Adams County v. National Box Co.

• Decision Date: 02 May 1921
• Docket Number: 21768
• Citation: 125 Miss. 598,88 So. 168
• Court: Mississippi Supreme Court
• Parties: ADAMS COUNTY v. NATIONAL BOX CO

88 So. 168

125 Miss. 598

ADAMS COUNTY v. NATIONAL BOX CO

No. 21768

Supreme Court of Mississippi

May 2, 1921

1 TAXATION. Exemption of factories includes property necessary to operation only; "manufacturing plant."

Under chapter 100, Acts 1916 (Hemingway's Code, sections 6878, 6879), the exemption allowed goes only to the manufacturing plant, which includes those things necessary in and to its operation. The act intends to exempt the real estate buildings, machinery, improvements, and equipments, and other personal property, forming a part of, and belonging to, the plant, and essential to and necessarily used In its operation.

2 TAXATION. Exemption statutes strictly construed against exemptions; exemption statute construed; raw materials and finished products not part of factory exempted.

Exemption statutes are to be strictly construed against exemptions to persons or corporations for gain; and chapter 100, Acts 1916 (Hemingway's Code, sections 6878, 6879), does not exempt raw materials and finished products on hand belonging to a factory, as they are not a part of the manufacturing plant nor does it exempt a steamboat used exclusively in transporting logs to the factory for manufacturing purposes it being no essential part of the plant used directly in its operation.

3. TAXATION. Objection to assessment on ground of exemption precludes company from raising regularity of assessment on appeal.

Objection to an assessment of a company on the ground that it is exempt from taxation precludes the company from raising the point on appeal that the assessment was not made as required by law in assessing corporations, nor can such point be raised where the record evidence fails to show that the company is a corporation.

HON. R. L. CORBAN, Judge.

APPEAL from circuit court of Adams county, HON. R. L. CORBAN, Judge.

Proceedings by Adams County to assess the National Box Company for personal property. Objections to the assessment were overruled by the board of supervisors, and on appeal the company's liability was fixed. From the judgment the county appeals direct, and the box company cross-appeals. Reversed on direct appeal, and affirmed on cross-appeal, and case remanded.

Judgment reversed in part, affirmed in part, and cause remanded.

Wilmer Shields, for appellant.

The questions presented for review by this appeal and cross-appeal are: (1) Is a steamboat, of the assessed value of ten thousand dollars, navigating the Mississippi river, belonging to a corporation owning a factory exempt from taxation under chapter 100, Laws 1916, and used exclusively to convey raw materials to said factory, exempt from taxation as being a part of said factory? (2) Is the raw material to be used in such factory in the process of manufacture and the finished products thereof, while on the premises of such factory exempt from taxation under the provisions of said chapter 100, Laws 1916?

Turning to the statute invoked by appellee, we find that the exemption is granted to all permanent factories or plants of the kind hereinafter named, etc., and hence to resolve the questions raised it is only necessary to ascertain the sense in which the legislature used the words, "factories" and "plants" in this statute, for that part of the statute with which we are here concerned does not purport to exempt any property not comprehended under those terms. The standard dictionary defines "factory" as "an establishment appropriated to the manufacture of something, including the building and machinery necessary to such manufacture," and "plant" as "a set of machines, tools, etc., necessary to conduct a mechanical business; often including the buildings and grounds, or, in case of a railroad, the rolling stock, but not including material or product," and counsel for appellant has been unable to find any authoritative definition of either of said words broad enough to include raw materials, or manufactured products on hand, or a steamboat for transporting raw materials. Hence, even under the rule for construing statutes other than those granting exemptions that words in common use are to be construed in their natural, plain and ordinary signification, the claim of appellee for exemption should be denied.

But the rule is well settled, and in the case of corporations organized for profit is universal, that statutes exempting property from taxation are to be strictly construed and in all cases of doubt as to the legislative intention, or as to the inclusion of particular property within the terms of the statute, the presumption is in favor of the taxing power, and the burden is on the claimant to establish clearly his right to exemption. 37 Cyc. 891.

Immunity from taxation cannot be made out by inference or implication, but must be conferred in terms too clear and plain to be mistaken, and in fact admitting of no reasonable doubt. 37 Cyc. 892. This court has said, in Yazoo & M. V. R. Co. v. Thomas, 65 Miss. 553, that "legislation which relieves any species of property from its due proportion of the burdens of government must be so clear that there can be neither reasonable doubt nor controversy in regard to its meaning," and in Ice Co. v. Greenville, 69 Miss. 86, the court says: "The party pleading exemption from taxation has imposed upon him the burden of clearly showing his title to the immunity claimed, and if his right may be fairly said to remain in doubt, the claim must be denied." The court's attention is also called to Morris Ice Company v. Adams, 75 Miss. 410, and to the more recent cases of Adams County v. Catholic Diocese of Natchez, 110 Miss. 890, and New Standard Club v. McRaven, 111 Miss. 92, in all of which case the doctrine of strict construction of such statute is laid down.

Under a statute exempting "property used in manufacturing" it has been held that the property, to be exempt, must be used directly in the process of manufacture, and that vessels used to convey the raw product to the place of manufacture are not exempt. See 26 Ruling Case Law, sec. 287, page 330, Title, "Taxation" citing Martin v. New Orleans, 38 La. Ann. 397, 58 Amer. Rep. 194.

The appellee, to say the least, has fallen far short of establishing clearly its rights to the exemption claimed, and has not met and cannot meet the burden imposed upon it of showing clearly and beyond reasonable doubt and controversy that the property in question is exempt from taxation under the terms of the statute invoked by it, and therefore appellant insists and submits that the judgment of the court below, in so far as it held said steamboat to be exempt from taxation should be reversed and in all other particulars affirmed, and that judgment for appellant should be entered here.

Reed, Brandon & Bowman, for appellee and cross-appellant.

We present briefly the following arguments in support of our contention: First: The law contemplated the exemption of factories or plants coming within the provision, from all taxation.

We reach this conclusion from a general knowledge of the purposes of the exemption granted. It was principally for no other purpose than to encourage the establishment and operation of these industries. Why then should the statute be construed so as to abrogate the provision that the said factories would be exempt from all taxation and confine it only to that specific property included in the application?

It can readily be appreciated that a factory could not at the very outset of its construction ascertain and set forth in the application every piece of property that would be placed in the plant or should form a part of the establishment. If it is held that only the property specifically described is exempt then any piece of machinery or other property afterwards placed in the plant or that may have been in the plant and not contained in the description would be liable for taxation. It is true that the law on this subject provides that the auditor shall notify the chancery clerk stating distinctly the property exempt, but we contend that this is not for the purpose of outlining in detail each and every article or piece of property exempt but simply to inform the taxing authorities that this particular factory is exempt from taxation and that the articles of description are to identify the holdings of the factory and not to restrict the taxation of these specific properties described.

Second The National Box Company is a corporation and if it is to be taxed at all, it must be taxed in the manner provided for the assessment of corporations. The law is very plain that a corporation shall be assessed for the value of...