Opinion
3 Div. 356.
April 16, 1942. Rehearing Denied June 11, 1942.
Appeal from Circuit Court, Montgomery County; Walter B. Jones, Judge.
Bill by J. B. Poer, doing business as New Yorker Beverage Company, for declaratory judgment against John C. Curry, as Commissioner of Revenue, to determine liability under Use Tax Act. From an adverse decree, complainant appeals.
Affirmed.
The agreed statement of facts is as follows:
"It is hereby stipulated and agreed by and between the parties in the above entitled cause that the following and none others are the facts.
"1. J. B. Poer, hereinafter called Complainant is over the age of twenty-one (21) years and is a resident of Jefferson County, Alabama and is engaged in the business of manufacturing and selling at wholesale in Alabama carbonated beverages for human consumption. Complainant conducts such business under the name and style of 'New Yorker Beverage Company.'
"2. John C. Curry is the duly appointed qualified and acting commissioner of Revenue of the State Department of Revenue, hereinafter called, Respondent. Respondent's official residence is Montgomery County, Alabama.
"3. In manufacturing and selling at wholesale carbonated beverages, Complainant markets the same in bottles which are closed by tops, caps, or crowns composed of a piece of metal lined with a sterile substance not affected by a carbonated beverage, the edges of which metal are fluted and sprung over the lip of the bottle neck. The carbonated beverages are mixed, prepared and conditioned by machinery and inserted in said bottles and the caps or crowns are placed thereon mechanically.
"4. Said bottled beverages are sold by Complainant to retail dealers in case or larger lots, each case containing twenty-four (24) bottles. The retail dealers dispensing said beverage to the public sell the same from coolers at filling stations, grocery stores, cold drink stands, manufacturing establishments, hotels, drug stores and in similar places in quantities ranging from one bottle to a customer for consumption on the premises of the retailer to lots consisting of several cases for consumption at other places. Said carbonated beverages are sold at retail for five cents (5¢) and one (1) token per bottle, provided the customer returns the bottle to the dealer; the dealer who in turn returns the bottle to the manufacturer, is allowed full credit for each bottle so returned.
"The cap, top or crown, however, must be removed before the beverages can be consumed from the bottle, and once removed, it is no longer sterile or usable for the purpose for which it was manufactured. Said cap is ordinarily thrown away at the time the beverage is consumed, having only salvage or junk value thereafter. Same is not reclaimed or reused by the bottler. After the beverage is bought by the customer from the retailer, the customer sometimes requests the retailer to remove the cap or crown from the bottle and sometimes the customer removes it himself on the premises; at other times the customer carries the bottle away unopened and removes the cap or crown elsewhere for the consumption of the beverage. The retailer, however, never removes the cap or crown from the beverage until it has been sold, as the beverage will rapidly deteriorate if kept on hand by the dealer without a cap or crown on the bottle while he awaits its sale.
"5. Complainant purchases said caps or crowns in large quantities from manufacturers thereof located without the State of Alabama. Pursuant to the regulations of the Department of Agriculture and Industries, of Alabama, there is printed thereon the name of the beverage to be put in the bottle to which said cap or crown will be attached. Said cap is one of the means attached to said bottle to show the contents thereof. Some bottles have only that mark of identification.
"The retail dealers in Complainant's beverages very frequently intermingle in one cooler, or refrigerator the various beverages manufactured by Complainant with beverages manufactured by other bottlers, and in selecting a beverage for a given customer, the identity of the beverage sold to said customer is determined in the main by the lettering on the cap or crown.
"In order that said bottle will retain the carbonated beverage and the gas which is a necessary component part of carbonated beverages, said bottle must be sealed airtight by said top or crown or by some other air tight top or crown.
"6. In the manufacture of said carbonated beverage, Complainant charges in the cost of said cap just as he does the cost of the sugar, the gas, the flavoring and other ingredients that go to make up the bottled beverage, and the purchaser from the retailer at the price of five cents (5¢) and one token which he pays for said bottled beverage, pays the cost of said cap or top.
"7. That in the conduct of his business Complainant heretofore purchased a quantity of said bottle caps, crowns or tops from outside of the State of Alabama for the aggregate price of $438.84; that such caps or crowns were brought into the State of Alabama and have been used and are being used by Complainant in connection with bottling and selling his beverages solely in the manner aforesaid.
"8. That on April 22nd, 1941, the State Department of Revenue acting by and through the Respondent, John C. Curry, Commissioner of Revenue, made a determination and assessment against the Complainant for taxes, interest and penalties aggregating $9.69 alleged to be due by the Complainant under the provisions of the Alabama Use Tax Act (General Acts of 1939, page 96 et seq.) on account of Complainant's purchase and use of said caps, crowns or tops; that a true and correct copy of the notice of said determination and assessment sent to Complainant is attached to the Bill of Complaint marked Exhibit 'A' and by reference made a part hereof.
"9. That on to wit, May 2nd, 1941, Complainant filed a Petition for Redetermination of said tax, pursuant to Section XI of said Alabama Use Tax Act and that on May 7th, 1941, the said State Department of Revenue acting by and through the Respondent overruled said Petition for Redetermination and made said assessment of $9.69 final and gave notice thereof to Complainant; that a true and correct copy of said notice together with the Minute Entry on the Minutes of said Department is attached to the Bill of Complaint marked Exhibit 'B' and by reference made a part hereof.
"10. That on May 20, 1941, Complainant paid said assessment of $9.69 under protest duly verified and setting forth his grounds of objection to the legality of said tax and assessment; that a true and correct copy of said protest is attached to the Bill of Complaint, marked Exhibit 'C' and by reference made a part hereof."
Oliver W. Brantley and Lange, Simpson, Brantley Robinson, all of Birmingham, for appellant.
The term "wholesale sales" includes the sale to a manufacturer of the furnished container of the products which he manufactures for sale. It includes the selling to a manufacturer of the label of the product which he manufactures for sale. Code 1940, Tit. 51, §§ 787, 788, 789; McCarroll v. Scott Paper Box Co., 195 Ark. 1105, 115 S.W.2d 839; Ivey v. Railway Fuel Co., 218 Ala. 407, 118 So. 583; City Nat. Bank v. Nelson, 218 Ala. 90, 117 So. 681, 61 A.L.R. 938. Where the language of a statute is unambiguous, the clearly expressed intention must be given effect, and there is no room for construction. Louisville N. R. Co. v. West Union Tel. Co., 195 Ala. 124, 71 So. 118, Ann.Cas. 1917B, 696; Tucker v. McLendon, 210 Ala. 562, 98 So. 797; State v. Fain Service Station, 23 Ala. App. 239, 124 So. 119; Daley v. State, 13 Ala. App. 310, 69 So. 338; State v. Tuscaloosa B. L. Ass'n, 230 Ala. 476, 161 So. 530, 99 A.L.R. 1019; Abraham v. Hard, 229 Ala. 2, 155 So. 590; Dixie Coaches v. Ramsden, 238 Ala. 285, 190 So. 92; Hattemer v. State Tax Commission, 235 Ala. 44, 177 So. 156. Taxing statutes are strictly construed against the taxing power and in favor of the taxpayer. Yarbrough Bros. Hardware Co. v. Phillips, 209 Ala. 341, 96 So. 414; State v. Seals Piano Co., 209 Ala. 93, 95 So. 451; State v. Fain Service Station, supra; Jefferson County v. Smith, 23 Ala. App. 421, 129 So. 401; Hill Grocery Co. v. State, 26 Ala. App. 302, 159 So. 269; 25 R.C.L. 1092, § 307; 59 C.J. 1131, § 670.
Thos. S. Lawson, Atty. Gen., and John W. Lapsley and J. Edw. Thornton, Asst. Attys. Gen., for appellee.
The sale of bottle tops to a bottler of soft drinks is a "retail sale". Code 1940, Tit. 51, § 787(d), (e). Bottle tops are not "furnished containers". The language is plain, calling for no construction, and the legislative history negatives this result. City Paper Co. v. Long, 235 Ala. 652, 180 So. 324; Durr Drug Co. v. Long, 237 Ala. 689, 188 So. 873; Birmingham Paper Co. v. Curry, 238 Ala. 138, 190 So. 86; Raible Co. v. State Tax Commission, 239 Ala. 41, 194 So. 560. Nor are bottle tops labels of furnished containers. Higgins v. Keuffel, 140 U.S. 428, 11 S.Ct. 731, 35 L.Ed. 470; United States v. Sixty-Five Casks Liquid Extracts, D.C., 170 F. 449, affirmed 4 Cir., 175 F. 1022; United States v. Skilken, D.C., 293 F. 916; Perkins v. Heert, 5 App. Div. 335, 39 N.Y.S. 223; United States v. Marble, 14 D.C. 32, 3 Mackey 32; United States v. Herzog, 2 Cir., 145 F. 622; Lorillard Co. v. Drummond Tobacco Co., C.C., 14 F. 111. Cf. Smith Grape Juice Co. v. United States, 63 Ct.Cl. 140.
Bill for declaratory judgment by J. B. Poer, an individual doing business as New Yorker Beverage Company, against John C. Curry, as Commissioner of Revenue and as Chief Executive Officer of The Department of Revenue of the State of Alabama. Title 51, Section 810, Code 1940. From a decree favorable to respondent, complainant appeals.
The cause was submitted upon an agreed stipulation of facts which appears in the reporter's statement of the case.
The question presented by this appeal is: Does the purchase of the crowns, caps or tops used by complainant on his bottled beverages constitute a "wholesale sale" within the meaning of the term as employed in the Alabama Use Tax Act, or, does it constitute a "retail sale", as that term is used in the Act? The trial court ruled that it was a "retail sale".
The pertinent provisions of Section 788, Title 51, Code 1940, are as follows: "Property taxed; persons liable. — (a) An excise tax is hereby imposed on the storage, use or other consumption in this state of tangible personal property purchased at retail on or after the first of March 1939, for storage, use or other consumption in this state at the rate of two percent of the sales price of such property," etc.
Section 787, Title 51, Code of 1940, contains, among others, the following statutory definitions: "(d) The term 'wholesale sale' or 'sale at wholesale' means a sale of tangible personal property by wholesalers to licensed retail merchants, jobbers, dealers, or other wholesalers for resale and does not include a sale by wholesalers to users or consumers not for resale. The term 'wholesale sale' shall include a sale of tangible personal property or products (including iron ore) to a manufacturer or compounder which enters into and becomes an ingredient or component part of the tangible personal property or products which he manufactures or compounds for sale, and the furnished container and label thereof. (e) The term 'sale at retail' or 'retail sale' shall mean all sales of tangible personal property except those above defined as wholesale sales. The quantities of goods sold or prices at which sold are immaterial in determining whether or not a sale is at retail."
Clearly, the appellant, a manufacturer and seller of bottled soft drinks, did not purchase the crowns, caps or tops for resale. City Paper Co. et al. v. Long et al., 235 Ala. 652, 180 So. 324; Durr Drug Co. v. Long et al., 237 Ala. 689, 188 So. 873. Equally clear, they do not constitute an ingredient or component part of the soft drinks manufactured and sold by appellant. Thus by elimination, the crowns, caps or tops must come within the meaning of the term "the furnished container and label thereof" in order to constitute a "wholesale sale" under the statutory definition.
We deem it unnecessary to repeat here the well-recognized canons of construction of taxing statutes. See Louisville Nashville R. Co. v. Western Union Telegraph Co., 195 Ala. 124, 71 So. 118, Ann.Cas. 1917B, 696; Tucker v. McLendon et al., 210 Ala. 562, 98 So. 797; Hattemer v. State Tax Commission, 235 Ala. 44, 177 So. 156; Fidelity Deposit Co. of Maryland v. Farmers' Hardware Co. et al., 223 Ala. 477, 136 So. 824; Thomason v. Court of County Commissioners et al., 184 Ala. 28, 63 So. 87; Ex parte State ex rel. Lawson, 241 Ala. 304, 2 So.2d 765, 766; Abramson et al. v. Hard, Comptroller, 229 Ala. 2, 155 So. 590; American Bakeries Co. v. City of Opelika, 229 Ala. 388, 157 So. 206; Birmingham Paper Co. v. Curry, 238 Ala. 138, 190 So. 86.
It will be observed that the Act construed in the cases of City Paper Co. et al. v. Long et al., supra, and Durr Drug Co. v. Long et al., supra, did not contain the term "the furnished container and label thereof." General and Local Acts 1936-1937, Extra Session, page 125.
The Legislature in 1939 changed the definition of "wholesale sales" in the Sales Tax Act, General Acts 1939, page 16, Code 1940, Tit. 51, § 752-754, 756 et seq., and at the same time adopted the so-called "Use Tax Act" General Acts 1939, page 96, Code 1940, Tit. 51, § 787 et seq., the Act here involved, with the same definition of wholesale sales as was inserted in the new and amended Sales Tax Act.
No doubt the definitions found in the Use Tax Act, and in the 1939 amendment to the Sales Tax Act, bear the influence of the decision in the case of City Paper Co. et al. v. Long et al., supra.
Admittedly, if appellant furnished the bottle with the soft drink manufactured, and sold the entire unit to the retail merchant, the bottle would constitute the "furnished container". But here, the bottle is returned, not sold. Appellant argues, however, that the bottle crown, cap or top is a part of the container and is not returned, and therefore, being apart of the container, and furnished, is exempt. The argument is ingenious, but not convincing. In our opinion, the Legislature did not have in mind such piecemeal legislation, but was thinking in terms of furnished containers as a unit — one used or destroyed in the transaction.
We are also of the opinion that the crowns, caps or tops are not exempt as "labels". First, it is to be noted that the exemption applies to "furnished containers and labels thereof." [Italics supplied.] Labels thereof, in the same clause with furnished containers, refers to furnished containers. There being no furnished containers, the crowns, caps or tops have no field of operation as labels under the facts of this case.
Second, if it be conceded that labels thereof, as used in the Act refers to the contents of the bottle rather than furnished containers, the crowns, caps or tops here considered were never intended to serve the purpose of such label. Although they may bear the name of the drink contained in the bottle, their primary purpose is to serve as seals or stoppers, and not as labels, as the term is ordinarily used. In our opinion, and we hold, the crowns, caps or tops do not come within the statutory definition of "wholesale sales," but are within the definition of "retail sale," and are, therefore, subject to the tax.
Affirmed.
GARDNER, C. J., and BOULDIN and FOSTER, JJ., concur.