Commonwealth v. McCrady-Rodgers Company
| Decision Date | 30 June 1934 |
| Docket Number | 31 |
| Citation | 174 A. 395,316 Pa. 155 |
| Parties | Commonwealth, Appellant, v. McCrady-Rodgers Company |
| Court | Pennsylvania Supreme Court |
Argued May 21, 1934
Appeal, No. 31, May T., 1934, by plaintiff, from judgment of C.P. Dauphin Co., Commonwealth Docket, 1933, No. 19, in case of Commonwealth v. McCrady-Rodgers Company. Judgment affirmed.
Appeal from capital stock tax settlement. Before FOX, J.
The opinion of the Supreme Court states the facts.
Decree entered directing judgment for defendant. Plaintiff appealed.
Error assigned, inter alia, was decree, quoting record.
Judgment affirmed.
Philip S. Moyer, Deputy Attorney General, with him Wm. A. Schnader Attorney General, for appellant.
R. A. McCrady, of McCrady, McClure, Nicklas & Hirschfield, for appellee.
Before FRAZER, C.J., SIMPSON, KEPHART, SCHAFFER, MAXEY, DREW and LINN, JJ.
The court below held that the process of making concrete by placing measured amounts of dry materials into a mixer, revolving the dry mass until thoroughly mixed, and then, while it is in motion, adding a measured amount of water to bring the mixture to a plastic state, all for the purpose of selling as a commercial article, is manufacturing, and capital employed therein is exempt from taxation under the provisions in the Capital Stock Tax Acts. The Commonwealth appeals.
The taxing statute in force during the year, 1931, was the Act of June 1, 1889, P.L. 420, as amended in 1913, P.L. 903, and 1929, P.L. 657; it is under these acts exemption is claimed. They provide for an exemption from state taxes of capital employed in manufacturing purposes. Tax exemption provisions must be strictly construed; and the burden is on the corporation or party making the claim to prove the right and the part of its capital used in manufacturing.
The Commonwealth charged that appellee was not a manufacturing corporation. Among the purposes for which appellee was incorporated was that of the "manufacturing of . . . concrete." The proof shows it exercised that right as an important part of its business in which a large part of its capital was employed; so much of it that such undertaking could not be considered as a mere incident of its main business. The Commonwealth contends that the process employed or the work actually done was not manufacturing within the terms of the act.
The mere fact that a company may have as one or all of its chartered purposes the right to "manufacture" a given article, such fact, standing alone, will not entitle it to an exemption from a state tax unless the capital for which exemption is sought is actually engaged in manufacturing and the article manufactured is sold by it as an article of commerce. If such company is engaged in a general business not recognized by law as manufacturing, and its chartered powers give it the right to "manufacture" and such company engages in manufacturing, but confines the use of the product made to its own general business, the capital so employed would not be exempt since the product is not sold as an article of commerce by that company. A company is not entitled to exemption if the thing manufactured is an incident of its general business which is not manufacturing.
Appellee owns a plant consisting of buildings containing bins, scales, and other equipment, including traveling mixers, all of which are used in making concrete. The company is engaged generally in the business of selling ready-mixed concrete or transient-mixed concrete to any one wishing to purchase it. The process is as follows: raw materials, consisting of cement, sand, gravel, and coarse aggregate, are stored in large bins. From these bins the coarse aggregate, that is, crushed stone, cinders, etc., in varying amounts is poured into a hopper and weighed; a separate hopper weighs the cement necessary to complete the mixture. These materials are then "fed" into a mixer which is in motion, so that the stone, sand, and cement are thoroughly mixed dry. When so mixed, and while the mixer is revolving, a measured amount of water, sufficient to make the mass plastic, is added; when the contents reach the plastic state it is concrete, or what is known as "ready-mixed concrete." This is then delivered to the purchasers. The mix is always in the proportion specified by the purchaser, it varies, it may be one or more parts cement, two or more of sand, and three or more of crushed stone, or slag or cinders, etc. These proportions may further vary.
It is contended that as the concrete reached the purchaser in its plastic form, without shape, the mass as delivered was not a manufactured commodity; the process to this point was not manufacturing in its popular sense. It is conceded that if it had been permitted to harden by the ordinary process of nature into some merchantable form, the...
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