Iowa Limestone Co. v. Cook

• Decision Date: 13 December 1930
• Docket Number: 40466
• Citation: 233 N.W. 682,211 Iowa 534
• Parties: IOWA LIMESTONE COMPANY, Appellant, v. J. G. COOK, County Auditor, et al., Appellees
• Court: Iowa Supreme Court

233 N.W. 682

211 Iowa 534

IOWA LIMESTONE COMPANY, Appellant, v. J. G. COOK, County Auditor, et al., Appellees

No. 40466

Supreme Court of Iowa, Des Moines

December 13, 1930

Appeal from Polk District Court.--W. G. BONNER, Judge.

Action to cancel a certain assessment made on moneys and credits of the plaintiff's, and to enjoin the collection of the same. The court dismissed the plaintiff's petition, and it appeals.

Reversed.

Brammer Brody, Charlton & Parker, for appellant.

Carl S Missildine, George Comfort, C. A. Weaver, and C. R. S Anderson, for appellees.

FAVILLE, J. MORLING, C. J., and EVANS, STEVENS, and WAGNER, JJ., concur. ALBERT, J., not participating. GRIMM, J. (dissenting).

OPINION

FAVILLE, J.

There is no dispute in the facts involved in this case. The appellant was organized as a corporation under the laws of this state, its articles reciting that its principal place of business is at Alden, in Hardin County, Iowa. All of the officers and members of the board of directors of the corporation are residents of Des Moines, in Polk County. The corporation owns and operates a limestone quarry at Alden. The business at Alden is managed by a superintendent, who resides there. It is stipulated that:

"The processes performed in the plant consist of blasting of limestone from a natural deposit and the crushing and screening of the limestone to merchantable sizes. The limestone is loaded into cars, trucks, and wagons from the plant and shipped direct to purchasers."

It also appears from the stipulation that there are no facilities within Polk County for handling the products of the quarry. However, an office is maintained in Des Moines, where the principal set of books of the corporation is kept. A small quantity of stationery is kept in this office, and space is rented from another corporation. The president, vice president, and treasurer of the appellant are also officers of the company, which is engaged in the coal business. The books of the appellant are kept by the coal company under a contract. The appellant corporation employs one salesman, for part time only. This salesman resides in Des Moines, but his territory is in the northern and central parts of the state. It does not appear that any sales are made from the office in Des Moines. When sales of limestone are reported to the officers of the corporation in Des Moines, an order is sent to the superintendent at Alden, who fills the same. This superintendent also sells limestone products at Alden, and takes orders from various localities in the state as they are sent to him. All remittances, whether received at Alden or not, are forwarded to the treasurer of the corporation at Des Moines. A substantial deposit is maintained in a bank at Alden, and the operating expenses are paid through said bank. The office at Alden keeps complete pay-roll records, and complete records of all loadings and deliveries and of all orders received. Stockholders' meetings are held in the office of the company at Alden. The books containing the records of the stockholders' and directors' meetings are kept at Des Moines. A bank account is kept by the corporation in Des Moines, and notes receivable and other evidences of indebtedness due the corporation are also kept in Des Moines. Approximately 92 per cent of the sales of the corporation are made within the state of Iowa, and within some 30 counties of the state. About 8 per cent of the output is disposed of in Polk County. The corporation has been assessed for the year of 1929 on its personal property and moneys and credits by the assessment district of the town of Alden. It also appears that the assessor for the city of Des Moines made an assessment against the appellant on account of moneys and credits in the aggregate of $ 51,209, together with a penalty of 100 per cent for said year. This assessment was reduced by the city council of the city of Des Moines to $ 1,000. This action is brought to cancel this assessment.

I. Briefly stated, it is the contention of the appellant that it is not a "manufacturer," within the meaning of the statutes of this state, and hence is subject to taxation only as provided by Section 7008 of the Code, 1927. Said section is as follows:

"The shares of stock of any corporation organized under the laws of this state, except corporations otherwise provided for in Chapters 330 to 341, inclusive, and except as provided in Section 7102, shall be assessed to the owners thereof as moneys and credits at the place where its principal business is transacted. The assessment shall be on the value of such shares on the first day of January in each year. In arriving at the assessable value of the shares of stock of such corporations, the amount of their capital actually invested in property other than moneys and credits shall be deducted from the actual value of such shares. Such property other than moneys and credits shall be assessed as other like property."

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."

Code Section 6978 provides:

"Corporations organized under the laws of this state for pecuniary profit and engaged in manufacturing as defined in the third preceding section shall list their real estate, personal property not hereinbefore mentioned, and moneys and credits in the same manner as is required of individuals."

Is the appellant to be deemed "a manufacturer," under said statute? The provisions of the articles of incorporation of appellant are not shown in the record. There is no dispute as to the method of operation of the appellant's plant. Under the stipulation, the "process performed in the plant consists of blasting limestone from a natural deposit and the crushing and screening of the limestone to merchantable sizes and loading it into cars, trucks, and wagons from the plant." Does this make the appellant a manufacturer, within the meaning of the statute?

In Hartranft v. Wiegmann, 121 U.S. 609 (30 L.Ed. 1012, 7 S.Ct. 1240), the Supreme Court of the United States considered a question involving the custom duty on shells. The court said:

"We are of opinion that the shells in question here were not manufactured, and were not manufactures of shells, within the sense of the statute imposing a duty of 35 per centum upon such manufactures, but were shells not manufactured, and fell under that designation in the free list. They were still shells. They had not been manufactured into a new and different article, having a distinctive name, character or use from that of a shell. The application of labor to an article, either by hand or by mechanism, does not make the article necessarily a manufactured article, within the meaning of that term as used in the tariff laws. Washing and scouring wool does not make the resulting wool a manufacture of wool. Cleaning and ginning cotton does not make the resulting cotton a manufacture of cotton. * * * In Frazee v. Moffitt, 20 Blatchf. 267, 18 F. 584, it was held that hay pressed in bales, ready for market, was not a manufactured article, though labor had been bestowed in cutting and drying the grass and bailing the hay."

Commonwealth v. John T. Dyer Quarry Co., 250 Pa. 589 (95 A. 797), involved the taxation of a corporation. The Supreme Court of Pennsylvania adopted the opinion of the trial court, from which we quote:

"The defendant company does not in terms appear to have been organized for manufacturing purposes. Its corporate purposes are stated to be 'quarrying, crushing, preparing and marketing stone.' Although it is not expressly declared to be a manufacturing company, it may be so in fact if its business is actually that of manufacturing. Whether this is so or not will depend upon what it does in the carrying on of its business. Quarrying is not manufacturing; neither is crushing, in and of itself, a manufacturing process, unless it results in the production of a new and different article. Marketing stone is certainly not manufacturing. Whether preparing stone is to be so regarded as manufacturing depends upon the method and result of the preparation. The testimony of its treasurer submitted at the trial thus defines the method and result of the preparation made by the company 'The company takes the raw material, consisting of rock and stone, from the quarries, and carries it by hand or machinery to large crushers, which crush the stone into smaller sizes. This crushed stone is carried by belts or conductors to large screens, where it is assorted, the different sizes going into different bins, and that which is not in condition to pass through the screens goes into another bin, whence it is taken back to the crusher and again recrushed to a marketable size. * * *' While it has extensive machinery, it is used only for the breaking of the stone or rock into the sizes required for the different purposes for which the stone is afterwards used. If the breaking of the stone into these sizes was performed, as it could be, by the manual labor of men wielding hammers and breaking the stone into the required sizes, it could scarcely be pretended that this is manufacturing. The machinery employed doubtless crushes the stone much more rapidly and economically than it could be done by men wielding hammers, and the sorting of the sizes is accomplished by running the crushed stone over screens with different sized mesh, and permitting the...