GEHL CORPORATION,                 )
                                  )
      Plaintiff/Appellant,        )      Appeal No.
                                  )      01-A-01-9803-CH-00165
v.                                )
                                  )         FILED
                                         Davidson Chancery
RUTH E. JOHNSON,                  )      No. 95-3343-III
                                            December 4, 1998
Commissioner of Revenue for the   )
State of Tennessee,               )         Cecil W. Crowson
                                  )        Appellate Court Clerk
      Defendant/Appellee.         )



                  COURT OF APPEALS OF TENNESSEE


     APPEAL FROM THE DAVIDSON COUNTY CHANCERY COURT
                      AT NASHVILLE, TENNESSEE


       THE HONORABLE ELLEN HOBBS LYLE, CHANCELLOR




WILLIAM H.D. FONES, JR.
JANIS WILD KESSER
Baker, Donelson, Bearman & Caldwell
2000 First Tennessee Building
Memphis, Tennessee 38103
      ATTORNEYS FOR PLAINTIFF/APPELLANT



JOHN KNOX WALKUP
Attorney General & Reporter

STACY E. GIBSON
425 Fifth Avenue North
Cordell Hull Building, Second Floor
Nashville, Tennessee 37243-0489
      ATTORNEYSFOR DEFENDANT/APPELLEE




                      AFFIRMED AND REMANDED



                                        WILLIAM B. CAIN, JUDGE
                               OPINION

      Gehl Corporation filed suit in the Chancery Court of Davidson County to
contest an assessment by the Commissioner of Revenue of the "Amusement Tax"
imposed by Tennessee Code Annotated section 67-6-212(a)(2).


      Gehl received a notice of assessment dated July 20, 1995 notifying it that
it had been assessed for sales and use taxes for the period December, 1990
through September, 1994. Gehl chose not to pay this assessment and filed suit
pursuant to Tennessee Code Annotated section 67-1-1801 requesting the court
to set aside the assessment. At issue is an assessment for tax in the amount of
$361,795.00, together with penalty and interest totaling $557,231.00 as of July
20, 1995.


      The Gehl Corporation engages in two major activities in Tennessee. In
addition to promoting and organizing tours for several Country Music stars, The
Gehl Corporation entered into contracts with the Memphis Firefighters’
Association, Nashville Firefighters Association and Clarksville Professional
Firefighters, regarding benefit concerts. The record reveals that the contracts
executed by the representatives of the three firefighters’ associations
(denominated in the agreements as “COMMITTEE”) and Gehl (denominated in
the agreements as “SHOW”) are substantially similar.


      The associations and Gehl, in an attempt to raise money for the association
and to earn a profit for Gehl, arranged to put on a number of benefit concerts on
behalf of the association. As an example, the contract with the Memphis
Firefighters Association states in pertinent part:


      2.     The COMMITTEE hereby grants and extends to the SHOW
      the use of its good name, goodwill and cooperation to stimulate the
      sale of tickets and advertising and its complete cooperation in
      presenting six (6) fund raising events, ... .

      3.    The SHOW agrees to provide a campaign manager who shall
      direct a campaign for the sale of admission tickets and
      advertisements in connection with the above-mentioned attraction.
      All sales work, in connection herewith, shall be done by sales
      manager and/or his employees and shall be done by letter, personal

                                       -2-
contact or telephone.

4.     Said campaign manager shall receive forty percent (40%)
(gross) of the monies derived from his sales and/or the sales of his
employees. Said percentage shall be paid to the campaign manager
weekly, but shall only be paid on monies collected and deposited
with the COMMITTEE. Said percentage shall be compensation in
full for his services and the services of everyone employed by the
campaign manager.
                                . . .
5.     Campaign manager shall assume, in full, that portion of the
campaign operating costs which specifically includes the following
items: Office personnel, sales personnel and delivery personnel.

      a) All monies collected from any source whatsoever under
the terms of this Agreement shall be made payable to the
COMMITTEE, and shall be mailed or delivered each week during
the continuance of this Agreement to the duly appointed officer of
the COMMITTEE.

      b) All monies collected are to be deposited in a special
checking account in a bank of COMMITTEE’s choice. It will be
necessary to have two (2) signatures on all checks disbursed, one
from the COMMITTEE and one representing the SHOW.

6.    All costs incurred in connection with the fulfillment of the
terms of this Agreement shall be paid out of the monies grossed and
said costs shall be paid in full, prior to the division of profits
according to the terms herein stated. Said costs shall consist of the
following:

      a) The cost of the attraction shall be actual.

      b) Additional expenses shall be: Office rental, telephone
service, liability insurance, printing, rental costs of the theatre[sic]
or auditorium, postage, and any other costs directly related to and
incurred under the terms of this agreement.

                                . . .

7.     After all costs, as outlined above, have been paid and after
sales taxes have been paid, the amount remaining shall be the net
profit and shall be divided as follows:

       a) The COMMITTEE shall receive the first Twenty
Thousand Dollars ($20,000.00) of the net profit per event, and the
SHOW shall receive the next ($20,000.00) of the net profit, per
event.

     b) All additional monies shall be divided equally fifty percent
(50%) [to] the COMMITTEE and fifty percent (50%) to the SHOW.


                                  -3-
                                    . . .
      9.    Should a deficit occur as a result of this agreement, SHOW
      agrees to assume all responsibility for the payment of all liabilities
      incurred and COMMITTEE shall in no way whatsoever be liable
      for same.


Gehl would appoint the campaign manager, whose job it was to solicit, primarily
by phone, the purchase of tickets for the charity events presented on behalf of the
associations.


      In the action below challenging that assessment, both Gehl Corporation
and the Commissioner filed motions for summary judgment. Gehl Corporation
comes to us to review Chancellor Lyle’s order granting summary judgment for
the Commissioner and denying Gehl Corp.’s cross-motion. Our standard of
review in this case is accordingly de novo with no presumption of the correctness
of the trial court action. Cowden v. Sovran Bank/Central South, 816 S.W.2d
741, 744 (Tenn. 1991) and Hembree v. State, 925 S.W.2d 513, 515 (Tenn. 1996).


      Gehl Corp. urges the following issues on appeal:
      1.    Whether the trial court erred in denying Gehl’s Motion for
      Summary Judgment by finding that Gehl was a taxpayer and not an
      agent of the firefighters.

      2.     Whether the trial court erred by finding that the proceeds of
      the ticket sales to concerts presented pursuant to agreements with
      non-profit labor organizations were not exempt from the
      amusement tax pursuant to T.C.A. § 67-6-330 (a) (7) and/or (16).

      3.     Whether the trial court erred by finding that the proceeds of
      the ticket sales were taxable admissions.



I. Agency
      Gehl’s first two issues hinge on the main question of whether or not Gehl
Corp. was an agent of the charitable firefighter organizations. If Gehl was
indeed acting as an agent, then the entity conducting the ticket sales was actually
the Nashville, Memphis and Clarksville Firefighters’ Associations respectively.
In addition, if Gehl was acting under the direction of these associations in
producing, promoting and controlling these concerts, then the charitable
organizations are the principals. In any event, should agency exist, then no tax

                                        -4-
is owed on the proceeds from these ticket sales.


      Two universal rules of agency appear with regularity in the cases of our
jurisdiction. The first recognizes the element of benefit to the principal of the
agency relationship. In an agency relationship, the agent carries on a business
for the benefit of its principal. See e.g. Nidiffer v. Clinchfield R. Co., 600
S.W.2d 242, 245 (Tenn. App. 1980); Jack Daniel Distillery, Lem Motlow Prop.
v. Jackson, 740 S.W.2d 413, 416 (Tenn. 1987). The second rule, and the most
significant rule for the case at bar, is stated most succinctly by Judge Franks,
writing for the Eastern Section in Nidiffer:


      ...[T]he principal test of agency is whether the principal has the
      right to control the conduct of the agent with respect to matters
      entrusted to the agent. It is said this right of control is the primary
      or the essential test of an agency relationship without which no
      agency exists. 2A C.J.S. Agency § 6, at 560 through 561. Accord:
      3 Am.Jur.2d, Agency, § 2.

      Nidiffer v. Clinchfield R. Co., 600 S.W.2d 242, 245 (Tenn. App. 1980)

      The record reveals no such right of control on the part of the firefighters’
associations. With regard to the sales of tickets, Gehl was in charge of the
selection of a campaign manager. We find the depositions of Firefighter Danny
Todd and Fire Captain Billie Hall enlightening as to the supposed right of the
associations to control Gehl’s fundraising activities. Firefighter Todd represents
the Memphis Firefighters Association; Captain Hall represents the Nashville
Firefighters Association. With regard to the campaign manager, Firefighter
Todd stated in his deposition as follows:


      Q.   Have you had involvement in the hiring or firing of campaign
      managers?

      A.     I guess definition of involvement, but had discussions about
      different managers over the years and, you know, who was coming
      or more importantly when it was time to make a change in Show
      Fund managers I’ve had some discussions and input into when a
      change was made with the supervisors and the other employees of
      -- the owners of the Gehl Group.

Captain Hall had this to say regarding the selection of a campaign manager:

      Q.     And who did you work with from The Gehl Corporation?
                                        -5-
A.    There have been several individuals over the years. I’ve
worked with Frank Stevens. I’ve worked directly with Joe Gehl at
times. One time it was a gentleman, Forrest Ferguson. The
gentleman that’s there now, I’ve worked briefly with. I think his
name is Tom, if I’m not mistaken.

                              . . .

Q.    ...The individuals you mentioned just a minute ago, were they
the campaign managers hired by Gehl, or were they other
individuals?

A.    Of course, Gehl owns the business. Frank Stevens is a partner
or something in the business. He’s not a campaign manager.
Forrest Ferguson was the campaign manager, and Tom is the
campaign manager that runs the show fund office.

Q.    Do they generally hire a separate campaign manager every
year? How does that work? How often does that change?

A.     Probably, it’s been more stable now than it has in the past.
At one time, it was not very stable. We were more or less
designated, for some reason -- I have no reason to be a trainer for
managers or whatever. That caused us various problems, and we
told them that we didn’t like that arrangement, that we wanted
someone that we could have a relationship with, you know, that we
knew on a day-in and day-out basis.

Q.     Let me make sure I understand. You were getting several
different managers because you were kind of a training ground; a
person would learn in Nashville and then move on?

A.   Right. If it was a good manager consequently -- we knew he
was going to move on whether he was good, bad, or in between.
We didn’t like that particular relationship.

Q.    You said you expressed that to Gehl?

A.    The Gehl Group, yes, ma’am.

Q.    Did they change their policy on that?

A.    Yes, ma’am. I think probably since then we’ve probably had
two managers, maybe an interim manager between one or the other
but basically two managers.

Q.    Are the fire fighters involved at all in choosing a manager?

A.    We have approval, you know. If it is someone that, for some
reason, we just didn’t get along with gee-haw with or whatever,
they would have to go.


                                -6-
      The testimony of these witnesses taken as a whole fails to estsablish any
right of control on the part of the firefighters’ associations. These campaign
managers, chosen by Gehl subject to the approval from the charitable
associations, were in charge of the solicitation of ticket sales by other employees
of Gehl.


      Concerning the actual production and direction of the concerts, the
associations relied on Gehl’s expertise in this area as well. The leasing of the
auditoriums, contracts for lighting and sound, negotiation with the acts involved,
all of these activities were undertaken by Gehl. The record regarding the parties
conduct shows no evidence of the control required for Gehl to be considered an
agent of the associations.


      Both Gehl and the Commissioner refer us to our previous decision in
Raskin Co. v. Johnson, 1998 WL 24260 (May 15, 1998). For the reasons
articulated above, we find the case at bar distinguished on its facts. In Raskin,
the City exercised control over personnel, food-service, green fees on land
owned by it and operated by the Raskin Company. These items are classic
indicia of control by a principal over an agent’s duties.             Whereas the
Municipality suffered the risk of loss attendant to having an agent manage its
real property, the firefighters associations in the case at bar bore no risk of loss.


      In sum, this situation falls under the application of the rules of agency set
forth in United States v. Boyd, 211 Tenn. 139, 363 S.W.2d 193 (1962). In Boyd,
several subcontractors of the Atomic Energy Commission of the United States
were seeking to avoid tax liability by virtue of a supposed agency relationship
with the federal government. The contractors were assessed sales tax on items
purchased for the benefit of the government as well as use tax assessed on
equipment utilized by the subcontractors themselves.           In determining the
question of agency existence for the purpose of taxing equipment, the court
found that the entities involved were chosen by the government for their
expertise. The contracts involved suggested that these entities would use their
specialized expertise to obtain a goal for the A.E.C.. The subcontractors were
left to their own devices within their relative fields of expertise. The relationship
involved was purely goal-oriented. The A.E.C. had no right to control the

                                         -7-
subcontractors within their respective fields, so no agency existed. United States
v. Boyd, 211 Tenn. 139, 159, 363 S.W.2d 193, 202 (1962).


      The chancellor held and the record without dispute discloses:
      While the record before the court establishes that the firefighters are
      allowed to make requests and have input, they have no authority to
      fire employees or change entertainers or fire telemarketers. The
      stipulations filed with the court used the term "requests" or "asks"
      in describing the firefighters role, relationship and control with
      respect to Gehl Corporation. Additionally, the firefighters are not
      paying Gehl such as one would expect with an agent. Gehl is paid
      profits out of the account. Thus, Gehl has failed to carry its burden
      of demonstrating by clear and convincing evidence that it is the
      agent and not the actual entity which should be taxed.


      Such is the burden that rests upon the taxpayer. Edmonson Management
Services, Inc. v. Woods, 603 S.W.2d 716 (Tenn. 1980) and Stratton v. Jackson,
707 S.W.2d 865 (Tenn. 1986).


II.   Exemption under T.C.A. § 67-6-330(a)(7) or (16)
      There is exempt from the sales tax upon admission, dues or fees imposed
by § 67-6-212 [Amusement Tax]:
      (7) Gross proceeds derived from admissions to amusement or
      recreational activities or facilities conducted, produced or provided
      by:

      (C) Organizations listed in Major Group No. 86 of the Standard
      Industrial Classification Manual of 1972, as amended, prepared by
      the office of management and budget by the federal government;
      provided that this exemption shall not apply unless such entities,
      societies, associations or organizations promote, produce and
      control the entire production or function; . . .

Further, T.C.A. § 67-6-330(16) also exempts:

      Gross proceeds derived from admissions to musical concerts
      conducted, produced or provided by not-for-profit community
      group associations if such associations promote, produce and
      control such concerts; . . .



      It is indisputable that Gehl does not qualify for exempt status under these
statutory provisions as it is neither a Major Group No. 86 organization nor the
agent of such an organization.
                                        -8-
      Such exemptions are strictly construed against the taxpayer. Tibbals
Flooring v. Huddleston, 891 S.W.2d 196, 198 (Tenn. 1994).


      As demonstrated in the authorities cited above, summary judgment in
favor of the Commissioner on the issue of agency was proper. While it is true
that courts may look beyond the four corners of agreements with third parties to
determine the supposed agency status of the taxpayer, Boyd supra; in the case
at bar, such investigation only proves to reinforce the impression established by
the contracts in question. Gehl was not an agent, but rather a purchaser of good
will and sponsorship.


III. Tickets as Donations
      The last issue Gehl raises on appeal questions the nature of the actual
ticket sales. Gehl of course contends that at least a portion of these ticket
purchases represent pure donation. Without discussing the portion of tickets
used, the fact remains that individuals in Clarksville, Memphis and Nashville
have given money and received in exchange therefor the right to admission to the
concerts promoted in their respective city. While the odds on every ticket-holder
exercising this right at the same time are slight; in truth, every person
successfully solicited for a ticket has purchased a right, and that purchase is
taxable under Tennessee Code Annotated section 67-6-212(a)(2).
      67-6-212. Amusement tax. -- (a) There is levied a tax at a rate
      equal to the rate of tax levied on the sale of tangible personal
      property at retail by the provisions of § 67-6-202 of the gross
      receipts or gross proceeds of each sale at retail of the following:
                                       . . .
      (2) Sales of tickets, fees or other charges made for admission to or
      voluntary contributions made to places of amusement, sports,
      entertainment, exhibition, display or other recreational events or
      activities, including free or complimentary admissions when made
      in connection with a valuable contribution to any organization or
      establishment holding or sponsoring such activities which shall
      have the value equivalent to the charge that would have otherwise
      been made;

Tenn. Code Ann. § 67-6-212 (1998).


IV. Disposition
      The order of the chancellor granting summary judgment in favor of the


                                       -9-
commissioner is affirmed in all respects. The cause is remanded to the trial court
for proceedings pursuant to Tennessee Code Annotated section 67-1-1803(d) and
such further action as may be necessary. Costs of the appeal are taxed against
Gehl Corporation.




                                          ________________________________
                                          WILLIAM B. CAIN, JUDGE


CONCUR:


____________________________________
BEN H. CANTRELL, PRES. JUDGE, M.S.


____________________________________
HENRY F. TODD, JUDGE




                                       -10-
