Kurtz Concrete, Inc. v. Spradling
| Decision Date | 09 January 1978 |
| Docket Number | No. 59919,59919 |
| Citation | 560 S.W.2d 858 |
| Parties | KURTZ CONCRETE, INC., a Missouri Corporation, Respondent, v. James R. SPRADLING, Director of Revenue, State of Missouri, Appellant. |
| Court | Missouri Supreme Court |
John D. Ashcroft, Atty. Gen., Jefferson City, J. Michael Davis, Asst. Atty. Gen., for appellant.
Dale L. Rollings, St. Charles, for respondent.
The issue on this appeal is whether hauling charges for redi-mix concrete are taxable under the Missouri Sales Tax Law. §§ 144.010-144.510, RSMo 1969. Kurtz Concrete, Inc., taxpayer, paid $9,512.77 for the period August 1, 1973, to July 31, 1974, under protest to the Department of Revenue, as sales tax on hauling charges on delivered concrete for that period.
Redi-mix concrete is composed of cement, coarse and fine aggregates, water, and possibly suitable add mixtures. Before the materials are added together in trucks at Kurtz' plant, they are kept in bins above a weigh batcher. Approximate amounts of materials are dispensed concurrently to make up concrete of the quality and quantity specified by customers and are mixed in the concrete trucks. Once materials are added together in the truck, they cannot be returned to stock. The materials begin to mix as soon as they are added together with water in the truck. It takes approximately five minutes for the materials to become concrete after they are placed on the truck. Kurtz' trucks are usually still at the loading bin during this five-minute mixing process. The maximum amount of time during which the concrete is in useable form is several hours. Although the concrete truck turns enroute to its destination, the turning does not contribute to the manufacturing process, and may be detrimental to some types of mixtures. The truck turns enroute to insure that the materials do not separate. If the concrete cannot be used within several hours for some reason, it must be dumped as it is useless. Once concrete is poured and sets, it is not removable without the use of a jackhammer or bulldozer. The bulk of concrete sold by Kurtz is used for footings, foundations and flatwork. When a truck reaches the jobsite it is positioned at the direction of the contractor and then dumps the concrete, usually into a form.
E. Eric Kurtz, president of Kurtz Concrete, Inc., testified that his company quotes prices upon the request of customers, 95% Of which requests are verbal. Most of Kurtz's customers are contractors. Material and delivery charges are quoted separately in every case, and are separately specified upon billing. At the time of hearing in this case, the delivery charge for concrete was $5.00 per cubic yard. Mr. Kurtz testified that computing the charge for delivery on cubic yards of concrete rather than on mileage was a more accurate means for Kurtz to recover its actual costs for delivery due to the variables involved in each job. The variables taken into account to compute the delivery charge are mileage, the time the truck is on the job, night hauling, small loads, and special equipment or maintenance required on the truck. Profit is not designed into the hauling charges, and no discount is figured on hauling charges as it may be on materials. A "part-load" charge is made for small amounts sent out in trucks. This charge is added to the regular hauling charge. About 97% Of the concrete sold by Kurtz is delivered by Kurtz; only a small percentage of customers pick up their own concrete. If a customer comes with his own redi-mix truck, the materials are simply dumped into it. If the customer comes without such a truck, Kurtz mixes the concrete on its own truck, and then dumps it into the customer's truck. There is no hauling charge when a customer picks up his own concrete.
Mr. Kurtz testified that the materials are identified as the customer's when they are put in the truck. If a customer cancels his order before the materials are weighed and put in the truck, the order is simply cancelled and the customer is not charged. If material has already been placed in the truck, an attempt is made to resell it for the customer who originally ordered it. If the concrete on the truck cannot be diverted to another customer, it is dumped and the original customer is billed. It is understood by contractors in the industry that once the materials are on the truck the concrete is their product. If an order is cancelled and the concrete on the truck is sold to another customer who wants a lower grade, the original customer is billed for the difference in price between the higher grade concrete and the lower grade desired by the customer to whom it was diverted. The original customer also pays hauling charges. If the truck has left Kurtz' plant and is enroute before the concrete is diverted to a second customer due to cancellation, both the original customer and the diverted-to customer may have to pay hauling charges for that load. Should a load not be delivered due to some factor other than cancellation, Mr. Kurtz did not know if the customer would be billed if the concrete had already been placed on the truck. Mr. Kurtz stated that this situation had not arisen to his knowledge. Various concrete contractors testified that it was understood within the industry that once concrete was on the truck, if an order was cancelled, the original customer had to pay for the concrete if it could not be diverted. These contractors did not know what would happen if the concrete were not delivered for some reason other than cancellation. However, one stated that he would not expect to be billed for it.
The hearing officer for the Department of Revenue made the finding that the delivery of redi-mix concrete is an integral part of the sale of concrete and that ownership or title to the concrete passes at the time of delivery on the jobsite. The hearing commissioner further found that the sale of building supplies is taxable, and that hauling charges are includable in the taxpayer's "gross receipts" as a service incident to the sale of concrete under Section 144.010(1)(4). The circuit court reversed the findings of the Department of Revenue and found as a matter of law that title to the redi-mix concrete passes at the time of introduction of the ingredients into the rotating drum at the batch plant. The circuit court further found that the delivery of redi-mix concrete is a separate delivery service which is not a part of the sale made by petitioner to its customer and is not includable in the "gross receipts" and therefore not subject to sales tax. The circuit court found that hauling does not constitute a "sale at retail" under § 144.010(1)(9).
In our opinion, the issue in this case narrows to the question: When does title to the concrete pass from...
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