In re Koss Const. Co.

• Decision Date: 15 March 1932
• Docket Number: 41289
• Citation: 241 N.W. 495,214 Iowa 125
• Parties: IN RE APPEAL OF KOSS CONSTRUCTION COMPANY
• Court: Iowa Supreme Court

241 N.W. 495

214 Iowa 125

IN RE APPEAL OF KOSS CONSTRUCTION COMPANY

No. 41289

Supreme Court of Iowa, Des Moines

March 15, 1932

Appeal from Polk District Court.--LOY LADD, Judge.

Appeal from the order of the district court in holding that a taxpayer was a manufacturer and entitled to be assessed as such.

Reversed.

George P. Comfort, Chauncey A. Weaver, and C. R. S. Anderson, for appellant.

Stipp Perry, Bannister & Starzinger, for appellee.

FAVILLE J. WAGNER, C. J., and STEVENS, DE GRAFF, ALBERT, EVANS MORLING, and GRIMM, JJ., concur.

OPINION

FAVILLE, J.

The cause is submitted upon a stipulation of facts, the material portion of which is as follows:

"The Koss Construction Company is a corporation organized under the laws of the State of Iowa, having its principal place of business in the City of Des Moines thereof, and is engaged in the business of constructing pavements and selling the same to the State of Iowa, and various municipalities in said State; that in the conduct of its business, said Company constructs concrete paving by combining in accurately determined proportions, reinforcing steel, crushed rock or gravel, sand, cement and water, by the use of machinery built for and appropriate to that purpose, and by said process, produces concrete which said Company then transfers to the highway of the State or street of the municipality, where the same is treated with calcium chloride or other materials and by process of chemical reaction, becomes hardened into finished pavement.

"That in the construction of asphalt pavement, said Company constructs the concrete foundation in the same manner as hereinbefore described and by the use of its large asphalt plant, heats asphalt, graded sands and fluxing oil to certain accurately regulated temperatures, and by the use of large heated revolving drums, combines the same into plastic product, which is placed hot, on such concrete foundation on the streets or highways where it is properly rolled until it becomes a finished asphalt pavement.

"That the machinery used for the foregoing processes is portable, and is transported to the various localities where the paving is being constructed."

Code section 6975 is as follows:

"Any person, firm, or corporation who purchases, receives, or holds personal property of any description for the purpose of adding to the value thereof by any process of manufacturing, refining, purifying, combining of different materials, or by the packing of meats, with a view to selling the same for gain or profit, shall be deemed a manufacturer for the purposes of this title, and shall list such property for taxation."

It is further provided by the stipulation:

"It is further stipulated between the parties, that the only point in dispute is whether Koss Construction Company is a manufacturer as defined in Section 6975 of the Code of Iowa, 1927, so as to entitle its capital stock to be exempt from taxation as provided by sub-division 20 of section 6944, Code of Iowa, 1927."

Our inquiry is narrowed to the one question presented in the stipulation: namely, is the appellee a manufacturer under the statute in carrying on the business of paving highways in the manner described in the stipulation?

The courts have construed the word "manufacturer" under a variety of statutes, and under very divergent fact conditions. We have considered it in at least three cases. In Appeal of the Iowa Pipe & Tile Co., 101 Iowa 170, 70 N.W. 115, we held that a corporation that made sewer pipe and drain tile and sold the finished product to customers generally was a manufacturer within the provisions of this statute. In Bennett v. Finkbine Lbr. Co., 199 Iowa 1085, 198 N.W. 1, we held that a corporation owning large tracts of timber lands from which it cut the timber and manufactured it into a finished product was "a manufacturer." In Iowa Limestone Co. v. Cook, 211 Iowa 534, 233 N.W. 682, we held that a corporation which took stone from the quarry and simply broke it into smaller pieces was not a manufacturer within the meaning of the tax statute.

It is obvious that our former decisions are not controlling in the case at bar.

In this case the business of the appellee is the construction of permanent pavements. It is apparent from the stipulation that the appellee does not make a product and sell it to some other party who in turn uses it to make a pavement. It not only "combines" the several ingredients, but it uses this combination itself in making the finished product which becomes a permanent part of the realty. It furnishes all the material, and does all the work of laying permanent paving.

We think it is apparent that in the enactment of the statute in question the legislature intended to describe a manufacturer as one dealing with personal property.

The statute came into its present form from the Code of 1897 where the whole subject was dealt with in one section (1319). The preceding section (1318) of said Code dealt with the taxation of merchants. It is quite apparent that in both sections the legislature was dealing with personal property. When section 6975 of the present Code was adopted the legislative intent was to deal with personal property. The statute was not intended to apply to builders, or those who...