Chattanooga Plow Co. v. Hays

• Decision Date: 24 November 1911
• Citation: 140 S.W. 1068,125 Tenn. 148
• Parties: CHATTANOOGA PLOW CO. v. HAYS, County Clerk, et al.
• Court: Tennessee Supreme Court

140 S.W. 1068

125 Tenn. 148

CHATTANOOGA PLOW CO. v. HAYS, County Clerk, et al.

Supreme Court of Tennessee.

November 24, 1911

Appeal from Chancery Court, Hamilton County; T. M. McConnell Chancellor.

"To be officially reported."

Action by the Chattanooga Plow Company against W. P. Hays, County Clerk, and others. Decree for complainant, and defendants appeal. Affirmed.

Attorney General Cates, Pritchard & Sizer, and Chambliss & Chambliss for appellants.

Wheeler Martin & Trimble, for appellee.

LANSDEN J.

The question for decision in this case is whether the Chattanooga Plow Company, a Tennessee corporation, and a manufacturer of plows, cane mills, and other agricultural implements, is a dealer or merchant, within the meaning of our revenue statute, so as to be liable for a merchant's tax. The complainant is taxed as a manufacturer, and has paid all taxes assessed against it as such. Its business extends all over the world, and far more of its goods are exported to foreign lands, or shipped to other states of the United States, than are used or sold within the state of Tennessee. Less than 10 per cent. of its sales are made in Tennessee. Most of complainant's goods are manufactured to fill orders already received. Some are made up in order to keep its factory in operation and its men employed when orders for goods have not been actually booked, but it is known they will be required by dealers and commission merchants who handle its products. It does not manufacture to keep stock on hand for sale generally. Its warerooms are adjacent to its factory, and are places of temporary storage, and not salesrooms. Its traveling men begin in the spring to take and send in orders for fall delivery, and in the fall to take orders for spring delivery. They also take orders for immediate delivery. It does not keep any goods on exhibit. Its plows, cane mills, and other products are not put together and set up in its warehouse, but are knocked down ready for shipment. They merely pass from the different departments where made into the warehouse or shipping departments, and pass on through to wagons or railroad cars. It has no storerooms, salesrooms, or place of business apart from its factory. All of its products are sold by merchants who keep them on exhibit and sale.

Complainant has been in business in Hamilton county, Tenn., for 28 years and has never been called upon to pay any license, or privilege taxes, in the nature of the taxes now demanded. The defendants are seeking to hold the complainant liable for a merchant's tax, together with 15 per cent. penalties, alleged to have accrued thereon for three years.

The acts of the Assembly which it is insisted make complainant liable for the tax demanded are chapter 479, Acts of 1909; section 3 of which provides as follows:

"That all merchants shall pay an ad valorem tax upon the average capital invested by them in their business of 50 cents on the $100, 35 cents of which shall be for state purposes and 15 cents for school purposes; and a privilege tax of fifteen cents on each $100 worth of taxable property, 7 1/2 cents of which shall be for school purposes and 7 1/2 cents for state purposes."

Assessment Act 1907, c. 602, § 26, defines the term "merchant" as follows:

"All persons, copartnerships, or corporations engaged in trading or dealing in any kind of goods, wares, merchandise, either on land or in steamboats, wharf boats, or other craft stationed or plying in the waters of this state, and confectioners, whether such goods, wares, or merchandise be kept on hand for sale or the same be purchased and delivered for profit as ordered."

Section 26, subsec. 1, of the assessment act, defines the method of applying the rates of taxation provided by the act of 1909, supra, to be upon the average amount of capital invested by the merchant in his business. Section 27 provides as follows:

"That no merchant, firm, company, copartnership, corporation, agent, or trader shall commence or continue a business declared to be a privilege under this act or [the] revenue act in any county of this state without obtaining license from the clerk of such county in accordance with the previous provisions of this act."

Class 9 of section 8 is defined as follows:

"All personal property which is a part of the capital invested in the business of a merchant, commission, or auction merchant, factors, or manufacturers shall not be assessed separately as personalty, but shall be assessed as part of the capital as provided in section 26 of this act."

Under the foregoing statutes, it is insisted by the state that the allegations of the bill show that the complainant is a trader or dealer in goods, wares, and merchandise, and is therefore a merchant, as defined by section 26, act of 1907, supra. It is insisted that the complainant falls within the authority of Kurth v. State, 86 Tenn. 137, 5 S.W. 593, Webb v. State, 11 Lea, 662, and American Steel & Wire Co. v. Speed, 110 Tenn. 524, 75 S.W. 1037, 100 Am. St. Rep. 814. The learned Attorney General interprets the foregoing cases as holding that a manufacturer, selling his own manufactured articles, is a dealer, although he does not buy to sell again, and is taxable as such.

We will first observe that Kurth v. State, Webb v. State, and Taylor v. Vincent, 12 Lea, 282, 47 Am. Rep. 338, are whisky cases, involving the status of whisky dealers under the whisky revenue statutes, and, therefore, do not fall within the same class of authority as American Steel & Wire Company v. Speed. It has been determined by this court, and we think it is generally understood by the profession, that statutes enacted for the purpose of raising revenue upon intoxicating liquors have a two-fold legislative purpose, and their enforcement has been administered with this double purpose in view. They not only provide revenue for the government, but such revenues are placed at a high figure, so that the collection of them aids materially in the regulation of the traffic. Kelly & Co. v. State, 123 Tenn. 516, 132 S.W. 193. This was recognized by the court in Kurth v. State, though not expressly stated in terms. In that case the court, speaking through Mr. Justice Lurton, said:

"If the sale of wine under the circumstances of this case may be made without license, then every distiller, or other manufacturer of liquor out of the produce of the state, can become a tippler, and the regulation of the business of selling liquors as regulated by statute practically swept away. In the contest

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