49 N.E.2d 1 | Ind. Ct. App. | 1943
The appellee brought this action against the appellant to recover certain taxes previously paid under the Indiana Gross Income Tax Act (Acts 1933, ch. 50; Acts 1937, ch. 117), the tax periods involved being those from May 1, 1933 through December 31, 1939. Judgment below was for the appellee. The appellant assigns as error the overruling of its motion for new trial which asserts that the decision of the court is not sustained by sufficient evidence and is contrary to law.
The evidence is by way of an agreed stipulation of facts, Paragraph 3 of which reads as follows:
"Plaintiff's receipts involved herein arose from the following course of business: Plaintiff manufactures and sells glass bottles and other glass products. Said receipts were from the sale of glass bottles to persons engaged in the production and brewing of beer in Indiana. Plaintiff's said customers placed beer in said bottles, placed caps and labels thereon, and sold the bottles of beer to licensed wholesalers within Indiana for a specified price. There was included in the total amount paid by such wholesalers a stipulated amount which said breweries, in accordance with the trade practice pertaining to said bottles, would refund or credit to said wholesalers upon return of said bottles by said wholesalers. Said specified amount was substantially the same as the cost of said bottles to plaintiff's customers. In the event the bottles were not returned to plaintiff's customers, said customers continued to retain the aforesaid stipulated amount in accordance with the usual trade practice. Most of said wholesalers returned said bottles to plaintiff's customers and were refunded *687 the aforesaid stipulated amount, and said bottles were again filled and delivered by plaintiff's customers to the wholesalers under the same arrangement. This process was repeated until said bottles had been returned, refilled and redelivered an average of approximately seventeen times to plaintiff's customers before such bottles were not returned to plaintiff's customers. The bottles that were not returned were ordinarily replaced, from time to time, by plaintiff's customers through the purchase of new bottles. The wholesalers, with whom plaintiff's customers dealt, disposed of the bottles of beer to retailers under the same conditions with respect to bottles, and the retailers disposed of said bottles of beer under the same conditions with respect to bottles when the bottles were removed by the retailers' customers from the retailers' premises."
The amounts involved are also stipulated, as are all formal matters.
The question is whether the appellee was properly taxable at the rate of one percent or one-quarter of one percent, and it arises under § 3 of the original act, being Acts 1933, ch. 50, for the periods prior to April 1, 1937 and under the same section as amended in Acts 1937, ch. 117, for the periods from that date through December 31, 1939.
Section 3 of the original act provided that:
"The tax hereby provided for shall be imposed at the following rates:
"(a) Upon the entire gross income of every person engaged in the business of manufacturing, compounding, or preparing for sale, profit, or use, any article or articles, substance or substances, commodity or commodities; . . . one-fourth of one per cent.
"(b) Upon the entire gross income of every person engaged in the business of wholesaling and/or jobbing tangible commodities not specifically mentioned in subsection (d) of this section, one-fourth of one per cent. *688
"(c) Upon the entire gross income of every person engaged in the business of retailing of any tangible commodity or commodities not specifically mentioned in subsection (d) of this section, one per cent."
Section 3 as amended in 1937 provides in part as follows:
"The tax upon the receipt of gross income hereby provided for, shall be measured by the amount or volume of such gross income and shall be imposed at the following rates:
"(a) With respect to that part of the gross income of every person which is received from wholesale sales, except as hereinafter provided in subsection (d) of this section, the tax shall be equal to one-fourth of one per cent of such part of the gross income. The term `wholesale sales' means and includes only the following: (1) Sales of any tangible personal property (except capital assets of the seller) to a purchaser who purchases the same for the purpose of re-selling it in the form in which it is sold to him; . . .
"(f) With respect to that part of the gross income of every person which is received from any source not enumerated in subsections (a) to (e) inclusive, of this section, . . . the tax shall be equal to one per cent of such part of the gross income."
The act further provides that all sales not specifically defined as wholesale sales are retail sales, and are taxable at one percent, Acts 1937, ch. 117, § 3 (c).
It was said in the case of Storen v. J.D. Adams Mfg. Co.
(1937),
"The court erred in concluding that that part of the income of a manufacturer, which was received from sales at retail to the ultimate users, is not taxable at one per cent." In recognition of the rule laid down in that case and several in this court following it, the appellee admits that it is not entitled to the lower rate merely because it manufactured the bottles.
Decisive of the question here is the brewer's purpose in buying the bottles, the real question being whether the brewers bought the bottles from the appellee for the purpose of resale within the meaning of the Gross Income Tax Law, as contended by the appellee, so that such sales are properly taxable at the one-quarter of one percent rate applicable to "wholesale sales," or whether the brewer bought them for use by themselves as contended by the appellant, thus fixing the rate at one percent.
The regulations adopted by the Gross Income Tax Division defined wholesale sales under the original act as "(d) Wholesale — a sale made to another for resale." Regulation 9 (d) (July, 1934 ed.). "Wholesale sales are defined by the department as being any sales made to another for resale regardless of price or quantity, and whenever the taxpayer can show that the purchaser is buying an article for the purpose of reselling it, it will be deemed to be a wholesale sale and one-fourth of one percent rate will apply." Regulation 48 (July, 1934 ed.). It will be noted that the statutory definition of wholesale sales contained in § 3 of the 1937 Act provides, like Regulation 48, that a wholesale sale is a sale made to another who purposes to resell it but with the added requirement that to constitute a wholesale *690 sale the article must have been purchased for the purpose of reselling it in the form in which it is sold to him. (Our italics.)
The appellant relies strongly upon the following language above quoted from Storen v. Adams Mfg. Co. supra, that "The court erred in concluding that that part of the income of a manufacturer which was received from sales at retail to theultimate users is not taxable at one percent." (Our italics.) It contends that the brewer is the ultimate user of the bottles within the meaning of the quoted language. But we believe that the appellant errs in this assumption under the facts in this case. It appears to us that the bottles are as useful to the wholesaler, the retailer and the consumer as they are to the brewer, and we believe that those purchasing bottled beverages under the arrangement mentioned here universally feel that they are the owners of the bottles and can keep or dispose of them as they see fit unless and until they choose to return them to their immediate vendor. The bottles go down the line from manufacturer to brewer to wholesaler to retailer to the customer who, after surmounting a multitude of laws, ordinances, regulations, rules and rulings, all of which are intended, and a few of which are appropriate for the purpose of curbing the unbridled enjoyment of the beverage, finally drinks it. He is the ultimate or last user of the bottle as well as its contents, and he and he alone determines whether the bottle may again enter the channels of trade and thus again become useful to its successive owners as a container of beer. The empty bottle may retrace its steps to the same brewer, it is true, but on the other hand may find itself in an ash can or being put to other uses more or less practical and advantageous to its then owner. *691
The appellant contends that the brewer does not purchase for resale and in fact does not sell the bottles to its customers because there is no mutual agreement between the 1-3. parties and no transfer of title between the parties. With this contention we do not agree. In City ofCannelton v. Collins (1909),
"Subject to the provisions of this act and of any statute in that behalf, a contract to sell or a sale may be made in writing (either with or without seal), or by word of mouth, or partly in writing and partly by word of mouth, or may be inferred from the conduct of the parties. (Acts 1929, ch. 192, § 3, p. 628.)"
The transaction as shown by the stipulation of facts and the inferences legitimately to be drawn from them is one well recognized in the law. Rule 3 (1), § 58-203, Burns' 1933 provides that:
"When goods are delivered to the buyer `on sale or return,' or on other terms indicating an intention to make a present sale, but to give the buyer an option to return the goods instead of paying the price, the property passes to the buyer on delivery, *692 but he may revest the property in the seller by returning or tendering the goods within the time fixed in the contract, or, if no time has been fixed, within a reasonable time." (Our italics.)
The appellant argues with much plausibility that considering the fact that the brewer's principal business is that of making and selling beer, that it refills the bottles an average 4, 5. of seventeen times, necessarily covering a considerable period of time and that it makes no profit on the bottles clearly demonstrates that it purchases the bottles for use and not for resale within the meaning of the Act and the argument is not without appeal. However, similar situations have been dealt with by the courts. In the case of People v.Cannon (1893),
"The evidence here shows as it seems to us the existence of an understanding that the party may return the bottles and get back his money, or keep the bottles and regard the deposit as a payment, just as he might elect. . . . The case is barren of any evidence proving an obligation to return the bottles. . . . The taking of security for the return of the bottles from the party to whom they were delivered, so long as there is no evidence of an agreement and the party is under no legal obligation to return them, he having the right to retain them if he choose to leave the money deposited as a payment for the bottles, amounts in law to a sale of them at the election of the party to whom they are delivered."
The case of Commonwealth v. Brandon Farms Milk Company
(1924),
It is lastly contended that in any event the brewer does not purchase the bottles for the purpose of reselling them in the form in which they are sold to it, for it fills them with 6. beer and caps and labels them before disposing of them, but to our mind no change in the form of the article occurs within the meaning of the statute. After disposing of its *695 contents the ultimate purchaser of the bottle has exactly what the appellee sold in the first place — an empty bottle. Its shape, structure and identity as a bottle remain unchanged and the principal further use to which it may be put remains exactly the same.
The appellee suggests that we invoke the rule that statutes levying taxes "are not to be extended by implications beyond the clear import of the language used, in order to enlarge their operation, so as to embrace transactions not specifically pointed out. In case of doubt such statutes are to be construed more strongly against the state and in favor of the citizen."Department of Treasury of Indiana v. Muessel, et al. (1941),
Judgment affirmed.
NOTE. — Reported in