WPC3 a,\y΃MڰkB~P@`0Կ c4r~h p)3P9;\qIw C" n3,Cf?8\ozu1A D!J`5\ܹ1cYsC!8>L).΅:#9b՝᭣eyA-=v?8l;[M8=4͜t5;+F*Av |VkҟdJHN/9A2$Qz9F;qer7xS ]%!x؟ ș(De TrRfE_ᔺuK"|{ 4lE"v~S@8L\q8mb+iq F2M<ֳ͔N{2B5 S0ۍ~b礇OOΡ4LsG̫$TˉZ)E]b#\ %% ^ + 07 UN w 4 z%  q  m  {A 0 DNE 09cW 1u 72/ 0wa 0 0b 0 0 0} 0X 0DG 1 72 F 4d d !u"=#!&9';+bY,a,a,a,a,a,a,a,a,a,a,a,a,a,a,a,a,a,a,a,a,a,a,a,a,a,a,a,a,a,a,a,a,a,a,a, 0 ---- B.. 0/ D3/ D-/ 0K 0 0 AST00 0m1 0D2 AU2\\ib01s01\clerk1nas,,,,0h1 (`$.8dd8    ("  Z6Times New Roman Regular0:i+00 C:\PROGRA~1\COREL\WORDPE~1\TEMPLATE\CUSTOM~1\REVISE~1.WPTC:\Program Files\Corel\WordPerfect Office 2000\Template\Custom WP Templates\revised standard opinion.wpt 3|x U  R $      8    _ThechancellorspecificallycreditedthetestimonyofCarlMcKelvey,DavidMayoandMichelleBagleywith  thisfinding.ThechancellorcitedthetestimonyofMr.McKelvey,theuniversitysvicepresidentofcampusaffairs,who t characterizedtherelationshipas anoutsourcecontractandthatthedirectorofbusinessoperationsattheuniversity 8 whoperformedqualitycontrolandmonitored_Sodexho_sfoodservicesoperationsfortheuniversityDavidMayoalso L characterizeditasoneof outsourcingandMichelle_Bagley_,foodservicesdirectorfor_Sodexho_,testifiedthatwhatthe  universitywaslookingforwasan endresult.Level 1Level 2Level 3Level 4Level 5Level 1Level 2Level 3Level 4Level 5Level 1Level 2Level 3Level 4Level 5Level 1Level 2Level 3Level 4Level 5(#$  0    R $      1    _ThoughasmallamountofsalestaxwasassessedtoSodexhoforthesaleofbannersattheuniversitylocation,  salestaxisnotanissue.Atotalof$108.00wasestimatedforthesesalesandwasassessedtoSodexho.Theparties t stipulatedthatonlytheusetaxassessedwasindispute.Thusonlytheusetaxisatissue.  R $      4    _TheAgreementacknowledgedthattheuniversitysfoodserviceoperation ismaintainedasanintegralpart  oftheUniversityseducationalactivitiessolelyfortheuseofstudents,faculty,staff,employees,invitedguestsandothers t designatedbyUniversity. R $      2    _Itisundisputedthatsalestaxwasnotpreviouslypaid.(;3$2#  0  .3  0  3#37=CIQYag1.a.i.(1)(a)(i)1)a)i)(O;$0  2#  a  .3  0` (#(#(b$0  0` (#(#2#   .3  0 ` (#` (#(xir$0  0` (#(#0 ` (#` (#2#(  0  )3  0 (# (#($0  0` (#(#0 ` (#` (#0 (# (#2#(  a  )3  0h(#(#(F$0  0` (#(#0 ` (#` (#0 (# (#0h(#(#2#(   )3  0h(#h(#($0  0` (#(#0 ` (#` (#0 (# (#0h(#(#0h(#h(#2#  0  )3  0(#(#({$0  0` (#(#0 ` (#` (#0 (# (#0h(#(#0h(#h(#0(#(#2#  a  )3  0p(#(#(F$0  0` (#(#0 ` (#` (#0 (# (#0h(#(#0h(#h(#0(#(#0p(#(#2#     )3  0p(#p(#  !xEGaeimquy}Bullet ListBullets List#" Lipscomb * R $      7    _Allmealplanswereforsevendaysaweek.PlanAincluded21mealsperweek,planBincluded15mealsper  week,andplanCincluded10mealsperweek. R $      5    _TheAgreementandSodexhosbriefidentifiedthepartyasaMarriott,notSodexho. R $      6    _ParentheticalreferencesaretotheparagraphsintheAgreement.  R $      9    _ThechancellorfoundthereweretwopersonnelissuesinvolvinginteractionbetweenaSodexhoemployeeand  studentsandanallegedtheft,wheretheuniversitywasinvolvedinterminationoftheemployee;nevertheless,shefound t that,theseincidentswerenotindicativeofanexerciseofcontroloverSodexhospersonnel.However,thechancellor 8 alsofoundthatSodexho hired,fired,paidsalaryandbenefitsandtrainedfoodservicesemployeesandthattheplaintiff L controlledhowthefoodwasprepared.  R $      3    _Thefoodserviceswereprovidedontheuniversitycampusandattheuniversityshighschool,middleschool  andelementaryschool.  R $      10    _Sodexhocommencedthisactionseekingarefundofusetaxassessedonitsuseofequipmentandutilitiesin  connectionwithitsmanagementoffoodservicesforErlangerHospitalinChattanoogaandDavidLipscombUniversity t inNashville.InitiallythechancellorheldinfavorofSodexhoconcerningErlangerbutinfavoroftheCommissioner 8 concerningtheuniversity.Onreconsideration,thechancellorreversedherselfstatingthatshe erroneouslyarrivedat L itsconclusionthat[Sodexho]didnotproveagencywithrespecttothe[university]contractbecausetheproofonthat  contractwasnotasponderousastheproofontheErlangercontract.TheCommissioneronlyappealedtheruling  concerningtheuniversity,notErlanger. 1 R $      11    _Ananalogousexamplewouldbethatofaprincipalrequiringacontractortoconstructaroadandrequiring  thatitbepavedwithasphaltinsteadofconcrete.- -  R $      12    _JohnSobrero,formerdistrictmanagerforSodexho,testifiedthatSodexhoemployeesweresubjecttothe  universitysstandardsofconductwhiletheywereonthecampus.Theywerenotsubjecttopersonnelpoliciesofthe t university.(|G2 $ !.8Zdd8         0   d(|3G$ !.8Zdd8     VVVV'dxd)!dxdx( $ Figure  1  ^_X`YE<<CLevel 1Level 2Level 3Level 4Level 5(|3G$ !.8Zdd8     ($$   1  X[Z&OLE 2.0 Box <=8C HKKKK !.8Zdd8     _  Z8QXXdd8  @ UZINTHECOURTOFAPPEALSOFTENNESSEE  @kk$ATNASHVILLE#ZU #Ԉ 8   May7,2004Session ^ XQXZ #ZXXQ#_SODEXHO_ԀMANAGEMENT,INC.,v.RUTHE.JOHNSONXQXZ   \ @@ AppealfromtheChanceryCourtforDavidsonCounty  \ @@No.983318IIIEllen_Hobbs_ԀLyle,Chancellor  H @@*AV) ` dE<` A   @@TTNo.M200300660_COA_ԄR3CVFiledNovember8,_2004_   AV) ` dE<` A      Thisdisputearisesfromtheassessmentofthe contractorsusetax#ZXXQ#XQXZ#ZXXQr#XQXZagainst_Sodexho_ԀManagement,   Inc.foritsuseofpersonalpropertyownedandutilitiesprovidedbyDavidLipscombUniversity.  _Sodexho_Ԁusedtheuniversitysproperty#ZXXQ#XQXZԀtoprovidefoodserviceforthetaxexemptuniversity.The v Commissionerassessedausetaxonthevalueofthepersonalpropertyandutilitiesprovidedbythe b universitybecausetheuniversity,asanexemptorganization,hadnotpreviouslypaidsalestax.#ZXXQ #XQXZThe N pivotalissueiswhether_Sodexho_Ԁoperatedthefoodserviceasanagentofthetaxexemptuniversity#ZXXQw#XQXZ : orasanindependentcontractor.#ZXXQT #XQXZԀTheChancellorheldthat_Sodexho_Ԁwasanagentoftheuniversity &v andthatnousetaxwasowed.Wereverse,findingthat_Sodexho_Ԁdidnotcarryitsburdenofproof b toestablishthatitwasanagentoftheuniversityandthusisliablefortheusetax. N #ZXXQ #XQXZ Tenn.R.App.P.3AppealasofRight;JudgmentoftheChanceryCourt & ReversedandRemanded     #ZXQ #XQX.ZFrankG.Clement,Jr.,J.,deliveredtheopinionofthecourt,inwhichWilliamC.Koch,Jr.,_P.J._,  M.S.,andWilliamB.Cain,J.,joined.  PaulG.Summers,AttorneyGeneralandReporter;MichaelE.Moore,SolicitorGeneral;and_Wyla_ ^!  M._Posey_,AssistantAttorneyGeneral,fortheappellant,RuthE.Johnson,Commissionerof J"! Revenue,StateofTennessee. 6#" PatriciaHead_Moskal_ԀandJosephW.Gibbs,Nashville,Tennessee,fortheappellee,_Sodexho_ %^ $ Management,Inc. %J!% B  OPINION #ZXXQq #XQXZ '"#'   Ӏ#ZXXQ#XQXZ  Theissueiswhether_Sodexho_ԀManagement,Inc.,(_Sodexho_)(formerly_Sodexho_ԄMarriott )$) ManagementServices),aforprofitcorporation,operatedthefoodserviceoperationsofthetax *%* exempt,notforprofitDavidLipscombUniversity( theuniversity)asanindependentcontractor +&+ orasanagent.If_Sodexho_Ԁoperatedthefoodserviceoperationsoftheuniversityasanindependent n,', contractor,then_Sodexho_Ԁowesusetaxonthepersonalpropertyandutilitiesprovidedbythe Z-(- _universitythatSodexhousedintheperformanceofitscontracts.IfSodexhoactedasanagentit  doesnotoweusetaxbecauseSodexhowouldbeconsideredthesameentityastheuniversity,and  thus!liketheuniversity!wouldbetaxexempt.  #ZXXQ>#XQXZ  Thetaxatissueisthe usetax(alsoreferredtoasthe contractorsusetax). #  1      ׀Tenn.Code ` Ann.676209(b).#ZXXQ#XQXZTheusetaxwasassessedagainstSodexho!nottheuniversity!dueto L  Sodexhosuseoftheuniversityspersonalpropertyintheperformanceofitsfoodservices#ZXXQ#XQXZ.Thetax 8  inTenn.CodeAnn.676209isataxonthecontractorsuseofthetangiblepersonalproperty.#ZXXQ#XQXZ $ t Thestatuteprovidesthatcontractorsaretheconsumersoftheitemsoftangiblepersonalproperty  ` theyuseintheperformanceoftheircontracts.Theuseatissueisconsideredaseparateanddistinct  L  taxableactivity.UnitedStatesv.Boyd,378U.S.39,44(1964)(whenacontractorusespropertyfor  8  itsownprivateends,theusetaxisowed,regardlessofwhetheritscustomerisataxexemptentity#ZXXQ#XQXZ).#ZXXQ#XQXZ $  ThetwocategoriesofusetaxassessedagainstSodexhoatissueare(1)customerprovidedassetsand   (2)customerprovidedexpenses(utilities).     CustomerProvidedAssetsareassetsusedbySodexhointheoperationoftheuniversitys   foodservice.Theassessmentdoesnotincludeassetsthatwereinstalledasimprovementstoreal p propertyorfixedassets.ItdoeshoweverincludeassetsthattheuniversityprovidedtoSodexhothat \ didnotbecomepartoftherealproperty,suchaspots,pansandtoolsofthetrade.Tenn.CodeAnn. H 676209(b)and676102(31).#ZXXQB#XQXZ 4   CustomerProvidedExpensesareutilitiesprovidedbytheuniversitythatSodexhousedin  \ theoperationoftheuniversitysfoodservice.Theutilitiesassessedareconsideredtobetangible H personalproperty,includingelectricity,naturalorartificialgasandwater.Tenn.CodeAnn.676 4 209(b)and676102(31)#ZXXQj#XQXZ.   #ZXXQ[#XQXZ  Customerprovidedassetsandcustomerprovidedexpensesaresubjecttothecontractorsuse  taxifnosalesorusetaxwaspreviouslypaidbeforebeingusedbySodexho. #  2      ׀Tenn.CodeAnn.  676209(b)(Supp.1990).#ZXXQ#XQXZTheuseoftangiblepersonalpropertyintheperformanceofacontractis  taxable whetherthetitletosuchpropertybeinthecontractor,subcontractor,contractee, l subcontractee,oranyotherperson,orwhetherthetitleholderofsuchpropertywouldbesubjectto X  paythesalesorusetax.Tenn.CodeAnn.676209(b).#ZXXQY!#XQXZThatstatuteprovides: D! 8  (b)Whereacontractororsubcontractor...usestangiblepersonalpropertyinthe #l! performanceofhiscontract,ortofulfillcontractorsubcontractobligations,whether $X" thetitletosuchpropertybeinthecontractor,subcontractor,contractee, $D # subcontractee,oranyotherperson,orwhetherthetitleholderofsuchpropertywould %0!$ besubjecttopaythesalesorusetax,...suchcontractororsubcontractorshallpay &"% ataxattherateprescribedby676203measuredbythepurchasepriceofsuch  property,unlesssuchpropertyhasbeenpreviouslysubjectedtoasalesorusetax,and  thetaxduethereonhasbeenpaid.   #ZXXQ(##XQXZ#ZXXQ&#XQXZ  TheCommissionerbearstheinitialburdenofprovingthatSodexhoissubjecttotheusetax ` atissue.SeeProdigyServicesCorp.v.Johnson,125S.W.3d413,416(Tenn.Ct.App.2003).Ifthe L  Commissionermakesoutsuchacase,Sodexhothenbearstheburdenofprovingthatitisexempt, 8  seeJackDanielsDistillery,LemMotlow,Prop.v.Johnson,740S.W.2d413,416(Tenn.1987),and $ t thereisapresumptionagainst#ZXXQ '#XQXZԀexemptions.SeeKingsportPublishingCorp.v.Olsen,667S.W.2d  ` 745,746(Tenn.1984).#ZXXQS)#XQXZԀ  L  #ZXXQ*#XQXZ  Itisundisputedthattheuniversityisanexemptentityandthatnotaxwouldbeowingifthe $  universityprovidedthefoodserviceatissue.Moreover,itisundisputedthatSodexhowouldalso   beexemptandthatnotaxwouldbeowingifSodexhosuseoftheuniversityspersonalpropertywas   inthecapacityastheagentorservantoftheuniversity,asdistinguishedfromthatofanindependent   contractor,becauseanagent#ZXXQ`*#XQXZ(orcontractor)stepsintotheshoesofitstaxexemptclientwhenitis   aservantofthatclient.U.S.v.Boyd,378U.S.at4448;GehlCorp.v.Johnson,991S.W.2d246 p (Tenn.Ct.App.1998),perm.app.dend,(1999)#ZXXQ,#XQXZ.#ZXXQ.#XQXZForSodexhotobesubjecttotheusetax \ assessment,whatmattersisthatSodexhousedthepropertyintheperformanceofitsfoodservice H contractforitsbusinesspurposesinitscapacityasanindependentcontractor,notasanagentor 4 servant.#ZXXQT.#XQXZԀ  p   Anelementoftheagencyrelationshipisthattheobjectofthecontractbeforthebenefitof H theprincipal.Thetestiswhethertheprincipalhasarighttocontroltheconductoftheagentwith 4 respecttomattersentrustedtotheagent.The rightofcontrolistheprimaryoressentialtestofan   agencyrelationshipwithoutwhichnoagencyexists.[citationsomitted]Thesamestandardapplies   whentheagencyrelationshipisimplied:therightoftheprincipaltocontroltheagentsconductor  theactualexerciseofsuchcontrolistheessentialtest.Nidifferv.ClinchfieldRR.Co.,600S.W.2d  242,245(Tenn.Ct.App.1980).#ZXXQ/#XQXZԀThedistinctionsbetweenanindependentcontractorandanagent  arenotalwayseasytodetermine,andthereisnouniformrulebywhichtheymaybedifferentiated#ZXXQ83#XQXZ. l Carbide&CarbonChemicalCorp.v.Carson,239S.W.2d27,31(Tenn.1951)#ZXXQ24#XQXZ.OurSupremeCourt X  discussedthedifferencesbetweenthetwoandstated: D! 8  Generallythedistinctionbetweentherelationofprincipalandagentandemployer #l! andindependentcontractorisbasedontheextentofthecontrolexercisedoverthe $X" employeeintheperformanceofhiswork,hebeinganindependentcontractorifthe $D # willoftheemployerisrepresentedonlybytheresult,butanagentwherethe %0!$ employerswillisrepresentedbythemeansaswellastheresult.8@8   &"% UnitedStatesv.Boyd,363S.W.2d193,197(Tenn.1962),affd,378U.S.39(1964)(citing, (#' Carbide,239S.W.2dat31;2C.J.S.,Agency,2,p.1027). )$( #ZXXQ4#XQXZ  h+&*   Courtsofthisstatehavefrequentlyanalyzedthetypeanddegreeofcontrolprincipalsand  employersexertoveragentsandservants.Yearsagooursupremecourtconcludedthat,asapractical  matter,everycontractforworktobedonereservestotheprincipaloremployeracertaindegreeof  controlbecausesomedegreeofcontrolisnecessarytoassurethattheworkisperformedaccording t expectationsorspecifications.#ZXXQ8#XQXZԀOdomv.Sanford&Treadway,299S.W.1045,1046(Tenn.1927)#ZXXQ:#XQXZ.#ZXXQd;#XQXZ ` 8  Theemployermayexercisealimitedcontrolovertheworkwithoutrenderingthe 8  employeeamereservant,fortherelationofmasterandservantisnotinferablefrom $ t thereservationofpowerswhichdonotdeprivethecontractorofhisrighttodothe  ` workaccordingtohisowninitiativesolongashedoesitinaccordancewiththe  L  contract.Thecontroloftheworkreservedintheemployerwhichmakesthe  8  employeeamereservantisacontrol,notonlyoftheresultofthework,butalsothe $  meansandthemanneroftheperformancethereof;wheretheemployeerepresentsthe   willoftheemployerastotheresultoftheworkbutnotastothemeansormanner   ofaccomplishment,heisanindependentcontractor.Thusapersonemployedto   performcertainworkisnotnecessarilyamereservantbecausethecontractprovides   thattheworkshallbesubjecttotheapprovalorsatisfactionoftheemployer.Such p aprovisionisnotanassumptionbytheemployeroftherighttocontroltheemployee \ astothedetailsormethodsofdoingthework,butisonlythattheemployermaysee H thatthecontractiscarriedoutaccordingtotheplans.4   Odom,299S.W.at1046,quoting14R.C.L.67;#ZXXQ;#XQXZSeealsoWilsonv.MemphisPub.Co.,231S.W.2d  \ 404(Tenn.Ct.App.1950)cert.dend,(1950);Gracev.Louisville&N.R.Co.,89S.W.2d354 H (Tenn.Ct.App.1935),cert.dend,(1936). 4   Thefactorthatdistinguishescontractorsfromagentsisthatthecontractorisusingthe   property inconnectionwithitsowncommercialactivities.#ZXXQA#XQXZBoyd,at45(quotingUnitedStatesv.  TownshipofMuskegon,355U.S.484,486(1958)).#ZXXQC#XQXZTheUnitedStatesSupremeCourtfurther  commentedthatthefactthepropertywasbeingusedfortheprincipalsbenefitwasirrelevantforthat  istrueinvirtuallyeverymanagementcontract.#ZXXQD#XQXZԀUnitedStatesv.NewMexico,455U.S.720,739 l (1982).TheNewMexicocourtobservedthatthefact#ZXXQE#XQXZԀfederalpropertyinvolvedwasbeingusedfor X  theGovernmentsbenefitwasirrelevant,#ZXXQF#XQXZԀwhatmatteredwasthefactthatthecontractorsremained D! distinctentitiespursuing privateendsandtheiractionsremained commercialactivitiescarried 0"  onforprofit.NewMexico,455U.S.at739,quoting#ZXXQfG#XQXZBoyd,378U.S.at4445.#ZXXQH#XQXZWhendealingwith #l! issuessimilartothosepresentedhere,thiscourtfoundthekeyfactorstobetheprincipals rightto $X" controlandthe extentofcontroltheprincipalactuallyexerted.SeeEdwinB.RaskinCo.,v.Ruth $D # E.Johnson,No.01A019708CH00392,1998WL#ZXXQ$I#XQXZ242605(May15,1998Tenn.Ct.App.).#ZXXQJ#XQXZԀ %0!$   &"%   Ouranalysisstartswiththeagreement(Agreement)theuniversityenteredinto#ZXXQ.K#XQXZwithMarriott  Corporation(Sodexho)forthemanagementandoperationoftheuniversitysfoodservices#ZXXQL#XQXZ.+ #  3      ׀The   statedpurposeoftheAgreementwastoretainSodexhoto manageandoperatetheuniversitys  foodserviceoperations. #  4      #ZXXQL#XQXZԀTheAgreementidentifiedthepartiesrelationshipasoneofagency: t 8  2.1AgencyRelationship.Universitygrants[Sodexho],asagentforUniversity,the L  exclusiverighttomanageandoperatetheFoodService.ToaccommodateUniversity 8  andtofacilitateaccountingandcontrolofinventoriestobeutilizedby[Sodexho], $ t [Sodexho]shallpurchasefoodandsuppliesinitsname,asagentforUniversity,and  ` shallpaytheinvoices. L    Thatparagraphfurtherread, Asprincipal,[theuniversity]maysupervise[Sodexhos]daily $  operationoftheFoodService,includingworkingconditionsforFoodServiceemployeesandthe   safety,sanitation,andmaintenanceoftheFoodServicefacilities.     SodexhoidentifiedcertainprovisionsintheAgreementthatitarguesareindicativeofthe   universitysrighttocontrolthefoodservicesoperations.TheprovisionsSodexhoemphasized p #ZXXQaN#XQXZincludethefollowing:#ZXXQ%S#XQXZ \  # !"(Ey3"3"  8  33T2E3  0`     RighttoRegulateOperations.Theuniversityreservedtherighttomake 4 reasonableregulationswithregardtothefoodserviceoperationsand  p [Sodexho](, #  5      ׀wasrequiredtocomplywithinareasonabletime.(2.1)#ZXXQ}S#XQXZ) #  6      #ZXXQ1V#XQXZ33TlT݌ \` `  Ќ  8      "3"  8  3KW2E3  0`     RightofAccess.Universityrepresentativeshadaccesstothefoodservice 4 facilitiesatallreasonabletimes.(2.1)3KWW݌ ` `  Ќ  8      "3"  8  3X2E3  0`     Locations/MealPlans.[Sodexho]wasrequiredtoprovideFoodServicefor  theuniversitysresidentdiningpatronsatninespecifiedlocationsin  accordancewiththemealplans&D  #  7      ׀selectedbytheuniversity.(3.1,3.2)3XY݌` `    8  l   "3"  8  3-[2E3  0`     SecondspolicyandServingStyle.[Sodexho]wasrequiredtoserveallmeals   cafeteriastyle.Mostmealsincludedunlimitedservingsoffoodand  beverages.(3.3,3.4)8` ` 3-[f[݌pp Ќ  "3"  8  3\2E3  0`     MenusandPrices.Allmenusandpricesweretoberecommendedby ` [Sodexho],butweresubjecttouniversityapproval.(3.5)3\+]݌L ` `  Ќ  8      "3"  8  3x^2E3  0`     LocationsandPrices.[Sodexho]wasrequiredtoprovideretailsalesattwo $ t specifiedlocations,withpricestobedeterminedbythemutualagreement.  ` (4.1,4.2)3x^^݌ L ` `  Ќ  8      "3"  8  3=`2E3  0`     ManagementNonhire.Thepartiesagreedthattheywouldnothirethe $  othersmanagementemployeesforspecifiedperiodsfollowingtermination   oftheemployeeortheAgreement.(5.4)3=`v`݌ ` `  Ќ  8      "3"  8  3b2E3  0`     OfficeFacilities.Theuniversityownedandprovidedofficefacilities,   includingequipmentandfurniture,atnocostto[Sodexho].(6.3)3bNb݌p` `  Ќ  8      "3"  8  3c2E3  0`     Cleaning/Sanitation.[Sodexho]wasresponsiblefortheusualandcustomary H cleaningoffoodserviceareas.Theuniversitywasresponsibleforcleaning 4 window,walls,ceilings,drapes,fixtures,etc.(6.6)3cc݌ p` `  Ќ  8      "3 "  8  3e2E3  0`     Maintenance.Theuniversitywasrequiredtofurnishitsmaintenancestaffto H maintainfoodservicefacilitiesandequipmentatitscost,includinglaborand 4 supplies.(6.7)3ee݌ ` `  Ќ  8      "3 "  8  3cg2E3  0`     Utilities.Theuniversitywasresponsibleforthecost/purchaseofutilities.  (6.9)3cgg݌` `  Ќ  8      "3 "  8  3h2E3  0`     WorkingCapital.Theuniversitydeposited$85,000inOctoberofeachyear l tooffset[Sodexhos]operatingexpenses.Anyunusedportionwastobe X  creditedtotheuniversityattheendoftheyear.(7.1)3hh݌D!` `  Ќ  8        TheCommissionercounteredassertingthatSodexhowasnotamereagentoftheuniversity #l! foritboretheriskoflossfromitsfoodservicesoperations,anyprofititmadewasnotpaidtothe $X" university,ratherSodexhoretainedtheprofits,Sodexhonotonlyhadtherighttocontrolthemeans $D # andmethodsofitsoperations,namelyordering,preparing,andservingfoodandmanagingthe %0!$ process,Sodexhoindeeddidcontrolthemeansandmethodsofitsoperations,thatSodexho &"% employedandpaid itsworkerstoconductthefoodserviceoperations,andSodexhohaditsown '#& chainofcommandformanagementofitsfoodserviceoperationsandthechainofcommanddidnot (#' includetheuniversity. )$(   |*%)   TheAgreementisarelevantfactor;however,itisnottheonlyrelevantfactor.Theconduct   ofthepartiesisalsorelevant.Raskin,1998WL242605,#ZXXQV#XQXZԀat*2.TheissueinRaskinwaswhether  theprivatemanager(Raskin)ofacityownedgolfcoursewasentitledtothecitysexemptionfrom  theusetax.#ZXXQo#XQXZԀHere,theuniversityhadtherighttocontrolmanyaspectsofSodexhosoperations; t however,themereexistenceoftherighttocontrolcertainaspectsofanothersoperationsisnot ` determinativeoftheagencyissue.SeeRaskin,1998WL242605,at*2.AspronouncedinBoyd L  andRaskin,ourdeterminationshouldbebasedontheextentofcontrolexercisedoverthe 8  agent/contractorincludingwhethertheprincipalretainedandexercisedcontroloverthemeansof $ t accomplishingtheresultasdistinguishedfromcontrollingtheresultbutnotthemeans.SeeBoyd,  ` 363S.W.2dat197;Raskin,1998WL242605,at*2.Adegreeofcontrolisnotdeterminativefor  L  everycontractforworkreservestotheemployer/principalacertaindegreeofcontrol.Odom,299  8  S.W.at1046.Thecontroloftheworkreservedtotheprincipalwhichmakestheagentamere $  servantisacontrolnotonlyoftheresultoftheworkbutofthemeansandthemannerofthe   performance.Id.,at1046.Wheretheagentrepresentsthewilloftheprincipalastotheresultofthe   workbutnotastothemeansormannerofaccomplishingthework,itisanindependentcontractor.   Id.,at1046#ZXXQ,p#XQXZ.#ZXXQ&v#XQXZԀ     #ZXXQjv#XQXZHere,thechancellorrenderedtwomemorandumopinions.Shemadenumerousfindingsof \ fact,thebulkofwhicharestatedinthefirstopinion.Webelievethemoresignificantfindingsto H bethefollowing: 4 "3 "  8  3w2E3  0`     #ZXXQv#XQXZTherelationshipwas morearesultorientedoneinwhich[Sodexho]was  \ retainedtouseitsspecializedexpertisetoefficientlyandwithqualitymanage H andoperatethefoodservicesand lessarelationshipwhere[theuniversity] 4 controlledtheplaintiffsduties.3w4x݌ ` `  Ќ  ݀"3 "  8  3_z2E3  0`     #ZXXQx#XQXZTheuniversitywas lookingfortheendresultandthattheplaintiffactedas  anoutsourcingcontractor,thattheuniversityhad triedunsuccessfullyto  operatethefoodservicesoperation,thatit wanteditsfoodservicestobe  moreefficientandprovidebetterqualityforthestudents.  #  8      ׀3_zz݌l` `  Ќ  #ZXXQ {#XQXZ"3"  8  3x}2E3  0`     #ZXXQX}#XQXZSodexhowas lefttoitsowndeviceswithinitsfieldofexpertise.3x}}݌D!` `  Ќ  "3"  8  3~2E3  0`     TheAgreementprovidedthatSodexhohadthe exclusiverighttomanage #l! andoperatetheFoodService.3~ ݌$X"` `     $D # "3"  8  382E3  0`     TheproofshowedthatSodexho controlledcookingandfoodpreparation,   thataprimarypartofthetaskoffoodpreparationandservicewasthe  personneltoprepareandservethefoodandtrainingpersonnel,which  Sodexhowasresponsiblefor,andthatSodexho controlledthepersonnelof t thefoodservicesoperation.38q݌`` `  Ќ  "3"  8  32E3  0`     #ZXXQ"~#XQXZTheAgreementheldSodexho solelyresponsiblefortheemployeesonits 8  payrollandthatSodexhomadethedecisionstohireandfirenon $ t managementemployeesandthoughMr.Mayo,directorofbusiness  ` operationsfortheuniversity,wasassignedtomonitorSodexhosfood  L  servicesoperation,hehadnoauthoritytohireorfireSodexhosemployees.* #  9      #ZXXQT#XQXZԀ#ZXXQ#XQXZ3݌ 8 ` `  Ќ    Inthefirstmemorandumopinion,thechancellorreachedthelegalconclusionthatSodexho   hadfailedtoprovethatitwastheuniversitysagentforpurposesofthecontractorsusetax.On   reconsideration,however,thechancellorreversedherrulingbyconcludingthatshehaderroneously   comparedthefactsatissuewiththoseintheErlangerHospitaldispute,d #  10      ׀#ZXXQ#XQXZandthatsheshouldnothave   deemedasirrelevantspecificationsforthetypesoffoodorpricesandfactssuchaswherethefood p wasservedandthehoursofoperation.Thoughthechancellorchangedheropiniononwhether \ Sodexhowastheuniversitysagent,shedidnotrescindherfindingsoffactinthefirstmemorandum H opinion.Thechancellorstatedthatsheshouldhaveconsideredothersfactorsasmorerelevantand 4 shouldhaveplacedlessemphasisonthedifferenceswiththeErlangerHospitaldispute.Thus,they  p standasthechancellorsfindingsoffact,whichareentitledtoourreviewwithapresumptionthat  \ thefactualfindingsarecorrect,absentashowingthattheevidencepreponderatestothecontrary. H Tenn.R.App.P.13(d);seeBerryhillv.Rhodes,21S.W.3d188,190(Tenn.2000). 4   Weagreewiththepartofthechancellorssecondopinion#ZXXQw#XQXZwhereinshedeterminedthatless   emphasisshouldhavebeenplacedonthedifferenceswiththeErlangerHospitalagreementandthat  timeandplacewererelevantfactorsbutwedifferwiththesignificancethechancellorplacedonthe  latter.Timeandplacearerelevantwhenconsideringagency;however,allsuchagreementsarefact  intensiveandoneofthepertinentfactshereisthattheenterpriseatissueisafoodserviceoperation. l Thus,itislesssignificantthatthelocationsofthefoodserviceoperationswereestablishedinthe X  agreementbecausemostfoodserviceoperationsarestationery.Itwasalsolesssignificantthatthe  hoursofoperationwereestablishedintheagreementforfoodserviceoperationsinschoolshave  customaryhoursofoperation.Wealsofindthefactthattheuniversitycontrolledthetypeoffood  relevantbutnotoverlysignificantbecausetherequirementthatSodexhoprovidecafeteriastylefood t oranothertypeoffoodismoreacontroloftheresultthanthemeansormannerofoperation.- #  11      ׀#ZXXQ#XQXZԀWe ` thereforeagreewiththechancellorthatthesearerelevantfactorsbutfindtheirrelevancetobeless L  significant. 8  ̀  WenowreturntotheRaskinopinionforthefactsthereandherearesimilarbutwedonot  ` findthemtobe onallfoursasSodexhocharacterizedtheminitsbrief.Uponexaminationofthe  L  contractualprovisionsandthecourseofdealingsbetweenRaskinandtheCityofHendersonville,  8  itisapparentthatthecityhadmorecontrolandexertedmorecontrolthantheuniversityhador $  exerted.Forexample,allofRaskinsnetoperatingprofitswerepaidovertothecitywhileSodexho   retainedtheoperatingnetincomeandonlypaidtheuniversityasmallpercentageofitsprofits;   Raskinwaspaidaguaranteedminimumannualfeeof$40,000,assuringRaskinofbeing   compensatedforitsserviceswhileSodexhoboretheriskofloss;theproceedsofthegolfcourse   operationbelongedtothecityandRaskinsbankaccountswereaccessibletothecityatalltimes p whiletheproceedsofthefoodserviceoperationbelongedtoSodexhoandtheuniversitymerelyhad \ therighttoaudittheaccounts;andRaskinspersonnelpoliciesweresubjecttothecitysapproval H whileSodexhosemployeeswereonlysubjecttotheuniversitysstandardofconductwhileonthe 4 campus./ #  12      ׀#ZXXQ]#XQXZ  p   MakingthedeterminationthatSodexhoisanindependentcontractororanagentiscertainly H noteasy.Thisisdueinparttothefactthatsuchdeterminationsarefactintensiveandthereisno 4 uniformrulebywhichtheymaybedistinguished.Carbide&CarbonChemicalCorp.v.Carson,   239S.W.2d27,31(Tenn.1951)#ZXXQg#XQXZ.#ZXXQN#XQXZ Generallythedistinctionbetweentherelationofprincipaland   agentandemployerandindependentcontractorisbasedontheextentofthecontrolexercisedover  theemployeeintheperformanceofhiswork,hebeinganindependentcontractorifthewillofthe  employerisrepresentedonlybytheresult,butanagentwheretheemployerswillisrepresentedby  themeansaswellastheresult.Boyd,363S.W.2d193,197#ZXXQ#XQXZ.Apersonemployedtoperformcertain l workisnotnecessarilyaservantbecausethecontractprovidesthattheworkissubjecttothe X  approvaloftheemployer. Suchaprovisionisnotanassumptionbytheemployeroftherightto D! control...thedetailsormethodsofdoingthework,butisonlythattheemployermayseethatthe 0"  contractiscarriedoutaccordingtotheplans.Odom,299S.W.at1046(quoting14R.C.L.68). #l!   $X"   InRaskin,thecourtpresentedtheissuebeforeitasfollows: IfRaskinismerelyanagent,  theCityisoperatingthegolfcoursethroughRaskinsagency;ifRaskinisanindependentcontractor,  itisoperatingthegolfcourseasanindependententity,andtheoperationisnottheCitys.Raskin, t at#ZXXQ#XQXZ*2.HavingexaminednotonlytheAgreementbutalsotheconductoftheuniversityandSodexho, ` weareunabletoconcludethat#ZXXQ#XQXZtheuniversitywasoperatingthefoodserviceoperations,tothe L  contrary,Sodexhowas.#ZXXQϢ#XQXZOurconclusionisbasedonthefact#ZXXQ#XQXZԀthattheevidencedoesnotpreponderate 8  againstthechancellorsfindingsoffactsetforthinthefirstmemorandumopinionandthefactthat $ t werespectfullydisagreewiththechancellorslegalconclusionasstatedinthesecondandfinal  ` memorandumopinion.Wehavereachedthesameconclusionasdidthechancellorinthefirst  L  memorandumopinion,thatSodexhofailedtocarryitsburdenofprooftoestablishthatitwasthe  8  agentoftheuniversity.Specifically,wehaveconcludedthattheAgreementandthecontrolexerted $  bytheuniversitywasresultsorientedanddidnotconstitutesufficientcontroloverthemeansand   methodsofSodexhosfoodserviceoperationstorenderSodexhoanagentoftheuniversityfor   purposesoftheexemption.Thus,Sodexhoisnotentitledtothetaxexemptstatusoftheuniversity   andisliableforthecontractorsusetaxpursuanttoTenn.CodeAnn.676209(b#ZXXQ#XQXZ)asassessedby   theCommissioner.#ZXXQy#XQXZ p #ZXXQ#XQXZ  Thismatterisremandedtothetrialcourtforfurtherproceedingsconsistentwiththisopinion. H CostsareassessedagainstSodexhoManagement,Inc. 4 #ZXXQH#XQXZ   `     h     ___________________________________      `     h     FRANKG.CLEMENT,JR.,JUDGE#ZXXQT#