Neuhoff Packing Co. v. Sharpe

• Decision Date: 27 May 1922
• Citation: 240 S.W. 1101,146 Tenn. 293
• Parties: NEUHOFF PACKING CO. v. SHARPE ET AL.
• Court: Tennessee Supreme Court

240 S.W. 1101

146 Tenn. 293

NEUHOFF PACKING CO. v. SHARPE ET AL.

Supreme Court of Tennessee.

May 27, 1922

Certiorari to Court of Civil Appeals.

Action by the Neuhoff Packing Company against Vernon Sharpe and others. From judgment of Court of Civil Appeals affirming judgment for defendant, plaintiff brings certiorari. Affirmed.

M. T Bryan and Levine & Levine, all of Nashville, for plaintiff in error.

Morton B. Adams, City Atty., and J. Washington Moore, Asst. City Atty., both of Nashville, for defendants in error.

McKINNEY J.

The plaintiff in error, Neuhoff Packing Company, is a Tennessee corporation, and operates a packing plant in Nashville.

Vernon Sharpe, city tax assessor of Nashville, assessed the plaintiff in error for the year 1920 as a nonmanufacturing corporation under section 24 of chapter 602 of the Acts of 1907.

It was contended by the plaintiff in error that it was a manufacturing corporation, and that it should be assessed as such under section 22 of the act of 1907, the pertinent part of which is as follows:

"That all persons, copartners, and joint-stock companies engaged in the manufacture of any goods, wares, merchandise, or other articles of value shall pay an ad valorem tax," etc.

The circuit judge and the Court of Civil Appeals were both of the opinion that the plaintiff in error was a manufacturing corporation and subject to assessment as such, and to question this holding the defendants in error have brought the case to this court by petition for writ of certiorari.

The business which the plaintiff in error is authorized to engage in, according to the statute, and as same appears in its charter, is as follows:

"The business of said company shall be the buying and slaughtering of live stock and the buying of meats for curing, rehandling, packing, and manufacturing into all forms known to commerce."

Relative to the nature and extent of the business Mr. Neuhoff testified that the principal business of the corporation was the buying and killing of cattle, sheep, and hogs; that when they killed said animals they put them in cold storage and chilled them, and then made different cuts of them, such as hams, bacon, lard, sausage, and all kinds of packing products; that it required skilled labor to do this work that the meats have to be chilled right; that a certain temperature has to be maintained; that all the sweet pickle meats have to be cured in brine made of sugar and other ingredients, and the process of curing and preparing said meat for the market in its changed form requires from 30 to 60 days. As an example of how this meat is used, he stated that they make sausage in large quantities, and upon this question he testified as follows:

"We make different kinds of sausage, takes different kinds of meat, and different kinds of spices, and the way it is chopped. Some is chopped finer than others, and different flavors used and put in different cases. You see some long sausages, some round ones, and some is smoked and cooked before we sell it, and some of it is sold raw, like you make it, for instance. This fresh sausage is sold like made without smoking or cooking, and some is smoked, and some is even cooked. For instance, some of the sausage we use veal and beef and pork in it. Nearly all of it is beef and pork mixed."

He testified that the principal business of the plaintiff in error was converting the slaughtered animals into the different products, and that such conversion requires a knowledge of investment and skill in order to do it successfully. He further testified that there were 125 persons employed in the plant of the plaintiff in error.

As previously stated, the charter provides that the business of the plaintiff in error shall be "the buying and slaughtering of live stock" and "manufacturing into all forms known to commerce." In Chattanooga Plow Co. v. Hays, 125 Tenn. 148, 140 S.W. 1068, this court, in pointing out the distinction between a merchant and a manufacturer, said:

"The marked distinction between a manufacturer and a merchant is that the merchant or dealer sells to earn a profit, and the manufacturer sells to take profit already earned. He must buy the materials out of which to make his finished product, and he must sell the product of his factory after it is finished. But such dealings are not his occupation. The one supplies him with the materials with which to pursue it, while the other merely enables him to take the profit earned."

We approve the reasoning of the court in Engle v. Sohn & Co., 41 Ohio St. 691, 52 Am. Rep. 103, and quote extensively therefrom as follows:

"During the years 1879 and 1880 John W. Sohn & Co., were a firm engaged in the business of purchasing and slaughtering hogs and packing pork in the city of Hamilton, Butler county. They bought and slaughtered hogs, and subjected the same to certain processes and combination with other materials, requiring the application of skill, labor, and capital, and converted them into lard and cured meats, for the purpose of adding to the value thereof, with the view of making gain or profit. It required about 40 men to carry on the business, which was conducted under several departments, each requiring the supervision of a foreman possessed of skill and experience. In rendering lard, curing sides and shoulders, curing, smoking, and canvasing hams, and packing pork, it became necessary to use other raw material of various kinds, such as salt, saltpeter, saleratus, sugar, molasses, flour, chrome yellow, linseed oil, canvas, wood, paper, barrels, tierces, and kegs, and also to use various tools, implements, and mechanical devices. The process of curing hams required about three months. They were then ready for smoking, which occupied from six to eight days, when they were wrapped, canvased and dipped in a mixture, to render them air tight and proof against atmospheric influences and insects. The different branches of the business were carried on together in one building. Sohn & Co. cured all their own meats, and did not deal in meats cured by others. In former years those that slaughtered were not in the packing business, and packers did not slaughter; but for several years the two branches of business had been, as now, combined. * * *

The question for our consideration is whether upon the facts in the case at bar the defendants in error were taxable as merchants or manufacturers. If taxable as manufacturers only they were required to return for taxation, as they did, the monthly average value of the raw material which they had on hand during the preceding year, in the same condition in which it was purchased, received, or otherwise held for the purpose of being used by them in their manufacturing business. But they were not required to list for taxation such material in a manufactured or partly manufactured state, unless manufactured one year or more previous thereto, as it was not the intention of ...