Stone v. Sullivan

• Decision Date: 10 February 1967
• Citation: 154 Conn. 498,227 A.2d 76
• Court: Connecticut Supreme Court
• Parties: Larry STONE v. John L. SULLIVAN, Tax Commissioner of the State of Connecticut.

Page 76

227 A.2d 76

154 Conn. 498

Larry STONE v. John L. SULLIVAN, Tax Commissioner of the State of Connecticut.

Supreme Court of Connecticut.

Feb. 10, 1967.

Ralph G. Murphy, Asst. Atty. Gen., with whom, on the brief, were Harold M. Mulvey, Atty. Gen., and Walter T. Faulkner, Asst. Atty. Gen., for appellant (defendant).

Lawrence W. Kanaga, Bridgeport, with whom, on the brief, was Bernard S. Peck, Bridgeport, for appellee (plaintiff).

Before KING, C.J., and ALCORN, HOUSE, THIM and RYAN, JJ.

KING, Chief Justice.

This case is concerned with the extent of the plaintiff's liability for the unincorporated business tax. General Statutes §§ 12-269-12-284. The tax is imposed, with exceptions not involved in this case, on the annual gross imcome or receipts of each taxpayer subject thereto. The rate on a manufacturing business and that on a retail mercantile business is the same but is approximately four times that on a wholesale mercantile business.

The facts of this case, as set froth in the appeal petition and admitted by demurrer, include the following: In the years 1962, 1963, and 1964, the plaintiff, doing business as the Chicago Beef and Provision Company, was subject to the unincorporated business tax. His business 'consisted of buying sides of beef and other large portions of meat, dividing them into their constituent parts, and selling these parts to consumers, retailers, and jobbers.' The plaintiff paid his tax at the higher (retail) rate on his retail sales to consumers and at the lower (wholesale) rate on his wholesale sales to jobbers and retailers who purchased for resale.

The defendant tax commissioner assessed a deficiency against the plaintiff on the ground that the division of animal carcasses into their 'constituent parts' fell within the statutory definition of manufacturing and, therefore, that the plaintiff's entire gross income was derived from manufacturing, regardless of whether the manufactured product was sold at wholesale or retail. On this theory, the commissioner taxed the entire gross income at the higher rate. ¹ The assessment was affirmed upon administrative review, but the plaintiff did not pay it. Instead he appealed to the Court of Common Pleas, seeking a correction of the defendant's assessment by the cancelation of the increase which the defendant had made. General Statutes § 12-282. That court overruled the defendant's demurrer to the plaintiff's appeal petition and, upon the defendant's failure to plead over, rendered judgment for the plaintiff. The defendant took this appeal from that judgment.

The burden of proving that the assessment was erroneous was on the plaintiff. General Statutes § 12-282; see cases such as Curly Construction Co. v. Town of Darien, 147 Conn. 308, 310, 160 A.2d 751; Thaw v. Town of Fairfield, 132 Conn. 173, 179, 43 A.2d 65, 160 A.L.R. 679. But, if the allegations of the appeal petition are broad enough to permit evidence showing that the controversial portion of the plaintiff's business was not manufacturing under the statutory definition, the demurrer was properly overruled. In other words, unless the allegations of the appeal petition show, as a matter of law, that the plaintiff is engaged in manufacturing, rather than in a wholesale mercantile business, under the respective statutory definitions as hereinafter quoted, the court was correct in overruling the defendant's demurrer. Cyr v. Town of Brookfield, 153 Conn. 261, 263, 216 A.2d 198.

'Manufacturing' is defined in General Statutes § 12-269 as 'the making or changing of articles or material into suitable forms for use or consumption for profit or gain, or repairing, renovating or cleaning property for profit or gain'. Therefore, we are concerned only with whether the plaintiff's business, as it is described in his appeal petition, necessarily fell within the scope of the quote statutory definition, regardless of whether it would be considered manufacturing within the commonly approved usage of that term. Planning & Zoning Commission of Town of Westport v. Synanon Foundation, Inc., 153 Conn. 305, 311, 216 A.2d 442; Toll Gate Farms, Inc. v. Milk Regulation Board, 148 Conn. 341, 347, 170 A.2d 883; United Aircraft Corporation v. O'Connor, 141 Conn. 530, 537, 107 A.2d 398; Neptune Park Assn. v. Steinberg, 138 Conn. 357, 362, 84 A.2d 687.

The crucial allegations describe the plaintiff's business as 'buying sides of beef and other large portions of meat, dividing them into their constituent parts, and selling these parts to consumers, retailers, and jobbers.'

It is arguable that, under a strictly literal application of our statutory definition of manufacturing, the plaintiff's business, as described in the quoted portion of his appeal petition, to which the defendant's demurrer was addressed, would constitute manufacturing because any change of shape or size would constitute a change of form under a literal interpretation of that definition.

The statutory definition of 'retail mercantile business' is 'the buying of tangible personal property and selling the same for profit or gain'; and the statutory definition of 'wholesale mercantile business' is 'the buying of tangible personal property and selling the same to be resold at retail for profit or gain'. General Statutes § 12-269.

If the defendant's literal interpretation of the definition of manufacturing were to be held applicable to the plaintiff's business, it must also be held applicable to a retail butcher who cuts a steak or a lamb chop or a slice of ham from a larger portion of meat for sale to, and consumption by, a customer. And if the customer were an operator of a...