to meanings that are different, but rational.” This Court “presume[s] the Legislature did not intend an absurd or ludicrous result or unjust conse-

[¶ 13] Amerada argues that, although N.D.C.C. § 57-38.4-01(4) does not expressly list I.R.C. § 78 gross-up amounts as foreign dividends subject to partial exclusion under N.D.C.C. § 57-38.4-02(2), the reference to the I.R.C. §§ 951 through 954 amounts, otherwise commonly known as Subpart F income, is prefaced by the term “including,” which ordinarily is not a term of limitation, but a term of enlargement. See Hilton v. North Dakota Educ. Ass’n, 2002 ND 209, ¶ 12, 655 N.W.2d 60; Thompson v. Associated Potato Growers, Inc., 2000 ND 95, ¶ 12, 610 N.W.2d 53; Lucke v. Lucke, 300 N.W.2d 231, 234 (N.D.1980); see also North Dakota Legislative Drafting Manual 107 (1987) (“An exhaustive definition uses the word means while a partial definition uses the word includes ”). Amerada contends that, because Subpart F income, like I.R.C. § 78 gross-up amounts, is treated under the federal tax laws as a “deemed dividend,” the gross-up amounts are included within the statutory definition of foreign dividends. The Commissioner argues I.R.C. § 78 gross-up amounts are not considered foreign dividends under the statute because those amounts are not dividends actually received, but constitute foreign taxes paid. The Commissioner also argues they are not foreign dividends under the statute because, unlike Subpart F income, I.R.C. § 78 gross-up amounts are not expressly mentioned in the statute. Because the statute is susceptible to rational, but different meanings concerning whether I.R.C. § 78 gross-up amounts qualify as foreign dividends, we conclude the statute is ambiguous and it is therefore appropriate to look to the available legislative history. Western Gas Res., Inc. v. Heitkamp, 489 N.W.2d 869, 872-73 (N.D.1992).

[¶ 14] Chapter 57-38.4, N.D.C.C., had its genesis in House Bill 1064 introduced at the 50th session of the legislative assembly in 1987. See 1987 N.D. Sess. Laws ch. 702. The proposed legislation was the result of a study by the Interim Committee on Taxation. See Report of the N.D. Legis. Council 183-86 (1987). Exhibits provided to that Committee detailing the “Six Approaches to Unitary Taxation” and the “Fiscal Impact Analysis” of the various approaches list “Foreign dividends” and “Section 78 gross-up” in separate categories. Section 6 of House Bill 1064, as originally introduced, provided in relevant part:

SECTION 6. Treatment of dividends. For purposes of this Act all of the following apply:
1. Dividends received from corporations incorporated outside the fifty states and District of Columbia, to the extent taxable, shall be deemed income subject to apportionment.
3. Amounts included in income under sections 951 through 964 of the Internal Revenue Code shall be deemed dividends from corporations outside the fifty states and District of Columbia.
5. Deemed distributions defined by section 78 of the Internal Revenue Code and corresponding amounts with respect to deemed dividends in subsection 2 shall be excluded from the income of the water’s edge combined group.

The original draft of the proposed legislation treated Subpart F income and I.R.C. § 78 gross-up income differently, subjecting the former to apportionment and ex-eluding the latter from the income of the water’s edge group.

[¶ 15] Proposed amendments to House Bill 1064 were offered on March 13 and March 17, 1987, that completely changed the text of the original bill. However, both of these proposed amendments continued to provide that “ ‘[f|unctionally related income’ ... does not include the gross-up of foreign taxes computed for the foreign tax credit.” Proposed Amendments to Engrossed House Bill No. 1064 § 1 (March 13, 1987) (prepared by Tax Department staff for Sen. Satrom); Senate Amendments to Engrossed House Bill No. 1064 § 1 (March 17, 1987) (prepared by Tax Department staff for Sen. Satrom). Another proposed amendment to the bill was offered on April 10, 1987, that again changed much of the text of the original bill and the other proposed amendments. However, the proposed amendment continued to treat Subpart F income and gross-up income differently, providing that “[ajmounts included in income under sections 951 through 964 of the Internal Revenue Code shall be deemed dividends from corporations outside the fifty states and District of Columbia” and that “[d]eemed distributions defined by section 78 of the Internal Revenue Code and corresponding amounts with respect to deemed dividends in subsection 2 shall be excluded from the income of the water’s edge combined group.” Proposed Amendments to Engrossed House Bill No. 1064 § 5 (April 10, 1987) (prepared by Legislative Council staff for Rep. Moore). The version of House Bill 1064 that was eventually passed after being referred to a conference committee during the waning days of the legislative session bears little resemblance to the prior versions of the bill. As enacted, House Bill 1064 for the first time specifically defined “[fjoreign dividends” as “including amounts included in income computed under sections 951 through 954 of the Internal Revenue Code,” but did not mention I.R.C. § 78 deemed distributions.

[¶ 16] The committee minutes do not specifically state why I.R.C. § 78 gross-up income was not, as was Subpart F income, listed as being included within the definition of “foreign dividends.” The minutes do reflect that lawmakers were concerned about balancing the loss of tax revenue resulting from allowance of water’s edge filing with fairness to the multinational corporations doing business within the state in an effort to be competitive with other states’ corporate tax rates. See Hearing on H.B. 106k Before the House Finance and Taxation Comm., 50th N.D. Legis. Sess. (Jan. 26, 1987) (testimony of Rep. Schneider; Rep. Moore; John Wal-stad, Legislative Council staff; Bob Kes-sel, State Tax Department). Hearing on H.B. 106k Before the House Finance and Taxation Conference Comm., 50th N.D. Legis. Sess. (April 9, 1987) (testimony of Rep. Moore; Rep. Schneider; Bob Kessel, State Tax Department); Hearing on H.B. 106k Before the House Finance and Taxation Conference Comm., 50th N.D. Legis. Sess. (April 14, 1987) (testimony of Rep. Moore; Rep. Schneider; Sen. Dotzenrod); Hearing on H.B. 106k Before the House Finance and Taxation Conference Comm., 50th N.D. Legis. Sess. (April 16, 1987) (testimony of Rep. Moore; Rep. Schneider; Sen. Dotzenrod).

[¶ 17] The legislative history shows that Subpart F income and I.R.C. § 78 deemed distributions were specifically mentioned and treated differently in preliminary drafts of and amendments to House Bill 1064. The final version of the bill contains a definition of foreign dividends that includes Subpart F income but does not mention I.R.C. § 78 deemed distributions. We are convinced that the legislature, having specifically differentiated between Subpart F income and I.R.C. § 78 deemed distributions in the earlier drafts of the legislation, would have expressly mentioned I.R.C. § 78 deemed distributions as being included as foreign dividends if it had intended them to be given the same preferential treatment as Sub-part F income. We conclude that I.R.C. § 78 deemed distributions are not “foreign dividends” for purposes of N.D.C.C. §§ 57-38.4-01(4) and 57-38.4-02(2).

[¶ 18] Amerada raises several other arguments challenging the Commissioner’s refusal to recognize I.R.C. § 78 gross-up amounts as foreign dividends. Amerada relies on Dow Chem. Co. v. Commissioner of Revenue, 378 Mass. 254, 391 N.E.2d 253, 264-66 (1979), and Dow Chem. Co. v. Director of Revenue, 787 S.W.2d 276, 284-86 (Mo.1990), to support its argument that the gross-up amounts should be considered foreign dividends under North Dakota law. The statutes at issue in both of these cases simply allowed deductions for corporate dividends, and the courts concluded that if the tax authority adopted the fictional aspect of gross-up amounts as income for purposes of inclusion, the tax authority could not reject the fictional aspect for purposes of exclusion as a deductible dividend. Those statutory deductions for dividends differ from North Dakota law, which specifically mentions as deductible portions of Subpart F income. Amerada also argues that, because both Subpart F income and § 78 gross-up amounts are considered “deemed dividends” under federal tax law, see, e.g., Dow Chemical, 787 S.W.2d at 277, 286 (indicating DISC income, Subpart F income, and § 78 gross-up amounts are “deemed dividends”), they should be treated alike under N.D.C.C. § 57-38-01(14), which directs that any “term, as used in this code, as it pertains to the ... reporting of income, deductions, or exemptions ... has the same meaning as when used in a comparable context in the laws of the United States relating to federal income taxes, unless a different meaning is clearly required or contemplated.” However, we are not for purposes of state law defining a term differently than the term is defined under the federal tax laws. Rather, we hold that the legislature has chosen to treat these two types of “deemed dividends” differently for purposes of partial exclusion, and Amerada has cited no authority indicating the legislature lacks the power to do so. There may be several policy reasons that would support deduction of § 78 gross-up amounts under North Dakota law. However, the “propriety of a deduction does not turn upon general equitable considerations ... [but] “depends upon Legislative grace; and only as there is clear provision therefor can any particular deduction be allowed.” ” International Minerals, 417 N.W.2d at 796 (quoting Commissioner v. National Alfalfa Dehydrating & Milling Co., 417 U.S. 134, 149, 94 S.Ct. 2129, 40 L.Ed.2d 717 (1974)).

[¶ 19] Amerada also argues that it should prevail because, “if a tax statute contains any ambiguities, it must be strictly construed against the state.” We believe Amerada oversimplifies this maxim of statutory construction. Amerada relies on American West, 2002 ND 98, ¶ 14, 645 N.W.2d 196 (quoting Rocky Mountain Oil & Gas Ass’n v. Conrad, 405 N.W.2d 279, 281 (N.D.1987)), and other cases in which we said, “[I]f a tax statute is ambiguous so that the legislative intention with respect to the meaning of the statute is doubtful, the doubt must be resolved in favor of the taxpayer.” This statement does not mean any ambiguous tax statute must be strictly construed against the state. American West, at ¶ 14, and the other cases relied upon by Amerada recognize that the primary purpose of statutory construction is to ascertain the intent of the legislature and that a court may resort to other rules of statutory construction, including extrinsic aids, to interpret an ambiguous tax statute. See also Western Gas, 489 N.W.2d at 872-73; Great N. Ry. Co. v. Flaten, 225 N.W.2d 75, 78 (N.D.1974); Great N. Ry. Co. v. Severson, 78 N.D. 610, 618, 50 N.W.2d 889, 892-93 (1951); Standard Oil Co. v. State Tax Comm’r, 71 N.D. 146, 150, 299 N.W. 447, 449 (1941); Goldberg v. Gray, 70 N.D. 663, 670, 297 N.W. 124, 127 (1941). We agree -with the reasoning of the Arizona Court of Appeals in Centric-Jones Co. v. Town of Marana, 188 Ariz. 464, 937 P.2d 654, 659 (App.1996) (citations omitted), when faced with a similar argument that all ambiguities in tax statutes must be resolved in favor of the taxpayer, with the result that no power to tax may be found:

We do not read this [maxim] as absolving us of our duty to find legislative intent through statutory construction whenever, on an initial reading, the subject statute yields an ambiguity. Yet that is what Centric’s interpretation ... would require.
We see the function of the maxim as follows. If, when the court concludes its process of construction, an ambiguity nevertheless remains, the maxim does generally dictate a result in favor of the taxpayer. Centric’s approach, however, would sidestep the process of construction entirely and apply the maxim prematurely.

This reasoning comports with our prior caselaw. See, e.g., Western Gas, 489 N.W.2d at 873 (“Although we generally attempt to resolve questions of doubtful legislative intent in favor of the taxpayer ..., the legislative history, as a whole, establishes a clear legislative intent”); Goldberg, 70 N.D. at 670, 297 N.W. at 127 (‘We do not question the rule [of strict construction against the tax authority]. However, the ultimate purpose sought to be attained by the construction of any statute is to arrive at the intention of the lawmaking body that enacted it”); see also District of Columbia v. Acme Reporting Co., 530 A.2d 708, 712-13 (D.C.Ct.App.1987) (applying all rules of statutory construction to interpretation of ambiguous tax statute); Parr v. Dep’t of Revenue, 276 Or. 113, 553 P.2d 1051, 1053 (1976) (concluding “there should not be separate and different rules of statutory construction for ambiguous tax statutes than for other ambiguous statutes passed by the legislature”); Sharp v. Park ‘N Fly of Texas, Inc., 969 S.W.2d 572, 574 (Tex.Ct.App.1998) (where ambiguities in construction of tax statutes remain after application of other rules of statutory construction, courts will strictly construe the applicability of taxation against the taxing authority and in the taxpayer’s favor); 3A N. Singer, Statutes and Statutory Construction § 66:3, pp. 24-25 (6th ed. 2003 Rev.) (footnotes omitted) (“Since the obligation to pay taxes arises only by force of legislative action, the nature and extent of that liability is determined by the legislative meaning. Therefore, all the rules of statutory construction are relevant in the interpretation of revenue measures”).

[¶ 20] We conclude that the rule of strict construction of ambiguous tax statutes in favor of the taxpayer is a rule of last resort when other means of ascertaining the legislature’s intentions have failed. Compare Webster v. Regan, 2000 ND 89, ¶ 11, 609 N.W.2d 733 (“interpretation of ambiguities in a grantee’s favor is a last resort rule of construction, applied when all other means of ascertaining the parties’ intent have failed”); Kaler v. Kraemer, 1999 ND 237, ¶ 19, 603 N.W.2d 698 (“a court should construe a contract against its drafter only when the uncertainty is not removed by application of other rules of contract interpretation”). Because we are able to ascertain the legislature’s intention from the legislative history, there is no need to resort to the strict construction rule.

[¶ 21] Amerada also argues the Commissioner incorrectly decided that his decision to exclude I.R.C. § 78 gross-up amounts from the statutory definition of foreign dividends “is not inconsistent with the Commissioner’s own policy interpretation of the law, notwithstanding a contrary interpretation in an audit manual.” In 1992 the Commissioner prepared a “Water’s Edge Tax Guide” for use by the Tax Department’s corporate income tax auditors stating that I.R.C. § 78 gross-up amounts were to be treated as foreign dividends under N.D.C.C. § 57-38.4-01(4). A corporate income tax auditor testified that after a 1995 review of the legislative history, the Tax Department determined that the gross-up amounts were not to be treated as foreign dividends. No change was made to the 1992 “Water’s Edge Tax Guide” because, according to the corporate income tax auditor, he was the only person at the Tax Department performing corporate income tax audits at the time. According to the Commissioner, the ‘Water’s Edge Tax Guide” is not published for distribution to taxpayers, but is an internal document used by the auditors and Amer-ada obtained its copy during the discovery process in this case. The Commissioner did not document the change in policy until 2002 after this case began.

[¶ 22] Amerada asserts that, because this internal policy was “an agency statement of general applicability which implements or prescribes law or policy” under N.D.C.C. § 28-32-01(11), the Commissioner should have promulgated an administrative rule on the subject under the rulemaking provisions of N.D.C.C. ch. 28-32. While it might have been preferable for the Commissioner to use the rulemak-ing procedure under N.D.C.C. ch 28-32, an administrative agency need not use the rulemaking process to correct an erroneous interpretation of a statute. See Amerada Hess Corp. v. Conrad, 410 N.W.2d 124, 129 n. 5 (N.D.1987); see also New Town Pub. Sch. Dist. No. 1 v. State Bd. of Educ., 2002 ND 127, ¶ 10, 650 N.W.2d 813 (administrative agency may reexamine a prior decision and the agency may depart from the prior decision if it distinguishes or rationally explains its departure); Koch Oil Co. v. Hanson, 536 N.W.2d 702, 709 (N.D.1995) (recognizing Tax Commissioner’s failure to adopt a rule and failure to collect a tax in the past does not estop him from assessing a tax); Turnbow v. Job Service North Dakota, 479 N.W.2d 827, 831 (N.D.1992) (“NDCC 28-32-02 authorizes, but does not require, administrative agencies to adopt reasonable rules in conformity with the statutes they administer or enforce”); True v. Heitkamp, 470 N.W.2d 582, 587 (N.D.1991) (Tax Commissioner’s failure to properly promulgate a rule does not require the Commissioner to accept a different unpromulgated rule or .test urged by a taxpayer). In Amerada Hess, 410 N.W.2d at 133 (citations omitted), this Court explained:

It is settled that, as a general rule, an administrative agency is not required to promulgate detailed rules interpreting every statutory provision that may be relevant to its actions, or covering every conceivable situation which might come before it. Rather, an administrative agency may announce new principles through adjudicative proceedings in addition to rule-making proceedings.

Amerada has not shown how it was harmed by the Commissioner’s failure to promulgate a rule on treatment of I.R.C. § 78 gross-up amounts. We reject Amera-da’s argument that this failure entitles it to prevail.

[¶ 23] We conclude the Commissioner correctly concluded that Amerada’s I.R.C. § 78 gross-up amounts are not foreign dividends for purposes of N.D.C.C. §§ 57-38.4-01(4) and 57-38.4-02(2).

B

[¶ 24] Amerada argues the Commissioner incorrectly concluded that the income of its 80/20 corporation and the dividends paid by that 80/20 corporation to its parent may properly be included in the taxable income of the water’s edge group because the inclusion of the dividends allegedly results in double taxation. Again, some background is helpful to understand the parties’ positions.

[¶ 25] During the relevant tax years, Amerada owned 100 percent of a Delaware corporation known as AHOC Abu Dhabi (“AHOC”), which is a corporation with less than 20 percent of its property and payroll located within the United States. A corporation which is incorporated in the United States, which is eligible to be included in a federal consolidated return, and which has less than 20 percent of its property and payroll assigned to locations within the United States is an “80/20 corporation.” See N.D.C.C. § 57-38.4-01(5); N.D. Admin. Code § 81-03-05.2-01(4). AHOC is an 80/20 corporation, and as such, it is specifically excluded from the water’s edge group under N.D.C.C. § 57-38.4-01 (8)(a). Under N.D.C.C. § 57-38.4-02(2)(a) and (c), 60 percent of net book income from 80/20 corporations must be included in the income of the water’s edge group for tax years beginning before December 31, 1994, and 30 percent of net book income must be included in the income of the water’s edge group for tax years beginning after December 31, 1994. See N.D.C.C. § 57-38.4-01(5) (defining “[i]ncome from 80/20 corporations” as “net book income after taxes”). During the tax year ending December 31, 1994, AHOC had $10,193,000 of net book income and 60 percent of this amount, or $7,135,100, was included in the income of the water’s edge group. During the tax year ending December 31, 1995, AHOC had $11,201,054 of net book income, and 30 percent of this amount, or $3,360,300 was included in the income of the water’s edge group.

[¶ 26] During the 1994 tax year, AHOC distributed $551,570 of its net book income to its parent, Amerada, as a dividend. During the 1995 tax year, AHOC distributed $499,559 of its net book income to Am-erada as a dividend. The Commissioner has promulgated N.D. Admin. Code § 81-03-05.2-04(2)(b), which provides:

2. Income for the water’s edge group must be computed on the same basis as federal taxable income, except as provided for in the following subdivisions and in subsection 2 of North Dakota Century Code section 57-38.4-02, and plus or minus the adjustments provided for in North Dakota Century Code section 57-38-01.3 with the exception of subdivision c of subsection 1 of North Dakota Century Code section 57-38-01.3:
b. Transactions between a member of the water’s edge group and an affiliated corporation that has been excluded from the group must be included.

Under this provision, the Commissioner concluded that, although the income giving rise to the Amerada dividends has already been included in the income of the water’s edge group, 100 percent of the AHOC dividends distributed to Amerada during the 1994 and 1995 tax years must also be included in the income of the water’s edge group. The Commissioner required that the intercompany dividends between AHOC and Amerada that were eliminated in Amerada’s consolidated federal tax return be added back for purposes of its state tax return.

[¶ 27] Amerada does not contend the Commissioner exceeded his statutory authority in promulgating N.D. Admin. Code § 81-03-05.2-04(2)(b). Rather, Amerada asserts that the inclusion of the intercompany dividends destroys the “parity” in the treatment of foreign corporations and 80/20 corporations contemplated by N.D.C.C. § 57-88.4-02 and results in double taxation. We reject Amerada’s argument for several reasons.

[¶ 28] The Commissioner’s interpretation of this complex and technical subject does not contradict the language of N.D.C.C. § 57-38.4-02 and is entitled to appreciable deference. See Kinney Shoe Corp. v. State ex rel. Hanson, 552 N.W.2d 788, 790 (N.D.1996). While there may be a desire to avoid double taxation as a matter of public policy, there is no constitutional prohibition against double taxation. See, e.g., Illinois Cent. R.R. Co. v. State of Minnesota, 309 U.S. 157, 164, 60 S.Ct. 419, 84 L.Ed. 670 (1940); Cincinnati Bell Tel. Co. v. City of Cincinnati, 81 Ohio St.3d 599, 693 N.E.2d 212, 218 (1998); 71 Am.Jur.2d State and Local Taxation § 27 (2001), and cases collected therein. We recognize that under N.D.C.C. § 57-38-01.3(2), the Commissioner is “authorized to prescribe rules and regulations to prevent requiring income that had been previously taxed under this chapter from being taxed again because of the provisions of this chapter,” and that avoiding double taxation is a permissible legislative goal. D.D.I., Inc. v. State ex rel. Clayburgh, 2003 ND 32, ¶ 15, 657 N.W.2d 228. Nevertheless, “determining the taxable income of multinational corporations is hardly an exact science,” Minnesota Mining, 418 N.W.2d at 281, and the legislature has given the Commissioner discretion to “impose necessary conditions other than the imposition of worldwide combination to prevent tax avoidance or to clearly reflect income in accordance with chapter 57-38.1.” N.D.C.C. § 57-38.4-03.

[¶ 29] Moreover, this Court has defined “double taxation” as “the ‘requirement that one person or known subject of taxation shall directly contribute twice to the same burden, while other subjects of taxation, belonging to the same class, are required to contribute but once.’ ” In re First Nat’l Bank of Hillsboro, 25 N.D. 635, 642-43, 146 N.W. 1064, 1067 (1898) (quoting Second Ward Sav. Bank v. Milwaukee, 94 Wis. 587, 69 N.W. 359, 362 (1896)). A Tax Department corporate income tax auditor testified at the administrative hearing that North Dakota had not engaged in double taxation of Amerada’s income:

MR. SWIFT:
[Hjere’s how the water’s edge election works in regard to ... 80/20 corporations. 80/20 corporations are allowed to deduct their taxable income from the North Dakota tax base.... Taxable income is almost always greater than book income. That’s why they made the election. If it wasn’t to their advantage to elect to be an 80, to make a water’s edge election, they wouldn’t do it. So you have a situation where they ... a corporation, in this case Amerada Hess, makes ... an election to file in the water’s edge method because it’s to their advantage to do so. They can ... eliminate all of their foreign subsidiaries from the North Dakota tax base. They can eliminate all of their 80/20 corporations, which are U.S. corporations, that are doing business overseas, from the North Dakota tax base. Mechanically how it works is that for an 80/20 corporation they will deduct their ... United States federal taxable income from the North Dakota tax base. They will then add back, in this case in 1994, 60 percent of their book income ... and in 1995, 30 percent of their book income. Typically book income is less than taxable income. It doesn’t ... necessarily have to be, but it often is. At any rate, if you deduct 100 percent of the number and add back 60 percent or 30 percent, you are not taxing more than 100 percent of their federal taxable income. In this particular case, the dividend that AHOC Abu Dhabi paid to Amerada Hess was around a half a million dollars in 1994 and 1995. If you add that half a million dollars to the 60 percent of book income and 30 percent of book income respectively, ... I do not believe ... you get anywhere close to their 100 percent of their federal taxable income. So in this case, it is my opinion we are not dealing with a case of double taxation. We have not even subjected 100 percent. Not even 100 percent of AHOC Abu Dhabi’s taxable income is in the North Dakota tax base.
MR. MORRISON:
And you agree that 60 percent and 30 percent, depending upon which year you’re in, of the book income is included in the taxable income because the Legislature said that’s how it’s going to be taxed?
MR. SWIFT:
That’s correct.
MR. MORRISON:
And in spite of the fact that the income of AHOC Abu Dhabi was included in the manner prescribed by the Legislature, the Tax Department’s position is that you can tax again by taxing the dividend distribution to the parent. Is that correct?
MR. SWIFT:
We’re not taxing it again. We ... are taxing a dividend distribution that ... AHOC Abu Dhabi made to the parent, but we are not taxing 100 percent of AHOC[’s] ... book income, we are not taxing 100 percent AHOC Abu Dhabi’s taxable income.
The ALJ found the Commissioner’s explanation persuasive:
The Commissioner’s taxation of the inter-company dividend and a portion of AHOC’s net book income, while arguably unfair, is acceptable tax policy, based on the applicable statutes and rules, and is not unconstitutional. The Commissioner’s explanation of how an .80/20 corporation is treated under the water’s edge filing method is ... easily understandable and consistent with the law. What [Amerada Hess] confuses with double taxation is, in effect, two separate entities being taxed on income derived from two separate events. Am-erada Hess elected the water’s edge method. Therefore, the treatment of AHOC dividends paid to [Amerada Hess] as a taxable event, as well as the treatment of a portion of AHOC’s book income being attributable to Amerada Hess as a taxable event is the logical and lawful result of its election. Accordingly, under the law, AHOC dividends must be included in [Amerada Hess’s] taxable income.

[¶ 30] We conclude the Commissioner’s findings are supported by a preponderance of the evidence, the conclusions of law and order are supported by the findings of fact, and the order that AHOC’s dividends must be included in Amerada’s taxable income is in accordance with the law.

Ill

[¶ 31] The judgment is affirmed.

[¶ 32] DANIEL J. CROTHERS, DALE V. SANDSTROM, and CAROL RONNING KAPSNER, JJ., concur.

VANDE WALLE, Chief Justice,

concurring specially.

[¶ 33] This is yet another case in which rules and regulations adopted by the Tax Commissioner might well have prevented the current proceedings. See, e.g., Koch Oil Co. v. Hanson, 536 N.W.2d 702 (N.D. 1995); True v. Heitkamp, 470 N.W.2d 582, 593 (N.D.1991) (VandeWalle, J., concurring and dissenting); Amerada Hess Corp. v. Conrad, 410 N.W.2d 124, 127 (N.D.1987) (VandeWalle, J., concurring in part and dissenting in part); Rocky Mountain Oil & Gas Ass’n v. Conrad, 405 N.W.2d 279, 284 (N.D.1987) (VandeWalle, J., dissenting).

[¶ 34] Unitary business taxation, the Uniform Division of Income for Tax Purposes Act, as found in N.D.C.C. ch. 57-38.1, the water’s edge method codified in N.D.C.C. ch. 57-38.4, treating foreign tax credits as foreign dividends are at best complex, generally ambiguous and at times inherently incomprehensible concepts except, perhaps, to their progenitors. It is in just such a situation the department charged with administering the law, in this case the Tax Commissioner, should enact rules and regulations to explain in writing the Commissioner’s interpretation of the law. Concededly, reducing to writing the interpretations necessary to administer the concepts in these laws might be a challenge but the rulemaking process contemplated by N.D.C.C. ch. 28-32 may very well serve to inform the Commissioner as well as those whose businesses are governed by the unitary laws. And, while the majority opinion suggests it “might have been preferable for the Commissioner to use the rulemaking procedure” similar suggestions to the Commissioner have been ineffective as noted by the cases cited above.

[¶ 35] I am particularly concerned that in this instance the change in the “internal” policy was not announced until after the audit in this case, in other words after the tax returns had been filed and during the course of the audit. Although, according to the auditor, the change was made in 1995 after a review of the legislative history, it was not announced until the notice of determination was issued in 2000. That necessarily means the tax returns would be incorrect when filed. I do not understand the logic of such a procedure.

[¶ 36] I have previously dissented in those instances in which the Commissioner has changed an interpretation without recourse to the rulemaking process. I do not do so here, because a rule or interpretation of a statute cannot contradict the meaning and intent of the statute being implemented by the interpretation. I am convinced that the majority opinion correctly determines legislative intent from the legislative history cited therein and I therefore concur in the result. But, how much simpler it would have been if, in 1995, the Commissioner had adopted rules to this effect, notwithstanding the Water’s Edge Tax Guide “is not published for distribution to taxpayers, but is an internal document used by the auditors” and that the corporate income tax auditor “was the only person at the Tax Department performing corporate income tax audits at the time.” It would be better if the taxpayers, the objects of the audit, were also informed of the interpretation, preferably ahead of the time the tax returns are filed. While such a procedure might not result in headlines as to how much in additional taxes had been recovered as a result of the audit, it would make the work of the auditor, the taxpayers and the courts, much less complicated.

[¶ 37] Gerald W. Vande Walle, C. J.


source: Caselaw Access Project

license: Public Domain

text:
    2005 ND 157
    In the Matter of the Application for DISCIPLINARY ACTION AGAINST William P. VELA, a Person Admitted to the Bar of the State of North Dakota. Disciplinary Board of the Supreme Court of the State of North Dakota, Petitioner v. William P. Vela, Respondent.
    No. 20050173.
    Supreme Court of North Dakota.
    Sept. 23, 2005.
   SUSPENSION ORDERED

[¶ 1] On June 24, 2005, the Supreme Court entered an order accepting the Findings of Fact, Conclusions of Law and Recommendations of the- Hearing Panel, and suspending William P. Vela from the practice of law for one year effective when, and if, he pays his 2005 license fee or applies for relicensure after January 1, 2006. See, Disciplinary Board v. Vela, 2005 ND 119, 699 N.W.2d 839.

[¶ 2] The Supreme Court’s June 24, 2005, Order further required Vela to pay restitution, pay the costs of the disciplinary proceeding, and to comply with N.D.R. Lawyer Discipl. 6.3. To date, Vela has not provided proof of payment of restitution, and has not paid costs. Further, Vela must comply with N.D.R. Lawyer Discipl. 6.3.

[¶ 3] On September 23, 2005, Vela paid his license fee for 2005. Accordingly, Vela’s one-year suspension will commence as of September 23, 2005.

[¶ 4] This Order is entered September 23, 2005, at the direction of the Honorable Gerald W. VandeWalle, Chief Justice.

[¶ 5] Penny Miller, Clerk

North Dakota Supreme Court


author: KONENKAMP, Justice.

text:
    2005 SD 94
    FARM CREDIT SERVICES OF AMERICA, f/k/a Farm Credit Services of America, PCA, Plaintiff and Appellee, v. Daniel R. DOUGAN, a/k/a Daniel Rex Dougan; Beverly Dougan, Defendants and Appellants.
    No. 23102.
    Supreme Court of South Dakota.
    Argued on Aug. 25, 2004.
    Decided Aug. 24, 2005.

      Timothy M. Engel of May, Adam, Gerdes and Thompson, Pierre, South Dakota, Attorneys for plaintiff and appellee.
    James P. Hurley of Bangs, McCullen, Butler, Foye & Simmons, Rapid City, South Dakota, Attorneys for defendants and appellants.
   KONENKAMP, Justice.

[¶ 1.] While a lender was in the process of foreclosing on its mortgage loan, the borrowers managed to obtain a new loan to pay off the debt and the foreclosure was dismissed. But the borrowers persisted in their counterclaim against the lender, seeking damages for breach of the implied covenant of good faith and fair dealing for the lender’s conduct in attempting to foreclose. The essential complaint was that the lender only granted a two-month extension on a late installment payment instead of the longer extension the borrowers sought. Because the lender held adequate security, the borrowers believe there was no good faith economic reason for not giving the requested extension. The circuit court granted summary judgment dismissing the counterclaim. On appeal, we conclude that because the lending agreement specifically permitted the lender’s actions, there could be no breach of the covenant of good faith and fair dealing, and therefore summary judgment was properly granted.

Background

[¶ 2.] Defendants Daniel and Beverly Dougan own a ranch in rural Pennington County. Their earnings come primarily from raising wheat, livestock, and registered horses. They inherited the ranch along with considerable debt when Daniel’s grandmother passed away. To pay off the debt and to continue operating the ranch, they obtained several loans in the spring of 2001 from Farm Credit Services of America (FCS). In April, they received a revolving line of credit for $100,000 (Note 101) and an installment loan of $25,000 (Note 151). In May, they borrowed $791,000 (Note 201), secured by a mortgage on the real property, and another $60,000 (Note 152), secured by their personal property. In August, they took an installment loan of $15,000 (Note 153).

[¶ 3.] Financial conditions for the ranch deteriorated after the horrific events of September 11, 2001. Along with all the other nationwide economic repercussions, prices for livestock and commodities plunged. And to compound these troubles, western South Dakota fell under a severe drought. When the Dougans were unable to make their first installment payment for the real estate loan (Note 201) on March 1, 2002, they asked for an extension until October 1, 2002. FCS refused to grant the requested extension, but it did agree to extend the due date to May 1, 2002. On April 1, FCS and the Dougans signed a “Loan Agreement Amendment and/or Revision of Promissory Note” providing for the later payment date. All other loan provisions remained in effect. In addition to falling behind on their real estate loan, they were also delinquent on their March 1 payment for Note 151. Therefore, as a part of the amended agreement with FCS, the Dougans paid $11,991 to cover the past-due payment on Note 151 and the interest due on Note 101. Under the amended loan agreement, “failure to pay any amounts or to otherwise comply with the terms and conditions ... may be treated as a default under the original note(s), mortgage(s), [and] other loan documents.”

[¶ 4.] When the May 1 due date arrived, the Dougans failed to make any payments on Note 201 and Note 152. In accord with the loan agreements, FCS advised them of their default status on the real estate note (Note 201). It warned that if the note was not brought current by July 1, 2002, the default interest rate would thereafter apply. Also, in compliance with the Agriculture Credit Act of 1987, FCS mailed a written notice to the Dougans telling them of the opportunity to restructure their loans. They received the letter, but made no request for loan restructuring. Furthermore, in July 2002, the Dougans were mailed a written notice of their right to mediate the FCS loan claim with the South Dakota Department of Agriculture. Again, they did not respond and, thus, waived their right to mediation. See SDCL 54-13-10. FCS accelerated Note 201 and declared the entire balance due on October 2, 2002. When the Dougans failed to make a payment on Note 153 on January 1, 2003, FCS exercised the cross-default provision in the personal property notes and declared all notes in default.

[¶ 5.] FCS commenced a foreclosure action on January 7, 2003. In their answer, the Dougans counterclaimed for breach of the implied covenant of good faith and fair dealing. The case proceeded on course until September, when the Dougans obtained a new loan from another financial institution and paid off all obligations to FCS. FCS released its mortgage and its action for foreclosure was dismissed. All that remained was the counterclaim. As counsel for the Dougans would later explain, the refusal to grant them additional time to make payments on their overdue debts was unreasonable in view of the large amount of security FCS held. After a hearing, the circuit court granted summary judgment for FCS. On appeal, the Dougans argue that theré are genuine issues of material fact on whether FCS breached its loan agreement and the implied covenant of good faith and fair dealing. We address the question whether these issues can be determined as a matter of law.

Analysis and Decision

[¶ 6.] From the language of their counterclaim, it appears that the Dougans are not alleging a tort claim for breach of the implied covenant of good faith and fair dealing. Their claim sounds in contract. They aver a breach of “the contracts that exist between the parties, in that [FCS] failed to use good faith in its performance of the contracts[.]” In the context of loan transactions, South Dakota does not recognize an independent tort for breach of the implied covenant of good faith and fair dealing. See Garrett v. BankWest, Inc., 459 N.W.2d 833, 842 (S.D.1990); see also McKie v. Huntley, 2000 SD 160, ¶ 10, 620 N.W.2d 599, 602. Contract claims raise questions of interpretation, and therefore, absent any factual disputes, they remain legal questions. State Farm Mut. Auto. Ins. Co. v. Vostad, 520 N.W.2d 273, 275 (S.D.1994) (citing Dirks v. Sioux Valley Empire Elec. Ass’n, 450 N.W.2d 426, 427-28 (S.D.1990)).

[¶ 7.] The Dougans contend that the circuit court erred in granting summary judgment because a “claim of a breach of the covenant of good faith is a jury question.” We have never held that these contract claims are always jury questions. On the contrary, summary judgment is a preferred method for disposing of any legally inadequate claim. Horne v. Crozier, 1997 SD 65, ¶ 5, 565 N.W.2d 50, 52. The question here, as in any summary judgment appeal, is “whether genuine issues of material fact existed and whether the law was correctly applied.” Bozied v. City of Brookings, 2001 SD 150, ¶ 8, 638 N.W.2d 264, 268 (citing Harms v. Northland Ford Dealers, 1999 SD 143, ¶ 8, 602 N.W.2d 58, 61). We will affirm the trial court’s decision if we find any legal basis to support it. De Smet Ins. Co. of South Dakota v. Gibson, 1996 SD 102, ¶ 5, 552 N.W.2d 98, 99; SDCL 15-6-56(c).

Implied Covenant of Good Faith and Fair Dealing

[¶ 8.] We begin our analysis with Judge Kean’s landmark opinion in Garrett v. BankWest, Inc., 459 N.W.2d 833 (S.D.1990). There, this Court held for the first time that “[e]very contract contains an implied covenant of good faith and fair dealing which prohibits either contracting party from preventing or injuring the other party’s right to receive the agreed benefits of the contract.” Id. at 841. Definitions of good faith were taken from the UCC and the Restatement (Second) of ConTRActs § 205 (1981). Id. Good faith is defined as “ ‘honesty in fact in the conduct or transaction concerned.’ ” Id. (quoting SDCL 57A-1-20(19)); Restatement (Second) of Contracts § 205 (1981). See also Mahan v. Avera St. Lukes, 2001 SD 9, ¶¶ 30-31, 621 N.W.2d 150, 159-60; Nelson v. WEB Water Dev. Ass’n, Inc., 507 N.W.2d 691, 698 (S.D.1993). “Good faith is derived from the transaction and conduct of the parties. Its meaning varies with the context and emphasizes faithfulness to an agreed common purpose and consistency with the justified expectations of the other party.” Garrett, 459 N.W.2d at 841 (citing Restatement (Second) of ContRacts § 205, cmt. a (1981)).

[¶ 9.] The Dougans argue that FCS breached the implied covenant of good faith and fair dealing when it refused to grant them an extension until October 1, 2002, in order to make the first payment on their real estate note (Note 201). They contend that, had FCS extended the due date as they requested, rather than only granting a sixty-day extension to May 1, 2001, they would have been able to adequately perform their obligations. Without more, this cannot constitute a breach of the implied covenant of good faith. When the express provisions of the loan documents required timely installment payments and no provision entitled the borrowers to extensions as a matter of right, there can be no breach of the implied covenant. This was essentially the holding in Garrett, 459 N.W.2d at 847. The covenant of good faith does not create an amorphous companion contract with latent provisions to stand at odds with or in modification of the express language of the parties’ agreement. It is not a repository of limitless duties and obligations. See id. at 841.

[¶ 10.] Other courts have held likewise. Good faith has “ ‘nothing to do with the enforcement of terms actually negotiated’ and therefore cannot ‘block use of terms that actually appear in the contract.’ ” Taylor Equip., Inc. v. John Deere Co., 98 F.3d 1028, 1032 (8thCir.l996) (quoting Continental Bank, N.A. v. Everett, 964 F.2d 701, 705 (7thCir.l992), cert. denied, 506 U.S. 1035, 113 S.Ct. 816, 121 L.Ed.2d 688 (1992)). If the express language of a contract addresses an issue, then there is no need to construe intent or supply implied terms. Id. (citing Cambee’s Furniture, Inc. v. Doughboy Recreational, Inc., 825 F.2d 167, 175 n. 13 (8thCir.l987) (applying South Dakota law)).

Although courts often refer to the obligation of good faith that exists in every contractual relation, ... this is not an invitation to the court to decide whether one party ought to have exercised privileges expressly reserved in the document. “Good faith” is a compact reference to an implied undertaking not to take opportunistic advantage in a way that could not have been contemplated at the time of drafting, and which therefore was not resolved explicitly by the parties. When the contract is silent, principles of good faith ... fill the gap. They do not block use of terms that actually appear in the contract.

Kham & Nate’s Shoes No. 2, Inc. v. First Bank of Whiting, 908 F.2d 1351, 1357 (7thCir.l990) (internal citations omitted).

[¶ 11.] The Dougans entered into a separate amended loan contract allowing one extension and requiring timely payments thereafter. By the terms of their agreement, the Dougans were made aware of the potential consequences if the amended agreement was not adhered to. FCS, therefore, could not have been acting in bad faith in pursuing its contractually permitted rights. See Uptown Heights Assoc. Ltd. P’ship v. Seafirst Corp., 320 Or. 638, 891 P.2d 639, 645-46 (1995).

[¶ 12.] As part of their bad faith claim, the Dougans argue that in September 2002, FCS misapplied their payments. It appears from our review of the record, however, that Dan Dougan agreed that the payments could be so applied. In his deposition, he testified:

Q. Now, the first three words here say [referring to FCS’s letter to his attorney], “As we agreed, I applied the proceeds.” Did you agree that that’s how the proceeds could be applied?
A. Well, I really didn’t — yes.

In any event, a clause of the loan documents provides: “Any amounts submitted by [the Dougans] will, at lender’s option, be applied first to the payment of default interest, then to protective advances and fees, then to accrued interest, and finally to principal to the extent of the amount submitted.” Thus, the substantive language of the loan agreement gave FCS discretion on where to apply payments. “ ‘[T]he obligation of good faith does not vary the substantive terms of the bargain, ... nor does it provide a remedy for an unpleasantly motivated act that is expressly permitted by contract.’ ” Seafirst, 891 P.2d at 643 (citations omitted). Good faith honors a party’s “justified expectations.” Garrett, 459 N.W.2d at 841 (citation omitted) (emphasis added); Kham & Nate’s Shoes, 908 F.2d at 1357. To hold otherwise, would jeopardize “the institution of contract^]” Kham & Nate’s Shoes, 908 F.2d at 1357 (citing Travelers Ins. Co. v. Budget Rent-A-Car Sys., Inc., 901 F.2d 765 (9thCir.l990)). Use of remedies expressly provided for in a contract will not give rise to a claim for breach of good faith. See Mahan, 2001 SD 9, ¶32, 621 N.W.2d at 160; Alan Schwartz, Justice and the Law of Contracts: A Case for the Traditional Approach, 9 Hauv J L & Pub Pol’y 107 (1986).

[¶ 13.] Even if their payments were applied incorrectly, as they believe, the Dougans do not dispute that they were still not able to bring their loan payments current and they would still have been in default. But the Dougans argue that their farming and ranching operations were interfered with under the loan agreement when FCS shut off Note 101’s revolving line of credit. This decision, they contend, prevented them from proceeding with their harvest and horse sales. They argue that because FCS’s discretion could not be absolute, its conduct prevented them from making adequate payments and was a breach of good faith. Under the terms of the agreement, however, “Lender, at its option, may advance sums to Maker(s) as a revolving line of credit ....” (emphasis added). Discretion was vested in the express terms of the contract. The Dougans were delinquent with their payments on other notes. As the Seventh Circuit Court of Appeals observed, “Banks sometimes bind themselves to make loans (commitment letters and letters of credit have this effect) and sometimes reserve the right to terminate further advances. Courts may not convert one form of contract into the other after the fact, without raising the cost of credit or jeopardizing its availability.” Kham & Nate’s Shoes, 908 F.2d at 1356-57. Here, FCS was acting within the terms of the contract. In entering into the credit agreement with FCS, the Dougans agreed to the possibility that funds may not be advanced at the option of FCS. “Performance of a contract according to its terms cannot be characterized as bad faith.” Wallace v. Nat’l Bank of Commerce, 938 S.W.2d 684, 687 (Tenn.1996).

[¶ 14.] In the Dougans’ view, a jury question exists on whether FCS was reasonable in declining to extend the loan payment, in failing to extend more credit, and in later foreclosing. The term “reasonableness” is used in the Restatement to illustrate types of bad faith.

Good faith performance or enforcement of a contract emphasizes faithfulness to an agreed common purpose and consistency with the justified expectations of the other party; it excludes a variety of types of conduct characterized as involving “bad faith” because they violate community standards of decency, fairness or reasonableness.

Restatement (Seoond) of Contracts § 205 cmt. a (emphasis added). Thus, the Doug-ans argue that FCS, acting without any legitimate commercial need, unreasonably refused to provide a longer extension date until the wheat was harvested and a horse sale took place. After all, they insist, FCS was never in danger of losing its security: “FCS was foreclosing and liquidating on assets FCS valued at $2,563,983, with equity valued by FCS at $1,588,783, all because [the] Dougans were short $15,000 from having all payments made in a severe drought year.” But as the Oregon Supreme Court held, “[t]he loan agreement ... authorizes foreclosure for any default, not merely for a default that jeopardizes security.” Seafirst, 891 P.2d at 647. There, the court ruled that the borrower’s claim based on the implied covenant of good faith was without merit under contract terms that expressly provided for the lender’s remedies. Here, the Dougans’ loan agreement with FCS provided:

If any principal, interest, or advance is past due, regardless of the length of time, or if there is any failure to comply with any covenant, condition, or agreement contained in this Note, in any loan agreement, or in any mortgage, trust deed, security agreement, or other document given to secure payment of this Note, then, at the election of the holder hereof, all principal, all accrued interest thereon, and all advances will become immediately due....

The loan documents provided no exculpatory clauses forgiving untimely payments in certain circumstances and the record is void of any suggestion that the Dougans requested or bargained for any. Absent an unconscionable provision, the concept of “reasonableness” will not modify contract terms.

[¶ 15.] The Dougans contend that FCS was over secured, taking into account the value of the real and personal property FCS held as security. Again, however, the loan documents provide no intimation that an untimely payment would be waived if the collateral exceeded the amount of the indebtedness. Under Garrett, we “should not require a [lender] to totally disregard its own interests and compel it to place itself in a worse position when neither the contract nor the requirement of good faith demand such action.” 459 N.W.2d at 847; First Bank of South Dakota v. VonEye, 425 N.W.2d 630, 637 (S.D.1988). “A bank is not an investor, but rather a lender with the right to define and limit the risks it will accept.” VonEye, 425 N.W.2d at 637 (citation omitted). FCS followed the explicit terms of its bargained for promise.

[¶ 16.] We think it also noteworthy that the Dougans declined to avail themselves of their contractual and legal remedies. FCS only commenced foreclosure after notifying the Dougans of their opportunity to mediate or restructure their loan payments. “The doctrine of waiver is applicable where one in possession of any right, whether conferred by law or by contract, and with a full knowledge of the material facts, does or forebears the doing of something inconsistent with the exercise of the right.” Hammerquist v. Warburton, 458 N.W.2d 773, 778 (S.D.1990). In this commercial transaction, “ ‘it does not in the end promote justice to seek strained interpretations in aid of those who do not protect themselves.’” Kham & Nate’s Shoes, 908 F.2d at 1357 (quoting James Baird Co. v. Gimbel Bros., Inc., 64 F.2d 344, 346 (2dCir.l933)).

[¶ 17.] When their financial circumstances became difficult, the Dougans may have expected more from their banking relationship, but whatever solutions and remedies both parties were entitled to had already been provided through the explicit terms of the contract. “Any attempt to add an overlay of ‘just cause’ ... to the exercise of contractual privileges would reduce commercial certainty and breed costly litigation.” Id.

[¶ 18.] Lastly, the Dougans make much of the circuit court’s comments from the bench. Even while he was dismissing the case, the judge nonetheless remarked that he thought the conduct of FCS was “unreasonable.” The Dougans cited this remark in their briefs and in oral argument to illustrate that the court’s reasoning was contradictory on the question of bad faith. Because we take an independent review of the record, we are not bound by the circuit judge’s factual assessments in granting summary judgment. Fritzel v. Roy Johnson Constr., 1999 SD 59, ¶ 7, 594 N.W.2d 336, 338 (citing Spenner v. City of Sioux Falls, 1998 SD 56, ¶ 7, 580 N.W.2d 606, 609 (citation omitted)). From our review of the transcript, we see that the court alluded to no particular event in its comment, thus we are at a loss to know exactly what was meant. Perhaps the judge believed FCS should have been more forbearing even if its contract entitled it to act as it did. If that was the court’s meaning, we express no view on it since we conclude as a matter of law that FCS did not breach its loan agreement or the implied covenant of good faith and fair dealing in proceeding in accord with the terms of the loan documents. The Doug-ans detail other factual issues to support their argument, but these lack sufficient merit for discussion.

[¶ 19.] As the circuit judge aptly phrased it, “the Dougans are asking in their counterclaim for a better bargain than they agreed to.” Indeed, the covenant of good faith and fair dealing ensures that contracting parties get the full benefit of their bargain, but no more. We conclude that the trial court properly granted summary judgment for FCS on the counterclaim.

[¶ 20.] Affirmed.

' [¶21.] GILBERTSON, Chief Justice, and SABERS, ZINTER, and MEIERHENRY, Justices, concur.


author: LEE D. ANDERSON, Circuit Judge.

text:
    2005 SD 95
    Jerome WOODCOCK, Petitioner and Appellant, v. CITY OF LAKE PRESTON, Employer and Appellee, and SDML Workers’ Compensation Fund, Insurer and Appellee.
    No. 23437.
    Supreme Court of South Dakota.
    Considered on Briefs May 24, 2005.
    Decided Aug. 31, 2005.

      Steven S. Siegel of Lynn, Jackson, Shultz & Lebrun, Sioux Falls, SD, for petitioner and appellant.
    Michael S. McKnight and Michael F. Tobin of Boyce, Greenfield, Pashby & Welk, Sioux Falls, SD, for employer, insurer and appellees.
   LEE D. ANDERSON, Circuit Judge.

[¶ 1.] The Department of Labor (Department) concluded that claimant had no contract of employment with the City of Lake Preston (City) and was not entitled to workers’ compensation benefits. The circuit court affirmed Department’s order granting summary judgment to City and SDML Workers’ Compensation Fund. We affirm.

FACTS

[¶ 2.] The facts are not in dispute. On, City scheduled a controlled burn of a building. There was no emergency or other exigent circumstances associated with the controlled burn exercise. To assist with the controlled burn, Assistant Fire Chief Joseph Schnell (Schnell) contacted volunteer fireman Jeremy Woodcock (Jeremy). When Schnell called, Jeremy was working with his father, Jerome Woodcock (Woodcock), on Woodcock’s home in Lake Preston. Jeremy agreed to participate in the controlled burn exercise and invited his father to ride along to the fire hall. Woodcock had served as an enrolled and active member of the Lake Preston Volunteer Fire Department but his enrolled status ended years earlier.

[¶ 3.] Jeremy and Woodcock joined volunteer firemen at the fire hall. They agreed to obtain containers of fuel from Jeremy’s repair shop to help accelerate the fire. Upon arrival at the burn site, Woodcock and Jeremy unloaded and spread the fuel inside the abandoned building. Schnell did witness Woodcock delivering and spreading the accelerant. At no time did Schnell ask Woodcock for help with the controlled burn.

[¶ 4.] After pouring the fuel, Woodcock grabbed the City’s propane torch and lit the fire. Suddenly there was a flash explosion and Woodcock was engulfed in flames. Woodcock dropped and rolled on the ground to extinguish the flames. As a result of the explosion, Woodcock had second and third degree burns to twenty-three percent of his body and was assigned a thirty-three percent whole-person impairment rating. Woodcock’s employer, Twin City Fan Companies, Ltd., paid the majority of his medical bills through its self-insurance plan, but he still incurred over $5,200 in out-of-pocket expenses.

[¶ 5.] It was not until fifteen months after his injury that Woodcock notified City that he was claiming a work related injury. On February 12, 2004, Woodcock filed a petition for hearing with Department claiming entitlement to benefits pursuant to SDCL 62-1-5 based on an implied contract of employment. In response, City filed a motion for summary judgment arguing that Woodcock was not entitled to any workers’ compensation benefits because he was not impressed into service to confront or respond to an emergency situation. Department agreed. Accordingly, it ruled as a matter of law that no contract of employment existed with City and Woodcock was not entitled to workers’ compensation benefits.

All persons providing voluntary service to a fire department, ambulance service, or rescue squad for any county, municipality, special purpose district, or township if regularly organized under the law shall be deemed employees of such county, municipality, special purpose district, or township while in the performance of their duties as members, if recommended by the person in charge to the governing body of such county, municipality, special purpose district, or township for membership and appointed by such governing body, and has not been removed by such governing body as members. For the purpose of computing compensation, the members shall be considered to be earning a wage that would entitle the members to the maximum compensation for death or injury allowable under this title. But in no event may payments to the members exceed the maximum limitations for benefits as set out in this title.

[¶ 6.] Woodcock appealed Department’s order granting summary judgment. The circuit court affirmed Department’s grant of summary judgment.

[¶ 7.] Woodcock appeals and raises the following issues:

Was an implied contract of employment created between City and Woodcock on August 26, 2002?
Is Woodcock entitled to workers’ compensation benefits in spite of the fact that there was no emergency on August 26, 2002?

STANDARD OF REVIEW

[¶ 8.] The scope of this Court’s review is prescribed by SDCL 1-26-37. We make the same review of the administrative agency’s decision as the circuit court, and the circuit court’s decision enjoys no presumption of correctness. Appeal of Templeton, 403 N.W.2d 398, 399 (S.D.1987). We give great weight to the findings and inferences made by the agency on factual questions. Wagaman v. Sioux Falls Constr., 1998 SD 27, 576 N.W.2d 237, 240. In this case, however, the facts are not in dispute. Agency decisions concerning questions of law are “fully reviewable.” Grauel v. South Dakota School of Mines, 2000 SD 145, ¶ 7, 619 N.W.2d 260, 262.

ANALYSIS

ISSUE ONE

[¶ 9.] Was an implied contract of employment created?

[¶ 10.] To receive workers’ compensation benefits, an employer/employee relationship must exist. Rohlck v. J & L Rainbow, Inc., 1996 SD 115, 553 N.W.2d 521. This means the injury must have “its origin in the hazard to which the employment exposed the employee while doing his work.” Roberts v. Stell, 367 N.W.2d 198, 199 (S.D.1985). The employer/employee relationship may be created by express or implied contract. SDCL 62-1-3; Schumacher v. Schumacher, 67 S.D. 46, 288 N.W. 796 (1939). “An implied contract is one, the existence and terms of which are manifested by conduct.” SDCL 53-1-3.

[¶ 11.] Woodcock argues City created an implied contract of employment when he offered his assistance with the volunteer fire department training exercise. He believes that he is entitled to full workers’ compensation benefits as a result of the burn injuries he sustained on August 26, 2002 while helping City with the controlled burn exercise.

[¶ 12.] Under some circumstances, this Court has held that an implied contract of employment can be created between private citizens and a municipality for worker’s compensation purposes. See Gulbrandson v. Town of Midland, 72 S.D. 461, 36 N.W.2d 655 (1949); Tennis v. City of Sturgis, 75 S.D. 17, 58 N.W.2d 301 (1953). The Gulbrandson case involved a private citizen who was killed while helping the sheriff apprehend robbers. In Tennis, the assistant fire chief ordered a man to assist in controlling a fire. Tennis, suffering from coronary sclerosis, died suddenly from exposure and exhaustion shortly after assisting at the fire. In both cases this Court found that an implied contract of employment resulted when a private citizen was impressed into service by a peace officer or a fireman.

[¶ 13.] In this case Schnell did observe Woodcock assisting Jeremy in obtaining and spreading accelerant. However, Woodcock was not asked to help at the control burn site nor otherwise impressed into service. At the time Woodcock ignited the fuel, several firemen had not yet put on their fire-protection clothing and the hoses had not been laid out and prepared for use. We have held, “services voluntarily and gratuitously performed create no liability.” Schumacher, 67 S.D. at 48, 288 N.W. at 797. Such services are outside the course of an employee’s employment.

[¶ 14.] Requiring municipal employees to keep a lookout for such in-termeddlers will only distract them from their employment duties. As one court noted,

Undoubtedly, the Legislature did not want to extend workmen’s compensation benefits to everyone who rushes upon the scene and sustains injury. An unauthorized, foolhardy intermeddler can cause great harm, not only to himself but also to others. A municipality may not be burdened with workmen’s compensation payments in favor of such an unauthorized injured person, no matter how noble his motive might have been or how great the help he may have rendered.

Volek v. Borough of Deal, 83 N.J.Super. 58, 198 A.2d 822, 825 (App.Div. 1964). It is clear to this Court that Woodcock’s actions were of his own volition, unlike the claimants in Gulbrandson and Tennis whose services were commandeered.

ISSUE TWO

[¶ 15.] Is Woodcock entitled to workers’ compensation benefits?

[¶ 16.] Woodcock argues that he is entitled to workers’ compensation benefits in spite of the fact that there was no emergency on August 26, 2002. City contends that two elements that must exist for a court to find an implied contract: the private citizen was (1) impressed into service (2) to confront an emergency. Gul brand-son, supra and Tennis, supra did involve emergency situations where a bystander was asked or directed to assist emergency personnel. However, these cases did not explicitly hold that an emergency must exist for an implied contract to be found.

[¶ 17.] We are not faced with a situation where a fire chief or sheriff has impressed a citizen into service in a non-emergency situation. In the present case, Woodcock was never recruited or asked to assist in the controlled burn by the assistant fire chief. Therefore, we need not decide the question of whether an emergency situation must exist in order to find an implied contract of employment.

CONCLUSION

[¶ 18.] Woodcock was not a volunteer fireman at the time of his injuries nor was he impressed into service by the Lake Preston Fire Department to assist with an emergency. Therefore, no implied contract of employment existed. Woodcock was not entitled to benefits under SDCL 62-1-5. We, therefore, affirm the circuit court’s order which affirmed the Department’s order granting summary judgment.

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

[¶ 20.] ANDERSON, Lee, Circuit Judge, for SABERS, Justice, disqualified.

      . SDCL 62-1-5 provides:


author: TIMM, Circuit Judge.

text:
    2005 SD 96
    Dominic D. KAPPENMAN, Plaintiff and Appellant, v. Doug STROH and Thomas Troy Spitzer, Defendants and Appellees.
    No. 23456.
    Supreme Court of South Dakota.
    Considered on Briefs April 25, 2005.
    Decided Aug. 31, 2005.

      Lee C. “Kit” McCahren of Olinger, Lo-vald & Reimers Pierre, SD, for plaintiff and appellant.
    Roy A. Wise of Richardson, Wyly, Wise, Sauck & Hieb, Aberdeen, SD, for defendant and appellee, Stroh.
    Larry M. Von Wald of Beardsley, Jensen & Von Wald, Rapid City, SD, for defendant and appellee, Spitzer.
   TIMM, Circuit Judge.

[¶ I.] The genesis of this case is a mid-afternoon meeting of two vehicles at the top of a hill on a gravel road in McPherson County. Neither vehicle was speeding. Neither driver was aware of the other’s presence on the road prior to the hilltop encounter. Upon visual contact, both drivers steered right. The pickup driven by Doug Stroh (Stroh) continued safely on. The Jeep in which Dominic Kappenman (Kappenman) was riding, driven by Thomas Spitzer (Spitzer), slid on loose gravel and rolled. Kappenman sustained injuries and sued both Stroh and Spitzer. Both drivers denied fault and filed cross claims. The issues of liability and damages were bifurcated. At the end of the liability phase of the trial, the jury brought back verdicts in favor of both Stroh and Spitzer. Kappenman appeals, claiming the trial court erred in a variety of ways. We affirm.

ISSUE ONE

[¶ 2.] Whether the trial court’s denial of Kappenman’s motion in limine was reversible error.

Nobody’s fault

[¶ 3.] Kappenman brought a motion in limine to preclude Stroh and Spit-zer from arguing that the accident was “nobody’s fault.” The trial court denied the motion.

[¶ 4.] The purpose of a motion in limine is to prevent prejudicial evidence, argument, or reference from reaching the ears of the jury. However, a trial court’s ruling on a motion in limine is preliminary and may change depending on what actually happens in trial. First Premier Bank v. Kolcraft Enterprises, Inc., 2004 SD 92, ¶ 7, 686 N.W.2d 430, 437. The initial ruling by itself preserves nothing for appeal. To claim error based on the denial of a motion in limine, the trial court must allow, over renewed objection, that which the moving party sought to exclude to be presented to the jury. Where an in limine motion is denied but the evidence, argument, or reference is subsequently entered in the record without objection, there is no appeal-able issue, no reversible error. State v. Red Star, 467 N.W.2d 769, 771 (S.D.1991) (citing State v. Gallipo, 460 N.W.2d 739, 743 (S.D.1990); State v. Novaock, 414 N.W.2d 299 (S.D.1987); State v. Olson, 408 N.W.2d 748 (S.D.1987)).

[¶ 5.] During the trial Kappenman had no opportunity to object to the argument he sought to keep from the jury because neither Stroh nor Spitzer made it. We find no issue here for review.

Sheriffs Report

[¶ 6.] Kappenman brought a motion in limine to exclude the sheriffs accident report. At the pretrial conference the trial court ruled the report was admissible. Stroh offered the report at trial. It was admitted without objection. Kappen-man has failed to preserve this issue for appeal. Id.

ISSUE TWO

[¶ 7.] Whether the trial court erred in failing to grant Kappenman’s motions for directed verdict.

[¶ 8.] A motion for directed verdict under SDCL 15-6-50(a) questions the legal sufficiency of the evidence to sustain a verdict against the moving party. Roth v. Farner-Bocken, 2003 SD 80, ¶ 8, 667 N.W.2d 651, 658. When a motion for directed verdict is made, the trial court must accept the evidence most favorable to the nonmoving party. Thompson v. Mehlhaff, 2005 SD 69, ¶ 38, 698 N.W.2d 512, 523. “If sufficient evidence exists so that reasonable minds could differ, a directed verdict is not appropriate.” Veeder v. Kennedy, 1999 SD 23, ¶ 25, 589 N.W.2d 610, 617.

[¶ 9.] Kappenman contends that the trial court erred by submitting the issue of liability to the jury rather than granting his motion for a directed verdict. He claims the evidence is uncontroverted that both drivers violated SDCL 32-26-3, a rule of the road which requires that “[d]rivers of vehicles proceeding in opposite directions shall pass each other to the right, each giving to the other at least one-half of the main-traveled portion of the roadway as nearly as possible” and, by implication, that their negligence was the legal cause of the Spitzer vehicle rollover.

Kappenman’s testimony

[¶ 10.] ■ Kappenman testified that Spit-zer’s Jeep was not on the wrong side of the road. He told his mother shortly after the accident that it was not Spitzer’s fault. He agreed that he would not have changed anything about Spitzer’s driving that day. He also testified that as the vehicles approached one another, each moved to the right and that there was sufficient room to pass, which they did without contact. Kappenman admitted that he had no evidence that Stroh’s pickup was on the wrong side of the road when the vehicles passed. Kappenman further testified that the Jeep started to slide when it was steered from the established tracks into loose gravel. No evidence was offered by Kappenman as to where the center of the road was located.

Stroh’s testimony

[¶ 11.] Stroh testified that when he saw the Jeep, both he and Spitzer moved their vehicles to the right which permitted the vehicles to pass without contact. "When the vehicles passed, he said that his pickup was on his side of the road. Stroh also testified that he pulled over as he went up the hill, which was his normal procedure, to avoid “any close calls.”

Spitzer’s testimony

[¶ 12.] Spitzer testified that his Jeep was traveling at forty to forty-five miles per hour. As he was driving up the hill, there was no dust coming from the other side of the hill, no sign of an oncoming vehicle. He said that the two vehicles went to their right when they met. He remembered that even if the vehicles had not moved right, they could have passed each other.

[¶ 13.] This evidence stands in substantial opposition to Kappenman’s claims that Spitzer and Stroh were negligent. The trial court’s decision to send the liability issues to the jury for resolution must be affirmed. Haggar v. Olfert, 387 N.W.2d 45, 49 (S.D.1985).

ISSUE THREE

[¶ 14.] Whether the trial court erred when instructing the jury.

Under our standard of review, we construe jury instructions as a whole to learn if they provided a full and correct statement of the law. If, as a whole, the instructions misled, conflicted, or confused, then reversible error occurred. The party charging that an instruction was given in error has the dual burden of showing that the instruction was erroneous and prejudicial. An erroneous instruction is prejudicial if in all probability it produced some effect upon the verdict and is harmful to the substantial rights of the party assigning it.

Behrens v. Wedmore, 2005 SD 79, ¶ 37, 698 N.W.2d 555, 570 (citing First Premier Bank v. Kolcraft Enterprises, Inc., 2004 SD 92, ¶ 40, 686 N.W.2d 430, 448). It was error, claims Kappenman, for the trial court to give instructions number 21 and 22.

Instruction No. 21

[¶ 15.] Instruction 21 reads as follows: “The fact that a motor vehicle skids on a highway does not in itself constitute negligence on the driver’s part.” It is an accurate statement of the law, readily apparent from this Court’s writing in Boyd v. Alguire, 82 S.D. 684, 153 N.W.2d 192, 197 (S.D.1967):

It has been generally held that the mere skidding of an automobile does not indicate or establish negligence. Annot., 58 A.L.R. [264,] 266 [(1929)], 113 A.L.R. [1002,] 1005 [(1938)]. It is clearly the position of this court that taken together with other acts or omissions of the driver, skidding may occur under such circumstances as to warrant a finding of negligence, (citing Zeigler v. Ryan, 65 S.D. 110, 271 N.W. 767 (1937); Jacobson v. Coady, 77 S.D. 1, 84 N.W.2d 1 (1957)). (emphasis added).

Instruction 21 was not the only instruction given regarding negligence. The general pattern instruction was given, defining negligence as the failure to use reasonable care under the facts shown by the evidence. The jury was also instructed on specific driving conduct that would fall short of the reasonable care standard, such as failing to give a vehicle approaching from the opposite direction at least one-half of the main-traveled portion of the roadway when passing, failing to keep a proper lookout, and failing to maintain control of the vehicle. These instructions provided the jury with a full and correct statement of the law.

[¶ 16.] We find no error arising from the trial court’s giving of instruction 21.

Instruction No. 22

[¶ 17.] Instruction 22 provided: “Negligence may not be assumed from the mere fact that an accident and injury occurred.” This Court has previously recognized that “the mere fact of an accident” instruction is proper as a cautionary measure because it deals with burden of proof. Del Vecchio v. Lund, 293 N.W.2d 474 (S.D.1980). Although we have recognized that such an instruction may be redundant given other instructions related to negligence, proximate cause, and burden of proof, Kuper v. Lincoln-Union Elec. Co., 1996 SD 145, ¶ 33, 557 N.W.2d 748, 759, it remains a correct statement of the law. Therefore, we find no error arising from the trial court’s instruction 22.

ISSUE FOUR

[¶ 18.] Whether the trial court erred by withdrawing the statement of the case read prior to jury selection rather than submitting it to the jury.

[¶ 19.] Prior to jury selection, a statement of the case authored by the trial court was read to prospective jurors. The statement had not been agreed to by the parties. The trial court omitted language, proffered by Stroh, which would have noted that both defendants denied liability. Prospective jurors were told, however, that Stroh and Spitzer each claimed the other was responsible for Kappenman’s injuries. The statement ended with these words: “your sole and exclusive duty today and tomorrow is to determine the percentage of negligence to assign to each driver.”

[¶20.] After the evidentiary phase of the trial, Spitzer objected to including the statement of the case with the settled instructions. The settled instructions correctly explained that Kappenman had the burden of proving that the rollover of the vehicle in which he was riding resulted from the negligence of Stroh and/or Spit-zer. The settled instructions also included the standard admonishment that if Kap-penman failed to prove negligence by the greater convincing force of the evidence, an adverse finding by the jury would be required. Spitzer pointed out that the statement of the case was at odds with the settled instructions because it implied that both defendants were negligent and that the jurors’ only duty would be to apportion fault. The trial court agreed and decided to withhold the statement of the case.

[¶ 21.] Kappenman claims that the trial court had no choice but to send the unexpurgated statement of the case to the jury, reciting for authority what he asserts is a mandate to that effect in the concluding paragraph of SDCL 15-6-51(a): “In all cases the instructions shall be taken by the jury in their retirement.... The instructions shall include any general or preliminary instructions prepared and read to the jury by the court....” From this language, Kappenman in essence argues that the trial court erred by refusing to submit an erroneous statement to the jury.

[¶ 22.] We need not proceed down that rabbit hole. A statement of the case is neither a general or preliminary instruction. Its submission to the jury is governed by SDCL 15-14-1. That statute provides: “The statement of the case read to the prospective jurors shall become a part of the instructions and charge to the jury except to the extent that justice may require any modification thereof after the evidence has been concluded.” (emphasis added).

[¶ 23.] Given that the statement read to prospective jurors contained inaccurate and conflicting information regarding the claims and issues, in the interest of justice the trial court could not submit it to the jury in its original form. Although it could be argued that the trial court erred by withholding rather than modifying the statement, we cannot come to that conclusion. Withdrawing the instruction (which should not have been given in the first instance due to lack of agreement by the parties under SDCL 15-14-1) accomplished the same goal as modification, that is, it prevented an inaccurate and conflicting version of claims and issues from confusing the jury. Furthermore, a modified statement would merely have been repetitive, as the settled instructions accurately advised the jury regarding the claims and issues to be resolved. It is not error for a trial court to refuse to give jury instructions which are already embodied in other given instructions. Herren v. Gantvoort, 454 N.W.2d 539, 542 (S.D.1990). The trial court is affirmed on this issue.

ISSUE FIVE

[¶ 24.] Whether the trial court erred by denying the motion for new trial.

Whether a new trial should be granted is left to the discretion of the trial court. This Court will not disturb the trial court’s decision absent a clear showing of abuse of discretion. We determine that an abuse of discretion occurred only if no judicial mind, in view of the law and the circumstances of the particular case, could reasonably have reached such a conclusion.

Bauman v. Auch, 539 N.W.2d 320, 325 (S.D.1995).

Insufficient Evidence

[¶ 25.] Following the adverse verdict, Kappenman timely moved for a new trial under SDCL 15-6-59(a)(6), asserting that there was insufficient evidence to support the jury’s decision. The trial court denied the motion, explaining:

When I review the totality of the circumstances, all of the evidence that was presented and all of the allegations of error, I am firmly convinced that the jury had before it accurate jury instructions, that they made a finding based on the evidence presented to them, and that their finding was supported by the evidence, and their finding was that neither of the defendants was negligent.

Kappenman ascribes error to that ruling.

[¶26.] Kappenman reprises the argument given in support of his motion for directed verdict that the evidence is uncon-troverted that both Stroh and Spitzer were negligent. As previously noted, the record contains evidence from which a jury could conclude that neither defendant was negligent. The trial court did not abuse its discretion in denying Kappenman’s motion for new trial based on insufficiency of the evidence.

Verdict Form

[¶ 27.] Kappenman also claimed entitlement to a new trial based on the trial court’s rejection of his proposed verdict form. This he claims was an error of law under SDCL 15-6-59(a)(7). Kap-penman’s special verdict form did not allow for findings on the issues of negligence and causation. It read:

We, the jury, duly empaneled in the above-entitled action, and sworn to try the Issues therein, assign the relative degrees of fault as follows:

Percentage of Fault

Defendant Thomas Troy Spitzer _%

Defendant Doug Stroh _%

(Must total 100%) Total _%

DATED this_day of_, 2004.

FOREPERSON

[¶ 28.] In contrast, and consistent with the settled instructions and the ruling denying Kappenman’s motion for directed verdict, the trial court’s special verdict form called for sequential determination of negligence and causation for each defendant. Relative fault was only required to be determined if both defendants were found liable for the accident. It is no secret that a verdict form must permit the jury to pass on all issues. Wilson v. Commercial Union Ins. Co., 15 S.D. 322, 89 N.W. 649, 651 (S.D.1902). Because we have determined that the trial court did not err in denying Kappenman’s motion for directed verdict on the issue of negligence, we find the trial court did not abuse its discretion in denying Kappenman’s motion for new trial based on the refusal to submit his proposed verdict form to the jury.

[¶ 29.] Affirmed.

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

[¶ 31.] TIMM, Circuit Judge, for SABERS, Justice, disqualified.

      . Neither defendant argued that the accident was "nobody’s fault” but rather that the accident was not their fault but that of the other driver.