King & Boozer v. State

• Citation: 241 Ala. 557,3 So.2d 572
• Decision Date: 29 July 1941
• Docket Number: 3 Div. 351.
• Parties: KING & BOOZER v. STATE (UNITED STATES, Intervener).
• Court: Supreme Court of Alabama

3 So.2d 572

241 Ala. 557

KING & BOOZER v. STATE (UNITED STATES, Intervener).

3 Div. 351.

Supreme Court of Alabama

July 29, 1941

[Copyrighted Material Omitted]

Knox Liles, Jones & Blackmon, of Anniston, for appellant King & Boozer.

Samuel O. Clark, Jr., Asst. Atty. Gen., Sewall Key, Berryman Green Lee A. Jackson, and Benjamin M. Brodsky, Sp. Assts. to the Atty. Gen., and Thomas D. Samford, U. S. Atty., of Montgomery, for the United States.

Thos. S. Lawson, Atty. Gen., and John W. Lapsley and J. Edw. Thornton, Asst. Attys. Gen., for the State.

LIVINGSTON, Justice.

This is an appeal from a decree of the Circuit Court of Montgomery County, in equity, confirming an assessment made by the State Department of Revenue on May 15, 1941, against King and Boozer, a part nership composed of Tom Cobb King and Simon Elbert Boozer, for sales taxes for the period beginning January 1, 1941, and ending March 31, 1941, in the sum of $1,236.71 tax and $123.67 penalty thereon The decree of the circuit court was entered on June 13, 1941, and the appeal therefrom to this Court was duly perfected on June 16, 1941.

The tax here involved was assessed under the provisions of the Alabama Sales Tax Act, General Acts 1939, page 16, Code 1940 Tit. 51, §§ 752-783, 785, 786, 831, on the gross proceeds of sales of tangible personal property, consisting of lumber purchased from King and Boozer in connection with the performance of a contract entered into by Dunn Construction Company, a corporation, and John S. Hodgson and Company, a partnership, jointly performing the contract, and hereinafter called the contractor, with the United States of America, hereinafter called the Government, on September 9, 1940, for the construction of a complete tent camp, including necessary buildings, temporary structures, utilities and appurtenances thereto at Fort McClellan, Alabama.

The facts necessary for the decision are, in addition to the above, substantially as follows:

The contract between the Government and the contractor is designated as a cost-plus fixed-fee construction contract. It states that the estimated total cost of construction work to be in the approximate amount of $3,204,588, exclusive of the contractor's fee, subject to the express understanding that the contractor does not guarantee the correctness of the estimate, which is recited to be based upon a detail estimate agreed upon by both the Government and the contractor. The contract states that a fixed fee of $128,865 is to be paid to the contractor, which shall constitute complete compensation for the contractor's services including profit and all general overhead expenses.

The contract provides that the contractor shall furnish all labor, materials, tools, machinery, equipment, facilities and supplies not furnished by the Government, and shall do all things necessary for the completion of the work in accordance with the drawings, specifications and instructions contained in the contract, or to be furnished by the contracting officer, the officer who executed the contract on the part of the Government and who was in charge of the construction work, by or through his authorized representative.

The contract further provides that in addition to the payment of the contractor's fixed fee, the contractor shall be reimbursed for such of his actual expenditures in the performance of the work as may be approved and ratified by the contracting officer, and for payment of rental to the contractor for the construction plant or parts thereof or tools or equipment as the contractor may furnish or rent from others, not to exceed the rates approved by the contracting officer.

The orders for materials and supplies were placed by the contractor, but the Government reserved the right to furnish any materials, construction, equipment, machinery, or tools necessary for the completion of the work, and to pay directly to the persons concerned all sums due from the contractor for labor, materials, freight charges and other charges.

With respect to the payment of costs, the contract provides that the Government will currently reimburse the contractor upon certification to and verification by the contracting officer of the original papers governing pay rolls for labor, invoices for materials, and other expenditures. Generally, reimbursements are to be made weekly, but may be made more frequently if conditions warrant.

The contract further provides that title to all work, completed or in the course of construction, shall be in the Government. Likewise, upon delivery at the site of the work, or at an approved storage site, and upon inspection and acceptance in writing by the contracting officer, title to all materials, tools, machinery, equipment and supplies, for which the contractor shall be entitled to reimbursement, is to vest in the Government. These provisions as to title being vested in the Government shall not operate to relieve the contractor from any duties imposed under the terms of the contract.

It is further provided by the contract that the contracting officer is authorized at any time to make changes in or additions to the drawings and specifications, to issue additional instructions, require additional work or to direct the omission of work covered by the contract. If such changes cause a material increase or decrease in the amount or character of the work, or in time required for its performance, an equitable adjustment of the amount of the fixed fee to be paid to the contractor shall be made, and the contract shall be modified in writing accordingly. It is also required by the contract that, unless the contracting officer shall waive in writing the requirement, the contractor shall reduce to writing every contract in excess of $2,000 made by him for the purpose of the work for services, materials, supplies, machinery, or equipment: insert therein a provision that such contract is assignable to the Government: make all contracts in his own name, and not bind or purport to bind the Government or the contracting officer; and make or place no purchases in excess of $500 without the prior approval of the contracting officer.

That the contractor shall keep records and books of account, showing actual cost to him of all items of labor, materials, equipment, supplies, services and other expenditures of whatever nature for which reimbursement is authorized under the provisions of the contract, and that the contracting officer shall at all times be afforded proper facilities for inspection of the work, and shall at all times have access to the premises, work, materials, books, records, correspondence, instructions, plans, drawings, receipts, vouchers, and memoranda of every description of the contractor pertaining to the work.

The contract further provides that the contractor shall be reimbursed for payments made by the contractor from his own funds under the Social Security Act, and any applicable state or local taxes, fees, or charges which the contractor may be required on account of the contract to pay on or for any plant, equipment, process, materials, supplies or personnel; and, subject to advance approval by the contracting officer, permit and license fees, and royalties on patents used, including those owned by the contractor.

Under the terms of the contract the contractor shall take advantage of all such benefits as cash and trades discounts, rebates, allowances, credits, salvage, commissions, etc., and that in determining the actual net cost of articles and materials, such benefits shall be deducted from the gross cost thereof.

The record contains in substance the following stipulation of facts: Prior to January 1, 1941, a proposal was submitted by King and Boozer in writing to the contractor to sell large quantities of prefabricated lumber at a stipulated price for use in the performance by the contractor of his contract with the Government of September 9, 1940. This proposal was submitted by the contractor to the constructing quartermaster, the authorized representative of the contracting officer at Fort McClellan for his approval and was approved by him. It was stipulated and agreed that all of the sales by King and Boozer of tangible personal property which are involved herein were made in connection with the performance by the contractor of his contract of September 9, 1940, and that the property was sold, paid for, and reimbursement made therefor in the manner stated hereinafter with respect to a particular purchase made on January 17, 1941.

Pursuant to the proposal submitted by King and Boozer, the contractor, on January 16, 1941, prepared and submitted to the constructing quartermaster a request for the purchase of certain lumber, and requested the approval by the constructing quartermaster of the purchase. The approval of the constructing quartermaster was endorsed on the request for purchase. Thereafter, on January 17, 1941, the contractor submitted to King and Boozer at Anniston, Alabama, an order for the lumber. As shown by a copy of the order, it was signed by the purchasing agent of the contractor and directed that the materials described in the order should be shipped to the United States Construction Quartermaster at Fort McClellan, Alabama, for account of Dunn Construction Company, Inc., and John S. Hodgson and Company, f. o. b., Fort McClellan. The order further provided as follows:

"This order is placed for the benefit of, and is assignable to, the United States Government.

"This purchase order does not bind, nor purport to bind, the United States Government or Government officers thereunder.

"Terms of Payment as stated on obverse side of this purchase order are understood to be effective upon arrival at destination and acceptance of material by...