Collector of Taxes of Boston v. Cigarette Service Co.

• Decision Date: 03 January 1950
• Citation: 89 N.E.2d 787,325 Mass. 162
• Parties: COLLECTOR OF TAXES OF BOSTON v. CIGARETTE SERVICE CO., Inc.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

325 Mass. 162

89 N.E.2d 787

COLLECTOR OF TAXES OF BOSTON v. CIGARETTE SERVICE CO., Inc.

Supreme Judicial Court of Massachusetts, Suffolk.

January 3, 1950

Argued Oct. 3 1949.

W H. Kerr, Boston, for plaintiff.

J. S. Ellis Boston, for defendant.

Before QUA, C. J and RONAN, WILKINS, SPALDING and COUNIHAN, JJ.

WILKINS, Justice.

This is an action of contract in five counts against a domestic business corporation, as defined in G.L. (Ter.Ed.) c. 63, § 30 cl. 1, to collect unpaid taxes upon tangible personal property assessed to the defendant by the assessors of the city of Boston for the years 1939, 1940, 1941, 1942, and 1943, respectively G.L. (Ter.Ed.) c. 60, § 35. See now St.1946, c. 251, §§ 1, 3. The property consisted entirely of cigarette vending machines situated in various business establishments in Boston on January 1 of the respective years. The case was heard upon a case stated, and the judge by finding for the defendant in effect ordered judgment for the defendant. Town of Dedham v. Newton, 320 Mass. 391, 392, 69 N.E.2d 677; Town of Pepperell v. Somerville, 321 Mass. 413, 414, 73 N.E.2d 850; Yoffe v. Krasnow Wool Stock Co., 322 Mass. 211, 76 N.E.2d 662. The plaintiff appealed. G.L.(Ter.Ed.) c. 231, § 96.

The sole question is whether the cigarette vending machines were subject to local taxation by reason of being 'machinery used in the conduct of the business' of the defendant within the meaning of G.L. (Ter.Ed.) c. 59, § 5, Sixteenth, as appearing in St.1936, c. 362, § 1. ^[1] The material portion of clause Sixteenth, describing an exemption, is 'property, other than real estate, poles, underground conduits, wires and pipes, and other than machinery used in the conduct of the business, owned by domestic business corporations or by foreign corporations, as defined in section thirty of chapter sixty-three; * * * provided, that the term 'machinery used in the conduct of the business' shall not, as herein used, be deemed to include stock in trade * * *.' See G.L. (Ter.Ed.) c. 59, § 2; § 18, Second, as appearing in St.1936, c. 362, § 2.

The defendant did not manufacture anything. Its sole business was the sale of different brands of cigarettes by means of vending machines owned by it and located at conspicuous places in various business establishments selected by it because readily accessible to the public. The machines were the sole means used by the defendant for the conduct of its business and were used only for the sale of cigarettes. They were placed in the various premises under a uniform written agreement with the proprietor of each business. By the agreement the defendant was 'authorized' to place a machine on the premises 'without cost to proprietor,' and the defendant agreed to service the machine as often as was necessary, and to pay a commission at rates varying with the number of packages sold. It was also provided that 'the machine is loaned to the proprietor and will remain at all times the property of Cigarette Service Co., Inc. and may be moved by them or their acting agents at will.' In the course of business the machines were placed in, and removed from, the locations by the defendant, which serviced and cared for them, collecting money from the coin boxes and supplying the cigaretts. The machines, while of different types, were substantially similar in that they were approximately six feet high, two feet wide, and one foot deep; were not attached to the premises but rested on their own weight, which was from eighty to one hundred twenty pounds; and were portable, and easily moved. A prospective purchaser inserted coins as directed by a sign on the machine, and by pushing the appropriate lever selected one of the brands of cigarettes. The machine responded by a mechanism within it and dispensed a package of the selected brand.

We think that the vending machines were 'machinery used in the conduct of the business' of the defendant within the meaning of clause Sixteenth. This result seems required by our recent decision in Board of Assessors of City of Brockton v. Brockton Olympia Realty Co., 322 Mass. 351, 77 N.E.2d 391, which is the only case in this court interpreting this phrase in the statute. We there held that projection equipment, sound producing equipment, a generator and an induction motor for operation of an organ, and used in operating a motion picture theatre, were by the common and approved use of the language 'machinery' within the intendment of the statute. Among the definitions of 'machinery' there given was 'any combination of mechanical means designed to work together so as to effect a given end.' 322 Mass. at page 355, 77 N.E.2d at page 393. This is an appropriate description of the machines of the defendant.

The defendant contends, however, that the vending machines could not be treated as 'machinery used in the conduct of the business,' because they were 'stock in trade', which the statute prescribes shall not be included in 'machinery.' The plaintiff argues to the contrary, and we think rightly so. The conclusion that the machines were not 'stock in trade' is implicit in our decision in New England Mutual Life Ins. Co. v. Boston, 321 Mass. 683, 75 N.E.2d 505, where the plaintiffs, which were lessees of electrical bookkeeping and accounting devices, were allowed to recover personal property taxes assessed to them which they had paid. In pointing out that the property was part of the stock in trade of the leasing owners, but not of the plaintiff lessees, we said, 321 Mass. at page 686, 75 N.E.2d at page 507, 'The leased property * * * was a part of the merchandise which the lessors owned and held for the purpose of leasing it in the usual course of their business to those who were willing to hire it. The leasing of the machinery was the means employed by the lessors to conduct their business just as the sales of goods over the counter by a merchant are the method by which he maintains his business. The machinery was as much stock in trade of the lessors as were the goods of the merchant.'

In the case at bar the defendant was in the business of selling cigarettes, not cigarette vending machines. Its 'stock in trade' under clause Sixteenth, therefore, consisted of cigarettes but not of the machines utilized to vend them. While the form of contract referred to a machine as 'loaned to the proprietor,' analysis of the relationship reveals that the transaction resembled a license given...