Court Opinion

ID: 9528008
Source: CourtListenerOpinion
Date Created: 2023-08-07 03:36:14.449788+00
Date Added: 2024-06-11T13:26:23.537268
License: Public Domain

Thompson, J.
(dissenting) — I am unable to agree with the reasoning and conclusions reached by the majority and respectfully dissent therefrom.
I. In Division I the majority opinion holds that the property, although brought into Iowa long before April 1, 1949, the date upon which section 2 of chapter 193 of the Acts of the Fifty-third General Assembly became effective, was not delivered to and accepted by the purchaser, the Farley-Loetseher Company, until after that time, and so was not readily obtainable in Iowa before the date named. If it had been delivered here before that date, it would have been readily obtainable under the rules of the Commission then prevailing and under our holding in Peoples Gas & Electric Co. v. State Tax Commission, 238 Iowa 1369, 28 N.W.2d 799.
This holding of the majority is based upon testimony of Robert F. Loetscher, a vice-president of the Farley-Loetseher Company, that “# * * this power plant did not operate, was not accepted by us as purchaser of equipment until July 1949'.” We said in City of Ames v. State Tax Commission, 246 Iowa 1016, 1023, 71 N.W.2d 15, 20, that “We think it clear that it is the law at the time the property comes to rest in the state and is used here that must govern the question of its taxability.”
Section 423.1(1) of the Code of Iowa provides: “‘Use’ means and includes the exercise by any person of any right or power over tangible personal property * * Even if the property had not been accepted by the purchaser before April 1, 1949, it had come to rest in Iowa and someone was exercising rights and power over it.
Nor can I accept Mr. Loetscher’s statement that the property had not been accepted before that date. Bids were called for in November 1945 and the appellee’s bid was accepted largely because it was willing to contract for delivery in 300 days. When it was sent into Iowa, “came to rest” here, is not exactly shown, but it was long before April 1, 1949. Conclusive, it ap*207pears to me, is the fact that it was paid for in full long before that date. The total price of the plant was $85,914.58. This was paid by the Farley-Loetscher Company -in these amounts and on these dates: July 16, 1947, $5055; September 9, 1947, $63,545,; September 10, 1947, $2200; November 29, 1947, $5852.49; December 6,1947, $2500; December 31,1947, $1023.69; and May 22, 1948, $5738.40. There is no record of any agreement that the buyer mig-ht refuse the plant after it had been paid for in full; and in view of the fact that it was built on the purchaser’s property and open to full inspection by it at all times, I am unable to agree that there was no acceptance by such payment. A purchaser who has property delivered to him and after complete opportunity to inspect it makes full payment will not ordinarily be heard to say that he had not then accepted it.
II. I am also in disagreement with the holding in Division III that this property was “directly” used in the manufacture or processing of tangible personal property intended to be sold ultimately at retail. In the City of Ames case, supra, we held that an electric plant which produced electricity intended to be sold to customers was directly used in such manufacturing or processing. But here the majority goes one step further. The electricity produced by the plant in question was not intended to be sold at retail. It was used to operate other machinery, which in turn produced the manufactured or fabricated product to be sold. The machinery which the electricity operated was directly used in such manner. It is the only machinery “directly” used in the manufacture of the property to be sold. The plant delivered by the appellee here was used only “indirectly” in such manufacture. As we said in Dain Mfg. Co. v. Iowa State Tax Commission, 237 Iowa 531, 538, 22 N.W.2d 786, 791, we cannot ignore the word “directly”, which must have been placed in the statute for a purpose.
Exactly in point factually is the case of Jackson Iron & Steel Co. v. Glander, 154 Ohio St. 369, 96 N.E.2d 21. The question involved is stated in the opinion of the Ohio Supreme Court, at page 370 of 154 Ohio St., page 22 of 96 N.E.2d: “The precise question now before the court is whether machinery and equipment purchased for use in mining coal, which coal is not *208sold but is later used in the production of pig iron, are used directly in the production of tangible personal property, within the contemplation of the exceptions referred to above.” The holding of the court is expressed in this language on page 373 of 154 Ohio St., page 23 of 96 N.E.2d: “In the instant ease, it cannot fairly be said that the mining of coal is a direct and integral part of the production of pig iron. Here, there are two distinct activities, namely, mining and smelting, and, although they are related in that mined coal is utilized in the production of pig iron, the two are still separate and distinct operations.”
In the Ohio case the machinery was used to produce coal, which in turn was used in the production of pig iron; in the case at bar the equipment is used to produce electricity, which in turn is used in the manufacture of the wood products intended to be sold at retail. Another ease directly analogous upon its facts, with a similar holding, is Tulsa Machinery Co. v. Oklahoma State Tax Commission, 208 Okla. 138, 253 P.2d 1067, 1069, 1070.
It is my conclusion that the holding of the trial court should be reversed.
Garfield, C. J., and Oliver, J,, join in this dissent.