Norris Dispensers, Inc. v. United States

• Decision Date: 12 September 1962
• Docket Number: No. 4-60-Civ. 219.,4-60-Civ. 219.
• Citation: Norris Dispensers, Inc. v. United States, 211 F.Supp. 79 (D. Minn. 1962)
• Parties: NORRIS DISPENSERS, INC., Plaintiff, v. The UNITED STATES of America, Defendant.
• Court: U.S. District Court — District of Minnesota

211 F. Supp. 79

NORRIS DISPENSERS, INC., Plaintiff, v.The UNITED STATES of America, Defendant.

No. 4-60-Civ. 219.

United States District Court D. Minnesota, Fourth Division.

September 12, 1962.

John W. Windhorst, Charles O. Howard, and Dorsey, Owen, Marquart, Windhorst & West, Minneapolis, Minn., for plaintiff.

Louis W. Oberdorfer, Asst. Atty. Gen., Edward S. Smith, David A. Wilson, Jr., and John T. Piper, Attys., Dept. of Justice, Washington, D. C., and Miles W. Lord, U. S. Atty., for defendant.

EARL R. LARSON, District Judge.

This action is brought by Norris Dispensers, Inc., (taxpayer) for refund of a manufacturer's excise tax, interest and penalties.

The first question is whether the Norris Dairy Bar and the Norris Home Milk Dispenser, made and sold by plaintiff, are "household type refrigerators" within the meaning of § 4111 of the Internal Revenue Code of 1954.

These items may be briefly described, as there is no dispute as to their appearance and function.Both items consist of steel, enamel finished cabinets which are cooled by ordinary refrigerating units.Inside the cabinet of the Home Milk Dispenser there is space only for two 3-gallon milk cans; the Dairy Bar has an additional three-quarter cubic foot space designed for the cool storage of other dairy products.The milk is dispensed through a rubber tube which runs through a valve to the outside of the cabinet.

The taxability of the Home Milk Dispenser, the unit without the additional space, might be considered first.The Government contends that this item is within the statute in that it refrigerates food for the household.More precisely stated, the argument is that a refrigerator does not cease to be a refrigerator because it is a specialty refrigerator equipped to dispense the product which it stores.The taxpayer, on the other hand, argues that the legislative history of this section, the Commissioner's method of interpreting similar excise tax provisions, and factors deemed important in previous excise tax cases support its position.

There can be little doubt that the legislative history is of importance in construing any internal revenue statute.Cf.Commissioner v. Bilder, 369 U.S. 499, 82 S.Ct. 881, 8 L.Ed.2d 65(1962).The original section 4111¹ was passed in 1932 and then, as now, taxed household type refrigerators.In 1941the statute was amended so as to tax sales of "refrigerators, beverage coolers, ice cream cabinets, water coolers, food and beverage display cases, food and beverage storage cabinets, ice making machines, and milk cooler cabinets * * *."²The taxpayer argues that the manner of changing the statute then is relevant now.It is contended that Congress could have made this change by simply deleting the term "household" but instead it chose to add a number of specific items used for cold storage of food and water but which are not usually known as "refrigerators."This is said to sustain the inference that Congress believed that the term "refrigerator" was limited in its meaning to articles usually known as "refrigerators".The Government, on the other hand, points to the committee report accompanying the same change which refers to the previously mentioned articles as "commercial types of refrigerators."³From this it argues that Congress understood the term "refrigerator" to include all the various specialty types of refrigerators.These two arguments are both persuasive, but when they are pitted against each other the precise "intent" of Congress does not clearly emerge from the fray.

An additional bit of legislative history might be mentioned.In 1950the statute was enlarged to provide an excise tax on "household type units for the quick freezing or frozen storage of foods" and on combinations of such units and household type refrigerators.⁴Both parties optimistically seize upon this change.The taxpayer argues that if the term refrigerator broadly includes all articles used for the cold storage of food, then it would seem to include freezers just as much as milk dispensers.The Commissioner did not tax freezers prior to this amendment and thus, argues the taxpayer, should not tax milk dispensers now.The Government's answer is that a freezer is not designed nor suitable to do the work of a refrigerator, whereas the taxpayer's product is designed and utilized to do work which would otherwise be done by refrigerators.Although these arguments could stand closer scrutiny, it seems preferable to conclude that the entire legislative history cannot be relied upon to determine a result either way.

The Commissioner's regulations require brief mention only.The particular regulation involved here, reprinted in the margin,⁵ is not as helpful as some; in fact, it begs the question by defining a refrigerator as a refrigerator.

The basic problem is one of statutory construction and these rules are well settled.When the statute does not define the article taxed, then the descriptive word used must be accepted in its ordinary and everyday meaning.Herring Magic v. United States, 9 Cir., 258 F.2d 197, 198(9th Cir., 1958).The Courts have consistently held that "* * words of a statute should be presumed to be used in their ordinary and usual sense within the meaning commonly attributed to them, unless the contrary clearly appears."Commerce Pacific Inc. v. United States, 278 F.2d 651, 654(9th Cir., 1960), quoting fromHine v. United States, 113 F.Supp. 340 at 343, 125 Ct.Cl. 836(1953).See alsoCrane v. Commissioner, 331 U.S. 1, 6, 67 S.Ct. 1047, 91 L.Ed. 1301(1946);Bostitch v. United States, 164 F.Supp. 877, 878(D.C.R.I.1958).The taxpayer argues that the Commissioner himself has also followed substantially the same rules in construing other excise provisions.⁶However, in view of the rules previously mentioned, it need not be decided whether the Commissioner's manner of construing other provisions is binding upon the Government in the construction of this provision.

Before deciding whether a milk dispenser is a refrigerator, the meaning of the words "household refrigerator" should be explored.Webster's 3rd New International Dictionary defines a refrigerator as "* * * a cabinet or room for keeping food or other articles cool."⁷Illustrative of the definition, the dictionary shows a picture of the typical household refrigerator.The picture there presented, it would seem, is the image which would leap to the mind of the average person when the words "household refrigerator" were mentioned.Those words suggest a tall rectangular box which contains at the desired temperature such things as soft drinks, butter, eggs, leftovers, milk, ice cubes, and perhaps vegetables in a crisper.These articles and others are of varying shapes and sizes.Maximum utilization of space has dictated that the household refrigerator provide compartments of different sizes or shelves spaced at varying distances.In addition, extensive packaging of frozen foods has created a demand for at least some freezer space in the average household refrigerator.The taxpayer has introduced pictures of several household refrigerators.One is large; one is small.One has a separate freezer space; one does not.One late model has swing-out shelves, swing-out vegetable bins, a swing-out "butter conditioner," and a swing-out egg tray.This latter model can hardly be described as typical, but all of plaintiff's exhibits do have certain common interior characteristics: compartmentalization, a crisper, ice trays and some freezing space.

Taxpayer's evidence thus suggests that before an item is taxable as a household refrigerator, some or all of these minimum features must be present.To rebut this evidence, the Government offered a small refrigerating cabinet manufactured by the taxpayer called the Cold Bar.This item had none of the foregoing features but had been taxed as a refrigerator without protest by the taxpayer.However, this Court concludes that the four interior characteristics previously mentioned are elements basic to household refrigerators as those words are commonly and popularly used.To eliminate some of these elements might be permissible; to eliminate all would be fatal to the ordinary concept of a household refrigerator.

The question is finally reached: Is the taxpayer's Milk Dispenser a household refrigerator within the plain and ordinary meaning of those words?No evidence was produced that anyone, the manufacturer included, has ever described it as such.Cf.Herring Magic v. United States, 258 F.2d 197(9th Cir., 1958).In fact, there was evidence that the taxpayer's milk dispensers have never been referred to in the milk dispenser industry or in the retail appliance business as "refrigerators."

Putting aside the oral testimony, an examination of the characteristics of the Milk Dispenser reveals none of those elements previously found to characterize the familiar household refrigerator.It seems doubtful that any appreciable number of people on the street, housewives, or any other segment of the populace would consider this Milk Dispenser to be a household refrigerator within the plain and ordinary meaning of those words.If Congress had phrased this statute to tax "household refrigerating devices" or had used some other equally broad terminology, that would be another matter.But Congress was fairly specific; it taxed "household refrigerators."That, in the opinion of this Court, is unequivocal language.If plain and ordinary meanings are to be given to words, the statutory phrase must be held to exclude the taxpayer's Milk Dispenser.The Dairy Bar is not brought within the statute because of the simple addition of a small refrigerated space.To suggest otherwise would seem to strain common meanings.

Factors determinative of previous excise tax cases seem of equal importance in this case.In Bunton Co. v. Gray, 59-1 U.S.T.C., Par. 15,219 (W.D.Ky.1959), the Court asked whether the article named in the statute had "an...