J. W. Meadors & Co. v. State, 34944

• Decision Date: 30 January 1954
• Docket Number: No. 34944,No. 1,34944,1
• Citation: 89 Ga.App. 583,80 S.E.2d 86
• Parties: J. W. MEADORS & CO. et al. v. STATE
• Court: Georgia Court of Appeals

Page 86

80 S.E.2d 86

89 Ga.App. 583

J. W. MEADORS & CO. et al. v. STATE.

No. 34944.

Court of Appeals of Georgia, Division No. 1.

Jan. 30, 1954.

SYLLABUS BY THE COURT.

A contractor who contracts with a municipality to construct and improve a waterworks system, under which it undertakes to do entire jobs, furnishing labor and materials, as to the tangible personal property utilized in the performance of the contracts, is as to such property bought without the State of Georgia the 'user' of such property, and is as to such property bought within the State the 'consumer' of such property and is liable to the State for use and sales tax on the sale of such property, even though the title to such property finally became vested in the city as a part of its waterworks system, and cannot be said to have resold such property to the city as tangible personal property. In such a situation, and under the allegations in the instant case, the contractor was not an agent of the city but was an independent contractor. The sale and use of such property was taxable to the contractor under the Georgia Retailers' and Consumers' Sales and Use Tax Act.

The City of Macon let two contracts to J. W. Meadors & Company, the lowest and best bidder, for the building and construction of improvements and betterments to the waterworks system of the City of Macon, consisting of the construction of filter plants, the installation of various equipment necessary to bring water from the Ocmulgee River into the filtering system and hence into the city's distribution system, the work involving surface construction, below-surface construction and above-surface construction and the installation of fixtures and equipment for the above purposes. The contracts provided that the city was to benefit in the amount of sales and use tax in the event the sales to the contractor were not taxable. The contractor, under protest, paid the sales tax on property purchased by it within the State and the use tax on that purchased without the State, and sued for a refund of the taxes paid on material which permanently went into the projects and title to which vested ultimately in the City of Macon. The court sustained the general demurrer to the petition for refund and dismissed the action. The city and the contractor, suing for the use of the city, excepted.

E. S. Sell, Jr., Miller & Miller, Macon, for plaintiffs in error.

Eugene Cook, Atty. Gen., George E. Sims, Jr., Asst. Atty. Gen., for defendant in error.

FELTON, Chief Judge.

The trial court correctly construed the Georgia Retailers' and Consumers' Sales and Use Tax Act, Laws 1951, p. 360, correctly applied it to the facts in this case and properly sustained the demurrer to the petition for a refund of the sales and use taxes paid under protest for the following reasons:

1. The taxes here involved are not taxes on property and the transactions are not exempt from taxation under Const. art. 7, § 1, par. 4, Code Ann. § 2-5404 and Code Ann. § 92-201.

2. Under the facts alleged, the contractor was an independent contractor, and under these facts the contractor cannot reasonably be said to have made a resale to the City of Macon of the tangible personal property as such. The contractor was compensated for a completed installation, and we surmise that the contract only separated the values of the personal property used from the other items of expense involved, because of the contention of the city that no sales taxes could be charged for the items since the city would ultimately acquire the property. 'A contractor when fabricating personalty into realty neither sells, resells, sells at retail, nor can he be considered a retailer.' Duhame v. State Tax Commission, 65 Ariz. 268, 179 P.2d 252, 259, 171 A.L.R. 684; Acorn Iron Works v. State Board of Tax Administration, 295 Mich. 143, 294 N.W. 126, 139 A.L.R. 368; City of St. Louis v. Smith, 342 Mo. 317, 114 S.W.2d 1017; Wood Preserving Corp. v. State Tax Commission, 235 Ala. 438, 179 So. 254; State Board of Equalization v. Stanolind Oil & Gas Co., 54 Wyo. 521, 94 P.2d 147; Atlas Supply Co. v. Maxwell, 212 N.C. 624, 194 S.E. 117; Albuquerque Lumber Co. v. Bureau of Revenue, 42 N.M. 58, 75 P.2d 334; Utah Concrete Products Corp. v. State Tax. Comm., 101 Utah 513, 125 P.2d 408; State v. Christhilf, 170 Md. 586, 185 A. 456; State v. J. Watts Kearny & Sons, 181 La. 554, 160 So. 77; Blome Co. v. Ames, 365 Ill. 456, 6 N.E.2d 841, 111 A.L.R. 940; Herlihy Mid-Continent Co. v. Nudelman, 367 Ill. 600, 12 N.E.2d 638, 115 A.L.R. 485, 491; 139 A.L.R. 373. 'A contractor who buys building material is not one who buys and sells--a trader. He is not a 'dealer,' or one who habitually and constantly, as a business, deals in and sells any given commodity. He does not sell lime and cement and nails and lumber. * * * Sales to contractors are sales to consumers * * *.' State v. J. Watts Kearny & Sons, supra [181 La. 554, 160 So. 78]. See also Volk v. Evatt, 142 Ohio 335, 52 N.E.2d 338; Craftsman Painters and Decorators v. Carpenter, 111 Colo. 1, 137 P.2d 414, 416; Townsend Electric Co. v. Evans, 193 Tenn. 536, 246 S.W.2d 967. There are authorities to the contrary but we think that the above express the correct reasoning and conclusion.

3. As to the property bought within the State the contractor was the 'consumer,' and as to property bought without the State the contractor was the 'user,' within the meaning of the act. In the context the words 'user' and 'consumer' are synonymous. To construe either word to mean that the sale of property which must be consumed or destroyed in the use to be taxable would virtually annihilate the act and give it a strained and unthought-of meaning. Such construction would immediately exclude diamond rings, other luxuries, and other things not destroyed or consumed immediately in the use, from the realm of liability for sales and use taxes. It seems idle to belabor this question, but even under the narrow definition, the personal property used by the contractor was consumed and used up as personal property. In addition to defining 'consume' to mean 'to destroy,' 'to use up' and to 'expend,' Webster's New International Dictionary gives the following definitions: 'consumer n. 1. One that consumes. 2. Economics. One who uses (economic) goods and so diminishes or destroys their utilities; opposed to producer.' 'consumption * * * 2. Economics. The use of (economic)...