Court Opinion

ID: 3626816
Source: CourtListenerOpinion
Date Created: 2016-07-06 00:07:11.517812+00
Date Added: 2024-06-11T14:23:10.197733
License: Public Domain

The principles underlying this case have been fully expressed in the companion case of Sterling Bag Co., Inc., v. City ofNew York, decided herewith. The only differences are, first,
drums and barrels are used as containers for molasses and syrup;second, some of the containers are purchased out of the State.
At the outset we are not concerned with the regulations of the Comptroller as we are solely guided by the meaning and purpose of the local tax law.
The American Molasses Co. of New York is engaged in the business of packing and selling syrup and molasses in New York city. It has its offices in Manhattan and its factory in Brooklyn. The product is packed in various types and sizes of containers which for this case consist of six-, eleven- and sixteen-gallon steel pails, fifty-five-gallon steel drums and fifty-seven-gallon wooden barrels. Only one per cent of the one-gallon cans are also included. Of the six-, eleven- and sixteen-gallon pails thirty per cent are sold to bakers and confectioners who use the contents in the manufacture of pastry, cake, candy and similar products, and seventy per cent are sold to dealers and distributors, persons who in turn resell the molasses in the original container. About fifty per cent of this latter portion is resold to bakers and confectioners and the remaining portion is sold by the wholesalers to retailers who dispense the product to housewives in smaller quantities. Of the fifty-five-gallon metal drums, which are used only for syrup, virtually all are ultimately sold to manufacturing bakers and confectioners. Of the fifty-seven-gallon wooden barrels used *Page 280 
for both syrup and molasses about fifty per cent are disposed of directly to bakers and confectioners who use the contents in their business, and about fifty per cent are sold to distributors, who in turn resell. Of this fifty per cent approximately one-half is parceled out in small containers by retailers for home consumption. The containers are not returned to the company, but when emptied can be disposed of in a second-hand market.
These various kinds of containers have from experience proved to be the most suitable for the business. The evidence shows that the customers for molasses or syrup are not billed for these containers and that the molasses company is not in the barrel, pail or steel drum business. The product sold is molasses or syrup, which has to be put into something, and a barrel or a pail is the most convenient according to quantity. That the customer does not purchase the container is evidenced by the fact that when empty he sells it for junk. Naturally, the cost of the container enters into the price, the larger the container the larger the price. Steel drums cost more than wooden barrels, etc. All that has been said about the sugar bags in the other case applies here, and these purchases by the molasses company are subject to the sales tax according to Local Law No. 20 there quoted.
The petitioner's illustration regarding the parts of an automobile is not very apt. True, a tire may be purchased here, the wheels there and the upholstery at yet a different place, and, questions the petitioner, would we tax the sale of these parts? The answer is no, for the simple reason that they are put together and resold as one manufactured article — the automobile — they are the automobile just as the hand and foot and head and neck are the person, as distinguished from his clothes. The wrappings or the clothes in which the molasses makes its appearance in public is not the molasses.
The other question, however, presents a point not in the bag company case. We have held in Matter of National Cash RegisterCo. v. Taylor (276 N.Y. 208); Matter of *Page 281 West Publishing Co. v. Taylor (276 N.Y. 535); Matter ofCompagnie Generale Transatlantique v. McGoldrick (279 N.Y. 192), that a certain class of sales were not taxable either because the contract of sale was not made in New York city or that it would be a burden on interstate commerce. The purchase of containers from Wheeling Corrugating Company, Pittsburgh Steel Drum Company and the National Steel Drum Company falls within the reasoning of these authorities. They were for articles to be manufactured and shipped from without the State and in some instances the contracts were approved at the place of manufacture. So, too, regarding the purchase of coal from the mines in Pennsylvania through the Logan Coal Company. Such items of purchase, whether containers or coal, as fall within this category, are not within the law, and the price is not subject to the two per cent tax.
The order of the Special Term and of the Appellate Division should be modified to this extent and the matter remitted to Special Term for judgment in accordance with this opinion. Except as modified, the orders should be affirmed, without costs.
HUBBS, LOUGHRAN and RIPPEY, JJ., concur with LEHMAN, J.; CRANE, Ch. J., dissents in separate opinion in each case, in which opinions FINCH, J., concurs; O'BRIEN, J., taking no part.
Order and judgment affirmed. *Page 282