Board of Assessors of City of Springfield v. Commissioner of Corporations and Taxation
| Decision Date | 05 April 1947 |
| Citation | 321 Mass. 186,72 N.E.2d 528 |
| Parties | ASSESSORS OF SPRINGFIELD v. COMMISSIONER OF CORPORATIONS AND TAXATION. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
November 29, 1946.
Present: FIELD, C.
J., LUMMUS, QUA DOLAN, & SPALDING, JJ.
Taxation, Personal property tax: machinery; Telephone company; Foreign corporation. Corporation, Foreign corporation. Telephone Company. Words, "Manufacture."
The production and transmission of artificial sound waves by a telephone company in the operation of its system are not "manufacture" within G.
L. (Ter. Ed.) c 59, Section 18, Second, as appearing in St. 1936, c. 362 Section 2; therefore the company's telephone instruments poles, wires and equipment used in producing and transmitting such sound waves, other than its machinery used for converting and generating electricity for its system, do not constitute "machinery employed in . . . manufacture" within the statute.
The phrase "other activity requiring the performance of labor", appearing in the definition of a foreign corporation in G. L. (Ter. Ed.) c. 63,
Section 30, cl. 2, as appearing in St. 1943, c. 459, Section 1, means an activity similar to "the construction, erection, alteration or repair of a building, bridge, railroad, railway or structure of any kind, or . . . the construction or repair of roads, highways or waterways"; and a foreign telephone company not engaged in any such activity, although its activities did require the performance of labor, was not within that definition, and its equipment and apparatus were not taxable under the provision of G. L. (Ter. Ed.) c. 59, Section 18, Second, as appearing in
St. 1936, c.
362, Section 2, for the assessment of the "machinery [of a foreign corporation as so defined] used in the conduct of . . . [its] business."
APPEAL from a decision by the Appellate Tax Board. The case was submitted on briefs.
S. A. Moynahan, City Solicitor, & C.
D. Sloan, Associate City Solicitor, for the assessors of Springfield.
C. A. Barnes, Attorney General, & W.
G. Perrin, Assistant Attorney General, for the Commissioner of Corporations and Taxation.
W. M. Hogan, Jr., & H.
P. Moulton, by leave of court, submitted a brief as amici curiae.
This is an appeal by the board of assessors of the city of Springfield (herein called the assessors) from a decision of the Appellate Tax Board (herein called the board) under G. L. (Ter. Ed.) c. 58A, Section 13, as amended. The commissioner of corporations and taxation (herein called the commissioner) under the provisions of G. L. (Ter. Ed.) c. 59, Section 39, as amended, on February 12, 1945, certified to the assessors the valuation at which they should assess (as of January 1, 1945) the machinery, poles, wires and underground conduits, wires and pipes of the New England Telephone and Telegraph Company (herein called the taxpayer) situated in the city of Springfield. The assessors, claiming to be aggrieved by the commissioner's determination, applied to the board to obtain a higher valuation than that fixed by him; they also sought to have him include in his valuation other property owned by the taxpayer. The decision of the board was in favor of the commissioner.
Pertinent facts found by the board may be summarized as follows: The taxpayer, a foreign corporation, with a usual place of business in this Commonwealth, filed with the commissioner on February 1, 1945, as required by G. L. (Ter. Ed.) c. 59, Section 41, as amended, a return showing the cost, as of December 1, 1944, of such of its machinery, poles, wires and underground conduits, wires and pipes, as it deemed was locally taxable in Springfield. [1] The machinery included in the return is power machinery and apparatus located in the taxpayer's central office and used in the conversion of electric power purchased by it into direct current of proper voltage for use in its telephone service, and all emergency standby equipment used for the initial generation of electricity in case of outside power failure.
Thereafter the commissioner in accordance with the provisions of G. L. (Ter. Ed.) c. 59, Section 39, as amended, certified to the assessors the valuation at which they should assess, as of January 1, 1945, the machinery, poles, wires and underground conduits, wires and pipes of the taxpayer. This valuation was as follows: Poles, wires and underground conduits, wires and pipes . . $2,785,550 00 Machinery . . . . . . . . . . . . . 71,300 00 ------------- Total . . . . . . . . . . . . . . $2,856,850 00 It was arrived at by accepting as correct the cost or book value set out in the taxpayer's return and deducting therefrom fifteen per cent for depreciation. The taxpayer's central office equipment, in addition to the conversion and generating machinery valued by the commissioner, included the following: aisle lighting equipment, balconies for distributing frames, connector banks, selector banks, batteries, battery cabinets, call registers, carrier equipment, carrier line filters and circuit breakers.
The board made detailed findings describing the functioning of the taxpayer's telephone system. They need not be recited in full. In substance they were as follows: In the central exchange there is a huge battery upon which fundamentally the electric current is drawn for the operation of the system. This battery is charged by motor driven charging generators. The current for the motors which operate these generators is purchased on a two hundred eight volt circuit of alternating current from the Western Massachusetts Electric Company. The generators produce direct current of two different kinds -- one of twenty-four volts and one of forty-eight volts. Part of this current goes into the battery to keep it constantly charged so that it will "be ready to stand by in the event of a power failure." The current not used for the battery "goes through the system" and furnishes the electricity necessary for its operation. "Electricity, in other words, is converted into a type that the telephone company can use." The electricity thus generated is When a person uses the system to communicate with another, his sound waves are transferred into variable electric currents which in turn are changed back into artificial sound waves in such a way that the characteristics of the voice of the speaker are carried along to the person receiving the message.
The assessors contend that the commissioner's valuation of the taxpayer's central office equipment should not have been limited to the conversion and generating machinery but should also have included the other equipment in the central office described above, and all of the taxpayer's telephone instruments, teletypewriter units, and private branch exchanges in Springfield, together with all its poles and wires, or so called aerial construction, located on public ways in that city. (It has not been argued that the valuations fixed by the commissioner were improper with respect to the property valued.) In support of their contention the assessors argue (1) that the omitted property is "machinery" and as such is taxable under G. L. (Ter. Ed.) c. 59, Section 39, as amended; (2) that, if not taxable as "machinery" under Section 39, it is nevertheless taxable locally as "machinery employed in any branch of manufacture" under G. L. (Ter. Ed.) c. 59, Section 18, Second, as amended; and (3) that, if neither of these propositions is sound, such property is nevertheless "machinery used in the conduct of . . . [its] business" and hence taxable under G. L. (Ter. Ed.) c. 59, Section 18, Second.
1. General Laws (Ter.
Ed.) c. 59, Section 39, as amended, provides: "The valuation at which the machinery, poles, wires and underground conduits, wires and pipes of all telephone and telegraph companies shall be assessed by the assessors of the respective towns where such property is subject to taxation shall be determined annually by the commissioner." This section imposes no tax on the classes of property therein enumerated, but, in conjunction with the three following sections (40, 41 and 42), prescribes the procedure by which such property, to the extent that it is subject to local taxation under other statutory provisions, shall be valued for assessment. The assessors rely on Hilliard v. Fells Ice Co. 200 Mass. 331 , but that decision, construing a different statute, is so obviously distinguishable that further discussion is not required.
2. To determine what machinery of the taxpayer is locally taxable it is necessary to turn to G. L. (Ter. Ed.) c. 59, Section 18 Second, as appearing in St. 1936, c. 362, Section 2, which, so far as here material, provides: "Machinery employed in any branch of manufacture . . . or, in the case of domestic business and foreign corporations as defined in section thirty of chapter sixty-three, machinery used in the conduct of the business, shall be assessed where such machinery or tangible personal property is situated to the owner or any person having possession of the same on January first." If the omitted property described above was "machinery employed in any branch of manufacture," it is, as the commissioner concedes, taxable locally and should have been included in the property valued by him. The board, however, found that, in so far as it was a question of fact, this property was not "machinery employed in any branch of manufacture." Since the board's decision is "final as to...
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