Moore & Van Allen v. Lynch

Court of Appeals of North Carolina

Moore & Van Allen v. Lynch

301 S.E.2d 426, 61 N.C. App. 601, 1983 N.C. App. LEXIS 2708

CourtCourt of Appeals of North Carolina

DecidedApril 5, 1983

DocketNo. 8226SC305

StatusPublished

Cited by2 cases

This text of 301 S.E.2d 426 (Moore & Van Allen v. Lynch) is published on Counsel Stack Legal Research, covering Court of Appeals of North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Moore & Van Allen v. Lynch, 301 S.E.2d 426, 61 N.C. App. 601, 1983 N.C. App. LEXIS 2708 (N.C. Ct. App. 1983).

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Opinion

WEBB, Judge.

The question posed by this appeal is whether summary judgment for the plaintiff is proper, holding that the plaintiff is not liable for intangible tax on claims arising from work it has done for clients when the claims have not progressed to the point at which the plaintiff is ready to submit bills for them. The answer to this question depends on the interpretation of G.S. 105-201 which provides in part:

“All accounts receivable on December 31 of each year, having a business, commercial or taxable situs in this State, shall be subject to an annual tax, which is hereby levied, of twenty-five cents (25$ on every one hundred dollars ($100.00) of the face value of such accounts receivable . . . .”

The statute does not define “accounts receivable.” We believe it is ordinarily understood to be an amount owed from one person to another usually arising from the sale of goods or rendering of services and not supported by negotiable paper. See Black’s Law Dictionary 17 (rev. 5th ed. 1979); 1 C.J.S. Account (1936); 1 Am. Jur. 2d Accounts and Accounting § 2 (1962). Affidavits were filed in the case by the defendant who is a certified public accountant and for the plaintiff by L. Howard Godfrey, a certified public accountant and member of the faculty at the University of North Carolina at Charlotte. The affidavits discussed the accounting principles involved in determining accounts receivable and incorporated some literature in the field on this subject. We believe these affidavits show that accounts receivable are the recognition of revenues to be received. In order to show assets correctly, certain claims should be entered on the books as accounts receivable. If there is some doubt as to the validity of a claim, such as collect-ability, it should not be shown as an account receivable. It requires at times considerable management judgment as to when services have proceeded to the point that they may be recognized as an asset which has value.

We believe that by the ordinary meaning of accounts receivable or by the accounting definition, it was error to allow the plaintiffs motion for summary judgment. The entries on the balance sheets showed the plaintiff had done some work for its clients and was owed something for it. This would make them accounts receivable. It may take some analysis to determine the [603]*603value, if any, of some of the accounts. This is the task of the parties or the courts if the parties cannot agree.

We reverse and remand for further proceedings consistent with this opinion.

Reversed and remanded.

Judges BECTON and HILL concur.

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WEBB, Judge.

The question posed by this appeal is whether summary judgment for the plaintiff is proper, holding that the plaintiff is not liable for intangible tax on claims arising from work it has done for clients when the claims have not progressed to the point at which the plaintiff is ready to submit bills for them. The answer to this question depends on the interpretation of G.S. 105-201 which provides in part:

“All accounts receivable on December 31 of each year, having a business, commercial or taxable situs in this State, shall be subject to an annual tax, which is hereby levied, of twenty-five cents (25$ on every one hundred dollars ($100.00) of the face value of such accounts receivable . . . .”

The statute does not define “accounts receivable.” We believe it is ordinarily understood to be an amount owed from one person to another usually arising from the sale of goods or rendering of services and not supported by negotiable paper. See Black’s Law Dictionary 17 (rev. 5th ed. 1979); 1 C.J.S. Account (1936); 1 Am. Jur. 2d Accounts and Accounting § 2 (1962). Affidavits were filed in the case by the defendant who is a certified public accountant and for the plaintiff by L. Howard Godfrey, a certified public accountant and member of the faculty at the University of North Carolina at Charlotte. The affidavits discussed the accounting principles involved in determining accounts receivable and incorporated some literature in the field on this subject. We believe these affidavits show that accounts receivable are the recognition of revenues to be received. In order to show assets correctly, certain claims should be entered on the books as accounts receivable. If there is some doubt as to the validity of a claim, such as collect-ability, it should not be shown as an account receivable. It requires at times considerable management judgment as to when services have proceeded to the point that they may be recognized as an asset which has value.

We believe that by the ordinary meaning of accounts receivable or by the accounting definition, it was error to allow the plaintiffs motion for summary judgment. The entries on the balance sheets showed the plaintiff had done some work for its clients and was owed something for it. This would make them accounts receivable. It may take some analysis to determine the [603]*603value, if any, of some of the accounts. This is the task of the parties or the courts if the parties cannot agree.

We reverse and remand for further proceedings consistent with this opinion.

Reversed and remanded.

Judges BECTON and HILL concur.

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301 S.E.2d 426, 61 N.C. App. 601, 1983 N.C. App. LEXIS 2708, Counsel Stack Legal Research, https://law.counselstack.com/opinion/moore-van-allen-v-lynch-ncctapp-1983.

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