*1 813 . . from premises . . and away has possession relinquished to this rise The accident giving . the insured.” . controlled had the insured relinquished after claim occurred both I can the insured’s premises, away possession out as majority of no reason think logical pointing when of the accident limit the that an insurer can does place stated exclusion the above states and then not it so applying in this policy. I dissent.
For the reasons stated respectfully Fogleman this dissent. join JJ., Jones, HEATH,
Richard Director, R. Department Finance Administration, And State of Arkansas
v. RESEARCH-COTTRELL, INC. 2d 529 S.W. delivered Opinion November 8, 1975.] December denied [Rehearing *2 Hodnett, Glass, Brockman, H. Cooper, Ray Robert Karl James Eads, Skelton, Walter for appellant. James & for appellee. Lindsey Jennings, Wright, Research-Cottrell, T. Roy, Appellee, Elsijane Justice. Bechtel Cor- with the Inc., under subcontract agreement Unit the Arkansas Nuclear contractor poration, Russellville, & located in Power Company Light install a Arkansas, furnish design, engaged Power & draft tower for Arkansas natural station. After power nuclear generating at Company audit, of tax assess- with notice served appellant *3 ment which was in an hearing. upheld administrative in the a for declaratory judgment brought petition Appellee After trial Court of Arkansas. Chancery Pope County, the notices court entered for the judgment declaring appellee issued, been and that assessment have wrongfully was entitled to a use tax exemption. appellee first that an is Appellee exemption applicable alleged (D)(2)(d), 84-3106 which statute under Ark. Stat. Ann. § for and gives exemption machinery equipment required by law or to be utilized state installed and regulations by facilities or rfeduce air water and/or It was under this that the court found for pollution. theory The other is that advanced a theory appellee. appellee 84-3106 under Ark. Stat. Ann. specific exemption applies § that (D)(2), and tower constructed was and directly manufacturing. is The contends that there no under appellant exemption and under Ark. Ann. 84-3129 and either that Stat. theory, § § is a 84-3130 contractor therefore a consumer of appellee the items purchased, consequently responsible paying the use tax on such also contends purchases. appellant contractor, is that that since appellee any exemption could be to Arkansas Power & Com- possibly applied would contractor. imputed pany is certain last contention that were appellant’s exemptions utilities 439 of Act granted by legislature which was later modified Act presently (H). codified Ark. Stat. Ann. 84-31.05.1 The net effect of § last contention is that are utilities afforded appellant’s unique laws, status in the use tax and are not characteriz- exemption utilities, therefore, ed as manufacturers but as even if Arkansas Power & had an it Light Company exemption, would not be under the of Ark. manufacturing exemption (D)(2), Stat. Ann. 84-3106 but be limited to Ark. would § Stat. (H). Ann. 84-3105.1 § from the adverse decision of
Appellant brings appeal Court. Pope County Chancery For reversal contends the chancellor erred in appellant Research-Cottrell, Inc., contractor, finding appellee entitled to the benefits of the use tax in Ark. found Stat. Ann. (D)(2)(d).
Under first we contention find the issue to be appellee’s its con- Research-Cottrell, whether performing contractor) to in- tract (the with Bechtel Corporation general stall a tower at the nuclear generating facility Arkansas Power & entitled to Light Company, exemp- tions to the use tax found in the above cited statute. law,
Under well established Research-Cottrell, appellee, *4 Inc., has the burden of to an clearly proving any right exemp- Commissioner, tion. v. Corporation Ark. Cheney, C.J.C. 2d 437 (1965). S.W. The basic use tax were enacted in Act 487 of exemptions Arkansas, the 1949 Acts of (Ark. 84-3106). Stat. Ann. § basic use These have been amended several exemptions times, Act 5 of (First the 1968 including Acts of Arkansas Ex. Sess.) which is now codified as Ark. Stat. Ann. (D)(2)(d) (1973 Cum. The exact of the Supp.). language statute is as follows:
“There are hereby the specifically exempted taxes levied in this Act:
“(D)(2)(d) Machinery equipment required by State law or to be installed and utilized regulations facilities or or plants processing or water pollution air or reduce State to prevent and/or from the result otherwise which might contamination or of such facility.” operation the because was the statute passed This part concerned increased anxiety the recognized legislature dis- the caused environment citizens about damage About the thermal discharge. waste and of industrial posal pollution and state began same federal governments time was method forms. One which took several efforts abatement end of the incentives. in the form of tax By subsidies grant offer laws to their tax of states had amended 1969 a number mode of of incentive as a approach one another form or problem. pollution to the use tax laws the cited passed substantial industries to make
in an effort to encourage air and and reduce investments in order to capital This overall environment. and to water pollution protect of the tax was exemption. clearly purpose use tax for the exemption, qualify Appellee, definition. within the must fit statutory precisely tower is not that a takes cooling Appellant position “a massive cement but is only tower does of the structure.” Such a characterization cooling its being machinery equipment. preclude between the draws comparison also cooling Appellant that an ordinary and a structure at issue chimney, asserting to characterize reluctance would share appellant’s person hand, has other on the a machine. this tower as Appellee, who mechanical engineer made available testimony and construction design responsible this tower who found no denominating tower and difficulty towers are draft that natural a machine. He stated *5 machines, pollu- largest probably evaporative cooling instance, the in In mechanisms use tion control today. water, which is a the hot serves to machine prevent cooling electrical damaging generation, necessary by-product Reservoir). this instance (in Dardanelle waterways was that fish and life would be testimony significantly in the Reservoir without of the cool- damaged operation ing tower. of one of on this testimony issue engineers appellee’s
follows: us, words, in own
Q. your you briefly Could just describe what is tower? evaporative cooling A. An tower a sim- evaporative cooling really quite machine that uses ple the laws of nature to do its work for it. of It consists a device which raises water to some elevation, it to allows fall back to the thereby ground with air in which is the other direction engaging moving the transfer of from the water to the allowing energy air the form heat transferred. energy being
[*] [*] [*] All would describe this Q. tower as right, you device, a control Mr. pollution Haggerty? Yes,
A. it is. Its is to function the dis- certainly prevent very heat into the charge high local quantities water, which would body result thermal pollution use, therefore, of that water. So its body is pollution control device thermal designed pollution. would tower, Also describe Q. you device, as a control only but as a machine you understand the word? Yes,
A. it’s machine in that it is probably largest kind. device of its single system cooling Largest type machine ever made in fact. Sons, v. W. E. Cox & Blankenship
S.W. 2d 918 (1942), we relied the WebsterInternational upon definition of the word “machine” as Dictionary “any being resistant, device of two or more con- consisting relatively *6 intermo which, by pre-determined certain strained parts, so motion force and transmit tion, modify serve to may kind of desired do some effect or to some given to produce “a crowbar abut out that pointed work ...” We additionally in use” would and “a a fulcrum” pliers pair ting against word “machine.” definition” of the “strict fall within any 697, Co., Pearson, Inc. v. Rust Later in Ben John definition found we the (1954), 2d incorporated 168 S.W. v. added an extract from Corning in Blankenship,supra, effect How.) 14 L. Ed. Burden, (15 56 U.S. device or includes mechanical machine every “the term some and devicesto mechanical perform powers combination function In the or result.” a certain (Emphasis supplied.) and produce effect in recir the involved bar, even principle case at though lacks the water for complexity the cooling purposes culating machine, there still with a is present associated customarily the heated mechanical elevating (by pumps) dynamics interaction of this water some 447 feet and subsequent aid in baffles to heated water with asbestos dissipating with This interaction water descends. comports heat as the Pearson, of a definitions Ben supra, Blankenship tower of the machine in that the internal components resistant, constrained more relatively “two or comprise desired effect or do some some given which parts” “produce kind of work.” use tax control
The second pollution exemp- part natural must come within is that tion which appellee be law or must state draft tower required reduce air installed to or regulations and/or result from the otherwise opera- water might tion of such facility. No. 22 was the issued by Exhibit permit
Appellee’s Power to Arkansas Commission Pollution Control Stat. Ark. This & required Company. permit for it is unlawful (2). The statute states that Ann. waters of into the effluent to discharge any any person for and obtained disposal first without applied having state Commission. from the permit the attorney 23 a letter from Exhibit No.
Appellee’s the State of Pollution Control and Department Ecology. letter states inter alia:
“In there no that the summary, question cooling tower was a control under the pollution required system Arkansas Water and Air Pollution Control Act Regula- tion No. and the terms of the Commission Ab- permit. tower, sent the thermal of the Dar- cooling pollution danelle Basin would result from the combined inevitably of water the two discharges nuclear units.” by No oral nor evidence was testimony offered documentary of by Finance and Administration Department to con- trovert the fact that the tower was state required law. the trial Mr. Dennis
During of Haggerty, engineer testified that the appellee, Arkansas Power & Station at Russellville is He really energy processing plant. explain- ed how the manufacture of can be traced as electricity just one can trace the of a that manufactures steel output plant food. Like other processes any manufacturing facility, power converts raw materials into a processing plant salable product.
In addition to the which indicated that testimony does power manufacture there is also Arkan- electricity, sas for this judicial authority position. Commissioner Morley, Root, Inc., v. Revenues Brown and 239 S.W. 2d 1012 (1951), we held that personal tangible property purchased contractors in construction of engaged a dam in for part “manufacturing” electricity exempt from the use tax to the extent that went into the con- property struction of the dam. We characterized the specifically of electrical generating power manufacturing process Morley, supra. Appellant that argues for utilities are exemptions restricted to Ark. Stat. Ann. 84-3105.1 (H) (Act 439 of 1969 as amended Act 222 1971). We find that Act 222 of 1971 removes of the use tax many which were exemptions formerly utilities, to granted but said public act does not indicate that it is exclusive and that there could not exist an concurrently control For exemption appellant pollution equipment. control that only argue pollution exemption applies some of manufacturers and not to others is not rational types for it that the Arkansas would be tantamount to saying industries to control the en- some is encouraging legislature while other in- vironmental discouraging pollution problem apparent dustries from so. It is to this to do Court attempting intended to grant 1968 was Act of (D)(2)(d) Section that incentives for any industry has the the air or water Arkansas. capability polluting further even if contends
Appellant were Power & available to Arkansas it is Light Company, available to Research-Cottrell as is a con- appellee *8 tractor must the use tax and such pay despite exemptions relies available to owners. Act 125 of 1965 Appellant upon 84-3129, (Ark. Acts of Stat. Ann. et which Arkansas seq.) § levied on all a 3% tax tangible personal property purchased to be used in the contractors of contracts performance It is to note 6 of within the state. that Section Act important 125 of 1965 states: this Act shall be cumulative to the
“The provisions
(As Amended).”
of Act 487 of 1949
provisions
Act
of 1949 is the basic use tax
statute
exemption
and one of several amendments
to it was Act 5 of 1968
to which
referred
included the
previously
“pollution” exemp
tion under consideration here. Ark. Stat. Ann.
84-3106 is
Act 487
with
of 1949
the amendments which
been
along
have
then.
since
This issue was considered in
adopted
Bryan Leary,
Comm. Revenuesv.
Wolfe,
“Had the intent been to of the repeal any provision then law was free to so recite in existing, legislature Act 125.”
Thus we held that the afforded tax- exemptions Wolfe (the Act 487 use basic were payer exemptions) not 125 of 1965. Act repealed by and of the plain unambiguous wording exemption herein reflects that it was based the nature of the tran- upon saction and not the It is an ex- identity taxpayer. to manufacturers or but emption granted only processors “installed utilized manufac- machinery or facilities in this State” .... are turing processing plants from the tax. specifically exempted To hold the did not to contractors apply would defeat the Act purpose designed the construction and installation of encourage anti-pollution few instances would equipment. very manufacturer undertake construction installation of and/or involved herein. In the course magnitude regular business owner would all contract with a do the contractor to con- probability qualified work. struction we with learned trial court in its
Accordingly, agree *9 that: holding
“1. The and installation of design, a furnishing natural draft tower under its subcon- by plaintiff tract with Bechtel the contractor Corporation, general Nuclear for Arkansas 1 of Power & within comes the of Ark. Company, specific exemption (D)(2) Stats. 84-3106 of the Arkansas Compensating § Use Tax and being machinery equipment required by law installed State or be and utilized regulations or or in facilities this processing plants State to water contamination which otherwise result from the of such might operation or facility. contractor, the Plaintiff,
“2. is entitled to 84- Ark. the of Stats. benefits of exemption specific § Arkan- is to relief from the (D)(2)(d), and entitled Tax in this transaction. sas Use Compensating defendant “3. The notice of assessment and the was specific issued wrongfully against plaintiff Tax Use the Arkansas exemption Compensating (D)(2)(d) set in Ark. Stats. forth exempts Use Tax.” from the Arkansas plaintiff Compensating is found that entitled the exemption Having in statute section the anti-pollution the provided pertinent we that the cool- not reach consideration of its contention do tower directly ing manufacturing. trial in all of the court is affirmed respects.
Judgment Fogleman George dissent. and Jones, JJ., Smith, Rose George I find it little Smith, dissenting. Justice, Rose court can describe that short of astonishing majority when machine, the One as a opinion Nuclear especially burden of show- has the clearly that taxpayer recognizes is to as we (“To doubt deny,” its to the right ing said), when is a foreign corporation have taxpayer of our to a free ride at the little claim expense taxpay- having citizens. ing enormous tower Nuclear One essentially — concrete, steel, all immovable com- stone
made True, it houses machinery construction. its ponents tower, so it that can hot of the top lifts the water at But point back to earth cooled by gravity. by falling contained within the machinery is not issue the exemption tower; is the question right certainly exempt. as a machine. tower itself exemption, of one testimony appellee’s The majority quote *10 in the most the matter light who presumably put employees, to favorable his employer:
An tower is a sim- evaporative cooling really quite machine that laws of to uses the nature do its work ple for it. It consists of a which raises water device to some elevation, allows it to fall back to the ground, thereby with air which is in the other direction engaging moving the transfer from water to the allowing energy air, and heat in the form is transferred. energy being to machine, that definition of are a there According such, machines that have not been with many recognized an attendant In a concrete rice-mill the exemption. rough is level, rice carried it by so that can be top as it economically descends processed machinery by gravi- But level. we don’t think of rice mill as ty ground a machine. a tower for the manufacture of leaden shot the lead carried to the of the tower and top dropped through state, the air in a molten so that it forms into before it spheres hits the water at the bottom. But we think don’t a tower as In the machine. Monument Washington people are carried to the in elevators and back down top brought But we don’t think of the gravity. monument as a machine. On Arkansas farms fodder is lifted to silo so that top it can settle to the bottom and be consumed cat- by gravity tle. But we don’t call coincidence, the silo a machine. By however, Nuclear One is called a silo. I think the popularly view to silo, popular Nuclear One is a not a right; machine.
Jones,
this dissent.
J., joins
Fogleman,
A.
While I must
Justice, dissenting.
John
with the
tower
agree
majority
equip-
ment, if not
I do
machinery,
directly manufacturing,
that there was
agree
from the use tax in this
case. Tax
must be
construed in
exemption provisions
strictly
favor of the state and
and to
doubt
against
taxpayer
Co.,
Heath v. Midco
deny
exemption.
Equipment
course,
2d 739.
S.W.
Of
the burden was
upon
to show its entitlement
exemption beyond
reasonable
Heath,
doubt. Arkansas
v.
Beverage Company
Ark.
825 Ark. Stat. not consider that First, I that I do should say separate 84-3106 is an (D)(2)(d) Ann. § § one describes of (d) (D)(2). merely 84-3106 The sub-section and machinery equipment the for which purposes manufac- of at commerce articles in directly manufacturing in the State of or facilities and turing plants processing used to for and qualify exemp- Arkansas may purchased and materials on the tion. The tax was assessed components tower, not the tower the on that into the of went construction must first itself. In order to the exemption appellee qualify and show assessed on machinery that the was equipment. This, us that from the record before not I cannot tell it did do. was tax was assessed or machinery on which the item any not it was. all of equipment. Certainly Research-Cottrell whatever was Secondly, purchased tower, not and used in the used directly building in or fabricating, producing manufacturing, assembling, as electricity, required processing, finishing packaging (D) (2), consideration can be under 84-3106 before qualify § set in uses and out sub- to the subordinate given purposes connection, (e). it should be (a) through In sections (d) emphasized sub-section did not amend the introduc- (2) (D) of 84-3106 as the seems tory majority language § (D). treat it. It added to subsection merely purpose I misread Act 5 of First Ex- has fear majority Session 1968. 2 of that Act an amend- of Sec. traordinary 1949, (D) ment of 6 of Act 487 of amended of subsection as § 1955, 55 1 141 of Act as amended of Act 1 § § 1957, 1959, 1 of 35 of as as amended Act amended by by § § of 1967 (§ of Act as amended 2 of Act 113 by § Stat., 1947) to as it (D) 84-3106 read is reproduced not Vol. 7B Ark. Ann. and Stat. Supp. quoted opinion. majority ignores language majority (D) (2). did not next Research-Cottrell purchase place, and utilized aby to be installed and machinery equipment state. It in this or facility processing plant did not install and utilize items for its any purchased own if called that could be As operation, manufacturing. before, out the assessment is on pointed in the first is not the use question place which Research-Cottrell’s will be end product put. ques- *12 tion is to what use did Research-Cottrell items those put which the tax was assessed. upon Research-Cottrell did customer, use them to air or water Its pollution. Arkansas Power & did. Company,
Under the construction this act given majority, any producer which it sells to any machinery some manufacturer in Arkansas for installation and use Arkansas will have a use tax he everything for use in purchases producing equip- ment. I submit that the General had no such inten- Assembly tion. E.
Mary BAKER et al v. Claude ODOM
et al 2d 138 S.W. delivered Opinion November