Gay v. Canada Dry Bottling Co. of Fla.

• Decision Date: 08 February 1952
• Citation: 59 So.2d 788
• Parties: GAY v. CANADA DRY BOTTLING CO. OF FLORIDA, Inc.
• Court: Florida Supreme Court

Page 788

59 So.2d 788

GAY v. CANADA DRY BOTTLING CO. OF FLORIDA, Inc.

Supreme Court of Florida, Special Division B.

Feb. 8, 1952.

On Rehearing June 24, 1952.

Richard W. Ervin, Atty. Gen., Ralph M. McLane, Asst. Atty. Gen. and Lewis H. Tribble, Tallahassee, for appellant.

Loftin, Anderson, Scott, McCarthy & Preston, Paul R. Scott and Marshall S. Scott, all of Miami, for appellee.

ROBERTS, Justice.

The sole question here is whether the purchase by appellee, a soft drink bottler, of new bottles, cases and the component parts thereof from manufacturers for the purpose of packaging and distributing the beverages is taxable under the Florida Revenue Act of 1949, being Chapter 26319, Laws of Florida, Acts of 1949 Ex.Sess., F.S.A. § 212.01 et seq., as a 'retail sale' to appellee. In a suit instituted by appellee for a declaratory decree and injunctive relief, the lower court held that such purchases were not taxable as a 'retail sale' under the 1949 Act and enjoined the Comptroller of this State, the appellant here, from enforcing the collection of the tax theretofore assessed against the appellee.

The case was tried in the court below on an agreed statement of facts, by which it appears that the appellee sells its various soft drink products to its customers at a fixed price per case, consisting of a charge for the bottles and cases as well as the contents, although these charges are not billed separately. A credit or cash refund is made to any one, whether the original purchaser or not, who returns empty bottles and cases in good condition. The charge ticket is the sole contract between appellee and its customers, and no reservation of title to the bottles and cases is made therein.

A 'retail sale' is defined in Section 2(c) 2 of the Act as 'a sale to a consumer or to any person for any purpose other than for resale in the form of tangible personal property, * * *.' It is further provided therein that the term 'retail sale' shall not include sales of 'materials, containers, labels, sacks or bags used for packaging tangible personal property for shipment or sale.' F.S.A. § 212.02(3)(a, b). It is the contention of the appellee that the bottles and cases (1) are purchased by it for resale and (2) are 'containers * * * used for packaging tangible personal property for shipment', so that its purchases of these items are not retail sales to it under either of the foregoing provisions of the Act.

In considering the question of whether the purchase of various types of containers for use in 'packaging tangible personal property for shipment or sale', or similarly worded statutes, is a purchase 'for resale,' it has been uniformly held that 'non-returnable' or 'expendable' containers, that is, those which are not returned to and re-used by the manufacturer of the product contained therein, are purchased for re-sale where the cost of such containers affects and adds to the price of the product. Lee v. Hector Supply Co., 133 Fla. 849, 183 So. 489 (vegetable crates); Moore v. Arizona Box Co., 59 Ariz. 262, 126 P.2d 305 (vegetable crates); McCarroll v. Scott Paper Box Company, 195 Ark. 1105, 115 S.W.2d 839 (pasteboard cartons for packing bakery products); Kroger Grocery & Baking Co. v. Glander, 149 Ohio St. 120, 77 N.E.2d 921 (various types of cartons, boxes and containers); American Molasses Co. of New York v. McGoldrick, 256 App.Div. 649, 11 N.Y.S.2d 289 (molasses pails, barrels and drums); Sterling Bag Co., Inc., v. City of New York, 256 App.Div. 645, 11 N.Y.S2d 297 (sugar bags).

The purpose of exempting from a retail sales tax such intermediate sales of containers and packaging materials appears to be, as stated in Kroger Grocery & Baking Co. v. Glander, supra, [149 St. 120, 77 N.E.2d 926] 'To avoid double taxation and to prevent the increase of ultimate sales price to the consumer, for, after all, the consumer pays the whole tax reflected in the price which he pays for the finished product.'

In the case of returnable containers, which have a definite fixed value both at the time of their 'sale' to the customer and at the time of their return for credit or for cash, the problem of double taxation is easily avoided and is, in fact, provided for by Rule 75 promulgated by the Comptroller of the State of Florida under his authority to make rules and regulations for the enforcement of the Act 'not inconsistent' therewith, Section 17 of the Revenue Act of 1949, as follows: 'If an article is sold in a returnable container and a deposit is posted to assure the return of the container, the sales tax does not apply to the deposit, but is to be applied to the selling price of the property sold.'

While it may be that, technically speaking, the appellee 'sells' its bottles and containers to its customers on a 'sale or return' basis, and its customers 'sell' such containers to the ultimate consumer of the product contained therein, it is equally true that the ultimate consumer 'buys' such containers for the purpose of 're-selling' them to the appellee or its agent and that the appellee is obligated to 're-purchase' all those in good condition.

We are not persuaded, then, that in the case of returnable containers for which a deposit is exacted by the seller of the product contained therein, the sale and delivery thereof to the ultimate consumer constitutes a 'retail sale' within the meaning of the Revenue Act of 1949, rather that the sale thereof to the manufacturer of the product contained therein. If the sale to the ultimate consumer of the product constitutes the only 'retail sale' of the container, then the...