Northwestern States Portland Cement Co. v. Board of Review of City of Mason City

• Decision Date: 08 April 1953
• Docket Number: No. 48258,48258
• Citation: 244 Iowa 720,58 N.W.2d 15
• Parties: NORTHWESTERN STATES PORTLAND CEMENT CO. v. BOARD OF REVIEW OF CITY OF MASON CITY.
• Court: Iowa Supreme Court

Page 15

58 N.W.2d 15

244 Iowa 720

NORTHWESTERN STATES PORTLAND CEMENT CO. v. BOARD OF REVIEW OF CITY OF MASON CITY.

No. 48258.

Supreme Court of Iowa.

April 8, 1953.

Ray E. Clough, of Mason City, for appellant and cross-appellee.

Smith & Beck, of Mason City, for appellee and cross-appellant.

BLISS, Justice.

We will refer to the Cement Company as the plaintiff and to the Board of Review as the defendant. The plaintiff operates a large plant in Mason City, Iowa, to manufacture Portland Cement. It owns a substantial amount of land underland with both limestone and clay which it quarries and excavates for use in the manufacture of cement in the plant located on this land.

On or about May 31st, 1951, the Assessor of Mason City, as of January 1st of that year, made an assessment for taxes against certain personal property of plaintiff, in which, with other kinds of property, all taxable as personal property, was a quantity of finished cement assessed in the sum of $22,173, and a quantity of raw material in the factory, in the process of being made into cement, which was assessed at $3,387, all as shown in Assessment Roll No. 2351.

At this time an assessment was also made against other personal property of plaintiff consisting of new machinery and equipment which it had installed in its main manufacturing plant or factory during the years 1949 and 1950, but which had not been assessed in either of those years. While it was personal property, under Code section hereinafter set out, it was required to be, and was, for the purposes of taxation, regarded as, and assessed as, real estate. As shown by Assessment Roll No. 2160, this new machinery and equipment was assessed at $297,344.

On June 18, 1951, plaintiff filed with the defendant Board a separate written protest against each assessment. As noted above, the first-mentioned assessment totaled $25,560. In its protest plaintiff stated that the assessment should have been $8,840, and that the over-assessment was $16,720. We will set out the basis for this claim of excessive valuation, as stated by plaintiff, hereinafter when we discuss it more fully.

In its protest against the assessment of the new machinery and equipment, there was no claim made that it was excessive, but it asked that it be cancelled as illegal and void, for the reason that, since under the statute the machinery used in a manufacturing establishment must be regarded as real estate for taxation purposes, the 'machinery and equipment referred to in said Assessment Roll No. 2160 was non-assessable for the year 1951 for the reason that the year 1951 was not a year in which real estate was listed and valued for taxation, and the same (machinery and equipment) neither constituted omitted real estate nor buildings erected since the previous assessment on real estate, as provided and defined by law'. The protest contained no other ground or objection.

The Board of Review denied each of the protests, and confirmed each of the challenged assessments. Plaintiff duly appealed to the district court from the ruling on each protest. On December 20, 1951, plaintiff filed its petition in the district court, and in division one thereof are found the allegations with respect to the assessment in Roll No. 2351, being the one against which plaintiff filed the protest first referred to herein. Commencing with paragraph 13 of the petition, it is alleged that: the assessment of $25,560 was 60% of the 100% valuation of $42,602 made by the assessor; the items of the finished cement, 184,780 barrels, clinker, 22,466 barrels, limestone, 16,105 tons, and clay, 29,391 tons; the assessor in his 1951 assessment valued the average inventories of plaintiff's finished cement and clinker each at twenty cents a barrel, the limestone at sixty cents a ton, and the clay in storage at forty cents a ton; the assessor arrived at these valuations by estimating the value of the clay and limestone entering into the finished cement and the goods in process at the time the same entered the primary crusher at plaintiff's manufacturing plant; that all such limestone and clay was acquired by plaintiff and was quarried and removed from the land which it had purchased in the vicinity of the plant, and was conveyed to the primary crushers by the plaintiff with its machinery and equipment, which was included in plaintiff's manufacturing machinery and equipment for the purpose of assessment for taxation and constituted a part of its manufacturing establishment; the average full and fair value of all such limestone and clay before the same was quarried, dug and removed from plaintiff's land was 5.42 cents per ton for the limestone, and 8.42 cents per ton for the clay, and that based on these values the average full and fair value of the clay and limestone which entered into plaintiff's average 1950 clinker inventory was 1.84 cents a barrel, and which entered into the average 1950 inventory of finished cement was 5.94 cents a barrel; the plaintiff acquired all of this land with its clay and limestone for the purpose of manufacturing cement; the plaintiff's process of manufacturing, for all purposes incident to the valuation and assessment of its personal property for taxation, commences with the digging and removing of the limestone and clay from its quarries and fields; the plaintiff's average inventories of finished cement and goods in process of manufacturing should be valued for assessment purposes under the laws of Iowa upon the basis of the value of the limestone and clay entering into such inventories before the same were quarried and removed by plaintiff from its limestone and clay fields, that is upon the basis of 5.42 cents per ton for limestone and 8.42 cents per ton for clay.

Based upon valuations determined in this way, plaintiff alleged in its petition that the barrels and tons of limestone, clay, and clinker, listed above were of a taxable or assessed value of but $8,840, instead of $25,560, the 60% valuation fixed by the assessor. Plaintiff so contends in this court, as it did in the district court, which confirmed the taxable valuation of the assessor and the order of the Board of Review.

Since the second protest of plaintiff, which challenged the assessment against the machinery and equipment in its factory made by the assessor, and which, after some adjustments, was fixed by the Board at $297,334, involves the construction of some tax statutes we think it well to here set out the pertinent parts of these statutes.

Section 428.4, Code 1950, I.C.A., provides: 'Property shall be taxed each year, and personal property shall be listed and assessed each year in the name of the owner thereof on the first day of January. Real estate shall be listed and valued in 1933 and every four years thereafter, and in each year in which real estate is not regularly assessed, the assessor shall list and assess any real property not included in the previous assessment, and also any buildings erected since the previous assessment, * * *.' (Italics ours.)

Section 428.20, Code 1950, I.C.A., is: "Manufacturer' defined--duty to list. Any person, firm, or corporation who purchases, receives, or holds personal property of any description for the purpose of adding to the value thereof by any process of manufacturing, refining, purifying, combining of different materials, or by the packing of meats, with a view to selling the same for gain or profit, shall be deemed a manufacturer for the purposes of this title (Taxation), and shall list such property for taxation.'

Section 428.21, Code 1950, I.C.A., is: 'Assessment--how made. Such personal property, whether in a finished or unfinished state, shall be assessed at the same ratio as provided in section 441.13 of its average value estimated upon those materials only which enter into the combination, manufacture, or pack, such average to be ascertained as in section 428.17.'

Section 428.22, Code 1950, I.C.A., is: 'Machinery deemed real estate. Machinery used in manufacturing establishments shall, for the purpose of taxation, be regarded as real estate.'

We have already stated the basis of plaintiff's protest to the Board against the assessment of new machinery and equipment placed in the manufacturing plant. This new machinery and equipment costing approximately a million dollars was installed in 1949 after January 1st, and in 1950. For the purpose of taxation it was regarded as real estate, as provided in section 428.22, supra. These matters are conceded by both parties.

The year 1949 was the year for assessing real estate. Since the new machinery and equipment was not in the plant 'as of January 1st', no part of it was assessed as real estate in 1949. The installation was completed in 1950 but none of this property was assessed in that year. In 1951, since this new machinery and new equipment was deemed real estate for taxation, it was assessed as provided in the italicized lines in the copy of section 428.4, supra, as 'any real property not included in the previous assessment'. It was the position of the plaintiff before the Board and the trial court, and is on this appeal, that this property was assessable only in the years in which real estate was regularly assessed, and that it could not be assessed in any other year, since it was not in fact, 'real property'. For this reason plaintiff insists that the assessment in 1951 be cancelled, in its entirety, as invalid.

The trial in the suit was begun in the district court on March 10, 1952 and after submission on written briefs and arguments, was orally argued on April 2, 1952, and submitted to and taken under advisement by the court. On June 16, 1952, the district court, of its own volition, and without any suggestion, motion, or application on the part of either party, reopened the case, as stated by the court, for 'additional testimony taken for the purpose of acquainting the court with how much of the machinery out at the plaintiff's plant...