City of Henderson v. George Delker Co.

• Decision Date: 16 December 1921
• Citation: 193 Ky. 248,235 S.W. 732
• Parties: CITY OF HENDERSON v. GEORGE DELKER CO. CITY OF HENDERSON v. DELKER BROS. BUGGY CO.
• Court: Kentucky Court of Appeals

235 S.W. 732

193 Ky. 248

CITY OF HENDERSON v. GEORGE DELKER CO.

CITY OF HENDERSON v. DELKER BROS. BUGGY CO.

Court of Appeals of Kentucky.

December 16, 1921

Appeal from Circuit Court, Henderson County.

Actions by the City of Henderson against the George Delker Company and against the Delker Bros. Buggy Company for municipal taxes on property used in the prosecution of defendants' businesses. From judgments for defendants as to the bulk of the property, plaintiff appeals, and from judgments for plaintiff as to the balance, defendants appeal. Affirmed.

B. S Morris, of Henderson, for appellant.

Henson & Taylor, of Henderson, for appellees.

THOMAS J.

The plaintiff and appellant, city of Henderson, brought these two actions against the two defendant corporations, the appellees, the George Delker Company and Delker Bros. Buggy Company, seeking to recover judgments against them for municipal taxes claimed to be due it from defendants upon certain property owned by them, which they each operated and used in the prosecution of their business enterprise, located within the limits of the city. The right to the recovery was resisted upon the ground that the property sought to be taxed was "machinery and products in course of manufacture of persons, firms or corporations actually engaged in manufacturing and their raw material actually on hand at their plants for the purpose of manufacture," which is expressly exempted from local taxation by exemption (2) of section 4019a10, volume 3, Kentucky Statutes, which was enacted at the 1917 special session of the Legislature.

Each defendant is engaged in precisely the same business, and each case was submitted and tried on an agreed stipulation of facts; the one being substantially, if not an exact copy of the other. Defendants are each wholesale and retail dealers in buggies, carriages, and other horse-drawn vehicles, which they claim are manufactured by them at their respective plants in the city of Henderson, while plaintiff insists that neither defendant manufactures any of the vehicles in which it deals, but that they assemble them by putting together the already manufactured parts, which are purchased by them from others who manufacture them. It therefore becomes essential to look to the facts from which a decision of the question must be made.

Each of the defendants operates a large factory within the corporate limits of the city; the defendant the George Delker Company employing 90 persons whose combined salary for the year ending June 30, 1918, was $75,606, and the defendant Delker Bros. Buggy Company during the same time employed "more than 175 persons" whose combined salary was $132,149.17. The acts performed and the work done, as well as the machinery and methods employed therein, are so clearly stated in the stipulations that we have concluded, in furtherance of a better understanding, though at the expense of space, to insert herein the following excerpt from the one in the action against defendant the George Delker Company:

"It [defendant] purchases in large quantities, and in the already manufactured state, leather, enameled goods, cloth lining, and excelsior, used in cushioning and upholstering the seats, backs, sides, and tops of buggies. This material is then cut by defendant, and fashioned in the proper shape, and fastened and put together and used by defendant in making up these parts.

The springs used in the seats, tacks, thread, knobs, fastenings and other similar accessories, and finishing material, are bought in large quantities already manufactured, and are used by defendant's employees in making up, fitting, and finishing the cushions, backs, tops, seats, and other parts of buggies. The joints, railings, bow sockets, and wood bows that go into the top are bought in large quantities already made and are used by defendant's employees in putting together, shaping, forming, riveting, and joining the parts of the tops.

The axles that are used by the defendant for the buggies are purchased in halves, made to the proper size, and with threads already cut on the ends of said axles, and taps therefor. The said axles are then at the defendant's place of business and by machinery and appliances thereto welded together, and wood caps are fitted thereon and glued, the said wood caps being already made and purchased in large quantities by the defendant, and are then clipped to the axle and dressed down to a smooth finish with the axle; the said clips and taps therefor being purchased by the defendant already made. The reaches are fitted to iron strips to reenforce them, and they are bolted together; the said reaches and iron strips are bored and punched by the defendant; and bolts so used are made when purchased by the defendant. To these are fitted the different irons and fifth wheel which irons and fifth wheel are purchased by the defendant in the finished state, and these in turn are attached to the axle.

The buggy springs are bought from factories that make a specialty of making such springs, and are clipped on and fastened to the axles, the fifth wheel, and reaches, and hangers, bar, etc., are also purchased by the defendant after they have been made, and are fitted to the springs or reaches, and are bolted or clipped on, and are dressed down to a smooth finish; the bolts and clips therefor being purchased by the defendant in quantities already made. The shaft arms, crossbars, and singletrees to which the tugs are fastened are purchased from a factory making a specialty of such parts and already made and shaped. When they arrive at the defendant's place of business, the holes through the shafts are already made for receiving the ends of the crossbars, and the ends of said crossbars are already dressed down and shaped ready to be tenoned together. At defendant's place of business the employees tenon these parts together, and irons, which are already manufactured when the defendant purchases them, are fitted to said parts; shafts are drilled by the defendant, and bolted on. The shaft straps and leathers are cut and shaped by the defendant, and fitted and fastened to the shafts.

The wheels are bought in large quantities in the white, and from companies making a specialty of their manufacture, the hubs and spokes and felloes, or rims, being made and put together and shaped and fitted before they are received at the defendant's place of business and ready for receiving the tires. The defendant at its place of business bores out the hub, through which a small hole has already been bored, and fits the metal box in the hub; but the said box is purchased by the defendant in its finished state, and is fitted in said hub by driving it through the hole thus bored out by the defendant. The tires for the wheels are purchased by the defendant in large quantities. They come in straight bars and the defendant cuts them to length, bends it to form a tire for the wheel, welds the tire, and shrinks it on the wheel, and then drills the rim and bolts the tire to the wheel, but the bolts and taps used in fitting the tire to the wheels are manufactured and made when purchased by the defendant.

The machinery at defendant's place of business as aforesaid is all used in cutting, drilling, shaping, forming, fitting, fastening, and adjusting the parts of the buggies as above set out, and is the machinery assessed by the plaintiff, city of Henderson, as hereinbefore stated.

In another department of defendant's place of business is done the painting of the buggies and other vehicles made by the defendant. The different parts of the buggy that are required to be painted are sanded down to a smooth finish, and to these parts are applied from 4 to 12 coats of paint, depending upon the use to which the part is subjected and the service thereof. Between the application of these different coats of paint, defendant's employees are engaged in sanding and smoothing the work to get the desired finish. In this department the paints and oils are varnished carefully and skillfully mixed, so as to produce the best possible result. The paints, oils, and varnishes used by the defendant company are made by and bought from factories making a specialty thereof. The buggies are then inspected and packed and shipped in large quantities to regular dealers in various states and in small quantities to many other states, and less than 2 per cent. are sold by retail from the said defendant's place of business in the city of Henderson."

The same agreement was made, as we have stated, in the other case, and the question is sharply presented whether the business therein described constitutes "manufacturing," within the contemplation of the statute creating the exemption, so as to relieve defendants' machinery and material and products so employed and actually on hand at their plants, from municipal taxation. The trial court in each case, upon...