Court Opinion

ID: 7820696
Source: CourtListenerOpinion
Date Created: 2022-09-07 17:53:43.943663+00
Date Added: 2024-06-11T16:30:43.904398
License: Public Domain

Conley Byrd, Justice, dissenting. The majority’s reliance upon the cotton gin case, Scurlock v. Henderson, 223 Ark. 727, 268 S.W. 2d 619 (1954), to overturn the trial court does not appear to be well founded. At the time the cotton gin case was before us, the Compensating Use Tax Act, Acts 1949, No. 487, § 6 provided: “There are hereby specifically exempted from the taxes levied in this Act: (d) Tangible personal property used by manufacturers or processors or distributors for further processing, compounding, or manufacturing tangible personal property used for repair, replacement, or expansion of existing manufacturing or processing facilities or in creating new manufacturing or processing facilities; and tangible personal property used in the repair, replacement, or expansion of existing, or in the creation of new, facilities used for public transmission, communication, or transportation purposes.” The General Assembly, following such cases as Scurlock v. Henderson, supra, amended the Compensating Use Tax Act so that the term manufacturers or processors or distributors would include cotton gins within its definition. Likewise, following the exemption of feedstuff in 1955, this Court took the illogical position in Hervey Comm’r v. Tyson’s Foods, Inc., 252 Ark. 703, 480 S.W. 2d 592 (1972), that items commonly added to chicken feed such as hormones and antibiotics did not constitute feedstuffs. The Court also there stated that “manufacturing and processing” were not two distinct operations — i.e. processing is carried out under the manufacturing process. Following the Tyson case, supra, the General Assembly passed with an emergency clause Acts 1973, No. 68 [Ark. Stat. Ann. §§ 84-1905.2 — 84-1905.5], specifically exempting medicinal preparations used in treating livestock and poultry. To avoid the construction that this Court has given to “manufacturing or processing” or “manufacturing and/or processing,” the General Assembly in 1975 rewrote the language of the exemption set out in subsection 2 of subsection D of Section 6 of Act 487 of 1949 and added an emergency clause critical of the interpretations given to the terms “manufacturing” and/or “processing.” See Acts 1975, No. 760, which became effective without the signature of the Governor and which, in so far as here pertinent, makes Ark. Stat. Ann. § 84-3106 (Supp. 1977) provide: “There are hereby specifically exempted from the taxes levied in this Act: (D) . . . (2) Machinery and equipment used directly in producing, manufacturing, fabricating, assembling, processing, finishing, or packaging of articles of commerce and manufacturing or processing plants or facilities in the State of Arkansas, including facilities and plants for manufacturing feed, processing of poultry and/or eggs and livestock and the hatching of poultry, but only to the extent that such machinery and equipment is purchased and used for the purposes set forth in this subsection. The emergency clause added to Acts 1975, No. 760, provides: “SECTION 5. EMERGENCY CLAUSE. It is hereby found and determined by the General Assembly that uncertainty exists as to the intended meanings of the terms ‘manufacturing’ and/or ‘processing’ as the same are used in Section 4 of the Arkansas Gross Receipts Act, as amended, and Section 6 of the Arkansas Compensating Tax Act, as amended, as a result of which the legislative intent is not being carried out and implemented; that the failure to carry out the legislative intent expressed in the sections amended herein is highly detrimental to the public interest of the State and that this inequitable situation should be corrected immediately. Therefore, an emergency is hereby declared to exist and this Act being necessary for the immediate preservation of the public peace, health and safety shall be in full force and effect from and after its passage and approval.” The majority’s citation of Heath v. Westark Poultry Processing Corp., 259 Ark. 141, 531 S.W. 2d 953 (1976); for the proposition that Hummelstein Iron & Metal Inc. does not qualify as a manufacturer under Acts 1975, No. 760 is likewise not well founded, for in that case we were construing the terms as they had been defined in Acts 1968, No. 5 (1st Ex. Sess.). It also involved a tax liability that had accrued in 1974 or prior years. The 1968 Act applied to machinery and equipment used directly in producing, manufacturing, fabricating, assembling, processing, finishing or packaging articles of commerce “at manufacutring or processing plants or facilities,” whereas the 1975 Act, supra, exempts “machinery and equipment used directly in producing, manufacturing, fabricating, assembling, processing, finishing or packaging of articles of commerce and manufacutring or processing plants ... .” [Emphasis mine]. The majority suggests in a footnote that the word “and” in the 1975 Act is a typographical error. This is an asserted omnipotence and clairvoyance that I have not been privileged to observe among the ordinary mortals that have been elected to serve on the Supreme Court of Arkansas. Furthermore, it flies in the face of the finding of the General Assembly in Acts 1975, No. 760 § 5, supra, that the 1975 amendment was necessary because “the intended meanings of the terms “manufacturing” and/or “processing” . . . is not being carried out and implemented.” [Emphasis mine]. Finally, the majority says that cases from other jurisdictions having to do with the exemption of commercial scrap dealers from the Compensating Use Tax are of scant assistance. With this statement I cannot agree because Acts 1975, No. 760 § 2 specifically provides: “(e) For the purpose of this subsection, the terms ‘manufacturing’ and/or ‘processing’ as used herein, refers to and include those operations commonly understood within their ordinary meaning, and shall include mining, quarrying, refining ... .” Since other jurisdictions recognize that commercial scrap operations are manufacturers within the meaning of their sales and use tax statutes — see Butts v. Phelps, 90 Mo. 670, 3 S.W. 218 (1887); Middletown Iron & Steel v. Evatt, 139 Ohio St. 113, 38 N.E. 2d 585 (1941); Commonwealth v. Sitkin’s Junk Co., 412 Pa. 132, 194 A. 2d 199 (1963); Mayor and City Council of Baltimore v. State Tax Commissioner, 161 Md. 234, 155 A. 739 (1931); and H. Samuels Co. v. W. Department of Revenue, 70 Wis. 2d 1076, 236 N.W. 2d 250 (1975) —, we likewise should give weight to such authorities on the issue of what is commonly understood to be “manufacturing” by those conversant with the commercial scrap metal trade. Otherwise, we will be in the position of the mother who pointed out that all of the marching soldiers, except her son Johnny, were out of step. Last but not least, I wish to point out that the undisputed proof shows that the steel smelting mills cannot get scrap metal in the furnace doors until it has been baled. If the steel mills were baling the scrap in the same manner that Hummelstein is baling the scrap, I doubt that anyone would characterize the process as other than a part of the steel mill operation — i.e. manufacturing. Since Hummelstein performs the same process that the steel mill would have to perform to get the commercial scrap into the furnace doors why should Hummelstein’s operation not be considered part of the operation necessary for the production of steel from recycled scrap — i.e. a part of the manufacturing process. For the reasons herein stated, I respectfully dissent. Hurtle, J., joins in this dissent.