Court Opinion

ID: 9530334
Source: CourtListenerOpinion
Date Created: 2023-08-07 03:59:10.664874+00
Date Added: 2024-06-11T13:28:05.047534
License: Public Domain

McCLINTOCK, Justice,
dissenting in part.
I dissent only from that portion of the opinion which affirms the holding of the district court that taxes were not assessable on expendable supplies used up in the process of getting out the newspaper, but no part of which can be said to have become a chemical or physical part of the printed publication. I agree that the publication of newspapers is generally considered to be manufacture; that statutes should be given a reasonable, practical construction, McGuire v. McGuire, Wyo., 608 P.2d 1278 (1980); and that effect should be given, if possible, to every word, clause and sentence of the statute, State ex rel. Benham v. Cheever, 71 Wyo. 303, 257 P.2d 337, 341 (1953). Our paramount concern is “to effectuate the purposes and intent of the legislature. We cannot rewrite a statute that we believe speaks clearly.” State ex rel. Albany County Weed and Pest District v. Board of County Commissioners of County of Albany, Wyo., 592 P.2d 1154, 1158 (1979). Or, as was well said by the Supreme Court of Oregon in Union Pac. R. Co. v. Bean, 167 Ore. 535, 119 P.2d 575, 579 (1941):
“In construing a statute, we are commanded ‘to ascertain and declare what is, in terms or in substance, contained therein, not to insert what has been omitted, or to omit what has been inserted; and where there are several provisions or particulars, such construction is, if possible, to be adopted as will give effect to all’. § 2-216, O.C.L.A.; Astoria v. Kozer, 124 Or. 261, 264 P. 445.”
The gist of the majority’s position is expressed in the following excerpt from the opinion where, after quoting from our earlier decision in State Board of Equalization of Wyoming v. Oil Wells Supply Co., 51 Wyo. 226, 65 P.2d 1093 (1937), it is said:
“ * * * As pointed out by this court, the words ‘[1] enters into’ are separated from ‘[2] becomes an ingredient or component part’ by the word ‘or,’ thus expressing the intention that the words ‘enters into’ are not used to denote that they enter into the product ‘in a physical sense.’ ” 611 P.2d at 808.
In claimed reliance upon Oil Wells Supply, the majority arbitrarily insert three very important words in § 39-312(e), W.S. 1957, 75 Cum.Supp., (Use Tax Act, Ch. 118, S.L. of Wyoming 1937), and change the phrase, “which directly enters into or becomes an ingredient or component part of any manufactured article” to read in effect, “which directly enters into THE PROCESSING OF or becomes an ingredient or component part” of such article. Thus, the whole context of the exemption is altered. There is considerable difference between the clause construed in Oil Wells Supply and the clause before us. I believe that consideration of that difference, when reviewed in connection with the pertinent leg*814islative history of the sales and use tax acts, demonstrates that the majority, under the guise of giving effect to what they call the separate parts of the exemption, have arbitrarily inserted into this section language that was deliberately and knowingly omitted therefrom by the legislature.
As appears from the opinion in Oil Wells Supply, the amendment of section 2(f) during the passage of the bill through the 1935 legislature was more extensive than merely changing “and” to “or.” Indicating deletion amendments by means of “-” and additions thereto through the use of capitals, we can compare the original bill with the final act, thus:
“(f) Each purchase of tangible personal property or product SERVICE made by a person engaged in the business of PRODUCING, FURNISHING, manufacturing, or compounding for sale, profit or use, any article, substance, SERVICE or commodity, which is ACTUALLY USED IN THE PRODUCTION OF, OR enters into THE PROCESSING OF, and OR becomes an ingredient or component part ...” (emphasis added)
of the finished article was a wholesale sale not subject to sales tax. Mr. Justice Kim-ball made this comment (65 P.2d at 1094):
“Plaintiff contends that an article is not ‘actually used in the production of’ a commodity, within the meaning of section 2(f), unless it enters into the commodity. But this is not what the Legislature has said. The construction contended for would in effect rewrite the section, and eliminate words that were evidently inserted with deliberation for the very purpose of making the exemption apply to sales of property that does not in a physical sense enter into the purchaser’s product.”
He then went into the history of the enactment quoted in the majority opinion, indicating that to sustain the state’s position it would be necessary to substitute “and” for “or” just before the phrase “becomes an ingredient or component part.” It is not difficult to see that the use of the word “and” at that point could have had the effect of destroying the previous qualifications for exemption because something could be used in “the production of” or could “enter into the production of” a finished article that did not become an actual part. If, however, those phrases were qualified by the further requirement that the purchased personalty had to become a part of the finished article, the effect of the first phrases as independent tests is destroyed. It seems obvious that the legislature did not want that result and advisedly used the word “or” at that place in the statute. But there is nothing in the opinion that justifies the conclusion that the phrase “enters into” the finished article means the same thing as “enters into the production or processing of” that finished article.
The opinion in Oil Wells Supply conceded that the statutory definition of wholesale sale was broader than that of most statutes but believed that sound reasons existed for this statutory exemption. However, the opinion is dated March 2, 1937. The legislature was then in session and was considering both sales and use tax legislation. An entirely new act, Ch. 102, S.L. of Wyoming 1937, referred to as the “Selective Sales Tax Act of 1937,” was adopted and section 2(f) was restored to the phraseology of the emergency tax act of 1935 as it had been originally introduced in the legislature. This meant that references to “used in the production of” and “the processing of,” which had been added in the course of the progress of the 1935 act through the legislature, were deleted. The law has remained in this form from 1937 until the 1977 revision, when the words “directly enters into” were removed so that the sales tax statute now permits the exemption only “when the tangible personal property purchased becomes an ingredient or component of the tangible personal property manufactured . . . .” § 39-6-405(a)(i), W.S.1977,1979 Cum.Supp.
The Use Tax Act, Ch. 118, § 4(e), S.L. of Wyoming 1937, exempted tangible personal property “which directly enters into or becomes an ingredient or component part of any manufactured article . . . .” This is the form of the present law, § 39-6-505(viii), W.S.1977, 1979 Cum.Supp.
*815My purpose in presenting this history is to demonstrate that the legislature, after two years experience with the sales tax act, eliminated therefrom provisions based upon the use of personal property in the course of manufacture and enacted the complementary use tax act with no reference to such use in manufacture. The only real test is whether the property claimed to be exempt has entered into or become an ingredient or component part of the finished product. Specific exceptions with reference to the sales tax, part of the 1937 act and now found in subsections (v) and (vi) of § 39-6-405(a), exempt sales of power or fuel to persons engaged in manufacture, agriculture or transportation when the power or fuel is consumed directly in that business. The present use tax provision, § 39-6-505, W.S.1977, 1979 Cum.Supp., provides no exemption for such sales.
I do not believe that the majority’s position is strengthened by reference to State Board of Equalization of Wyoming v. Stanolind Oil & Gas Co., 51 Wyo. 237, 65 P.2d 1095 (1937). That case was likewise concerned with language in section 2(f) of the 1935 sales tax act, and it was held that pipeline service of transporting oil to a company engaged in the business of refining was a service “used in the production of” or entering “into the processing of” a commodity and was therefore not taxable. It does not hold that the service entered into the product. The same can be said with reference to State v. Capital Coal Co., 54 Wyo. 176, 88 P.2d 481 (1939). Woodson v. State, 57 Wyo. 305, 116 P.2d 852 (1941), and State v. Holly Sugar Corporation, 57 Wyo. 272, 116 P.2d 847 (1941), also cited by the majority and which decisions involved the 1937 sales tax act, also seem to me to be consistent with my position.
My real difference with the majority lies in the fact that I do not think that by inserting the numeral “[1]” before the phrase “which directly enters into,” and the numeral “[2]” before the phrase “or becomes an ingredient or component part of” the majority can alter the fact that under the plain language of the statute the exemption is granted only as to material which enters into the manufactured article, i. e., the printed publication, or as to material which becomes an ingredient or component part of that printed publication. In neither event does the statute direct that material which is merely used in the manufacturing process is exempt. There is no reference to material which “enters into the processing of”; there is no exemption of material which “enters into the manufacture of” the finished article. Nor does the statute use the one word “publication,” which possibly might be construed as referring to the physical act of publishing a newspaper. The reference is to the “printed publication,” clearly the product and not the process by which that printed publication is effected.
After arbitrarily inserting new language in the statute, the majority then discuss the question whether the operation in this case amounted to manufacture, a point which I concede and which, because of specific reference to “printed publication” in the statute has little bearing upon the problem. However, it is indeed noteworthy that all of the cases cited in this portion of the opinion were concerned with statutes which explicitly granted the exemption to items that were used or consumed in the manufacturing process, even though they did not become a part of the product itself.
Thus, in McClure Newspapers, Inc. v. Vermont Department of Taxes, 132 Vt. 169, 315 A.2d 452, 453 (1974), the statute, in addition to exempting personal property which became an ingredient or component part of the finished product, also exempted personal property which “is consumed or destroyed or loses its identity in the manufacture of tangible personal property for later sale . . . .” (Emphasis added.)
The pertinent statute involved in Courier Citizen Company v. Commissioner of Corporations and Taxation, 358 Mass. 563, 266 N.E.2d 284, n.3 (1971), and Houghton Mifflin Company v. State Tax Commission, 373 Mass. 772, 370 N.E.2d 441, 444 (1977) contained the ingredient-and-component-part exemption but also exempted property *816which is “ ‘consumed and used directly . in an industrial plant in the process of the manufacture of tangible personal property to be sold, including the publishing of a newspaper.’ ” (Emphasis added.) It is pointed out in the later case that in 1971 the act had been amended to refer to the “actual manufacture,” which would of course narrow the exception.
In Niagara Mohawk Power Corporation v. Wanamaker, 286 App.Div. 446, 144 N.Y.S.2d 458,460 (1955), cited in Courier Citizen Company, supra, the exemption in pertinent part applied to personal property “ ‘for incorporation * * * as a material or a part into or for use or consumption directly and exclusively in the production of tangible personal property to be produced for sale by manufacturing, processing * ” (Emphasis added.) The court set forth the tests it considered necessary to determine “what constitutes ‘consumption directly and exclusively in the production’ of electricity,” 144 N.Y.S.2d at 461, and concluded that coal and ash handling equipment was sufficiently and closely connected with the process of generating electricity, the finished product, that it was directly used in the production of property.
United Aircraft Corporation v. Connelly, 145 Conn. 176, 140 A.2d 486, 491 (1958), is cited by the majority as significant because of its construction of the word “directly.” This is true, but the statute again was one which exempted materials “ ‘which became an ingredient or component part of tangible personal property to be sold or which are consumed and used directly * * * in an industrial plant in the process of manufacture of tangible personal property to be sold.’ ” (Emphasis added.)
None of these cases is authority for the proposition that an exemption which refers to personal property which enters into a manufactured product applies to materials which are used even to the point of destruction only as a part of the manufacturing process. I therefore must conclude that the majority’s equation of the phrase “property used up but not a component part of the publication” with property that enters into the printed publication, is merely assertion.
I would be the first to concede that there are no authorities completely in point to the situation presented to us. As numerous courts have pointed out, sales and use taxes vary considerably from state to state and decisions construing one statute can be applied only with caution in another state. However, for both legal and dictionary definition of the phrase “enters into” I can find no better statement than that of the Colorado Supreme Court in Bedford v. Colorado Fuel & Iron Corporation, 102 Colo. 588, 81 P.2d 752, 755-756 (1938), where it is said:
“In the current dictionaries the word ‘enter,’ and particularly the phrase ‘enters into’ are defined as follows:
“Webster’s International Dictionary, second edition: ‘Enter’ ‘(6) To form a constituent part; to become a part or partaker; to empenetrate; share; — with into; as, tin enters into the composition of pewter.’
“New Century Dictionary: ‘To enter into.’ * * * to form a constituent part or ingredient of (as lead enters into the composition of pewter).’
“The New Century Dictionary: ‘To enter into; to be an ingredient in; or a constituent part in; as lead enters into the composition of pewter.’
“It will thus be observed that in the ordinarily accepted sense as applied to the question under consideration the word ‘enter’ used with the preposition ‘into’ implies that the thing which enters impenetrates and becomes a part and ingredient of the thing produced. The Standard Dictionary defines ‘processing’ as ‘a course or method of operations.’ The Century Dictionary expresses the meaning as ‘An action, operation or method of treatment applying to something.’ Webster defines the term as ‘a series of actions, motions or occurrences; progressive act or continuous operation or treatment; a series of operations leading to some result; as a process of manufacture.’ Applying these definitions to the words under consideration it would seem certain they mean that to enter into the *817processing of an article, substance or commodity, tangible personal property must of necessity become a constituent part of such final product in the series of continuous operations and treatment leading to this result.”
The position of the Colorado court was reiterated in the recent case of Western Electric Company, Incorporated v. Weed, 185 Colo. 340, 524 P.2d 1369, reh. denied (1974). To me, these decisions and the dictionaries that are cited are clear authority that the terms “enter into” and “ingredient and component part” convey the same meaning and the terms are synonymous.
I submit that there are two classes of statutory exemption: that which exempts personal property that actually becomes a part of the finished product, and that which exempts to a limited extent personal property which does not become a part of the finished product but is nevertheless consumed in the manufacturing process. A case illustrative of the distinction I make is Briggs and Co. v. District of Columbia, C.A. D.C., 196 F.2d 241, 243 (1952). Two types of casings were used in the manufacture of frankfurters. One, referred to as natural casings, remained a part of the finished frankfurter. Cellulose casings, on the other hand, were used only for the purpose of shaping and smoking the frankfurters and after such use were removed and discarded. The statute in question defined retail sales to include sales “ ‘for any purpose other than those in which the purpose of the purchaser is * * * to use or incorporate the property so transferred as a material or part of other tangible personal property to be produced for sale . . . 196 F.2d at 243. The court said:
“Though used in the manufacturing process the casings plainly are not incorporated in the frankfurters. The tax applies, therefore, unless they are used as a material or part of the frankfurters. This is so even though we assume that ‘use’ must be given a meaning other than ‘incorporate.’ In contrast with the natural casings it seem to us from the description we have given of the manufacturing process that the cellulose casings are not used as a material or part of the frankfurters. In the language of the Board, notwithstanding their usefulness the casings ‘were merely an instrumentality or utensil in the manufacture * * *. They cannot be said to be or ever to have been a part of the sausage.’ ”
Courier and Houghton Mifflin point to amendments in the Massachusetts statute which indicate a legislative purpose in Massachusetts to limit the exemption based on use in manufacture. It is my belief that the same restrictive purpose is evidenced in the legislation of this state pertaining to sales and use taxes. Considering that history in specific reference to one of the early decisions of this court involving the sales tax act, I conclude that our legislature has indicated its clear intent that with one exception there should be exemption only in the case of materials which become a physical or chemical part of the finished product.
I do not deny that chemicals, photographic supplies and aluminum plates were used in the process of getting out the newspapers published by Cheyenne Newspapers. Nor do I deny that that use was of economic value in such publication and certainly would be part of the cost. In State Board of Equalization of Wyoming v. Stanolind Oil & Gas Co., supra, 51 Wyo. at 248, 65 P.2d at 1097, we find this pertinent statement with reference to the 1935 version of section 2(f):
“ * * * There can be no doubt that these amendments show the intention to exempt purchases of transportation service which the legislature thought might either be ‘used in the production’ or ‘enter into the processing’ of a manufactured commodity. This is evidently on the theory that in an economic sense the exempted service is resold by the purchaser when he sells the commodity which he produces or manufacturers. See State Board v. Oil Wells Supply Co., supra.”
The majority’s emphasis on the fact that the cost of these supplies has economic value in the act of publication of the newspaper cannot alter the fact that the legisla*818ture later clearly saw fit to eliminate any exemption pertaining to production or processing. I could agree that such items should be exempt; the legislature was for a short time of the same mind; it has long since changed from that position except in the case of fuel and power used in manufacture, which remain specifically exempt under the second paragraph of section 2(f), S.L. of Wyoming 1937 (§ 39-287(f) W.S. 1957) which reads as follows:
“Each purchase of power and/or fuel or any substitute for the same, made by a person engaged in the business of manufacturing or agriculture and consumed directly in manufacturing or by a person engaged in the transportation business and consumed directly in generating motive power for actual transportation purposes, shall be deemed a wholesale sale and shall be exempt from taxation under this act.” (Emphasis added.)
In State Board of Equalization of Wyoming v. Stanolind Oil & Gas Co., supra, this court refused to distinguish between electricity used in running machines and electricity used in lighting the plant, but the point is that to come within the provisions of this paragraph it was required only that the fuel or power be consumed in the business of manufacture, agriculture or transportation. The legislature was well aware of the differences and chose to terminate one exemption but continued the other.
The same question of economic value was considered by the District of Columbia Appeals Court in Briggs and Co. v. District of Columbia, supra. The court recognized that there was merit in creating an exemption in such case but that it was bound to apply the statutory limitations (196 F.2d at 243):
“Much could be said in favor of exempting from the coverage of the statute property used in the sense of being consumed in the manufacturing process where, as here, the value of the casing so used is represented in some part at least in the finished product. Since the casing (1) shapes the frankfurter and (2) allows penetration of the mixture by heat and smoke, some economic value of the finished product is attributable to the casing. See Western Cartridge Co. v. Smith, 2 Cir. 1941, 121 F.2d 593. But the statutory language does not, as in the cited case, exempt an article used ‘as material in the manufacture of’ another article, but only one used as a ‘material or part of' the other or incorporated in it.” (Emphasis added.)
In conclusion, I see no significance in the use of the word “or” in the phrase “which directly enters into or becomes an ingredient or component part” of the finished article. In either event the product and not the process is the only significant thing. There is nothing in the statute which indicates any intention upon the part of the legislature that materials, equipment or other items of personal property which are used even to the state of destruction in the manufacturing process and which are undoubtedly of value in achieving a finished product, are to be considered exempt. The only instance which I can find where something which is used in the manufacturing process is to be considered exempt is the use of fuel or power in that process and this exemption exists by reason of the specific direction of the legislature. To construe the words “enters into” as being the equivalent of a specific direction of the legislature exempting materials used in the manufacturing process is to subvert the intention of the legislature, plainly expressed years ago through the early amendment of the sales tax act and the omission of such language from the 1937 use tax act in its original form. This statute has continued in effect for over 40 years without any attempt on the part of the legislature to insert the language which the majority now succeeds in reading into the statute.