W.J. Sandberg Co. v. Iowa State Bd. of Assessment and Review
| Decision Date | 05 April 1938 |
| Docket Number | 44229. |
| Citation | 278 N.W. 643,225 Iowa 103 |
| Parties | W. J. SANDBERG CO. v. IOWA STATE BOARD OF ASSESSMENT AND REVIEW. |
| Court | Iowa Supreme Court |
Appeal from District Court, Polk County; Jos. E. Meyer, Judge.
The Iowa State Board of Assessment and Review imposed a retail sales tax upon the gross receipts from sales of leather and shoe findings made by the plaintiff to shoe repairmen under the provisions of chapter 329-F1 of the Code of 1935. To this action of said board the plaintiff took exception and brought this action in equity, by way of appeal, contesting the validity of said tax. The trial court found in favor of the state board and entered judgment against the plaintiff accordingly. The plaintiff has appealed.
Affirmed.
Otto L. Schluter, of Cedar Rapids, for appellant.
John H. Mitchell, Atty. Gen., and Clair E. Hamilton, of Winterset for appellee.
Plaintiff is an Iowa corporation located in Des Moines engaged in the business of selling leather and shoe findings to shoe repairmen in Iowa. There are about 5,000 shoe repairmen in this state. Plaintiff purchases the leather from the tannery in the forms of bends, strips, or taps; a bend is half of the hide of the animal with the head, belly, and shoulders cut off and is usually 52 inches long and 20 inches wide, a strip is cut out of a bend and is usually 6 1/2, 8 1/2, 11, and 13 inches wide, and taps or half soles are cut out of a bend or strip in width and length to fit the various sizes of men and women shoes. Other shoe findings consist, mainly, of cement glue, wax, thread, nails, polish, plates, rubber and leather heels. These materials are purchased of the plaintiff by the various shoe repairmen in quantities, large or small according to their needs. From these materials the shoe repairmen select and use whatever is necessary to make the repairs and the customer is charged a lump sum for the repair job on his shoes. The amount of material used in making the repairs averages about 30 per cent. of the total charge.
By the sales tax law there is imposed a flat tax of 2 per cent. on gross receipts from all sales of tangible personal property sold at retail in the state to " consumers or users." Code, § 6943-f39. Section 6943-f38 of the Code contains statutory definition of terms and phrases made use of in the Retail Sales Tax Law, pertinent provisions of which are:
" * * * b. ‘ Sale’ means any transfer, exchange, or barter, conditional or otherwise, in any manner or by any means whatsoever, for a consideration. c. ‘ Retail sale’ or ‘ sale at retail’ means the sale to a consumer or to any person for any purpose, other than for processing or for resale."
The State Board of Assessment and Review is clothed with power and authority to prescribe all rules and regulations, not inconsistent with the provisions of the act, necessary and advisable for its detailed administration and to effectuate its purpose. Section 6943-f55. Rules and regulations relating to retail sales tax were promulgated and published for the use of those interested, among which is rule No. 19, relating to shoe repairers as follows:
The law is made applicable to all sales on and after April 1, 1934. The plaintiff, contending that the shoe repairmen do not consume or use the material in making the repairs, but that the consumer of such material is the person who wears out the shoes, claims it is not subject to the tax. It also contends that it will be unable to successfully compete with jobbers outside of the state if compelled to add to its sale price the 2 per cent. tax. It, therefore, failed to file with the Iowa State Board of Assessment and Review proper return showing gross receipts from sales to shoe repairmen throughout the state; its customers numbering about 1,000. Thereupon, the board computed the amount of the gross receipts for a period beginning April 1, 1934, and ending September 30, 1936, and assessed the amount of tax due thereon as $2,705.65, with added penalty of $583.34. Notice of assessment was duly given; to which plaintiff appeared and filed objections and made application for hearing; said hearing was had on March 16, 1937, which resulted in the tax and penalty being sustained.
Five separate grounds of reversal are presented by appellant in its brief and argument:
I.
First, it is urged that the court erred in finding that the shoe repairman was a " consumer or user" of sole leather and rubber heels and that the sale by plaintiff of such materials to shoe repairmen was a " sale at retail."
It will be readily seen that a proper solution of the problem requires a construction of the language of the statute as to what is meant by the term " consumer or user." Is it the person who wears the shoes after they are repaired (the Supreme Court of Utah in case of Western Leather & Finding Company v. State Tax Commission of Utah, 87 Utah 227, 48 P.2d 526, answers the question in the affirmative) or is the repairman a " consumer or user" of tangible personal property when he uses the same in repairing shoes? Notwithstanding the ruling of the Utah Supreme Court, we are inclined to the view that, as the term is used in our statute and under the definition of " sale at retail" as contained in our statute, the shoe repairmen are " consumers or users" of the material that goes into repairing the shoes of another; and that the material so used is within the meaning of the statute " consumed or used," and hence the plaintiff, as seller, is subject to the tax. The act defines its own terms. " Sale at retail" is defined to mean " sale to a consumer or to any person for any purpose, other than for processing or for resale." Section 6943-f38, subd. c. If the property sold is to be used in " processing," theoretically if not actually, it becomes an intricate part or ingredient of a finished product for resale. A good example of this is ice cream, which contains many ingredients. " Sales at retail," in the commonly accepted meaning, are usually made by persons or corporations engaged in operating a retail store wherein are kept goods and merchandise for sale to the ultimate consumer; the appellant argues that, because it was not conducting such a store, but was a member of a national organization of wholesalers and jobbers and so listed in the trade journal, Shoe Repair Service, published by the trade promotion bureau, National Leather and Shoe Finders Association, located at St. Louis, Mo., that the court was in error in holding that sales by it were " sales at retail." In construing this statute, we are bound by the definition of terms made use of by the Legislature. As stated by this court in the case State v. City of Des Moines, 221 Iowa 642, 266 N.W. 41, 42, " the Legislature is its own lexicographer." The guiding and controlling consideration is " the disposition of the goods made by the buyer, not the character of the business of the seller or the buyer." Boyer-Campbell Co. v. Fry, 271 Mich. 282, 260 N.W. 165, 172, 98 A.L.R. 827. The point urged by the appellant is that, even though the material is used in repairing another person's shoes, and notwithstanding the service charge is one lump sum, that the material used is, in fact, a resale of such material. We are inclined to the view that this is too strained and narrow a construction and, when applied to the vocation of shoe repairers, would render the law unworkable and impracticable. Such a rule of construction might be made practical in so far as the use of such articles as rubber heels or the use of taps for a complete job of resoling the shoes is concerned, but, as applied to the numerous other and different repair jobs, which include patchwork of all kinds, necessitating the use of odd and irregular pieces of material and quantities incapable of any fixed or definite price...
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