Kentucky Electric Co. v. Buechel

• Decision Date: 08 February 1912
• Citation: 143 S.W. 58,146 Ky. 660
• Parties: KENTUCKY ELECTRIC CO. v. BUECHEL, City Assessor.
• Court: Kentucky Court of Appeals

143 S.W. 58

146 Ky. 660

KENTUCKY ELECTRIC CO. v. BUECHEL, City Assessor.

Court of Appeals of Kentucky.

February 8, 1912

Appeal from Circuit Court, Jefferson County, Chancery Branch, Second Division.

Action by the Kentucky Electric Company against John Buechel, City Assessor of the City of Louisville. From a judgment of dismissal, plaintiff appeals. Reversed and remanded.

Carroll & Middleton, for appellant.

Clayton B. Blakey, for appellee.

LASSING J.

The Kentucky Electric Company is a Kentucky corporation organized to engage in the manufacture and sale of electricity in the city of Louisville. In 1906 it obtained a franchise from the city, permitting it to use the streets thereof for its conduits, poles, and wires, used in the distribution of electricity to its patrons through-out the city. At or about the same time, it constructed a large plant and began to actively carry on its business.

The city assessor was proceeding to assess its property for taxes, and, conceiving that, under section 170 of the Constitution, section 2980a of the Statutes (Russell's St. § 907), and an ordinance, approved by the General Council of the city of Louisville July 29, 1898, its property was exempt from taxes, it sought by suit to have the assessor enjoined from assessing its property for taxation in the city of Louisville. Upon hearing, the trial court refused to grant the injunction, upon the ground that, while the appellant was a new business or enterprise in the city of Louisville, it was not a manufacturing plant, within the meaning of the state law and the ordinance of the city of Louisville, passed to carry it into effect, whereby new manufacturing plants locating in Louisville are exempt from taxation for a period of five years. Appellant's petition being dismissed, it seeks a reversal here.

Three questions are raised upon appeal: First, is appellant a manufacturing plant? second, if so, is there anything in the language of the statute or the ordinance denying it the benefit of the exemption? and, third, if it is entitled to the exemption, how much of appellant's property is covered by the words "manufacturing establishment," as used in the ordinance?

For the city it is insisted that, as electricity cannot be manufactured, appellant is not and never has been conducting a manufacturing plant or business, within the meaning of these terms as they are generally understood. Some authority is cited in support of this contention, the one most directly in point being that of Williams v. Park, 72 N.H 305, 56 A. 463, 64 L.R.A. 33, where the court held that because it did not know what electricity was, it was unwilling to say that, simply because machinery and manual labor were used in the process of producing it, it was a manufactured product. The case of Muir v. Samuels, 110 Ky. 605, 62 S.W. 481, 23 Ky. Law Rep. 14, is cited as supporting, by analogy, the reasoning of the court in the New Hampshire case. In the Muir Case the court held that a laundry was not a manufacturing plant; for, although machinery of various kinds and manual labor were employed in the conduct of the business, still, as by its use the laundry merely transformed soiled lien into clean linen, it could not properly be termed a manufacturing plant, for nothing new was produced. We think this latter opinion was entirely correct and rested upon a sound basis, for the linen that came out of the laundry was the same linen that went into it. The dirt merely had been removed therefrom. It had not been manufactured there--merely cleaned.

In the case of Lawrence v. Allen, 7 U.S. (How.) 785, 12 L.Ed. 914, it was held that the extracting of the sap of the india rubber tree, in its liquid or milky state, does not constitute manufacturing, and those engaged in extracting this sap or milk of the rubber plant cannot properly be said to be manufacturers. True the court held that the act of gathering the juice or sap of the rubber plant could not be termed manufacturing; nor could those who were engaged in this business be said to be manufacturers. But the court held that when this juice was boiled down and changed into any other form it would be a manufactured article, and those engaged in this business manufacturers. This opinion rather supports the contention of counsel for appellant; for, although the rubber is changed in form, it is still rubber. The one in a liquid state, and the other boiled down and subjected, perhaps, to some chemical process, by being mixed with other elements, is converted into some useful article of commerce. Those engaged in this business are clearly manufacturers. Other cases cited by counsel for appellee upon this question are not directly in point, and the reasoning for the rule upon which the opinion of the court in the New Hampshire case is rested is not satisfactory.

Counsel for appellant, conceding that occasional, isolated cases may be found which seem to support the contention of appellee insists that the decided weight of authority is in support of its claim that a company engaged in the production of electricity is in fact a manufacturing company, within the usual and generally accepted meaning of the term. As supporting this view, he cites the cases of People v. Wemple, 129 N.Y. 543, 29 N.E. 808, 14 L.R.A. 708, State v. American Sugar Refining Co., 108 La. 603, 32 So. 965, Commonwealth of Pennsylvania v. Northern Electric Light & Power Co., 145 Pa. 105, 22 A. 839, 14 L.R.A. 107, Southern Electric Light Co. v. Philadelphia, 191 Pa. 170, 43 A. 123, Commonwealth v. Keystone Electric Light Co., 193 Pa. 245, 44 A. 326, Beggs v. Edison Electric Light Co., 96 Ala. 295, 11 So. 381, 38 Am.St.Rep. 94, and Lamborn v. Bell, 18 Colo. 346, 32 P. 989, 20 L.R.A. 241, where the question whether or not an electric light company was a manufacturing plant was directly involved; and in each case the court held it to be such. The further cases of Opinion of the Justices, 150 Mass. 592, 24 N.E. 1084, 8 L.R.A. 487, Edison United Manufacturing Co. v. Farmington Electric Co., 82 Me. 464, 19 A. 859, Covington Gaslight Co. v. City, 84 Ky. 94, and Newport Light Co. v. City of Newport, 20 S.W. 434, are cited as showing that, while the question at point was not involved, from the manner in which the court in those opinions spoke of and referred to electric light companies and gas companies, they were clearly regarded as manufacturing plants. We think the contention of appellant upon this point is sound. This court has twice held that a company engaged in the manufacture of artificial gas was a manufacturing concern. It is possible that some distinction may be drawn between the making of artificial gas from coal by means of machinery, and the conversion of the heat units or latent electricity in coal and water into electricity, whereby the one may be termed manufactured and the other not. But we are unable to draw so fine a distinction. Gas is known to exist in nature, presumably produced from coal by some great heat and high pressure to which it was subjected in ages past, since which time it has been confined in pockets in the earth. Electricity is known to exist in nature. The manufactured gas is identical with the natural gas, save, perhaps, that some of the impurities are removed. Manufactured electricity is in many respects similar to electricity as it exists in nature everywhere, but particularly as it is known to exist in the atmosphere. The processes by which artificial gas and electricity are produced are in many respects similar. The heat energy in the coal is turned into electricity, and, by means of wire, forwarded from the plant where generated to the consumer. Artificial gas is extracted from the coal, and, through means of pipe or tubing, is transmitted from the factory to the consumer. Both are used for the purposes of supplying light, heat, and power. They are sold by quantity, and measured by meter. Hence the fact that courts generally have held that a...