Pineland Bag Corp. v. Riley

• Decision Date: 29 March 1926
• Docket Number: 25613
• Citation: 107 So. 554,142 Miss. 574
• Court: Mississippi Supreme Court
• Parties: PINELAND BAG CORPORATION v. RILEY, AUDITOR. [*]

107 So. 554

142 Miss. 574

PINELAND BAG CORPORATION v. RILEY, AUDITOR. ^[*]

No. 25613

Supreme Court of Mississippi

March 29, 1926

Division A

TAXATION. Factory, merely making lags from kraft paper, made by another from wood pulp, held not exempt (Laws 1922, chapter 138 section 1).

Factory merely making paper bags from kraft paper, made by another from wood pulp, is not within Laws 1922, chapter 138, section 1, exempting from taxation new factories for making paper or paper products out of "wood pulp, cotton stalks, or other material;" rule of ejusdem generis applying.

HON. W H. POTTER, Judge.

APPEAL from circuit court of Hinds county, first district, HON. W. H. POTTER, Judge.

Petition for mandamus by the Pineland Bag Corporation against George D. Riley, State Auditor. Demurrer to petition was sustained, and petition dismissed, and petitioner appeals. Affirmed.

Affirmed.

Wm. M. Colmer and Scott & Scott, for appellant.

This cause is controlled by chapters 138 and 139, Laws of 1922, providing for the exemption of certain factories and industries in this state for a period of five years. We call attention to the particular portion of said act under which the appellant claims the right of this exemption: "All factories for making paper or paper products out of wood pulp, cotton stalks or other material."

It is upon the construction of this section of the law that our right to the exemption stands or falls, of course, construed with reference to the entire chapter. It is our contention more specifically that the legislature intended to exempt factories manufacturing paper or paper products out of cotton, stalks, wood pulp and other materials, even though that "material" might be paper. Why can it be argued with reason that the legislature did not mean this? We know as a matter of fact that paper is manufactured from wood pulp, cotton stalks, paper, rags, rice straw and a large number of other materials. Could it be argued with reason that it was not the intention of the legislature to encourage factories to locate in Mississippi which would manufacture paper out of old paper, rags, or some other material. We know as a matter of fact that paper products are manufactured from paper and other materials. It is our contention that the words "other material" cover Kraft paper.

If any significance whatever is to be given to the words "paper products" in the statute, significance must also be given to the words "other material."

We are not unmindful of the rule of strict construction in exemption statutes, requiring that in cases where ambiguous language is used and there are reasonable and well-founded doubts as to the intention of the legislature, such doubts must be resolved in favor of the state and against the would-be exemptors. But can it be argued successfully that there is such a reasonable doubt here as to the meaning of the legislature as to resolve that doubt in favor of the state. 37 Cyc. 894; L. & N. R. R. Co. v. Gaines. (C. C.), 2 F. 266, 2 Flip. 621; 10 A. L. R. 1276.

Coming back to the contention of appellee that "other material," as used in the statute here, cannot mean paper, we desire to cite Washburn v. City of New Orleans, 9 So. 37, holding that wood shucks are articles of wood and that a factory manufacturing such wood shucks was entitled to an exemption from taxes under the constitutional provision providing for exemption of factories manufacturing shoes, harness, furniture, and other articles of wood.

Rush H. Knox, Attorney-General and Harry M. Bryan, Assistant Attorney-General, for appellee.

The sole question presented is whether appellant upon the showing made in its petition for exemption filed with the state auditor is entitled thereto under chapters 138 and 139, Laws of 1922. That is, whether or not appellant is, in truth and fact, that kind of industry comprehended by the terms of the above acts.

The petition of appellant for exemption very frankly states that it does not manufacture paper bags from wood pulp or cotton but that they are manufactured from paper which is purchased from other factories which have theretofore reduced it from wood pulp. It is the contention of appellant that the words "other materials" in the statute comprehend "kraft paper." It is my contention that to so construe the statute would be to credit the legislature with an absurdity because in that case, the sentence here for construction would be made to read. ". . . all factories for making paper or paper products out of wood pulp, cotton stalks, or paper." I cannot construe the statute as meaning that factories which purchase paper already manufactured by others from wood pulp may secure exemption because of the fact that they are making therefrom a finished product, such as bags. If so, with equal force could it be argued that all persons and corporations making stationery, envelopes, etc., etc., from paper bought from others would be entitled to exemption.

The use of the words "wood pulp and cotton stalks" immediately preceeding "and other materials" gives, together with the words forming the subject of the clause, the positive idea that they were so used by the legislature in the sense of developing manufactures from raw products. It cannot be denied that wood pulp and cotton stalks are raw products. The utilization of these raw products has come to be known only in comparatively recent years. Did the legislature intend that all persons and corporations in Mississippi who simply took paper and by the process of changing its shape, size or color could therefore be exempt? The idea of development from the raw state is the warp and woof of this particular clause which we are examining, else it would have been wholly unnecessary to specify wood pulp, and cotton stalks at all. The words "from any materials" would have served the purpose. See Greenville Ice & Coal Co. v. City of Greenville. 69 Miss. 86, 10 So. 574; Currie-Finch Brick & Lumber Co. v. Miller, Auditor of Public Accounts, 123 Miss. 850, 86 So. 579.

It is our understanding of the law governing exemptions that the would-be exemptionist must so clearly show his right to it that there can be no reasonable doubt. I do not mean by this that there must be a strained construction. I do not mean that either the statute under which it is sought must grant the exemption in express words or else there is such implication as will admit of no doubt whatever. The moment a reasonable doubt arises as to whether a given statute grants exemption, that doubt, under the rulings of this court, must be resolved in favor of the taxing authority. New Standard Club v. McGowen, 111 Miss. 92, 71 So. 289, Ann. Cas. 1918E, 274; Morris v. Riley, Auditor, 99 So. 466; Adams County v. Nat'l Box Co., 88 So. 168, 125 Miss. 598.

The lower court did not err when it sustained the demurrer of appellee, held that petitioner was not entitled to the exemption and dismissed the petition. We ask that the cause be affirmed.

Scott & Scott, in reply, for appellant.

Counsel has staked his entire case very largely on the rule ejusdem generis. We submit, however, that this rule has no application. The fundamental error made by counsel is in supposing that wood pulp is a raw material and similar to cotton stalks. See Volume 18 of the New International Encyclopedia, pp. 18-23, a treatise on paper showing that wood pulp is manufactured by a chemical process from wood. On page 19 under the heading "Raw Materials" wood pulp is not listed. On the other hand, cotton stalks are similar to the trees out of which wood pulp is made. There is as much likeness between kraft paper and wood pulp as there is between wood pulp and cotton stalks. The very essence of the rule ejusdem generis is that general words following the enumeration of specific subjects are generally restricted to subjects similar in kind to those specifically enumerated, unless the intention of the legislature to the contrary seems evident. When it is seen, therefore, that wood pulp is not a raw material, appellee's theory fails. See 25 R. C. L., sec 240; Jones v. State (Ark.), Ann. Cas. 1914C 302, and note; McReynolds v. People, 230 Ill. 623, 82 N.E. 945. In this case the difference between the materials specifically enumerated is the difference between a raw material and a manufactured product, and there is less difference between kraft paper and wood pulp than there is between wood pulp and cotton stalks.

Another mistake counsel makes is in giving more importance to the materials than the subjects to which the exemption was intended. There are two subject-matters here; to-wit, paper or paper products. Some meaning must be given to the subject paper products. If the construction contended for by appellee is correct, then it would have been idle for the legislature to have inserted the words "paper products" because if a factory makes paper, it would be entitled to the exemption; and if the legislature had simply provided an exemption for factories making paper, this would have been sufficient to exempt factories making paper and any kind of paper products. Therefore, it was useless to add the words paper products. The legislature must have intended by the use of these an exemption for a factory which did not manufacture paper but simply manufactured a paper product.

In Greenville Ice & Coal Co. v. City of Greenville, ...