State v. Joe H. Brady & Associates

• Decision Date: 12 April 1956
• Docket Number: 6 Div. 961
• Citation: 264 Ala. 397,87 So.2d 852
• Court: Alabama Supreme Court
• Parties: STATE of Alabama v. JOE H. BRADY & ASSOCIATES.

Page 852

87 So.2d 852

264 Ala. 397

STATE of Alabama v. JOE H. BRADY & ASSOCIATES.

6 Div. 961.

Supreme Court of Alabama.

April 12, 1956.

Rehearing Denied June 14, 1956.

John Patterson, Atty. Gen., and Willard W. Livingston and Jas. R. Payne, Asst. Attys. Gen., for appellant.

Pritchard, McCall & Jones, Birmingham, for appellees.

MERRILL, Justice.

This is an appeal by the state from a final decree of the Circuit Court of Jefferson County, in Equity, vacating and setting aside a sales tax assessment made by the State Department of Revenue against the appellees.

The sole question for our determination is whether the Alabama sales tax applies to sales by the appellees of McCulloch 'power chain saws' to various consumers or users who employ said saws in a manner hereinafter described.

The appellees contend that such sales are exempt from the sales tax by the provisions of Title 51, § 755(p), Code of Alabama, 1940 as amended, which, as pertinent here, reads:

'There are however exempted from the provisions of this article and from the computation of the amount of the tax levied, assessed or payable under this article the following: * * * (p) The gross proceeds of the sale of machines used in mining, quarrying, compounding, processing and manufacturing of tangible personal property; provided that the term 'machines,' as herein used, shall include machinery which is used for mining, quarrying, compounding, processing or manufacturing tangible personal property, and the parts of such machines, attachments and replacements therefor, which are made or manufactured for use on or in the operation of such machines and which are necessary to the operation of such machines and are customarily so used.'

The appellant contends that the provisions of the above quoted section are not applicable because the chain saws here involved are used for the purpose of obtaining raw material which is subsequently used in manufacturing; that the saws are not used to manufacture anything; and that the users or consumers of the saws are not manufacturers or processors but are 'loggers' or 'woodsmen'.

The appellant concedes that the saws involved are machines, thus the question resolves itself to the issue of whether they are used in 'processing' or 'manufacturing' as those words are used in Title 51, § 755(p), supra.

The evidence which was heard ore tenus by the judge consisted of the testimony of two witnesses for the appellees. Their testimony reveals that these power chain saws are portable machines which weigh about 25 pounds and are operated by one man. The owner or operator of the saw, who normally is either an independent contractor or an employee of a lumber mill or a paper mill, receives an order for a certain number of logs the lengths of which are usually specified. The number of logs he is able to secure from a single tree depends upon the size of log desired, and, of course, the size of the tree. He may make as many as 15 'cuts' on a tree, exclusive of the 'cuts' required to remove the limbs, and thus acquire 14 logs. The logs are then transported by various means to a lumber mill or paper mill to be made into lumber or paper.

In the case of State v. Try-Me Bottling Co., 257 Ala. 128, 57 So.2d 537, 539, this court stated:

'The words manufacturing, processing and compounding are used disjunctively in the statute and are evidently intended to have a broad and all inclusive meaning. There is no attempt in the statute to limit or qualify their meaning. In other words, the three words so used are intended to cover all the operations or processes by which the finished or ultimate product has been integrated from elements originally diverse in their forms.'

Does the usage of the saws in the manner above outlined constitute an operation or process 'by which the finished or ultimate product has been integrated from elements originally diverse in their forms'? We are at the conclusion that it does not. The end product derived from the operation of these saws is logs. Logs are not, in a proper sense, a finished or ultimate product nor a manufactured product. Logs are raw material from which is manufactured the finished or ultimate product, which, in this case, is either lumber or paper.

Black's Law Dictionary, Fourth Edition, page 1092 defines logs as:

'Stems or trunks of trees cut into convenient lengths for the purpose of being afterwards manufactured into lumber of various kinds; not including manufactured lumber of any sort, nor timber which is squared or otherwise shaped for use without further change in form.'

A definition substantially the same as the one above quoted is found in 54 C.J.S., Logs and Logging, § 1a:

'A log is the trunk of a tree cut down and stripped of its branches, or the stem or trunk of a tree cut into different lengths for the purpose of being manufactured into timber of various kinds. The word 'logs' does not include trees, manufactured lumber of any kind, or timber which is squared or otherwise shaped for use without further change in form.'

In the case of Mitchell v. Page, 107 Me. 388, 78 A. 570, 571, the court in ascertaining the meaning of the word 'lumber' as used in a lien statute then under consideration, stated:

'The word 'lumber' in its broadest use includes both the manufactured and the unmanufactured product. We speak of a lumber dealer, meaning a dealer in manufactured lumber, and again of a lumber operator, having reference to the man who cuts, fells, and hauls the trees, and the verb 'to lumber' is usually confined to the latter meaning.

'While, therefore,...