Opinion ID: 1837112
Heading Depth: 1
Heading Rank: 2

Heading: Flask Materials

Text: The position taken by the Lumber Company is that these materials are exempt under the provisions of § 755(p), supra; that the flasks are machines or machinery within the meaning of those terms as used in said section and, therefore, the materials going into the construction of such flasks constitute a part thereof and are likewise exempt. On the other hand, the state contends that flasks are not machines or machinery within the meaning of § 755 (p); that there are no moving parts in a `flask'; that the sole and only purpose of a flask is to hold and contain the sand in which the mold is made; and that to include a flask of this type within the definition of a machine or machinery would be giving such terms a meaning which is not generally accepted in popular everyday usage. It is further insisted on behalf of the state that the taxable event under the Sales Tax Act was the sale of the lumber materials by the appellees to the stove manufacturers and that, therefore, such sales are subject to the sales tax even though the lumber is used to make a flask and a flask be held to be a machine or machinery. From the evidence it appears that the process of manufacturing the stoves and furnaces, including the use of flasks in the process, consists substantially of the following: The buying of steel sheets in lengths, cutting the sheets to size, shearing and stamping them into certain shapes and forms, and punching holes in them; making castings in the foundry of various sizes, shapes and widths, and then assembling the stoves and furnaces in salable condition and selling them after they are completed; stoves and furnaces vary in sizes, ranging from about a 100 pound stove to a 2,200 pound furnace; the sizes manufactured vary from time to time according to the customers' orders; foundry pig iron is used in making the castings; in a general way, castings are made in the following manner: Foundry pig iron is purchased in carload lots. It is unloaded and hauled up by elevator to the top of what is called the cupola, which is a melting pot. The pig iron is melted with coke and when it comes out at the bottom of the cupola it is poured into a mold. The mold is made in many different ways. There is what is called machine molding, which takes a crew of five to ten men on a molding machine. That is the large operation. The next operation is what is termed a squeeze mold. That is a small one-man machine. And there is the floor molding. The flask material is used in all three operations. A flask is a part of each operation. The flask is used to hold molding sand so that an impression may be made in the sand with a pattern. The pattern is placed between the two parts of the flask and then the molding sand is tamped down in both parts of the flask, first in one part and then in the other. The wood flask material is grooved or fluted in order to hold the dampened molding sand in place. The impression having been made, the two parts of the flask are lifted apart, the pattern withdrawn, the two parts replaced together with an opening in the sand for pouring the molten iron into the impression, thus making, when solidified, an exact reproduction of the pattern. In each type operation the sand is squeezed or tamped down tightly against the pattern. It further appears from the evidence that it would be impossible for the companies to carry on their business of making the stove and furnace castings without flasks; that when the lumber material, from which the flasks were made, was ordered, it was specified and designated as flask material, and was ordered on specific thickness and width, though usually in random lengths; that the flutings were usually put in by the Lumber Company and were on the inside of the flasks when made; that the flask material was kept in a separate place, and as flasks were needed they were made in the plant to fit the patterns; that the needs of the business, in its proper operation, required that flasks of various sizes be made from time to time; that one of the companies had as many as 3,000 to 3,500 patterns; that it would be expensive to have already made up flasks to fit every size casting; that some foundries make their own flasks and some buy metal flasks, but most in this territory use wooden flasks and make their own; that it is more practical and economical for a foundry to make its own flasks; that it would be too expensive to use the flask material for any other purpose; that the flask material was ordered invoiced and so kept on the records of the Lumber Company; that it was made of pine lumber; that in the lumber business there are known classified standard sizes and widths of lumber and also sub-standard and extra size pieces; that flask material is not a standard size and is made for the manufacturers according to their specifications and is not manufactured to that size to sell to other customers; that it was made on order and not stocked; and that it was known by the particular name of flask material. A concise description of a flask is thus given in Webster's New International Dictionary, 2d Ed., p. 962: The wooden or iron frame which holds the sand, etc., forming the mold used in a foundry. It consists of two or more parts, viz: the cope, or top; sometimes, the cheeks, or middle part; and the drag, or bottom part. There is no question about the flasks being used for manufacturing tangible personal property. The problem is to ascertain whether they are machines or machinery being so used, as these terms are employed in the exemption statute, § 755(p), Tit. 51, supra. To resolve the point requires that we determine the legislative intent in providing the exemption. While the rule of strict construction against a tax exemption is well established in this state, State v. Wertheimer Bag Co., 253 Ala. 124, 127, 43 So.2d 824; State v. Bridges, 246 Ala. 486, 489, 21 So.2d 316, 159 A.L.R. 678, it is also recognized that such a rule `does not impinge upon the all-prevailing rule that a statute is to be construed in accordance with its real intent and meaning, and not so strictly as to defeat the legislative purpose', Alabama-Georgia Syrup Co. v. State, 253 Ala. 49, 52, 42 So.2d 796, 798; nor will the court indulge a strained construction to give effect to this rule where a fair interpretation of the legislative intent may lead to a contrary construction. Arbitrary rules of construction are of little value when the real intent of the legislature can be gathered from the act itself, State v. Calumet & Hecla Consol. Copper Co., 259 Ala. 225, 232, 66 So.2d 726, 730; Holt v. Long, 234 Ala. 369, 371, 174 So. 759. The terms machine and machinery are defined by Webster as follows: Machine. A contrivance, device, or structure by means of which a force or forces may be advantageously applied,   . Machinery. The component parts of a complex machine; machines in general. The mechanism of a machine; the working parts; any combination of appliances resulting in successful operation;   . Any combination, the harmonious workings of which terminate in a specific object;   . Webster's New Twentieth Century Dictionary, p. 1017. Ballentine's Law Dictionary, 2d Ed., p. 779, contains the following definitions: Machine. The term includes every mechanical device, or combination of mechanical powers and devices, to perform some function and produce a certain effect and result.    Machinery.    The Century Dictionary defines it as the parts of a machine considered collectively; any combination of mechanical means designed to work together so as to effect a given end;   . In Black's Law Dictionary, 4th Ed., p. 1101, are the following definitions: Machine.    Device or combination of devices by means of which energy can be utilized for useful operation to be performed.   ; mechanical device, or combination of mechanical powers and devices, to perform some function and produce a certain effect or result.   . Machinery. Complex combination of mechanical parts,   . A more comprehensive term than `machine'; including the appurtenances necessary to the working of a machine   . Parts of a machine considered collectively; also the combination of mechanical means to a given end.   . A part of a machine designed to work with other parts,   . Machines in general, or collectively; also, the working parts of a machine, engine or instrument;   . As so aptly stated in City of Louisville v. Howard, 306 Ky. 687, 208 S.W.2d 522, 526: The definition of machinery itself is broad enough to cover anything from a peanut-roasting outfit on Main Street to a blast furnace in Pittsburgh. It seems clear to us that a flask comes within the foregoing definitions of machine and machinery and is exempt from the sales tax. Being so, the flask material, used in making the flasks is also exempt. Then, too, there seems no question, aside from their independent qualities as machines or machinery, that flasks, are essential in the manufacture of stoves and furnaces by these companies and, therefore, constitute integral and indispensable parts of the over-all manufacturing machinery used by them. They are also exempt for this reason. The exemption granted by § 755 (p), Tit. 51, supra, to the extent here pertinent, is to machines or machinery used, for    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. We are satisfied from the evidence that the materials under this classification were manufactured by the Lumber Company for use by the stove and furnace manufacturers in making flasks, although such materials might be usable for other purposes. The provision is not that they be made for the `exclusive' use on or in the operation of such machines, but simply `for' such use. State v. Birmingham Rail & Locomotive Co., 259 Ala. 443, 448, 66 So.2d 884, 889, supra. It is also clear that the materials were necessary to the operation of such machines and are customarily so used. Although the tax exemption statute under consideration in Gulf Oil Corp. v. Philadelphia, 357 Pa. 101, 53 A.2d 250, 251, 252, 253, 172 A.L.R. 302, was not the same as the one now before us, we think the discussion of the point for decision there made is appropriate here. The statute there under consideration provided that in cities of the first class, the assessment of real estate for taxation, the machinery and tools used in manufacturing in any mill or manufactory shall not be considered or included in determining the value of real estate   . 53 P.S. § 4742. The question was whether certain tanks constituted machinery. The trial court held that they were not, giving as a reason that the tanks `are not intended to apply force or involve the quality of motion; they are static and have the same characteristics as the walls of a mill or of a silo.' The Supreme Court of Pennsylvania held otherwise, saying:    The fallacy that tanks or containers in which processing takes place cannot be either machines or machinery proceeds from the erroneous premise that nothing is machinery that does not `apply (physical) force or involve the quality of motion.' Before and at the very dawning of the `machine age' when the machinery best known to the public were saw mills and grist mills and later cotton gins and steam engines, it was natural to entertain the concept that all machinery involved motion and anything which did not move was not machinery. The modern `machine age' has outgrown that concept. Much of the machinery today has only passive or motion-less functions to perform in manufacturing. The position taken by the state that the taxable event was the sale of the lumber materials by the Lumber Company to the manufacturers is fully answered, we think, by the decision in State v. Birmingham Rail & Locomotive Co., 259 Ala. 443, 445, 448, 66 So.2d 884, 886, supra. As there said: The state makes the further insistence that the rails are building materials and, as such, are subject to the tax; that the tax event was the sale of the rails to the mine operators; that at the time of such sale the rails were not machines or machinery or parts of machines or machinery, but were building materials; that, therefore, they were taxable as such as of the time of the sale; that the tax is not on the use of the rails; and the fact, if it be a fact, that the rails later became a part of exempt machinery would not render them nontaxable.