A. C. Dutton Lumber Corp. v. City of New Haven

• Decision Date: 17 March 1969
• Docket Number: No. 80364,80364
• Citation: 254 A.2d 49,28 Conn.Supp. 140
• Court: Connecticut Court of Common Pleas
• Parties: A. C. Dutton lumber corporation v. CITY OF NEW HAVEN.

Page 49

254 A.2d 49

28 Conn.Supp. 140

A. C. Dutton lumber corporation v. CITY OF NEW HAVEN.

No. 80364.

Court of Common Pleas of Connecticut, New Haven County.

March 17, 1969.

Wiggin & Dana, New Haven, for plaintiff.

Thomas F. Keyes, Jr., Corporation Counsel, for defendant.

MIGNONE, Judge.

This is an appeal from certain assessments placed on personal property of the plaintiff which it claims was not legally taxable and for reimbursement from the defendant city of the amounts paid thereon.

The plaintiff is a wholesale lumber company incorporated in the state of New York with a principal office and place of business in Poughkeepsie, New York. It maintains a branch office in New Haven in space leased on part of the premises of the New Haven Terminal company office building, and it pays a monthly rent therefor.

The plaintiff uses an area of approximately two acres on the premises of the New Haven Terminal, Inc., which maintains a warehouse and dock on its premises in New Haven harbor. The plaintiff maintains six terminals along the Atlantic seaboard and brings in lumber from the west coast of the United States in standard cargo units. Each cargo unit is bound by wire bands. The lumber varies in length and usually comes in widths of three to five feet.

The plaintiff brings to New Haven, almost entirely by boat, cargo units of lumber which are taken off the boats by New Haven Terminal, which then moves it to a designated area of somewhat over two acres of the terminal's yard where the plaintiff stores its lumber. The local office of the plaintiff handles sales of lumber to lumber dealers in Connecticut and Massachusetts. It is headed by the office manager and has two secretaries employed there. They keep books and make out shipping tickets for sales and shipments of lumber from the New Haven operation. The local office also prepares and sends out invoices to the customer-purchaser after a load of lumber has been delivered and signed for. The books of the local office are audited here once a year. In the year 1966, its gross business of sales out of the New Haven office represented a sale of 28 million feet of lumber.

The ownership title to the lumber, while it is stored in the allotted storage area, is in the plaintiff. It pays New Haven Terminal for its fees in unloading the lumber from the boat onto the terminal's dock and for transporting it to the storage area. For the storage of its lumber in this designated area, the plaintiff pays the terminal a flat rate fee per thousand board feet measure, which is the standard unit of price. This fee is paid only once and is based on the bill of lading receipt from each ship which brings in lumber to New Haven Terminal and shows the quantity of lumber brought in to the dock in that particular shipment. The bill of lading from the ship will have the gross receipt of the quantity of lumber, and New Haven Terminal makes a charge to the plaintiff against that gross receipt. No other fee for the storage of the lumber is paid to the terminal, regardless of the length of time the lumber received remains in storage. And the terminal does not issue a warehouse receipt or similar document to the plaintiff. The terminal keeps no inventory control record of any kind, nor does it perform any inventory control function relative to the lumber received and stored. The plaintiff owns no mills and does not perform any cutting of logs or manufacturing of lumber on the west coast. It simply buys lumber in cargo units for shipment to its terminals on the east coast, including New Haven.

The New Haven office of the plaintiff receives orders from customers either directly or through the plaintiff's salesmen. It thereupon acts to fill these orders, and the lumber is transported to these customers either by contract carrier or in its customers' own trucks. Approximately .339 percent of these cargo units are broken up by the plaintiff, by design, to meet special requirements of customers.

The defendant sought to tax tangible personal property of the plaintiff under the provisions of the state statutes with reference to assessment of property taxes on corporations. The plaintiff claims that these taxes were improperly laid on the grand lists of June 1, 1967, and October 1, 1967, and were paid under protest.

The first claim of the plaintiff is that this lumber is exempt from local property taxation under the specific provisions of § 12-95a of the General Statutes, which provides in relevant part: '(b) Merchandise shipped into the state and placed in storage, in the name of or for the account of the producer or manufacturer, in the original package, in a public commercial storage warehouse or on a public wharf shall, while so in storage, be considered in transit and not subject to taxation.' As the defendant recognizes in its brief, the crucial issue involved is whether the plaintiff comes within the specific provision of this claimed exemption. It admittedly is not a manufacturer of this lumber, but it claims that it does come within the scope of the term 'producer.' Regrettably the statute in issue does not define the term 'producer.' The defendant seeks to resolve this issue by attempting to draw inferences from the legislative intent. The plaintiff has annexed to its brief a copy of the eleventh biennial report of the legislative council of Connecticut (1965) concerning the taxation of goods in transit. The plaintiff seeks to infer from this report that the purpose of the enactment of § 12-95a was to remove an existing inequity against resident owners who receive goods in interstate commerce and while such goods are stored in public warehouses. It is significant, however, that this report states (p. 88): 'The proposal would require that the goods be in the actual custody of a qualified warehouseman and beyond the owner's control.' It is further stated that the purpose of the proposal is to 'enhance Connecticut's competitive position as a warehousing state. Neither New York nor New Jersey assesses a personal property tax against goods in public storage.'

But this report and the record of the proceedings in the house and senate preceding the enactment of this bill do not furnish an adequate explanation of its purpose. As set out in the remarks preceding passage, the only reference to its purpose is stated generally: that it would 'exempt from property taxation goods, wares and merchandise in transit in commercial storage warehouses. This will encourage industry to do business in this State.' It appears to have been passed in the rush of the closing days of the 1965 legislature. It passed the house on June 5 and was discussed in the senate on the closing day of the session, June 9. In the senate there was an issue as to whether an amendment to the bill should be taken up, but this was turned down in view of lack of time for discussion.

This requires, therefore, that we seek a rational interpretation elsewhere. Webster's Third New International Dictionary defines the term 'producer' as follows: '1: one that produces, brings forth, or generates * * * 2: one that grows agricultural products or manufactures crude materials into articles of use. * * *'

The plaintiff has cited in its brief the case of Tennessee Burley Tobacco Growers Assn. v. Commodity Credit Assn., 350 F.2d 34, 41. This case refers to the second dictionary definition of 'producer' as set out above. Although the factual situation in this case is dissimilar, the holding of the court therein is...