author: PAUL H. ANDERSON, Justice.

text:
    CUSTOM AG SERVICE OF MONTEVIDEO, INC., Relator, v. COMMISSIONER OF REVENUE, Respondent.
    No. A06-1645.
    Supreme Court of Minnesota.
    March 22, 2007.
    Stephen F. Rufer, Chad R. Felstul, Pemberton, Sorlie, Rufer & Kershner, PLLP Fergus Falls, MN, for Relator.

      Lori Swanson, Minnesota Attorney General, Rita Coyle DeMeules, Assistant Attorney General, St. Paul, MN, for Respondent.
   OPINION

PAUL H. ANDERSON, Justice.

In 2003, the Minnesota Department of Revenue assessed Custom Ag Service of Montevideo, Inc. (Custom Ag), a Minnesota corporation, with approximately $94,200 in unpaid sales and use taxes for tax years 2000, 2001, and 2002. The use taxes were assessed on grain bins and other items that Custom Ag purchased from an Indiana vendor to serve as components in grain drying systems that Custom Ag installed on Minnesota farms. Custom Ag appealed the use tax assessment to the Commissioner of Revenue on the ground that the grain bins qualified as tax-exempt grain dryers or other tax-exempt farm machinery under Minn.Stat. § 297A.01, subd. 15 (2000). The Commissioner upheld the assessment, and Custom Ag appealed to the Minnesota Tax Court. Custom Ag and the Commissioner then filed cross-motions for summary judgment on stipulated facts. The tax court found that Custom Ag used the grain bins in Minnesota and was therefore liable for use tax under Minn.Stat. § 297A.14, subd. 1 (2000), regardless of the fact that the bins served as components of the grain drying systems Custom Ag sold to its customers. Accordingly, the tax court granted the Commissioner’s motion and denied Custom Ag’s motion. Custom Ag filed a writ of certiorari with our court for review of the tax court’s decision. We affirm.

Relator Custom Ag Service of Montevideo, Inc. is a Minnesota corporation that sells and installs farm equipment, including grain drying systems. Each grain drying system Custom Ag installs comprises several components: a wet holding bin, a grain dryer, a conditioning bin, and other miscellaneous parts. The wet holding bin and conditioning bin themselves comprise multiple parts, including, among others, a grain bin, perforated and support flooring, roof vents, ladders with cages and platforms, and fans and power sweeps. The record shows that the operation of Custom Ag’s grain drying system is relatively straightforward. A farmer places newly harvested grain into the wet holding bin, and then the grain is automatically transferred to the grain dryer. Once the grain has passed through the dryer, it is automatically transferred to the conditioning bin for cooling and further drying.

Custom Ag purchases some of the components for its grain drying systems from CTB, Inc./Brock Grain Systems, of Milford, Indiana (Brock). In some cases, Custom Ag combines purchased components with existing components at a customer’s farm to create a grain drying system. Custom Ag did not pay sales or use taxes on its purchases from Brock during tax years 2000, 2001, or 2002. In 2003, the Minnesota Department of Revenue issued to Custom Ag a Notice of Change in Sales and Use Tax, and a Sales and Use Tax Audit Report Explanation of Adjustments. According to these documents, Custom Ag owed $94,203.80 in unpaid taxes and interest for, among other things, grain bins and related parts that Custom Ag purchased from Brock.

Custom Ag filed an administrative appeal challenging the assessment with the Commissioner of Revenue, asserting that its grain bins were exempt from sales tax because they were products “used in the processing, drying and/or handling of a grain commodity.” Custom Ag noted in its appeal that a representative of the Commissioner had earlier told Custom Ag that such products were tax exempt. The Commissioner denied Custom Ag’s appeal, explaining that Custom Ag was subject to use tax rather than sales tax for the contested purchases from Brock, and that

[t]he requirement to accrue and pay use tax is different from collecting sales tax from your customers. * * * [Brock] should have collected sales tax on [its] sales of materials to you. If [it] did not, you were responsible to have accrued and paid use tax on those materials.

The Commissioner also noted that while farm machinery — -including grain dryers— was exempt from use tax under Minn.Stat. § 297A.01, subd. 15, grain bins were expressly excluded from the statutory definition of exempt farm machinery — and “[a]t-taching grain coolers/fan units and grain dryers to grain bins does not * * ⅜ change grain bins into something other than grain bins.”

Custom Ag appealed the Commissioner’s determination to the tax court, and the parties filed cross-motions for summary judgment based on stipulated facts. Custom Ag argued that although it purchased grain bins from Brock and grain bins are subject to tax under section 297A.01, subd. 15, “in their traditional form,” Custom Ag did not sell grain bins for the purposes of section 297A.01. Custom Ag asserted that because it transformed the bins into integral components of a grain drying system — in effect, a grain dryer — -the bins were tax exempt. Custom Ag argued in the alternative that if the grain bins it purchased from Brock were not tax exempt as integral components of a grain dryer, they were tax exempt as farm machinery generally. The Commissioner argued that Custom Ag’s use of the grain bins as components in a grain drying system did not transform the bins into tax-exempt grain dryers, and accordingly, the grain bins were subject to tax according to the plain language of section 297A.01, subd. 15. Adopting reasoning similar to the Commissioner’s, the tax court granted the Commissioner’s motion for summary judgment and denied Custom Ag’s motion for the same. Custom Ag Serv. of Montevideo, Inc. v. Comm’r of Revenue, No. 7714R, 2006 WL 2380596, at *3-6 (Minn. T.C. Aug. 2, 2006).

On certiorari to our court, Custom Ag asks us to determine whether the grain bins it purchased from Brock are tax exempt under Minn.Stat. eh. 297A (2000) as grain dryers or as farm machinery generally. We will review an order of the tax court on certiorari if, among other things, the order is not in conformity with the law. Minn.Stat. § 271.10, subd. 1 (2006). The tax. court’s application of the law to stipulated facts is a question of law that we review de novo. Morton Bldgs., Inc. v. Comm’r of Revenue, 488 N.W.2d 254, 257 (Minn.1992). We have stated that “[t]he general goal of sales and use taxes is to establish a complementary scheme whereby every sale is presumed taxable unless specifically exempted,” and the burden of proving an exemption rests with the party who seeks it. A & H Vending Co. v. Comm’r of Revenue, 608 N.W.2d 544, 548 (Minn.2000) (citation omitted); see also Am. Ry. Express Co. v. Holm, 169 Minn. 323, 325, 211 N.W. 467, 467 (1926) (“One who seeks shelter under an exemption must present a clear case, as the law is to be construed in favor of the public”).

The dispute before us centers on the interpretation of certain statutes within Minn.Stat. ch. 297A. The relevant statutes are as follows. Minnesota Statutes § 297A.02, subd. 1 (2000), imposes a sales tax:

Except as otherwise provided in [chapter 297A], there is imposed an excise tax of 6.5 percent of the gross receipts from sales at retail made by any person in this state.

Minnesota Statutes § 297A.14, subd. 1, imposes a use tax:

For the privilege of using, storing, distributing, or consuming in Minnesota tangible personal property or taxable services purchased for use, storage, distribution, or consumption in this state, a use tax is imposed on every person in this state at the rate of tax imposed under section 297A.02 on the sales price of sales at retail of the items, unless the tax imposed by section 297A.02 was paid on the sales price.
A use tax is imposed on every person who uses, stores, distributes, or consumes tangible personal property in Minnesota which has been manufactured, fabricated, or assembled by the person from materials, either within or without this state, at the rate of tax imposed * * * on the sales price of sales at retail of the materials contained in the tangible personal property, unless [sales tax] was paid on the sales price.

Minnesota Statutes § 297A.01, subd. 4(d) (2000), makes certain transactions “sales at retail” such that they are subject to the sales tax:

Sales of * * * supplies and equipment to owners, contractors, subcontractors or builders for the erection of buildings or the alteration, repair or improvement of real property are * * ⅜ “sales at retail” in whatever quantity sold and whether or not for purpose of resale in the form of real property or otherwise.

Minnesota Statutes § 297A.25, subd. 59 (2000), makes farm machinery tax exempt:

[AJfter June 30, 2000, the gross receipts from the sale of new farm maehinery[ ] are exempt.

And finally, Minn.Stat. § 297A.01, subd. 15, defines farm machinery as, in relevant part,

new or used machinery, equipment, implements, accessories, and contrivances used directly and principally in the production for sale * * * 0f * * * grains * * *. “Farm Machinery” includes:
(1) machinery for the preparation, seeding or cultivation of soil for growing agricultural crops and sod, harvesting and threshing of agricultural products, harvesting or mowing of sod, and certain machinery for dairy, livestock and poultry farms;
(2) barn cleaners, milking systems, grain dryers, automatic feeding systems and similar installations, whether or not the equipment is installed by the seller and becomes part of the real property; '
(3) irrigation equipment sold for exclusively agricultural use, including pumps, pipe fittings, valves, sprinklers and other equipment necessary to the operation of an irrigation system when sold as part of an irrigation system, whether or not the equipment is installed by the seller and becomes part of the real property;
Repair or replacement parts for farm machinery shall not be included in the definition of farm machinery.
Tools, shop equipment, grain bins, feed bunks, fencing material * * * and other farm supplies shall not be considered to be farm machinery.

(Emphasis added.)

Are Grain Bins Tax-Exempt Grain Dryers ?

Custom Ag argues that because it sold the grain bins purchased from Brock as components of a grain drying system, the bins are tax-exempt grain dryers under section 297A.01, subd. 15(2). It argues in the alternative that if the bins are not tax exempt as grain dryers, they are tax exempt as other farm machinery under section 297A.01, subd. 15. In support of its alternative argument, Custom Ag asserts that it is necessary to consider the function of a piece of equipment in deciding whether the equipment is farm machinery, and the bins in question are integral parts of a grain drying system and are not used for storing grain. The Commissioner argues in response that the function the grain bins serve is irrelevant to determining Custom Ag’s use tax liability because any exercise “of a right or power incidental to ownership” is a taxable use. See Minn. Stat. § 297A.01, subd. 6 (2000). The Commissioner further argues that under the plain and unambiguous language of section 297A.01, subd. 15, grain bins are taxable. The Commissioner asserts that because the statutory language is unambiguous, we should not consider Custom Ag's arguments as to the purpose for which the grain bins are used.

As an initial matter, we note that Custom Ag’s arguments rely on the premise that the way in which the bins were ultimately used by Custom Ag’s customers renders inapplicable the plainly-stated provision in section 297A.01, subd. 15, that grain bins “shall not be considered to be farm machinery.” Custom Ag makes this argument while conceding that the items it purchased from Brock are grain bins and that grain bins are expressly taxable under Minnesota’s tax laws. We conclude that the premise underlying Custom Ag’s arguments is problematic because it fails to recognize that for the purposes of the use tax, the relevant question is whether Custom Ag purchased and used grain bins in Minnesota — not whether Custom Ag’s customers used the grain bins as components of a grain drying system. Minnesota assesses a use tax “[f|or the privilege of using, storing, distributing, or consuming in Minnesota tangible personal property * * * purchased for use, storage, distribution, or consumption in this state.” Minn. Stat. § 297A.14, subd. 1. We reasoned in Morton Buildings that taxpayers are liable for use taxes on tangible personal property if (1) the property is used, stored, distributed, or consumed in Minnesota; (2) the property is purchased; and (3) the purchase was made for use, storage, distribution, or consumption in Minnesota. 488 N.W.2d at 257-58.

The second and third elements of the foregoing Morton Buildings test — that the property be purchased, and that it be purchased for use in Minnesota — are easily satisfied given the facts of this case. It is undisputed that Custom Ag purchased the grain bins from Brock, and there is nothing in the record to suggest that Custom Ag used the bins for grain drying systems at farm sites outside Minnesota.

As to the first element of the Morton Buildings test — that the property is used, stored, distributed, or consumed in Minnesota — “use[d]” is broadly defined under section 297A.01, subd. 6, as having “exerciser * * * any right or power over tangible personal property.” In keeping with this broad definition, we concluded in Moiion Buildings that a taxpayer used certain raw materials in Minnesota despite the fact that those materials were purchased outside the state and transformed through a manufacturing process — also outside the state — into building components that the taxpayer ultimately assembled into prefabricated buildings in Minnesota. 488 N.W.2d at 258. We also stated that although the taxpayer altered the raw materials during the manufacturing process,

the raw materials are still tangible personal property used in Minnesota as parts of [the taxpayer’s] prefabricated buildings. * * ⅜ This court never has required that raw materials be unaltered when used in Minnesota in order to trigger liability for the use tax.

Id. We expressly rejected the taxpayer’s argument that the relevant items of property “were not the raw materials [the taxpayer] purchased, but the building components * * * made out of the raw materials, which are new and different items.” Id. at 257-58 (quotation marks omitted).

We conclude that the grain bins Custom Ag purchased from Brock and the grain drying systems Custom Ag sold to its customers are analogous to the raw materials and the building components at issue in Morton Buildings. Custom Ag used the grain bins to create grain drying systems that it installed in Minnesota, just as the taxpayer in Moiion Buildings used raw materials to create the building components it assembled into buildings in Minnesota. Based on this analogy, we further conclude that when deciding whether Custom Ag is liable for use tax, our inquiry should focus on whether Custom Ag used the grain bins in Minnesota, and not on the fact that the grain bins ultimately served as components of new and different items. Applying the foregoing analytical framework to the facts in this case, Custom Ag used the grain bins in Minnesota, and accordingly, all three elements of the Morton Buildings test are satisfied.

Custom Ag argues that Morton Buildings is inapposite because in that case, the property at issue was not tax exempt, whereas here, the contested property constitutes tax-exempt grain dryers or other tax-exempt farm machinery. We find this argument unpersuasive because our holding in Morton Buildings is compatible with the exemption for farm machinery under Minn.Stat. § 297A.01, subd. 15. Specifically, when we analyze a case that implicates the use tax and farm machinery, we first apply the three-element Morton Buildings test to determine whether a taxpayer used in Minnesota tangible personal property that the taxpayer purchased for use in Minnesota. If we determine that all three elements of the test are met, we then consult section 297A.01, subd. 15, to determine whether that property, as used by the taxpayer, is tax exempt. If the property is tax exempt, the taxpayer is not liable for use tax on it.

We have already determined that all three elements of the Morton Buildings test are satisfied with respect to the grain bins in this case. Therefore, we must next determine whether those grain bins, as used by Custom Ag, are tax-exempt under section 297A.01, subd. 15. Despite this section’s unambiguous exclusion of grain bins from the definition of tax-exempt farm machinery, Custom Ag argues that because the grain bins serve as integral components of a grain drying system and a grain drying system functions as a grain dryer, the grain bins constitute tax-exempt grain dryers under section 297A.01, subd. 15. This argument is unavailing because, as stated above, we focus on the nature of the property as it is used by the taxpayer, not as it is used by the taxpayer’s customers. Morton Bldgs., 488 N.W.2d at 257-58.

We also note that the legislature has distinguished tax-exempt grain dryers from taxable grain bins since it first enacted section 297A.01, subd. 15, in 1981, and has maintained this distinction through several periods of amendment since that time. Under such facts, we may not assume a legislative intent in plain contradiction to words used by the legislature. Mankato Citizens Tel. Co. v. Comm’r of Taxation, 275 Minn. 107, 111, 145 N.W.2d 313, 316 (1966) (citation omitted). Moreover, the language of the statute indicates that when the legislature intended to exempt a system, as opposed to a single piece of equipment that might be part of that system, it knew how to do so explicitly. For example, section 297A.01, subd. 15(2), (3) (2000), exempts “milking systems” and “automatic feeding systems” on the one hand, and on the other, “irrigation equipment * * * including pumps, pipe fittings, valves,” etc. (Emphasis added.) For all of the foregoing reasons, we are not persuaded by Custom Ag’s argument that because the grain bins are components of a grain drying system and grain dryers are tax exempt, the bins themselves are tax exempt.

Are Grain Bins Other Tax-Exempt “Farm Machinery”?

Custom Ag makes an alternative argument that if the grain bins do not constitute tax-exempt grain dryers, they constitute some other form of tax-exempt farm machinery. Custom Ag grounds this argument on several theories. For example, Custom Ag asserts that it sells the bins for use in the production for sale of agricultural crops and for harvesting agricultural products. See Minn.Stat. § 297A.01, subd. 15 (defining farm machinery as equipment used “directly and principally” in the production for sale of certain agricultural crops, and including in the definition of farm machinery, equipment for the harvesting of agricultural products). Custom Ag also asserts that the grain bins could be considered “similar installations” under section 297A.01, subd. 15(2), which defines farm machinery to include “barn cleaners, milking systems, grain dryers, automatic feeding systems and similar installations.”

We reject these assertions for two reasons. First, they once again focus on the use of the grain bins by Custom Ag’s customers, rather than the use of the grain bins by Custom Ag. Second, they essentially invite us to ignore specific statutory language that excludes grain bins from the definition of farm machinery in favor of general statutory language that includes unspecified agricultural “machinery, equipment, implements, accessories, and contrivances.” Minn.Stat. § 297A.01, subd. 15. We decline to accept this invitation. As we have often noted when construing a statute that contains both specific and general provisions, canons of statutory construction dictate that the specific provisions prevail. See, e.g., In re Welfare of J.M., 574 N.W.2d 717, 721 (Minn.1998).

In sum, we conclude that Custom Ag is liable for the use tax the Commissioner assessed against it because Custom Ag used in Minnesota grain bins that it purchased for use in this state. We further conclude that Custom Ag’s sale of the grain bins as components of grain drying systems did not transform those bins into tax-exempt grain dryers or other tax-exempt farm machinery under Minn.Stat. ch. 297A. Accordingly, we hold that the tax court acted in conformity with the law when it granted the Commissioner’s motion for summary judgment and denied Custom Ag’s motion for the same.

Affirmed.

      . Part of the $94,203.80 is attributable to unpaid sales taxes for "miscellaneous sales” that Custom Ag made to its customers, but the sales tax portion of the assessment is not at issue in this appeal.

      . The legislature renumbered and changed sections within Minn.Stat. ch. 297A for style, form, and clarity in 2000. Act of Apr. 18, 2000, ch. 418, art. 1, 2000 Minn. Laws 796, 796-850. Because the audit of Custom Ag spanned both the original and the recodified versions of the statutes and because the reco-dification was not intended to make any substantive changes, we cite the original (i.e., the 2000) statutes in this opinion.

      . In the three-element test articulated in Morton Buildings, elements (1) and (3) did not respectively contain the words "distributed” and "distribution.” The legislature added these words to Minn.Stat. § 297A.14, subd. 1, in 1993, after we decided Morton Buildings. Act of May 24, 1993, ch. 375, art. 9, § 31, 1993 Minn. Laws 2728, 2901.

      . Custom Ag further asserts that the only meaningful distinction between use tax and sales tax is that the former applies to purchases outside the state and the latter to purchases inside the state, and consequently, the only reason this case implicates the use tax is that Custom Ag purchased the grain bins outside the state. But this assertion oversimplifies the relationship between use tax and sales tax. See Dahlberg Hearing Sys., Inc. v. Comm’r of Revenue, 546 N.W.2d 739, 743-44 (Minn.1996) (noting that while sales and use taxes are complementary, they do not serve as a substitute for one another). In Dahlberg, we held that a taxpayer who had not used certain otherwise taxable property could not be compelled to pay a use tax simply because an out-of-state vendor erroneously failed to collect a sales tax on the sale of the property to the taxpayer. Id. In other words, we concluded that use tax is not a mechanism by which the Commissioner can automatically recover monies that should have been collected as sales tax on the sale of property outside the state; rather, the Commissioner can only collect such monies if the statutory requirements for use tax liability are met.

      . Custom Ag acknowledges that section 297A.01, subd. 15, is clear and unambiguous, and states that grain bins are not tax exempt.

      . Act of June 6, 1981, ch. 1, art. 4, § 2, 1981 Minn. Laws 2373, 2394-95.


source: Caselaw Access Project

author: PER CURIAM.

license: Public Domain

text:
    In re Petition for REINSTATEMENT OF Richard T. JELLINGER, a Minnesota Attorney, Registration No. 137765.
    No. A05-2091.
    Supreme Court of Minnesota.
    March 22, 2007.

      Mark W. Gehan, Collins, Buckley, Saun-try & Haugh, PLLP, St. Paul, MN, for Petitioner.
    Martin A. Cole Office of Lawyers Professional Responsibility, St. Paul, MN, for Office of Lawyers Professional Responsibility.
   OPINION

PER CURIAM.

A panel of the Lawyers Professional Responsibility Board recommended that petitioner Richard T. Jellinger, who was indefinitely suspended from the practice of law, be reinstated subject to a four-year probationary period and other terms and conditions, including a restriction on the practice of law as a solo practitioner and a requirement that he apply for malpractice insurance. Jellinger argues that the length of the probationary period and the terms and conditions on his probation are inconsistent with the panel’s findings of fact. The Director of the Office of Lawyers Professional Responsibility (the Director) supports the panel’s recommendations. We have independently reviewed the file and conclude that Jellinger is entitled to be reinstated to the practice of law, subject to a probationary period and a number of conditions which are described more fully below.

Jellinger was admitted to practice law in Minnesota on May 13, 1982. For eight years, he practiced in a number of different settings. Jellinger then spent four years working for the Minnesota State Bar Association. In 1994, he opened his own practice, where he continued to work until we temporarily suspended him in 2001.

On May 3, 2001, because Jellinger “did not read or respond to the Director’s inquiries, * * * commingled client funds with operating funds in the trust account, neglected a client matter, failed to place a client’s retainer in trust, and repaid the client with funds from a personal account,” we publicly reprimanded Jellinger and placed him on probation, subject to certain conditions. In re Jellinger, 625 N.W.2d 143, 146-48 (Minn.2001).

Thereafter, Jellinger failed to comply with the terms of his probation, and the Director filed a petition for temporary suspension. The Director alleged that Jel-linger failed to respond to correspondence regarding his probation and failed to respond to notices of investigation of additional complaints of professional misconduct. In re Jellinger, 632 N.W.2d 640, 641 (Minn.2001). Jellinger did not respond to the petition, so we deemed the allegations admitted, and on August 17, 2001, we temporarily suspended Jellinger from the practice of law, pending final determination of the disciplinary proceedings. Id.

On November 29, 2001, the Director filed a supplementary petition for further disciplinary action, and the matter was referred to a referee. In re Jellinger, 655 N.W.2d 312, 313 (Minn.2002). We upheld the referee’s findings of misconduct — that Jellinger had misappropriated client funds, that he had failed to communicate with his clients, that he had neglected clients, that he had made false statements to clients, and that he had failed to cooperate with the Director’s investigation — and we concluded that Jellinger failed to prove his claim of mitigation by clear and convincing evidence. Id. at 315-16. We noted that Jellinger’s treating psychologist had testified that Jellinger had a major depressive disorder and that, in the psychologist’s opinion, Jellinger’s misconduct was “in large part a result of his depressive disorder.” Id. at 314. But we concluded that Jellinger had failed to prove that his depression was the cause of his misconduct. Id. at 315-16.

While we acknowledged that Jellinger’s depression might have caused his passive misconduct, we concluded that the psychologist’s testimony did not indicate that the depression was the likely cause of Jelling-er’s “affirmative acts of dishonesty (misappropriating funds from client accounts, making false statements to clients and making false statements to the Director’s office).” Id. at 315. Further, we concluded that, because he had only been undergoing treatment for two months, and his psychologist had prescribed a course of treatment that would take from two to three years to complete, Jellinger failed to prove that his recovery was sufficient to arrest the misconduct and therefore failed to prove that his misconduct was not apt to recur. Id.

We said that “ample precedent supports the sanction of disbarment in cases involving misappropriation of client funds.” Id. at 316. But we noted, as mitigating factors, that there was a causative relationship between Jellinger’s depression and his passive misconduct and that Jellinger’s former clients did not ultimately suffer any pecuniary loss as a result of his misconduct. Id. Therefore, on December 26, 2002, we disbarred Jellinger, but stayed the disbarment subject to indefinite suspension. Id. at 316. We ordered that Jellinger could not petition for reinstatement for at least two years, and said that “[ujpon reinstatement, [Jellinger] shall be on supervised probation for a period of two years under the conditions set forth in this court’s order of May 3, 2001.” Id. at 317.

After we indefinitely suspended him, Jellinger found employment for a short time as a tax preparer, and as a driver for a local courier service. Since July 2003 Jellinger has worked as a part-time paralegal.

On October 19, 2005, Jellinger petitioned for reinstatement pursuant to Rule 18 of the Rules on Lawyers Professional Responsibility (RLPR). The panel heard the matter on June 30, 2006.

The panel received testimony from Jel-linger’s psychologist by way of deposition. The psychologist opined that Jellinger’s depression “has dropped from the moderate range to the no concern range.” The psychologist also stated that “there does not seem to be any data that would preclude his ability to practice law” and that Jellinger “has been maintaining good mental health and practicing good self care.” Finally, the psychologist suggested that it would be important for Jellinger to have a “network of colleagues” to consult with on a semi-regular basis.

W.K., who has known Jellinger since 1985, and for whom Jellinger has worked in a paralegal capacity, also testified before the panel. According to the panel’s findings, W.K. testified that he and Jelling-er had discussed Jellinger’s past misconduct in detail, and W.K. had discussed with Jellinger at length how to successfully and ethically operate as a solo practitioner. Additionally, W.K. told the panel that if Jellinger were to be reinstated, W.K. would be willing to act as a co-signer on Jellinger’s trust account. W.K. acknowledged that this responsibility would require him to be familiar with the client files and services being performed by Jel-linger. W.K. also told the panel that he did not believe he could hire Jellinger as an employee, because Jellinger’s practice was different and because W.K. wanted to reduce, rather than increase, overhead.

Jellinger also testified before the panel. According to the panel’s findings, Jellinger expressed shame and remorse over his misconduct. He acknowledged that he will continue to struggle with “depression and honesty issues,” but said that he feels better equipped to handle such issues, in part because of his anti-depression medication and because of his work with his psychologist to identify the warning signs of depression. The panel also noted that Jel-linger testified about his business plan, and that W.K. has taught him about the network of lawyers available for him to contact in various areas of law practice.

Jellinger’s attorney argued to the panel that Jellinger should be reinstated subject to supervised probation for a period of two years, provided that Jellinger enter into an “of counsel” arrangement with W.K. The Director argued that Jellinger should be denied reinstatement for failing to show by clear and convincing evidence that he had achieved the requisite moral change required for reinstatement. In the alternative, the Director argued for reinstatement subject to a two-year period of supervised probation and subject to further terms and conditions including: monitoring by an attorney approved by the Director, no practice as a solo practitioner for one year, and the adoption of approved office procedures related to the handling of client funds and maintenance of a trust account.

The panel concluded that Jellinger had proven by clear and convincing evidence that he has:

(a) completed the required two-year period of suspension, (b) continued treatment for his depression and arranged for his psychologist to report periodically to the Director concerning the progress of his treatment, (c) paid the costs required by Rule 24, RLPR, (d) successfully completed the professional responsibility exam, (e) satisfied his CLE requirements, and (f) complied with Rule 26, RLPR.

The panel also concluded that Jellinger “possesses current legal skills and knowledge,” “is psychologically fit to resume the practice of law, as it relates to his prior passive misconduct,” “currently has in place adequate personal and professional support systems to assist him in managing the stress and practicalities of a law practice,” and “has shown the requisite moral change as to his prior dishonesty.”

On the basis of these findings of fact and conclusions of law, the panel recommended reinstatement, subject to a four-year period of supervised probation under a number of terms, including (1) that Jellinger not engage in the practice of law as a solo practitioner for two years from the date of the reinstatement order; and (2) that Jel-linger apply for malpractice insurance.

I.

Our first consideration is whether Jellinger should be reinstated to the practice of law. We independently review the entire record in reinstatement proceedings to determine if an attorney should be reinstated. In re Kadrie, 602 N.W.2d 868, 870 (Minn.1999). We consider the panel’s recommendations, but we are not bound by them. Id.

“[A]n attorney applying for reinstatement must establish by clear and convincing evidence that she or he has undergone such a moral change as now to render him a fit person to enjoy the public confidence and trust once forfeited.” In re Porter, 472 N.W.2d 654, 655 (Minn.1991) (quoting In re Hanson, 454 N.W.2d 924, 925 (Minn.1990)). Evidence of moral change is, however, only one factor. In re Kadrie, 602 N.W.2d at 870. Other factors to be considered are: “(1) [the attorney’s] recognition of the wrongfulness of his conduct; (2) the length of time since the misconduct and [the] disbarment or suspension; (3) the seriousness of the original misconduct; (4) the existence of physical or mental illness or pressures that are susceptible to correction; and (5) [the attorney’s] intellectual competency to practice law.” Id. (internal citations omitted).

The panel concluded that Jellinger has undergone the moral change required to be reinstated to the practice of law. And the Director no longer argues that Jelling-er is unfit to be reinstated. The panel found that Jellinger expressed shame and remorse over his misconduct and that Jel-linger indicated that he knew what he did was wrong. The panel’s findings also indicate that Jellinger has gained control of his depression by working with his psychologist and by taking anti-depression medication. The panel noted that Jelling-er said he is now aware of the warning signs of depression and that he will seek help if those signs occur.

We conclude that Jellinger has current legal skills and knowledge, demonstrated by his successful completion of the professional responsibility exam, satisfaction of his CLE requirements, and his work as a paralegal. And, although we only prohibited Jellinger from applying for reinstatement for two years, it has been more than four years since Jellinger’s indefinite suspension on December 26, 2002. Thus, although Jellinger’s misconduct was very serious, based on the panel’s findings of fact (and in the absence of a transcript of the hearing before the panel), we agree with the panel that Jellinger has shown that he is fit to resume the practice of law, and we hold that he should be reinstated.

II.

Having concluded that Jellinger has met his burden to show that he should be reinstated, we turn next to the issue of what, if any, conditions should continue to apply to Jellinger. The Director argues that a probationary period subject to certain conditions is routine in reinstatement matters, and that the panel’s recommendations related to the length of Jellinger’s probation and the conditions on the probation are reasonable in this case. Jellinger argues that the conditions recommended by the panel are punitive and inappropriate. In particular, he objects to the length of the probationary period, the condition that he apply for malpractice insurance, and the prohibition on practice as a solo practitioner for the first two years of his reinstatement.

The goals of the lawyer disciplinary system are to protect the public, the courts, and the legal profession, and to guard the administration of justice. Jellinger, 655 N.W.2d at 316. To further these purposes, we have imposed conditions on reinstatement in many previous cases, and often those conditions have been as rigorous, or even more rigorous than the conditions the panel recommended in this case. See, e.g., In re Anderley, 696 N.W.2d 380, 386 (Minn.2005) (reinstating Anderley subject to indefinite probation and prohibition on practice as a solo practitioner); Kadrie, 602 N.W.2d at 873 (reinstating Kadrie subject to two years of probation and no practice as a solo practitioner for two years); In re McCreary, 528 N.W.2d 856, 856 (Minn.1995) (reinstating McCreary subject to two years of probation and no practice as a solo practitioner). With the relevant goals in mind, we turn to an examination of the three conditions recommended by the panel to which Jellinger objects.

First, Jellinger objects to the length of the probationary period recommended by the panel. We conclude that the panel’s recommendation is in accord with the probationary periods we have imposed in other cases. See, e.g., In re Maki, 536 N.W.2d 631, 631 (Minn.1995) (reinstating lawyer and placing him on five years’ probation). In light of Jellinger’s disciplinary history, four years of probation is appropriate to ensure that Jellinger gets the supervision and experience necessary to adequately protect the public, the courts, and the legal profession from further misconduct.

Second, Jellinger objects to the panel’s recommendation that he be required to apply for malpractice insurance. We have imposed this as a condition in other cases. See In re Schaefer, 711 N.W.2d 467, 467 (Minn.2006); In re Schutter, 489 N.W.2d 233, 233 (Minn.1992). We likewise conclude it is appropriate in this case, if Jellinger engages in solo practice, to accomplish the goals of the lawyer disciplinary system.

Third, Jellinger objects to the panel’s recommendation that he be prohibited from engaging in the solo practice of law for two years. Jellinger argues that because he is a 59-year-old attorney with a disciplinary history, he will have difficulty attaining gainful legal employment. The Director notes that we have in past reinstatement cases imposed a prohibition on solo practice. See, e.g., Anderley, 696 N.W.2d at 386; Kadrie, 602 N.W.2d at 873; McCreary, 528 N.W.2d at 856. But in the cases the Director cites, the prohibition on solo practice does not appear to have been contested, as it is here.

The panel’s recommendation prohibiting solo practice was likely based on an assumption that Jellinger would find employment in a law firm or corporate setting. Given that Jellinger committed misconduct while he was engaged in solo practice it serves the goals of the disciplinary system to condition Jellinger’s return to solo practice upon reinstatement. If however, as Jellinger argues, he is unable to attain legal employment in a law firm or as in-house counsel, then a prohibition on solo practice will in effect operate as a continuation of his suspension rather than a reinstatement. The purpose of the attorney discipline system is not to punish the wrongdoer but to protect the public. In re Plummer, 725 N.W.2d 96, 98 (Minn.2006). We have said that “a disbarred attorney who meets the heavy burden of demonstrating [his] rehabilitation will be reinstated.” In re Ramirez, 719 N.W.2d 920, 924 (Minn.2006) (quoting Anderley, 696 N.W.2d at 385). In this case, we have concluded that Jellinger has carried this burden, and he is entitled to reinstatement. Thus, while it is appropriate to place certain conditions on his reinstatement, the effect of the conditions should not be to extend his suspension.

There is insufficient evidence in the record to substantiate Jellinger’s claim that it will be difficult or impossible for him to find gainful legal employment in any context other than solo practice. We conclude, however, that if Jellinger can demonstrate to the Director’s satisfaction that he cannot find other legal employment, then he may engage in the practice of law as a solo practitioner, subject to intensive supervision as set forth below.

We therefore order that Jellinger is reinstated to the practice of law and placed on probation for a period of four years, subject to certain conditions. The nature of the supervision during probation shall depend on the setting in which Jellinger practices law. The conditions of Jelling-er’s probation are as follows:

(a) Jellinger shall cooperate fully with the Director’s Office in its efforts to monitor compliance with this probation. Jellinger shall promptly respond to the Director’s correspondence by the due date. Jellinger shall cooperate with the Director’s investigation of any allegations of unprofessional conduct that may come to the Director’s attention. Upon the Director’s request, Jellinger shall provide authorization for release of information and documentation to verify compliance with the terms of this probation.
(b) Jellinger shall abide by the Minnesota Rules of Professional Conduct.
(c) Jellinger shall continue his current mental health treatment program, under which he is now seen on an as-needed basis, and shall follow all recommendations of his treating professional.
(d) If Jellinger engages in the practice of law other than as a solo practitioner, he shall do so subject to supervision, until the end of the probationary period, by a licensed Minnesota attorney, who may be employed by the same entity as Jellinger. The attorney shall be appointed by the Director to monitor Jel-linger’s compliance with the terms of this probation. Jellinger shall notify the Director as soon as practicable of his intention to engage in the practice of law other than as a solo practitioner. At the same time Jellinger notifies the Director of his intention to engage in the practice of law other than as a solo practitioner, Jellinger shall provide to the Director the names of at least two attorneys who have agreed to be nominated as his supervisor. If, after diligent effort, Jel-linger is unable to locate a supervisor acceptable to the Director, the Director will locate the supervisor. Jellinger shall cooperate fully with the supervisor in his or her efforts to monitor Jelling-er’s compliance with this probation. The supervisor shall file written reports with the Director at least quarterly, or at such more frequent intervals as the Director may reasonably request.
(e)Jellinger shall not engage in solo practice for the first two years of the probationary period unless Jellinger demonstrates to the satisfaction of the Director that he cannot find other employment as an attorney. If Jellinger engages in the practice of law as a solo practitioner at any time during the probationary period, he shall be subject to the following conditions for two years or until the end of the probationary period, whichever occurs sooner:
(i) Jellinger shall notify the Director at least 30 days before engaging in the practice of law as a solo practitioner.
(ii) Jellinger shall be supervised by a licensed Minnesota attorney, appointed by the Director to monitor Jelling-er’s compliance with the terms of this probation. At the same time Jellinger notifies the Director of his intention to
open a solo practice, Jellinger shall provide to the Director the names of at least two attorneys who have agreed to be nominated as his supervisor. If, after diligent effort, Jelling-er is unable to locate a supervisor acceptable to the Director, the Director will locate the supervisor. Jel-linger shall make active client files available to the Director upon request.
(iii) Jellinger shall cooperate fully with the supervisor in his or her efforts to monitor compliance with this probation. Jellinger shall contact the supervisor weekly, either in person or by telephone, and shall schedule a minimum of one in-person meeting per month. Jellinger shall submit to the supervisor an inventory of all active client files at least one week before each in-person meeting. With respect to each active client file, the inventory shall disclose the client name, type of representation, date opened, most recent activity, next anticipated action, and anticipated closing date. In addition, the inventory shall contain information about any retainers accepted and any trust account transactions affecting each such client. At least quarterly, the supervisor shall review a random sample of Jellinger’s open files. In a general way, Jellinger shall keep the supervisor aware of the financial success or difficulties being faced by the practice and Jellinger’s plans to address those matters. The supervisor shall file written reports with the Director at least quarterly, or at such more frequent intervals as may reasonably be requested by the Director.
(iv) Jellinger shall initiate and maintain office procedures that ensure (1) that there are prompt responses to correspondence, telephone calls, and other important communications from clients, courts, and other persons interested in matters he is handling, and
(2) that Jellinger regularly reviews all files and completes legal matters on a timely basis.
(v) At the same time Jellinger notifies the Director of his intention to engage in the solo practice of law, Jellinger shall provide to the Director a written plan outlining office procedures designed to ensure that Jellinger complies with the requirements of this probation. Jellinger shall also provide the Director with an updated business plan, and shall provide the updated business plan and office procedures plan to his supervisor, once appointed.
(vi) Jellinger shall enter into a written retainer agreement with each client, which shall be signed by Jellinger and the client and which shall comply with Rule 1.5(b), Minn. R. Prof. Conduct (MRPC), and Rule 1.15(b), MRPC.
(vii) Jellinger shall maintain law office and trust account books and records in compliance with Rule 1.15, MRPC. These books and records shall include the following: client subsidiary ledger, checkbook register, monthly trial balances, monthly trust account reconciliation, bank statements, cancelled checks, duplicate deposit slips and bank reports of interest earned, service charges, and interest payments to the Lawyers Trust Account Board. Such books and records shall be made available to the Director at such intervals as the Director deems necessary to determine compliance. Jellinger shall not maintain a trust account without a co-signer acceptable to the Director, whose signature shall be required on each trust account check.
(viii) Jellinger shall initially limit his practice to no more than 20 open files and shall thereafter increase his case load only with the approval of his supervisor and the Director.
(ix) Jellinger shall apply for malpractice insurance with coverage, limits, and an insurance company approved by the Director. Jellinger shall not be required to purchase malpractice insurance if he can demonstrate to the Director that it is unavailable or unduly expensive.
(f) Failure to comply with any of the conditions of this probation shall be grounds for revocation of probation and temporary suspension.

It is so ordered.

      . See Rule 16(c), Rules on Lawyers Professional Responsibility (RLPR).

      . The specific conditions on Jellinger’s probation are set forth at Jellinger, 625 N.W.2d at 148-49. These conditions do not include a restriction on practice as a solo practitioner or a requirement that Jellinger apply for malpractice insurance. Id.

      . On October 24, 2003, the Director issued Jellinger an admonition for conduct that took place before Jellinger's indefinite suspension but while he was on probation. The Director issued the admonition because Jellinger had failed to adequately communicate with a client, failed to return a retainer fee, and failed to notify the client that he had been suspended.

      .The parties did not order a transcript of the hearing before the panel. Our recitation of the facts is therefore taken from the panel's findings of fact. Cf. Rule 14(e), RLPR ("Unless the respondent or Director * * * orders a transcript * * * the findings of fact and conclusions shall be conclusive.”).

      . This relationship would essentially require W.K. to act as a co-signer on Jellinger’s trust account, to be familiar with Jellinger’s client files, and to serve as, in effect, a financial probation officer who would monitor the financial side of Jellinger’s practice.

      . The remaining terms and conditions recommended by the panel are generally consistent with the terms and conditions set forth in our May 3, 2001 order. Jellinger, 625 N.W.2d at 148. One other condition, however, was not part of our May 3, 2001 order: the requirement that Jellinger have another attorney cosign all checks written on his trust account. Jellinger does not object to the inclusion of this condition.