Long v. Roberts & Son, 3 Div. 212

• Decision Date: 24 June 1937
• Docket Number: 3 Div. 212
• Citation: 176 So. 213,234 Ala. 570
• Court: Alabama Supreme Court
• Parties: LONG et al. v. ROBERTS & SON.

176 So. 213

234 Ala. 570

LONG et al. v. ROBERTS & SON.

3 Div. 212

Supreme Court of Alabama

June 24, 1937

Rehearing Denied Oct. 14, 1937

Appeal from Circuit Court, Montgomery County; Walter B. Jones Judge.

Bill for declaratory judgment by Roberts & Son against Henry S Long, as president of the State Tax Commission, and others. From a decree favorable to complainant, respondents appeal.

Affirmed in part, in part reversed and rendered.

GARDNER J., dissenting in part.

A.A. Carmichael, Atty. Gen., B.W. Simmons, Asst. Atty. Gen., L.H. Ellis, of Columbiana, H.L. Anderton, of Birmingham, and E.C. Boswell, of Geneva, for appellants.

Bradley, Baldwin, All & White and Martin, Turner & McWhorter, all of Birmingham, and Rushton, Crenshaw, & Rushton, of Montgomery, for appellee.

Holley, Milner & Holley, of Wetumpka, amici curiae.

PER CURIAM.

This cause was originally assigned to Justice Gardner for preparation of an opinion, but upon consideration thereof in consultation the views expressed therein did not meet with the full approval of a majority of the court. The opinion prepared, however, states the case with citation of authorities, which are likewise reviewed in State Tax Commission v. Hopkins (Ala.Sup.) 176 So. 210, this day decided, and these opinions considered together constitute a sufficient discussion of the questions presented and cases noted, without further elaboration here.

All of the members of the court concur in so much of the opinion of Justice Gardner as treats the matter of exemption of the county from any liability on account of the sales tax brought forward by the amendment to the bill, and, therefore, in the affirmance of the decree in that respect.

A majority of the court, consisting of Chief Justice Anderson, and Justices Thomas, Brown, and Knight repudiate in toto the reasoning of the Illinois court in the cases noted so far as applicable to our sales tax, and think that question sufficiently dealt with in State Tax Commission v. Hopkins, supra, and that the tax is applicable in all transactions named in complainant's original bill.

The decree in this respect is therefore reversed, and one here rendered denying complainant the relief it seeks in said original bill.

Justices Bouldin and Foster concur in the reversal of the decree in that respect, but would qualify their concurrence by limiting the sales tax to those matters which constitute merchandise as commonly understood in the commercial world, and as exempting such matters relating to service where the material furnished was but an incident thereto, as stated in Doby v. State Tax Commission (Ala.Sup.) 174 So. 233. Justice Bouldin further states his views in a separate opinion hereto attached.

The decree is therefore affirmed in so far as county exemption is concerned, as set out in the amendment to the bill, and reversed as to the application of the sales tax to complainant's business, as appears in the original bill, and in that respect a decree is here rendered denying complainant relief it seeks.

Affirmed in part, and in part reversed and rendered.

ANDERSON, C.J., and THOMAS, BOULDIN, BROWN, FOSTER, and KNIGHT, JJ., concur as herein indicated.

GARDNER J., dissents in part.

GARDNER, Justice (dissenting in part).

The sales tax provided for in the Act of February 23, 1937, levies a tax "upon every person, firm or corporation engaged or continuing within this State in business of selling at retail any tangible personal property whatever, including merchandise and commodities of every kind and character."

Complainant operates a commercial printing, lithographing, engraving, and bookbinding establishment.

Illustrative of the character of business here insisted is without the influence of the act, is its commercial printing conducted substantially as follows: A customer brings to complainant's place of business what is known as "copy," and orders a certain number of printed forms, circulars, books, pamphlets, briefs, and the like printed from said copy, and to be delivered when so completed in accordance with the order. The order is filled by composing the copy into type form, either by hand setting or by the use of a typesetting machine; a careful comparison is then made, the type then locked into a chase, which, in turn, is locked on the press beds, the press put in motion and the forms produced; these forms, when the size of the job is such as to require it, are folded in sections, and in the case of pamphlets and books are gathered and stitched, the books being bound.

While the cost of paper and materials, which enter the completed job, constitutes about 26 per cent. of the price charged or received, yet the paper loses its commercial value, and becomes of value only to the customer for whom the work is specially done; and if the customer refuses to accept the completed job, then the finished product would be of no value, except as waste paper or junk. The largest part of the value of the work done by complainant in its commercial printing is in service of a highly skilled and technical character.

The work of lithographing, copper plate engraving, and steel die embossing resembles in substance and effect, so far as any legal principle is involved, that of commercial printing, above outlined, and need not be here detailed.

Complainant also operates a bookbindery in which matter printed in its commercial printing plant is bound into books, and manufactures and sells to the counties of this state printed and lithographed matter and bound books of record, made under special orders as received from the several counties.

Complainant insists that the character of business herein briefly outlined is not within the influence of the Sales Tax Act, as it does not constitute a "selling at retail any tangible personal property," but is essentially a service for which no tax is imposed, and that, in any event, there was no legislative intent that the tax should be paid by a county which is but an arm of the state. The trial court sustained complainant's theory, and entered a decree accordingly, from which the tax commission has prosecuted this appeal.

The state of Illinois has a recent Sales Tax Act substantially as our own, so far as the pertinent question here involved is concerned, and the rulings of the Supreme Court of that state fully sustain the holding here. J.A. Burgess Co. v. Ames, 359 Ill. 427, 194 N.E. 565, 566; A.B.C. Electrotype Co. v. Ames, 364 Ill. 360, 4 N.E.2d 476; H.G. Adair Printing Co. v. Ames, 364 Ill. 342, 4 N.E.2d 481. The holding in the latter case, here much in point, is well summarized in the headnote as follows:

"Printers who received copy for printed matter, and who in process of carrying out their contract of service used ink for purpose of destroying plain paper so far as its commercial value was concerned, which paper was of no value to any person other than one for whom printing was done, held not engaged in business of 'selling tangible personal property at retail,' within Retailers' Occupation Tax Act (Smith-Hurd Ill. Stats. c. 120, § 440 et seq.)."

The opinion refers to Burgess v. Ames, supra, as controlling in principle, wherein, referring to blueprints, it was said: "The paper is destroyed when the exposure is made, and it has no further use or value to any one other than the person interested in that particular reproduction," and then proceeds: "The same is true of the work carried on by appellees. Copy for printed matter is delivered to them, and in the process of carrying out their contract of service they use ink for the purpose of destroying plain paper so far as its commercial value is concerned. From that time it is of no use or value to any person other than the one for whom the printing is done. It should be apparent that letterheads, circulars, mail-order catalogues, printed briefs for an attorney, or any other special printed matter, would be without commercial value, and it follows that the printer is engaged only in service. The appellees are not engaged in the business of selling tangible personal property but in the business of printing--one of the graphic arts."

The A.B.C. Electrotype Case, supra, is to like effect, the court concluding: "What the customer really pays for is the skill, labor, and use of the machinery and equipment of the electrotyper. The electrotyper is engaged in the business of furnishing that skill and labor and the use of that machinery--not in the sale of tangible personal property at retail."

That these decisions are here directly in point cannot be seriously questioned, and we do not read the brief of counsel for the tax commission to the contrary.

It is insisted, in the first place, however, these rulings are not sound, and should not be followed, and, in the second place, that they are opposed by People of New York ex rel. Walker Engraving Corporation v. Graves (New York Supreme court, App.Div., 3rd Department) 243 A.D. 652, 276 N.Y.S. 674, and People ex rel. Foremost Studio, Inc. v. Graves (New York Supreme Court, App.Div., 3rd Department) 246 A.D. 130, 284 N.Y.S. 906. We have read these cases with interest, but we are not prepared to say that any real conflict exists between them and those from the Illinois court. Whether the completed product furnished the customer was of value to the public generally is not made to appear. Indeed it would seem more clearly to appear from the opinion in the Foremost Studio Case, supra, that the product did have a commercial value to the public, aside from its value to the customer. Other differentiating features may be noted, but further comparison is unnecessary.

And as to our own statute, we may also note the distinction that in the New York statute (Tax Law [Consol.Laws, c. 60] § 391)...