H.M. Rowe Co. v. Beck

• Decision Date: 09 December 1925
• Docket Number: 34.
• Citation: 131 A. 509,149 Md. 251
• Parties: H. M. ROWE CO. v. BECK ET AL.
• Court: Maryland Court of Appeals

131 A. 509

149 Md. 251

H. M. ROWE CO. v. BECK ET AL.

No. 34.

Court of Appeals of Maryland

December 9, 1925

Appeal from Baltimore City Court; Joseph N. Ulman, Judge.

"To be officially reported."

Petition by the H. M. Rowe Company against William W. Beck and others State Tax Commission, E. A. Hartman and others as Appeal Tax Court of Baltimore City and the Mayor and City Council of Baltimore. From an order of the Baltimore City Court affirming an order of the State Tax Commission, plaintiff appeals. Affirmed.

Argued before BOND, C.J., and URNER, ADKINS, OFFUTT, DIGGES, and PARKE, JJ.

J. Le Roy Hopkins, of Baltimore, for appellant.

Herbert Levy, Asst. Atty. Gen., and Paul F. Due, Asst. City Sol., of Baltimore (Thomas H. Robinson, Atty. Gen., and Philip B Perlman, City Sol., of Baltimore, on the brief), for appellees.

OFFUTT. J.

Acting under the authority conferred by chapter 528 of the Acts of 1914, on February 13, 1915, the mayor and city council of Baltimore, by Ordinance No. 571, exempted from taxation "all mechanical tools, whether worked by hand or steam or other motive power, and any machinery, manufacturing apparatus, or engines owned, as is required by said act of 1914, chapter 528, and which are actually employed and used in the business of manufacturing in the city of Baltimore" owned by "persons, firms and corporations actually engaged in manufacturing within the city of Baltimore" who complied with the terms of said act by furnishing true statements and making returns of their personal property as required by it.

On March 6, 1919, it passed Ordinance No. 462, which exempted from taxation for--

"all ordinary municipal purposes * * * all personal property of every description owned by any person, firm or corporation and used entirely or chiefly in connection with manufacturing in Baltimore city, including mechanical tools or implements, whether worked by hand or steam or other motive power machinery, manufacturing apparatus or engines raw material on hand, manufactured products in the hands of the manufacturer, bills receivable and business credits of every kind, due to the manufacturer, for goods manufactured in Baltimore city."

That ordinance also provided:

"In case any person, firm or corporation engaged in manufacturing in Baltimore city shall also be engaged in the business of a jobber, or wholesaler or retail merchant, in Baltimore city, nothing in this ordinance shall be construed to exempt the personal property, other than goods of his own manufacture, used in connection with said business of jobber or wholesale or retail merchant."

Having furnished the statements and returns required by chapter 528 of the Acts of 1914 and the two ordinances, the H. M. Rowe Company, a corporation claiming to be engaged in the business of manufacturing, made seasonable application to the appeal tax court of Baltimore city for the exemption from taxation for the year 1920 for ordinary municipal purposes of certain property used in connection with that business, valued at $76,507.22. The appeal tax court refused to allow the exemption, whereupon the appellant appealed to the state tax commission for the purpose of having it review and reverse the action of the appeal tax court. After a hearing, the order appealed from was affirmed, and the appellant then filed its petition and appeal in the Baltimore city court against the state tax commission, the appeal tax court, and the mayor and city council of Baltimore, praying that the several acts of the appeal tax court and the state tax commission in respect to its claim for exemption might be reviewed.

On May 5, 1925, the matter was submitted to that court for determination, and on May 7th it affirmed the order of the state tax commission, and from that order this appeal was taken.

The only question presented by the appeal is whether the business with respect to which the appellant claims exemption is a manufacturing business within the meaning of the statute and the two ordinances referred to. The facts relating to that issue are not disputed and may be thus summarized:

The H M. Rowe Company was incorporated for--

"publishing, manufacturing, dealing in, and selling of books, stationery, and miscellaneous materials and supplies for office and school purposes and to do whatever may be necessary appertaining to the book, stationery, and publishing business." "Its principal office is in Baltimore city, and it maintains offices in New York, Boston, Chicago, San Francisco, and other large cities, and sells to schools and educational institutions miscellaneous and complete sets of text-books, treatises, books of instructions, pamphlets, and practice forms for commercial courses of instruction in stenography, typewriting, bookkeeping, English, spelling, arithmetic, banking, commercial law, etc., and it also gets up, as hereinafter outlined, a monthly magazine known as the Budget, which deals with educational matters. The company does not buy ready made any of the books, pamphlets, treatises, magazines, practice forms, or other articles which it sells. As to some of these articles, the manuscript is composed and written by the company itself and is then sent to a printer in typewritten form. The printer, who is an independent contractor, with a separate place of business, sets it up in type on galley sheets. It is then proof read, corrected, amended, and divided into pages by the appellant. It is then sent back to the printer, who rearranges the type and prints another proof in page form. This is again proof read, corrected, and amended by the appellant. The make-up type of the manuscript in page form is then sent to an electrotyper, who is also an independent contractor, with a separate place of business, and he makes up electrotype plates, from which the pages of the book are printed. These pages, as to certain books, are then sent to a bindery, which is an independent contractor, with a separate place of business. The book is then copyrighted and is ready to be marketed."

It also makes and sells the "Rowe Budget Systems" of Bookkeeping--

"there being three separate systems, all of which are copyrighted and owned by the appellant. Each of these bookkeeping systems is composed of a text-book, anywhere from three to five printed 'budgets,' which are pads of printed pages and other printed sheets fastened at the four corners with brass staples and washers, anywhere from three to five sets of minature blank books of account; anywhere from three to five packages of blank forms for checks, notes, drafts, bills, receipts, and other business papers and documents used in bookkeeping and accounting offices, and anywhere from three to five sets of envelopes which represent files for the purpose of filing incoming business papers such as are named above which are contained in the 'budget' before mentioned after the student has recorded them in his books of accounts. In addition to the budget systems of bookkeeping just described, the appellant makes up and markets other casebound text-books on the subject of commercial arithmetic, commercial law, shorthand, typewriting, business English, rhetoric, spelling, and kindred subjects, also, various blank books and pieces of stationery that are used in commercial and business schools, public and private. No printing or electrotyping is done by the appellant, but all such work required by the appellants is done by independent contractors.

The appellant assembles and fastens together its bookkeeping 'budgets' on its own premises. In the several bookkeeping systems named, there are 15 or 16 'budgets.' Each 'budget' contains from 100 to 150 printed sheets; between these printed sheets are placed other loose printed sheets representing business papers such as checks, notes, drafts, bills, invoices, etc. There are probably on an average of 200 such printed sheets included between the instruction sheets in each budget. The appellant sells approximately 175,000 of these bookkeeping budgets a year. * * *

The printed white instruction sheets and the incoming business papers are placed in piles of 1,000 each in their proper order on racks. The appellant's employees then pick a sheet off each pile and place it in a tray which they hold in the hand. When the employee makes a complete circle around the rack, she will have gathered one complete budget. Before the white instruction sheets are placed on the racks, they are punched at the corners on a

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