State v. Holly Sugar Corporation

• Decision Date: 19 September 1941
• Docket Number: 2185
• Citation: 57 Wyo. 272,116 P.2d 847
• Parties: STATE v. HOLLY SUGAR CORPORATION ET AL
• Court: Wyoming Supreme Court

116 P.2d 847

57 Wyo. 272

STATE v. HOLLY SUGAR CORPORATION ET AL

No. 2185

Supreme Court of Wyoming

September 19, 1941

APPEAL from the District Court, Laramie County; SAM M. THOMPSON Judge.

Action by the State of Wyoming against the Holly Sugar Corporation and another, to recover amounts alleged to be due under the Selective Sales Tax Act of 1937 together with accrued penalties, interest and costs. From a judgment for the defendants, the State appeals.

Reversed.

For the appellant there was a brief by Ewing T. Kerr, Attorney General; Harold I. Bacheller, Deputy Attorney General; and Arthur Kline, Assistant Attorney General, all of Cheyenne Wyoming, and oral argument by Arthur Kline.

The action is brought to recover sales tax upon transportation of sugar beets, lime rock and beet pulp transported by the Union Pacific Railroad Company for Holly Sugar Corporation, claimed to be due under Section 4 (b) of the Selective Sales Tax Act. The case was tried upon an agreed statement of facts. The amount claimed to be due is $ 3,470.20. The legislature did not intend to exempt a purchase of transportation under the first paragraph of Section 2 (f). Courts will attempt to ascertain the intention of the legislature in construing a statute. State ex rel. Murane v. Jack, 52 Wyo. 173; Gale v. School District, 49 Wyo. 384; Houghton Bros. v. Yocum, 40 Wyo. 57; Burton v. Union Pacific Coal Co., 18 Wyo. 362. The same rule will be applied to amendments of a statute. Fidelity & Guaranty Co. v Anderson, 38 Wyo. 88. Service is not exempt from taxation. State Board of Equalization v. Stanolind Oil and Gas Company, 51 Wyo. 237; State v. Capital Coal Company, 54 Wyo. 176. The mere fact that the cost of transportation of sugar beets and lime rock is a part of the total cost of the sugar beets and lime rock at the Torrington factory does not exempt such transportation from the sales tax. It will be presumed that some change was intended by an amendment. Equitable Life Assurance Soc. v. Thulemeyer, 49 Wyo. 63; United States v. Southern Pacific Company, 230 F. 270. Such change was intended by substituting the word "service" for the word "product." It is the duty of the court to ascertain the intent of the statute. Board of Commissioners v. Blakely, 20 Wyo. 259. The misconstruction of the intent of the statute will not excuse defendants from payment of a penalty and interest in this case.

For the respondents, there was a brief by John C. Pickett and John U. Loomis of Cheyenne and Erle H. Reid of Torrington, and oral arguments by Messrs. Pickett and Reid.

The 1935 Sales Tax Act was adopted from Utah. The Supreme Court of that state has since construed the Act as a tax on a transaction. State Tax Commission v. City of Logan (Utah) 54 P.2d 1197; Jensen Candy Co. v. State Tax Commission, 61 P.2d 629; Union Stock Yards v. State Tax Commission, 71 P.2d 543. This court in State Board of Equalization v. Stanolind Oil and Gas Company, 51 Wyo. 237 held that transportation was not taxable under the Act. Appellant therefore argues that the omission of the word "service" from the 1937 Act shows an intention that transportation be taxable. State v. Capitol Coal Co., 54 Wyo. 176. The substitution of the word "product" in the 1937 Act does not change the rule. The case of Bedford v. Fuel and Iron Company (Colo.) 81 P.2d 752 differs from the present case on the facts. Moreover, the Colorado Court misconstrued the decision of this court in State Board v. Oil Well Supply Co., 65 P.2d 1093, since the 1937 Act was not an amendment of the 1935 Act. The cost of transportation of raw materials to a factory to be used in manufacturing, and the cost of feed for livestock, is part of the purchase price of such raw materials and exempt from the tax provided for in the Act of 1937. The agreed statement of facts concedes that transportation was a part of the actual cost of manufacturing sugar. The Act of 1937 exempts each purchase of tangible personal property by persons engaged in manufacturing, compounding for sale, profit or use, any article entering into and made a part of the product which he manufactures. The tax is erroneously levied under Section 4 (a) of the Act. It was the intent of the legislature to avoid this taxation. Transportation of raw materials to the place of manufacture is a part of the cost thereof. State Board v. Oil & Gas Company, 51 Wyo. 237; State v. Capitol Coal Co., 54 Wyo. 176; Franzen v. Southern Surety Company, 35 Wyo. 15; Illinois Surety Company v. Davis Company, 244 U.S. 376; American Liability & Surety Co. v. Bluefield Supply Co., 70 F.2d 187; Bank & Trust Co. v. Bonding and Insurance Company, 68 F.2d 445; Casualty Company v. Ohio Gravel Company, 20 F.2d 514; Nye-Fowler Co. v. Bridges Company (Nebr.) 151 N.W. 942; West Jersey Co. v. County (N. J.) 135 A. 74; Stimson Mill Co. v. Ferguson Co. (Wash.) 170 P. 573; Southwestern Electrical Co. v. Hughes (Kans.) 30 P.2d 114; Indemnity Company v. Portsmouth (Ohio) 172 N.E. 152; Lumber Co. v. Bosworth (Calif.) 180 P. 60; Gee Coal Co. v. Department of Finance (Ill.) 197 N.E. 871. Defendant Sugar Company relied upon the decision of the District Court of Laramie County, and of this court rendered in the case of State Board of Equalization v. Stanolind Oil and Gas Company, 51 Wyo. 237, and withheld the tax in good faith and not from a wilful disregard of the Act, and for those reasons defendants ought not to be penalized for a justifiable assertion of their rights.

RINER, Chief Justice. KIMBALL and BLUME, JJ., concur.

OPINION

RINER, Chief Justice.

This action arose in connection with the administration by the State Board of Equalization of the Selective Sales Tax Act of 1937, (Laws of Wyoming, 1937, Chapter 102.) The defendants declined to pay certain amounts claimed by said Board to be due the State of Wyoming under said Act, and this action was brought by the commonwealth to recover these amounts, together with accrued penalties, interest and costs. The plaintiff below, appellant here, will usually be referred to hereinafter as "the State" or the "plaintiff". The two respondents, defendants below, Holly Sugar Corporation and The Union Pacific Railroad Company, will be subsequently mentioned, the former as the "Sugar Company" and the latter as the "Railroad Company". The action was prosecuted unsuccessfully in the district court of Laramie County, and the Attorney General of the State of Wyoming and his assistants have brought the case here for review by direct appeal.

The facts material to be considered may be outlined as follows: The action aforesaid was instituted to recover claimed taxes in certain amounts listed in plaintiff's petition, upon the transportation of sugar beets, limerock and beet pulp carried by the Railroad Company for the Sugar Company, the transportation charges being paid by the latter to the former. These taxes are asserted to be due under Section 4 (b) of said Act, which, laying aside the language non-pertinent at present, reads:

"From and after the effective date of this Act, within the limitation herein set out, there is hereby levied and there shall be collected and paid:

"(b) An excise tax equivalent to two per cent. (2%) * * * * of the amount paid: (1) to carriers, * * * * for all transportation, * * * *."

The two respondents assert that the amounts paid the Railroad Company for transportation must be regarded as wholesale sales and so exempt from taxation under certain provisions of the first and third paragraphs of Section 2 (f) of said Act, which respectively contain the following language:

"(f) Each purchase of tangible personal property or product made by a person engaged in the business of manufacturing, compounding for sale, profit or use, any article, substance or commodity which directly enters into and becomes an ingredient or component part of the tangible personal property or product which he manufactures or compounds, or the furnished container, label, or the shipping case thereof, shall be deemed a wholesale sale and shall be exempt from taxation under this Act. * * * *

"For the purpose of this Act, all purchases of livestock, feeds for use in feeding livestock or poultry for marketing purposes, * * * * are deemed to be wholesale sales, exempt from taxation under this Act."

Section 2 (1) of the Act aforesaid contains also this definition:

"(1) The term 'tangible personal property' means personal property which may be seen, weighed, measured, felt, touched, or is in any other manner perceptible to the senses."

The cause was tried upon stipulated facts, and essentially these were: Between April, 1937, and September, 1939, inclusive the Railroad Company transported and delivered to the Sugar Company certain shipments of sugar beets and limerock, for which the latter paid to the former, as above described, stated sums of money; that during that period beet pulp, a by-product created by the manufacture of sugar from sugar beets and used only for livestock feed, to employ the precise language of the agreed facts, "was loaded in railroad cars at the pulp press at the factory of the defendant Holly Sugar Corporation, near Torrington, Wyoming, and shipped to farmers and livestock feeders within the State of Wyoming; that the sugar beet pulp is sold at a fixed price and the cost of the transportation of the same is added to the price of the beet pulp and paid by the defendant, Holly Sugar Corporation, when shipped and later collected from the purchaser of said beet pulp; that said transportation charges are paid by the defendant, Holly Sugar Corporation, for the convenience of the purchasers of said pulp; that all of the beet pulp hereinabove described was shipped to purchasers thereof and was used in feeding livestock for marketing purposes only; that...