Rust Engineering Co. v. State

• Decision Date: 04 February 1971
• Docket Number: 3 Div. 401
• Citation: 286 Ala. 589,243 So.2d 695
• Parties: The RUST ENGINEERING CO., a Corp. v. The STATE of Alabama.
• Court: Alabama Supreme Court

Page 695

243 So.2d 695

286 Ala. 589

The RUST ENGINEERING CO., a Corp. v. The STATE of Alabama.

3 Div. 401.

Supreme Court of Alabama.

Feb. 4, 1971.

Engel & Smith, Mobile, for appellant.

MacDonald Gallion, Atty. Gen., and Willard W. Livingston, Counsel, Dept. of Revenue and Asst. Atty. Gen., and William H. Burton, Asst. Counsel, Dept. of Revenue, and Asst. Atty. Gen., for the State of Alabama.

PER CURIAM.

This is an appeal from a final decree of the Circuit Court of Montgomery County, In Equity, upholding the final assessment of deficiency sales tax in the total amount of $26,425.39, which was made by the State Department of Revenue against appellant in this cause.

This case arises out of a contract which appellant had with the State Docks Department of Alabama to construct an export grain elevator in Mobile, Alabama. The provisions of the contract will be hereinafter set out in detail.

There are thirteen Assignments of Error.

Most of the argument in brief is directed to the finding and ruling of the court that 'The Appellant, as an independent contractor, and not as an agent for the State Docks Department purchased the materials, etc., which it used to perform the contract in this case, and is the person on whom the sales tax fell.' (Assignments of Error 1, 2, 3, 4, 5, and 11) Three of the assignments are not argued, 6, 7, and 8.

Assignments of Error 12 and 13 are based on an objection to portions of a deposition, offered by appellee and the court's refusal to exclude the same. We will consider these last two assignments. The deposition taken of J. B. Finley, the Secretary and Treasurer of Turner Supply Company of Mobile, Alabama, was offered by the state. Sales were made of the various items to Rust Engineering Company and delivered to the State Docks job. They were paid by the Rust Company for all of these sales. Thereafter, the witness was asked if any of the accounts for material sold by his company ever went bad. The objection to this question was overruled and the witness indicated that sales to Birmingham Maintenance and Mechanical Contractors, a subcontractor of Rust, failed to pay for purchases sold and delivered to it; also that the said subcontractor filed proceedings in voluntary bankruptcy. The witness, after filing its claim in the Bankruptcy Court, called one of the employees of the State Docks Department and requested payment of the account. It was refused.

Appellant made the objection to this part of the deposition that it was 'incompetent, irrelevant and immaterial, and it is not shown that the materials furnished to were furnished on this particular contract. * * *. The proper predicate has not been laid * * *.' We hold the trial judge properly admitted the evidence and ruled without error in refusing to grant the motion to exclude. The sales company had sold and delivered the merchandise to the subcontractor. On receiving notice of the bankruptcy, a claim was filed. Thereafter, an effort was made to see if the State Docks Department would reimburse the supplier. Certainly, they knew where the goods were delivered. This was a collateral matter and no predicate was required. The evidence was clearly within the issues formulated by the pleadings. Moreover, the same, almost identical, evidence was offered in the second deposition. Deposition of Charlton M. Dukes was offered and read. He was the Secretary and Treasurer of a hardware dealer in Mobile. They had sold supplies to the Rust Company for use in the construction of the Docks project. Rust had paid the supplier. The witness then stated his company sold supplies to Birmingham Maintenance and Mechanical Contractors. He was then asked about the bankruptcy proceedings of this subcontractor. Also, the following:

'Q Did you make a demand on the State Docks for the account?

'A Yes, I did but they wouldn't accept it.

'Q They would not pay it?

'A No.'

Counsel for appellant then stated:

'* * * I object to this question on the grounds it is incompetent, irrelevant and immaterial and the proper predicate has not been laid, and it is not shown that this is an authorized account for this project.'

The Court stated:

'Unless it is shown the Court sustains it.'

There were further questions and remarks between counsel and the court stated further:

'I'm going to let you read it. But my ruling is this, it is connected with this project that I sustain his objection.'

The deposition was finally accepted as evidence and appellant's counsel excepted.

This ruling is in no way made a part of this appeal. There is no assignment of error in any way presenting this ruling, and no argument relating to the reception of the deposition.

While we have indicated that the rulings of the court on the admissibility of the first deposition (Finley) was without error--but should it be assumed to be otherwise--it is harmless error for the trial court to exclude evidence when such evidence was admitted at another time and in another form. Supreme Court Rule 45. Assignment of Error 9.

Assignment of Error 9 recites:

'9. The trial court erred in not holding that the original contract dated June 24, 1964, as well as all documents referred to on the face of the June 24, 1964, document, including the contract for Special Management Services dated July 8, 1964, constituted a part of the entire contract and must be construed together to ascertain and give effect to the intention of the parties.'

This is another way of saying that the decree, holding to the contrary, was error. It will, therefore, be considered along with Assignments of Error 1 through 9 and 11.

Assignment of Error 10.

Assignment of Error 10 is quite lengthy. Essentially, it questions the sufficiency of the evidence in certain particular aspects to support the decree. All of these matters are considered in the decree here appealed from which is hereinafter set out and approved by us. No need, therefore, arises to further consider this assignment.

Assignments of Error 1, 2, 3, 4, 5, 9, and 11.

We here set out the final decree which reads as follows:

'FINAL DECREE

'This cause came on to be heard and was submitted upon pleadings and proof, consisting of the oral testimony of several witnesses and a number of exhibits, as have been noted.

'It is an appeal taken by the Appellant to this court under the provisions of Title 51, Section 140, Code 1940, Recompiled 1958, from a final assessment of deficiency sales tax made by the State Department of Revenue against the Appellant on January 17, 1968, for the period August 1, 1964, through June 30, 1967, and in the total amount of $26,425.39, including tax, penalty and interest computed to the date of the assessment. Under the provisions of said appeal statute, the Appellant has filed a timely and proper appeal from said final assessment to this court.

'Broadly stated, the Appellant contends that the State Sales Tax cannot be legally imposed upon it, inasmuch as it was allegedly the authorized agent of the Alabama State Docks Department, and in such capacity, it purchased and furnished the materials and supplies, which it used to construct a grain elevator for said Department at the State Docks in Mobile. This was contended to be true because, among other things, that he title to the materials and supplies was said to vest immediately in the Alabama State Docks Department, as an agency of the State of Alabama, upon the purchase thereof from the vendors. Thus, it was contended that the Alabama State Docks Department as an agency of the State of Alabama, was allegedly the real purchaser of the materials and supplies used in the construction of the grain elevator facilities, and it, not the Appellant, actually paid for or risked its credit in purchasing the materials, etc. from the suppliers. Therefore, under the sovereign immunity doctrine the Appellant was said not to be subject to the State Sales Tax. For said reasons, the Appellant insists that said final assessment was not lawfully and validly made and is void.

'On the other hand, the Appellee in answer to such contentions generally denies them. It also specifically denies that there was an agency relationship between the Alabama State Docks Department and the Appellant, and, to the contrary, asserts that the Appellant was an independent contractor and not an agent of the State in purchasing the materials and supplies from the vendors. This was said by the Appellee to be especially true as the actual facts are said to show that the Appellant paid for the materials with its own funds, and by checks drawn on its own private bank account, and as it took possession of them upon delivery, and used them in performing the contract and in earning the 'lump sum' consideration thereunder. The Appellee also alleges that the tax was properly applied to the Appellant as an independent and private contractor, and that the final assessment of sales tax which is the subject of the appeal was validly, lawfully and correctly made against the Appellant.

'The situation here involved is not very different from many of the cases involving the same questions in regard to contractors performing cost-plus and other contracts with the Federal Government. Moreover, the decisions of both the State and the Federal Courts in resolving such questions as they relate to the Federal Contractors, would also appear to be very applicable here. See Associated Contractors v. Hamm, 277 Ala. 500, 172 So. (2d) 385, Alabama v. King & Boozer, 314 U.S. 1, 62 S.Ct. 43, (86 L.Ed. 3) among others.

'The Appellant is very clearly a private corporation organized under laws of the State of Pennsylvania, and with its principle offices and place of business located in Pittsburgh, Pennsylvania. It has, however, a branch office and place of business located in Birmingham, Alabama. It is engaged primarily in the business of doing engineering and construction work throughout the United States, and has or has had several contracts for such work in...