State v. Grayson Lumber Co.
| Decision Date | 14 July 1960 |
| Docket Number | 6 Div. 231,6 Div. 232,6 Div. 233 |
| Citation | 122 So.2d 126,271 Ala. 35 |
| Court | Alabama Supreme Court |
| Parties | STATE of Alabama v. GRAYSON LUMBER COMPANY. ,, |
John Patterson, Atty. Gen., Willard W. Livingston and Wm. H. Burton, Asst. Attys. Gen., for appellant.
Cabaniss & Johnston, Lucien D. Gardner, Jr., and Geo. F. Maynard, Birmingham, for appellee.
Under the provisions of Title 51, Sec. 546, Code of Alabama 1940, Act No. 460, Gen.Acts of Alabama 1945, p. 693, the Revenue Department of the State of Alabama made final assessments against Grayson Lumber Company, Inc., in three separate cases, for privilege taxes due as a wholesale dealer in lumber. One case covered the fiscal period beginning October 1, 1954 and ending September 30, 1955; another, for the fiscal period beginning October 1, 1955 and ending September 30, 1956; and another for the fiscal period beginning October 1, 1956 and ending September 30, 1957.
Under the provisions of Sec. 140 of Title 51, Code of 1940, the three cases were appealed to the Circuit Court of the Tenth Judicial Circuit of Alabama.
It is admitted that the three cases are identical as to the law and facts, and differ only as to the fiscal period covered by the different assessments.
By agreement of the parties and with the consent of the trial court, the three appeals were consolidated and tried together in that court. After hearing the evidence ore tenus, the trial resulted in a decree of the lower court to the effect that the tax was not due. The state took appeals in all the cases by giving separate notices of appeal. The cases were docketed here as 6 Division 231, 232 and 233.
The three appeals were consolidated, argued and submitted here on one record, with the agreement of the parties that one opinion and decision would suffice for the three cases.
We will hereinafter refer to the parties as 'Grayson' and 'the state.' The facts, in material aspects, are not disputed.
During the years in question, Grayson operated a plant in the City of Birmingham consisting of a lumber yard and a planing mill, and for which privileges he procured a planing mill license under Sec. 614 of Title 51, Code of 1940, and a lumber yard license under Sec. 547 of Title 51, Code of 1940.
Grayson owned standing timber. He contracted with sawmill operators to cut the standing timber into logs, saw the logs into rough green lumber, and deliver the rough green lumber to his plant in Birmingham, Alabama. Title to the standing timber, the logs and the rough green lumber and the finished product of the planing mill at all times was, and remained, in Grayson until he sold it to the trade. So far as the record shows, the sawmill operators who cut Grayson's timber into logs and sawed it into rough green lumber and delivered it to Grayson in Birmingham paid a sawmill license under Sec. 585 of Title 51, Code of 1940, and Grayson did not at any time pertinent hereto purchase or own a sawmill license.
When the rough green lumber was delivered to Grayson's plant in Birmingham, it was green and rough, had not been trimmed, and had the rough and bark ends on it, and was not suitable in that form for the ordinary construction uses for which lumber is used.
The planing mill operated by Grayson consists of a resaw, multisaw, end trimmer, planer or matcher, molder and Canadian trimmer.
When the rough green lumber was received at Grayson's plant in Birmingham, it was run through the double end trimmer or multisaw trimmer, which trimmed the ends square, cut off bark or bad ends, and left each end at a 90 degree angle. The lumber was then graded, sorted and stacked for the purpose of being dried. A portion was dried by air, and the remainder kiln dried. After the lumber was dried, all of it (with exception of the oak lumber sold to Merit Oak Flooring Co.) was again run through the planing mill. Some of the lumber which was two inches thick was cut by the resaw into two pieces, each one inch thick. The rough lumber was finished by being dressed or planed into smooth lumber and the ends and sides being trimmed by the planer or matcher which produced the exact finished sides which are smaller than the rough sides. The finished lumber was then ready for ordinary construction use and was then either delivered to purchasers or stored in bins on the lumber yard for future sale.
Approximately 98 per cent of the lumber sold by Grayson was finished at the planing mill from rough lumber cut from timber owned by Grayson, and the remaining 2 per cent was lumber purchased from others. Included in this 2 per cent was west coast lumber, some of which was purchased in the rough state and some in the finished state, and all of which was purchased for the purpose of putting it in stock at the lumber yard. That which was purchased in the rough state was planed and dressed into the finished product at the planing mill.
There was testimony to the effect that the process by which the standing trees were converted into rough green lumber adds approximately 40 per cent to their value, and the process by which the rough green lumber is converted into finished product at the planing mill adds approximately 60 per cent to the value of the rough green lumber.
Approximately 85 per cent of the sales made by Grayson were to consumers from his lumber yard. Five per cent were made to wholesale dealers in lumber, 10 per cent were what Grayson termed or designated as accommodation or complimentary sales made to other lumber yards or made to a manufacturer who further processed the lumber.
All of the lumber included in the 5 per cent of sales made to wholesale lumber dealers was lumber made from timber owned by Grayson and which was received at his yard in the rough green state and which had been made into the finished product at Grayson's planing mill. Of the 10 per cent sold to other lumber yards or manufacturers, 7 or 8 per cent of the 10 per cent was what Grayson designated as complimentary or accommodation sales made to other lumber yards, and the remaining 2 or 3 per cent was oak lumber sold to Merit Oak Flooring Company, which was a manufacturer and which manufactured the same into oak flooring. All of the sales of oak lumber made by Grayson to Merit Oak Flooring Company was lumber made from timber owned by Grayson which was received at his plant as rough green lumber, and after being received was trimmed in the planing mill, sorted, stacked and dried before being sold to Merit Oak Flooring Company.
All the so-called complimentary or accommodation sales of lumber to other lumber yards was lumber which had been received by Grayson at his plant in the rough state and had been finished in the planing mill with the exception of a few sales of foreign wood purchased in a finished state which was so infinitesimal in amount that they were disregarded by the trial judge and were not referred to by the state in its brief.
Grayson was not a dealer in timber and did not sell timber.
The difficulty in resolving a case like the one presented by the record before us lies in the fact that we are called upon to determine the legislative intent in passing the statute involved. In the first place, one may do a legitimate business in Alabama without the procurement of a business license to do so, so long as the legislature does not see fit to require such a license. In the second place, it has long been the rule in this state that in construing taxing statutes which are of doubtful application, the taxpayer will be afforded the benefit of any doubt, and such statutes should be construed in favor of the taxpayer and against the state, State v. Holt, 34 Ala.App. 104, 38 So.2d 598, certiorari denied 251 Ala. 526, 38 So.2d 602; Jefferson County v. Great A & P Tea Co., 237 Ala. 103, 185 So. 766; National Linen Service Corp. v. State Tax Comm., 237 Ala. 360, 186 So. 478; Hill Grocery Co. v. State, 26 Ala.App. 302, 159 So. 269; State v. Downs, 29 Ala.App. 442, 197 So. 379.
Privilege tax laws should be based on a reasonable classification, and apply to all within the class. As disclosed by our statutes, the legislature has imposed a privilege tax on several classes, each of which is within what may be broadly termed the lumber industry. These statutes have been amended several times, and at present read as follows:
Sec....
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