Court Opinion

ID: 9711311
Source: CourtListenerOpinion
Date Created: 2023-08-26 04:29:10.159159+00
Date Added: 2024-06-11T18:23:03.728880
License: Public Domain

Hale, J.
(dissenting) — I am unable to agree with the majority opinion in its finding as to the interpretation of the statute in question. The tax is imposed on “the use in this state of tangible personal property purchased * * * for use in this state.” The difference between the two constructions centers around the words “for use in this state”, the majority holding that thé primary intent must be “to use in the state of Iowa.” The theory of this dissent being that in the case of a general contractor who had work in more than one state the original intent in purchase of the property would be to use the property where such property is actually taken and used, I think this the more reasonable interpretation of the words used in the statute.
Plaintiff cites section 423.5 of the 1946 Code relating to evidence of use, and section 423.25 relating to taxation in another state, as evidence of the intent of the legislature. The first of these two sections merely provides that evidence of tangible personal property sold by any person for delivery in *47this state shall be prima facie evidence that such tangible personal property was sold for use in this state, and second, the exemption for use tax on property that has already been subjected to a sales tax or a use tax.
Defendants’ argument, in brief, is: A general contractor who purchases personal property has the intention at the time of purchase to use the property wherever his business may take him; that the intent is comprehensive and includes any state where the work requires the use of that property; that in this case the plaintiff did bring his property into the state of Iowa and used it here, as “use” is defined in the statute; that therefore, coupled with the use in Iowa, this constitutes a use within the intent of the legislature.
“Use” as defined in Code section 423.1 is as follows:
“The -following words, terms, and phrases when used in this chapter [on use tax] shall have the meanings ascribed to them in this section:
“1. ‘Use’ means and includes the exercise by any person of any right or power over tangible personal property incident to the ownership of that property, except that it shall not include processing, or the sale of that property in the regular course of business * *
There is no question but that the property within the definition was used by the plaintiff in the state of Iowa. Defendants argue that the tax in question is on the privilege of that use within the state of Iowa, and we do not have to speculate about the plaintiff’s intent because it is presumed to have intended the natural consequences of its act, namely, the use of the property in Iowa.
In Chicago Bridge & Iron Co. v. Johnson, 19 Cal. 2d 162, 168, 119 P.2d 945, 948, it is said:
“Those materials were purchased for use, storage or other consumption in this state. While it is true that they were not acquired with the express purpose of performing any specified contract or order, plaintiff was engaged in the business of selling and constructing tanks in California. In the course of its business those materials might be used in California or elsewhere. *48It cannot be said therefore that they were not purchased for use here. They were purchased for use in California if and when the business required their use here to fill an order. The requirement arose and they were used in this state. It follows that those particular materials were purchased for use in California. The materials being used here follow the intent to use them here upon a certain contingency, it objectively follows that they were acquired for use here.”
The California use statute differs from ours in including the word “storage”, but, under our statutory definition of use, storage would be included as an incident to the exercise of right or power incident to the ownership of property. I would hold, therefore, that the principles set forth in the foregoing case apply to the situation here. The equipment or a large part of the property in question was purchased for use where the business of the plaintiff required it to be used, and it was used here. I am satisfied that to carry out the purpose of the law and at the same time equalize the burden upon the local taxpayer, when equipment is purchased for the general purpose of use wherever needed the commission is within its rights in assessing a tax in such amount as will equalize it with the burden of tax assumed by retailers in Iowa.
The statute under consideration seeks to equalize, since it may be offset if another use or sales tax has been paid on -the same thing. The purpose of the use tax is that retailers in the state of Iowa shall not be subjected to an unfair advantage taken by one wlm purchases at retail in another state where no sales tax is exacted, and it was held in Felt & Tarrant Mfg. Co. v. Gallagher, 306 U. S. 62, 59 S. Ct. 376, 83 L. Ed. 488, that the rule laid down in Henneford v. Silas Mason Co., Inc., 300 U. S. 577, 57 S. Ct. 524, 81 L. Ed. 814, is that the tax was not upon interstate commerce but upon the privilege of use af-ter commerce is at an end. See the latter case and authorities cited therein.
The intent of the statute seems to be the determining question in the case. Holding as I do I would affirm the ruling of the trial court.
Bliss, Oliver and Mulroney, JJ., join in this dissent.