*1 If, pertaining as stated official duties to relator’s office. crime, by respondents, there is the acts constitute a impeached why no reason the relator could not grand accusation, relator jury entitle which would by jury. to a trial jurisdiction

When a trial court assumes it is when lacking, highly standpoint it is desirable from the expeditious justice and economical administration by prohibition to have the matter decided rather than permit proceed expenses the trial court to with the trial, question appeal. and decide the same later an My experience original has been that briefs just helpful actions are court as the briefs appeal. holding temporary I concur in the that the prohibition permanent. writ should be made Note.—Reported in 106 N. E. 2d 441.

Samper Department v. The Indiana

State Revenue et al. 28,818. Filed June [No. 1952.] *3 Samper Gilliom, Ferdinand and Richard L. both of Indianapolis, appellant. McManamon, Attorney General;

J. Emmett John J. McShane, Lloyd Hutchinson, Joseph C. E. Nowak and Wallace, Deputy Attorneys General, Robert F. *4 appellees. Daniels; Joseph Daniels,

Baker & J. Paul N. Rowe counsel), (of Indianapolis, and Dan R. Winchell all of Amici Curiae.

Bobbitt, J. Appellant operates and a business owns city Company in the known as J. & R. Radio Service Indianapolis, Indiana. He has a store license issued During years 1946, by the State of Indiana. appellant’s 1948 and the first six of 1949 months derived from the fol- said business was lowing (1) and The sale radio sources activities: sets, for five which source accounted and television income; (2) per of his total the sale cent business parts equipment and “over-the-counter” of electronic any way with were in no connected service which income; thirty-two kind, per cent of said accounted equip- (3) repair of other electronic and radios and installation of “additional” ment and the sale and parts. equipment This and and radio other electronic sixty-three per cent of said income activity constituted jobs.” per cent are “addition of which five paid tax one reported and on activities Appellant of one- at the rate “retail merchant” and two as a this rate is The correctness of half of cent. one appellee. disputed by repair service, operation In the of his radio which place carried was on from same as was consisting of the sale of radios his business repairs, appellant purchased, equipment electronic kept prevailing prices, at the wholesale in stock convenience, parts equip- his and his customer’s might repair job. complete needed ment which parts equipment invoiced when so used were Such prevailing “over-the- customer price. profit on realized counter” jobs as that the same used in not in sold “over-the-counter” and identical repair. way connected with service or *5 charged the jobs for repair customer was In all charge customary prevailing labor labor involved at equipment charges parts and for work. The for such on separately and itemized set out and for labor were provided job. of each transaction was A record each con- three-part card which detachable the use of form which (1) check in the usual a claim sists the radio given he leaves customer at the time to the (2) index card which shows repaired; an to be customer, description of name and address together any specific with repaired the radio to repairs. This regarding nature of the information heading “estimate,” the contains, also under card following:

Tubes

Material

Labor

Total (3) appellant; card retained and a service and is assume, form, guarantee may we from its job completed given customer when the to the accepted. and

During years question appellant, the taxable here in 1937, ch. acting pursuant provisions of Acts Replacement, p. Burns’ 1951 §64-2604, §4, Income Tax separated and his Gross both on his books charges Return, for from the income received repair jobs, that received equipment from used in repair. charges with such for labor in connection from parts and part derived Upon of said income that paid tax the rate reported equipment upon of said cent, per of one of one-half paid reported tax resulting he from labor by the Gross per After audits cent. of one at the rate Department Tax Income an additional assessment was against appellant theory levied tax on the reported charges paid income from jobs used in and “addition” should be at activity rate of one cent because the from which performance the income derived a con- was Following an order the Indiana tract services. assessment, confirming Review Board additional said *6 petition in filed his the Marion Circuit Court provided by for a Judicial Review of said order as 1947, 365, p. 1451, ch. Burns’ §14, §63-3014, Acts of Replacement. From an order of the trial court affirming Board, except as to the order of the Review per “addition” cent of income derived from five prosecuted appeal court jobs, appellant to this 1947, p. 1451, Acts of said ch. 365 of the under of §18, Replacement. Burns’ 1951 §63-3018, presented con- questions here for our Three are : sideration activity- of appellant’s from the

First: income Is restoring receiving and other repairing radio sets and (1) equipment a “retail merchant” of electronic ordinary regularly selling course of his at retail in business; “for (2) it income received or conducted services; (3) is it or for performance of contracts” segregated may tax be both supra. purposes under §64-2604, questions these must found answer 370, (j) (k) and of of subsections ch. consideration 1947, 1471, p. Acts of Burns’ 1951 Re- §64-2601, §1, 310, (c) (g) p. placement; ch. §1, subsections Replacement; Acts of Burns’ 1951 §64-2603, 117, p. 604, the Acts of §64-2604, ch. §4, they supra, apply to in the case before us. as the facts They provide follows: 64-2601, supra, Section “(j) The term ‘retail and in- merchant’ means only person regularly occupationally cludes a engaged tangible purchasing personal property selling the same at retail at a fixed and estab- place

lished of business. “(k) ‘selling The term at in- retail’ means and only by cludes which a transaction a ‘retail merchant’ tangible ownership personal property transferred, conditionally otherwise, consideration, when such transfer is made ordinary regularly course the transferer’s con- place ducted and at a fixed business and established business, acquired by the transferee for any designated purpose other than those sub- (a) section sec. 3 of this act.” [§64-2603] 64-2603, supra,

Section respect “(c) part gross With in- person every come of who is retail merchant as selling defined in act this which is received from retail, equal the tax shall be to one-half of one gross part cent of such of the income. %] [V2 “(g) respect With to that every person income of which is received from *7 source not (a) enumerated in (f) subsections to inclusive, section, including, of this but foregoing, gross limitation of the pro- income from services, personal services, fessional or services of any whatsoever, estate, character of sales real rentals, performance all received funds of contracts, all funds received from the investment retail.’” receipts tax mean of capital, shall be definitions gross received from (Our italics). sale all equal income. The term ‘retail sales’ shall of receipts property any to ‘wholesale sales’ and one any from retail sales ^[1] source not included within cent of such whatsoever, ‘selling part all at 64-2604, supra,

Section “Any person gross receiving income taxable at ' provisions different rates under the of this act subject gross be upon shall to taxation his entire

34 highest applicable any part income at rate to gross segregate he such income unless shall of his income taxable different rates upon and in the he his records returns which files pursuant provisions segre- to the of this act. Such gation depart- subject shall review of provided.” hereinafter

ment as should, possible, prac receive a These when sections Department Treas- tical and construction. workable 9, Ridgely, (1937), ury 211 Ind. Executrix 557, 1067; 18, 4 E. 2d A. L. R. N. State 83, (1912), ex rel. Ind. v. Billheimer Shea Dept. 801; Dairy v. E. 96 N. Suabedissen-Wittner 626, 629, App. E. 2d Ind. 16 N. Treas. Finding 964; Tax Leather & Co. v. State Com Western P. 2d 529. 87 Utah mission necessary not such whether or It to consider is first 64-2604, segregation under subject section income is supra. derived from

Appellant contends him which are used sale equipment, de- and that electronic of radios and other such performed connection with rived from labor separate or activ- two sources repairs, from is income segregated his therefore, properly and, has he ities intent within the and service income as sales supra. provisions §64-2604, of said separation Appellees contend that the of such income merely a division of income from one source activity segregation income within the and is not a meaning supra. §64-2604, of said segre- correct, properly and he has

If gated jobs into from and service his income service, then he is taxable on sales at retail and the rate at retail at of one-half derived sales *8 per part on of his income derived of one cent and wholly per from labor or service at the rate of one cent. right, appellees If are then taxable single total of said income at a rate of tax either as a retail dealer under of the Income Tax Act Gross §3(c) per cent, (g) at one-half of one or he taxable under §3 performance on income received from the of con- tracts at the rate of one cent. may taxpayer

A have several kinds of income de activities, rived from different sources and each of which is taxable at a different rate. Section 64-2604, supra, possible it makes for such tax- segregate payer according income to its “Seg- pay applicable source and the rate tax thereto. regate” supra, in said means the §64-2604, as used separation among of income the different classifications they by are defined of taxable activities as §3 supra). Income Tax Act. (§64-2603, Gross Appellees proceeds further contend that derived job perform- from the from a radio is income contract as such is not ance of an indivisible single segregation subject since it from a is derived activity. source radio as to of a is such

If the contract for the income therefrom then or indivisible be entire segregation provi- subject under the proper supra. sions of said §64-2604, principle was invoked this court Gross

This Bridge Ft. Income Tax Div. v. Pitt Wks. appellee E. 2d N. E. 2d 87 N. 721.

Ind. contended that since the steel used in that case calling furnishing contract, performance of a Indiana, buildings in to erect and materials of labor it in inter- fabricated outside the state was sale and, therefore, appellee’s commerce state contract, represented the sale from the *9 price steel, subject was not income part It tax. also contended that its performed derived from the labor and work under the separate and distinct from that contract was was, therefore, derived from the of steel and sub- sale supra. ject segregation §64-2604, under said That in contracts—one for the sale of there were effect two in interstate commerce and one for steel fabricated rendered. This court 227 Ind. at and services labor p. 544, p. 86 N. E. 2d at said: question presents first which “The itself for whether, by

consideration is as contended Fort fact, Pitt, contracts, were, there in two one to be performed per- by Fort Pitt and the other to be It formed Hunter. seems to us that trans- irrevocably characterized the fact that action is was made in Fort Pitt’s name and Sheet & the bid Tube directed all orders and made payments all only Pitt, fabricating furnishing Fort not steel, also for erection and construction but work, permitted Pitt done. that Fort this to be single contract, whereby think, clearly was, It we obligated itself for the Fort Pitt committed entire result. language of the contract building or construction the conventional unlike obligates contract, to furnish the contractor in construct and erect and labor and material specifica- designated plans and accordance with nature, call- dual in contract is not tions. Such and, furnishing hand ing of material one for the calling hand, separately furnishing other and on the into a material to convert such of labor structure.” finished

Further, p. at 550: already indicated, we do not believe have we “As contract was a here involved the contract that sale mere Indiana as a in construction work with to furnish it was a contract think incident. We buildings It was Indiana. in erect material and performance contract. appellant aptly called a what being true, This the fact that the steel was fabri- prepared cated and in Ohio for use in Indiana under a Ohio, if, contract made in is immaterial fact, per- fabricated steel was used formance of the payments contract in Indiana and dependent upon to Fort Pitt were (Our use.” such italics.) p. And also 554: “We hold that the contract between Fort Pitt indivisible; & Sheet Tube that it was not contract,

a sales but awas contract to furnish ma- buildings terial and erect . Indiana . .” *10 severability The usual test of of a the contract entirety the divisibility consideration; and

whether a contract con entire or divisible is parties trolled the intention of the it is by the disclosed terms the contract. It is well parties that the to a that established contract intend terms, it be and entire indivisible when its nature contemplates purposes each and it and intends that provisions parts, and con all of its material the sideration, are each other and inter common completed part dependent, or it could in whether be Thompson (Transfer only. v. Fesler denied 80, 90, 91, 188; 1920), App. E. Ind. N. Traiman Rappaport A. 41 F. 2d L. R. 787; Contracts, 479; S., p. 12 Am. J. §331, 17 C. Jur., Contracts, p. 873. §317,

The contract entered into a when a customer takes equipment appellant’s radio or other electronic into place repair, purchase of business is not one parts radio or but one sale of electronic rather and, for the of the item to useful restoration its state paid by of the total sum to be consideration appellant customer, undertakes to furnish whatever necessary, service, including labor, parts and materials complete job. to purpose

The nature of such a contract contem- plates that, if intends new are needed in repair, part this of the contract is common to and interdependent upon part that of the contract which necessary complete for the labor and calls services to repair. completed a could contract not be Such only, viz., by performing the labor services furnishing any required may be without complete repair. necessary to contract would performed completely nor the consid- not have been both, performance complete without eration necessary a if to restore the item to usable both were condition. may for the that a contract

It be said things, but it is likewise a radio involves different to re- leaves his radio be that when customer true single whole trans- consent paired there is “a bringing party a radio It is evident action.” it with have left repaired would things necessary to all he believed unless done. would be condition workable it to a restore a radio Appellant contract for under *11 equipment could not have recovered electronic or other having performed parts without the furnished for complete performance necessary to a the labor for labor he have contract, recovered nor could having fur- contract without performed under such necessary or material and installed nished job. complete to beyond dispute took that the customer

It seems clear out of order appellant it was because radio his knowledge sought repairs, he needed making repairs. not He did such appellant skill appellant’s shop solely pur- take radio to for the parts. words, appellant’s chase of In other he went to place of with he business his broken radio because thought knowledge to, had the skill and would, could and restore it to a usable condition. by measured parties,

When the intention of the repair contract for the of a radio or other electronic equipment procedure ap- under the followed pellant, furnishing labor, includes the services any parts necessary or materials to restore condition, the item to a usable and workable and such contract is entire and indivisible. stated, appellant’s For the reasons above equip- from the of radios and other electronic ment is derived from indivisible contracts and it can- segregated gross purposes not be income tax as to performed. income derived from sold and labor Having Second: concluded that the income from appellant’s repairman subject business as radio is not segregation gross purposes, income tax we must now determine under classification the in- what total come from this source is taxable. tax determined rate of source or activ

ity each item of the re- from which income is general ceived, depend upon and does taxpayer of the business character v. engaged. Department primarily Oster 528; 313, 318, Treasury (1941), 219 Ind. 37 N. E. 2d 343, v. J. Mfg. 212 Ind. D. Adams Co. Storen v. Dept. 941; Treas. Fairmount 348, Glass N. E. 2d App. 688, 49 2d N. E. Wks., (1943), 113 Ind. Inc. Dept. Dairy 1; Treas. Suabedissen-Wittner 964, supra. E. 2d App. 16 N. 105 Ind. primary purpose in a

Appellees contend shop here under consideration is such *12 40 operational functioning, property

restoration of its furnishing necessary and the of thereto is materials primary purpose. but an incident to that sought activity “selling Is the retail” to be taxed at sale, in which to the or service incidental is the source appellant’s furnishing income under that of services a contract for the of radios other electronic or equipment supplying in which the and mate- rial is incidental? question solely by the

This cannot determined be used materials ratio which the value of cost rendered. Mahon bear to the of the service 2d E. Ill. N. Nudelman v. 550, 552. impression question first here before us is one of situations, However, comparative even

in this court. though articles and of them deal with new most considered, articles, have of used been with may applicable reasoning cases is those now the factual situation some assistance us. before Treasury Dry Dept.

In & Clark’s L. C. Co. Appel App. 359, 5 N. E. 2d Ind. question late Court had under consideration applicable income income tax derived rate of dry-cleaning laundry business. source engaged it was Appellant contended since there was, it for use preparing substances articles or provided by therefore, rate subsection entitled Act of while Income Tax (a) of the Gross of §3, applicable fixed rate was appellees contended section, because (f) of said subdivision con performance of “for received therefore, was, tax personal service” tracts sustaining appel- per cent. In one the rate of at able Appellate Court, 368, 364, lees’ pp. contention the *13 (103 App.) Ind. said: act, “After a careful consideration of entire of part, which section 3 forms a we are convinced legislature phrase ‘prepar- when the used the ing sale, (a) for or use’ in subdivision of profit, 3, it section did not intend to make income received making

because of service rendered in articles already use, which had in been more desirable for again, imposed use taxable at the rate said (a). give phrase employed subdivision To such meaning would, opinion, disregard in our be to provisions 3, particularly other section said (f) imposes tax subdivision thereof which at the upon any per income from rate of one cent busi- activity previously or in ness enumerated said 3.” section Creosoting

In Indiana McNutt, Co. v. Governor 656, 210 310, Ind. 5 E. 2d N. was engaged creosoting business railroad ties Bloomington, Indiana. It contended that it en gaged manufacturing, compounding preparing for plant Bloomington, sale at articles its and the activity income derived from such was taxable at per p. (210 one-fourth of one Ind.) cent. At this court said: “The creosoting nothing work done in the ties is more than a service purpose rendered for the preserving placed them and can not be in the classi- manufacturing, fication of compounding, pre- or paring sale, profit, any any or use of article painting more than house, buggy, could the of a or wagon. purpose The service of all is for the same

—preservation only material, difference being the method of the work the material used.” Appellant’s from the income was held to be derived used, activity creosoting ties, including materials (service) one cent §3(f) and was taxable at under Tax Act. Gross Income Department Treasury Ridgely, Executrix

In Ind. N. E. 2d 108 A. L. R. supra, upon court was called to construe subsec- this filling pre- applied to (c) it tion of said as §3 scriptions druggists. Appellee contended that such income from source was taxable under subsection being compounding (a) preparing derived from court, p. 18, certain articles. The sale at said: say legisla- it “Does seem reasonable to that the ture intended to tax income derived from the sale of article that involved the act of com- per cent, pounding, of one-fourth of one rate considering the character of business without *14 connected or circumstance there- other fact would be unreasonable.” with. That there, effect, preparation the held This court drugs prescriptions incident the sale but an was consumption, the income derived for final provided for retail the rate taxable at therefrom was selling at retail. merchants Conkey Div. v. Income Tax Co. (1950), 228 Gross 805, 352, was an N. E. 2d action to recover Ind. gross paid tax on income derived as sums binding of books and from the sale printing the by appellee the were made All of books of bookcases. By the customers. terms of its various order publisher-customer fur the or contracts these orders appellee printed and manuscript nished appellee fur these orders In all a book. bound into making of the used in all material nished fur instances the customer books, except certain other appellee furnished the paper while nished the binding. Ap- printing necessary for the materials printing pellee that its income from contended binding from the manufacture and of books was derived from the commerce and not sale of books in.interstate determining the rendition of local In source service. court, appellee’s from which derived this income was pp. 357, 358, said: “It would seem to us that printing as to the binding books, here, appellee was render ing a local.service and the receipts there from are not from interstate commerce. What appellee being paid for was the services ren dered and its activity materials used purely in an Dept. local in its nature. Treasury Indiana Ingram-Richardson v. Mfg. (1941), Co. 313 U. S. 252, 1313, 85 L. Ed. 866; 61 S. Ct. Live Western Stock v. Bureau 303 U. S. 82 L. Ed. 823, 58 S. Ct. 546. Its contracts were not for the books, sale of nor for a sale of the materials fur by appellee nished books, which went into the but work, labor and ultimately materials which .resulted in the transfer especially of a chattel made buyer for the and not suitable for sale to others in ordinary appellee’s By course of business. weight authority country in this such a contract Jur., Sales, not amount to would a sale. Am. 206; p. App. Yoe §12, Newcomb Ind. adoption E. 256. 71 N. Also recognized Act Uniform Sales this state has rule that contracts such as we have here are not goods. 58-104, for the sale of contracts Section Replacement.” sub-section Burns’ 1943 . . . delivery appellee’s “After claim would still be work, England labor and material. Even in where the rule liberal as what are contracts *15 said, sale, ‘If the contract be such of it has been out, that, in when carried it would result the sale chattel, party cannot sue for and of a the work labor; the contract is that the but has done work the result if of and labor which ends in party subject sale, nothing a the that can become the of goods sold and delivered. The party cannot sue for attorney employed prepare a deed It case an illustration anof proposition. latter cannot this of

44 paper prep be said that the ink he uses goods aration the deed are sold delivered. of printer printing The case a ivould book most of probably category.’ (Our within the same fall italics.) 272, Griffin, Lee 1 Best & Smith 121 v. Eng. Reprint 716, Eng. Rul. Cas. 191. See also Burgess Ill. A. Ames J. Co. 565; Printing H. Adair v. Ames 194 N. E. G. Co. Appellee 2d 364 Ill. E. 481. was N. publisher printer not of books. Its acceptance upon

gross depend income did a work order and not It came of the books. from purchase emphasis.] Its in order. [Our completed.” when the books were come was earned Appeals, Circuit, of in Seventh Circuit Court Mfg. Department Ingram-Richardson v.Co. Treas- ury (1940), question F. 2d had it the before as to whether or not income received enameling factory an located in Indiana was owner “services” or from sales” derived from “wholesale with- meaning Act. of the Indiana Gross Income Tax engaged Appellant in the manufacture of there was (cid:127) metal enamel which was fused with used refrigerators, which metal were sent stoves factory Frankfort, appellant’s Indi- customers to enameling process, ana, completion and after parts were returned to customers. the identical Appellant income contended that its source of argued tangible its personal property. It sale metal which was the sale the’ business consisted enameling process. The in connection with the used court, p. 892, said: “Clearly, think we was derived from its service, which included numerous rendition labor, transportation equip- elements such as expense. True, there was included the ment value part of the total income

of the material. Just what disclose, represented, the record does not but this

45 not, opinion, did, con- if it in our even it would meaning the Act.” of a sale within stitute Dept. Supreme of the United States Court Mfg. (1941), Treasury Ingram-Richardson Co. v. 1313, 866, sustained 252, L. Ed. 61 85 313 U. S. S. Ct. respond holding that Appeals in the Circuit Court enameling operation stove income, from the ent’s parts, of services from the rendition was derived not as a result .sales.

Questions have arisen one before us similar a retail law where in other have sales states which taxpayer proving that he is lies interest of “selling definition of the vari- at retail” within acts. ous sales tax Implement Sidney (1937),

In Hintze Stevens Co. v. 264, 632, 331, P. 2d 92 Utah 67 111 A. L. R. an action brought under the was Uniform Sales Act to recover owing the balance on a verbal contract between parties under constructed an automobile appellee. determining for the this trailer In whether Act, transaction a sale under the Uniform Sales 636,(67 Supreme Utah, p. 2d) P. Court said: think that “We under the evidence the contract plaintiff defendant, between relative to the con- trailer, work, labor, struction was one for and materials and not one of sale.” Perkins, In Zook v. Director Revenue 464, Supreme Colo. P. 2d Court of Colo Emergency rado held that under the Colorado Retail person engaged Act Sales of 1935 a business recapping tires, did not sell an article which was manufactured him by repair but rendered a service ing restoring manufactured, an article theretofore the income hence no sales tax was collectible on activity.

from such In Babcock Nudelman 367 Ill. Supreme N. 2d re E. Court of Illinois was quired Department adopted to construe a rule of the *17 entitled, Occupation “An under the Tax Act Retailers’ engaged upon persons in the Act in relation to a tax tangible selling personal property pur to business question consumption.” for The rule in chasers use or optometrists not liable provided that and oculists were occupation income received for the tax on retailers’ and professional services such as examination from eyes and treatment. of the or ocular care refraction spectacles, However, optometrist or oculist sold if the tangible lenses, personal eyeglasses, frames, or other consumers, they liable would be property to users or respect income received from such to for the tax with determining question, Supreme Court this In sale. 2d) Illinois, p. (12 N. E. said: “The lenses furnished are the result of skilled grinding preparation. and The ocular mechanical examination mands recipient of the service de- high degree things of skill. These are objectives. it true that frames the main While price and their considered furnished are purely purpose, it is ultimate attainment of the sought object main to be accom- to the incidental plished.” . . . tangible property furnishing personal “The cir- eyeglasses purchaser, under the to a such case, merely incidental of this cumstances making the rendered, person and the services operation the tax- exempt transfer ing statute.” E.N. Ill. (1941), 377 Mahon v. Nudelman Occupa the Retailers’ supra, also under 2d arose attempt an involved Illinois and Act of tion Tax appellants measured tax from Department collect the to repairing, re- the sales of certain material used in modeling, restyling pieces. coats and fur and other fur selling Appellants fur coats coriducted a business of They question case. about which no was raised separate department repairing also conducted restyling garments sum, in- fur for a fixed plus overhead cluded the of labor and materials cost stock, furnished, profit. Appellants from their necessary pieces strips linings, or where fur repairing restyling needed, complete to average garments. cent of the of fifteen An materials, twenty-five per cent for contract remaining sixty per cent for overhead labor and the brought a fur coat in profit. a customer When pieces used in the repaired, of skin be intervention the dealers without were selected upon the skill of the dealers who relied the customer materials, quantity as to proper both to select attempted to collect quality. of Finance The Director *18 gar- Occupation Tax in such cases where the Retailers’ repaired. remodeled, dealers altered or The were ments charges labor, time separated their books had imposed upon persons tax there is The materials. tangible selling personal “engaged of the business in although occupation tax an It is retail.” property at tax to be assessed. a measure taken as sales are sought to taxed determining the business whether In in service property which selling personal at retail was selling service in incidental, it was whether or making retail sales was or supplying materials p. Illinois, at of Supreme incidental, Court the (36 2d) N. E. said: engaged plaintiffs are “It is conceded gen- repair It a matter of fur business. is knowledge garment fur in need

eral that a generally repair cannot be restored to a serviceable material, condition without the installation of some used, repairing or and that either new such re- quires the skill of the furrier to match the fur linings, as well as to fit etc. In this case it is brings gar- stipulated that when the customer purpose repair, ment it for the and that selection, matching fitting pieces in of fur lining used, material is left to the choice and plaintiffs. evident from record It is this skill that thing sought by the customers of the repair plaintiffs and them is furnished brought garments pieces them. and fur fur primary necessary to the materials use it.” is incidental to purpose of the contract in the case the factual situation to us It seems Nudelman, supra, in Mahon v. that found at bar and reasoning by the analogous followed are equally applicable there is Illinois Supreme Court required here us. are question now before We appellant’s income the source of whether to determine that of a repair radio business his received from retail, selling in which service at merchant retail incidental, or repair contract rendered under selling contract, is, appellant under whether sell- materials and supplying of services, in which incidental. ing is but classify his income In order receipts mer- of a retail business radio retail, appear that it must from sales chant “selling at retail” derived from income was such performance from the of service than rather Appellant the case at repair contracts. under his engaged of re- in the business he is concedes that bar equipment aas other electronic pairing radios *19 radios, as may general It be said of his business. they cannot repair, garments in need fur usable con- and generally to a serviceable restored dition without parts installation of some or mate- rials, used, either new or repair and that the of radios equipment and electronic requires person the skill of a specially trained in that business. It disputed is not brings that when a customer appellant’s radio into place of purpose business for the having repaired it question any replacement as to whether parts or and, so, materials are needed if type, what kind or entirely left within the appellant’s discretion of re- pairman. It point seems beyond evident to a dispute, thing primary sought a customer when he brings appellant’s place his radio into of business for repair is the restoration of it to a usable condition— repair of the thing radio—and that is the furnished by appellant agreement under his to restore—to make the radio parts function. The use of and materials necessary put the radio in a usable condition is in- primary purpose cidental contract, the sale of such materials as are appellant’s used in repair jobs an to his but incident business.

The evidence in the case at bar shows that the repair jobs by appel- material used in are selected many lant prior and in instances installed without knowledge or purpose consent of the customer. The seeking repairman aof a radio customer is to obtain knowledge person possesses skill, some who experience necessary (1) repairs to determine needed, repairs (2) to make the that are neces- sary to restore the radio to a usable condition. analogous

The case at bar also Gross Income Conkey Tax 228 Ind. 90 N. E. Div. Co. supra, the contracts 2d in that equipment not for the sale radios and electronic were appellant which materials furnished go equipment, were for into the radio or other but *20 ultimately

work, resulted labor materials existing chattel in of an and restoration by not, in this court would as stated and such contracts Conkey supra, Co., amount Income Tax Div. v. Gross work, the contracts for than did to a sale more printing in used and furnished labor and materials a contract binding such Neither would of books. goods the Uniform.Sales under for the sale of be one Act. Conkey case, appellant’s repair in if contracts

As that, they out, carried in be when would result such tangible personal property appel- of at retail the sale per- lant a suit services labor could sustain However, under the facts in this case it seems formed. be to file suit to appellant that if should forced clear contract, money a radio the suit due on collect performed necessarily labor and services be for would repairing Appel- a radio. furnished in and materials performed for labor and services could not recover lant tangible personal delivery of the sale and in a suit for property. contract, the substance a as the one here

When consideration, repairs improve- to make or under already existence, a chattel considera- ments to person doing paid the work is not for to tion be tangible personal “ownership prop- the transfer (work per- rendered and labor erty” for services but is repair- formed) materials furnished in ing improving the chattel. curiae, true, contended amici may it as

While tangible property personal ownership of yet, customer, transferred from to come within the transfer for such in order “selling it retail” must statutory definition of ordinary course “by retail merchant be made regularly .” . . transferer’s conducted business appellant’s stock, part is taken from When radio regular which he for sale in the course maintains merchant, and is used him his business as a retail activity repairing replace a broken radios part, it cannot be the transfer of or worn said ordinary ownership course such made appellant’s regularly conducted business a retail *21 conceded, are if it be so we faced with merchant. Even supra, provisions (g) of §64-2603, the of subsection provides . . received from that Gross Income . which and “all character whatsoever” “services funds performance of contracts . . .” shall from the received (Our italics.) at one cent. be taxed opinion appellant’s that We are of the total in- and other come radio electronic contracts provisions (g), comes within this subsection supra, and should be taxed as funds received §64-2603, performance of at from the service contracts the rate per cent. of one Appellant

Third: contends that the effect of the trial court’s decision is to make a distinction between jobs

income from radio “addition” and radio argues “repair” jobs, and there is no basis By job is for such distinction. an “addition” of a and additional in meant the installation new unit customer, i.e., pur- a customer a cabinet owned radio, a television and record a cabinet built for chases only combination, purchase time of playing but at the Later such customer unit installed. the television is buy unit installation to a radio decides goes The customer television. houses his cabinet which purchasing radio purpose appellant to a usable con- place unit in in such order unit but dition, purchase customer to make induce the must, sale,

appellant install such as an incident to the desig- appellant unit in the cabinet. This customer’s agree there job. as cannot nates an “addition” We “addi- is derived from no distinction between income jobs “repair” jobs, in the “addition” tion” because unit) (the jobs appellant property additional owns the job installed, while a which is to be and is upon is property which service the customer owns the required condition. In it to a usable to restore unit, buying new the customer former instance incidental, installing in the latter while service replacement parts buying (repair) service he is job transaction “addition” In the are incidental. primary purpose of the customer is principal and (chattel) service purchase unit of new acceptable placing the chattel an appellant renders In merely incident the sale. an salable condition tangible personal prop- transfers case such regularly ordinary conducted course of erty in the transactions and such a retail merchant -business merchants provided for retail rate are taxable in the act. (cid:127)as defined *22 duty is the of this court to

It construe law as legislature. by the applied written In this case we have by presented it the law as we find to facts record before us. If the Tax Gross Income Law, written, inequities im- results poses ap- taxpayers a burden on the class of to which pellant belongs, unfair, rem- which to them seems legislature edy lies and not with this court. with the out, judgment For the reasons set hereinabove of the trial court affirmed.

Judgment affirmed. Emmert, J., opinion. dissents with Reported Note: N. 106 E. 2d 797.

53 DISSENTING OPINION very We should be careful that we do Emmert, J. not by implication gross stretch the tax laws to tax higher income at a prescribes, rate than the law since perfectly it is proper any taxpayer ethical and higher avoid tax rates if he can conduct his business applies. so justly a lower rate evasion taxes wrong government, due under a statute is a done the noted, always remembered, but it should be just acting sovereign, it is as immoral and evil for the through agents, money its tax to extract due in guise citizens, taxes one of its it as would taxpayer by fraud and deceit to seek justly sovereign. evade taxes he to his owes Bullen See 625, 630, (1916), 631, v. Wisconsin 240 U. 36 Ct. S. S. 473, 830, 835; Superior Mississippi L. 60 Ed. Oil Co. v. (1930), 390, 169, ex rel. Knox 280 U. S. 50 74 S. Ct. L. Ed. 504.1 recently said

“We with reference to another section Tax Gross Income Act of 1933 that ‘in case of doubt such statutes strongly are to be construed more against the state Depart- favor of the citizen.’ v. Muessel Treasury ment 250, 218 Ind. Oster (2d) Department E.N. 596.” Treasury 313, 317, 219 Ind. N. E. 2d 528. The tax rate under the Gross Income Tax statutes depends upon by the transaction which the in- speak evasion, because, “We do not when the law draws line, other, a case is one side of it or the and if on the legally party safe is none has availed side the worse permits. himself full of law an what When act evasion, an what is that it on the condemned as is meant policy wrong line if not the mere side of the indicated (1916), 240 U. letter of the law.” Bullen v. S. Wisconsin 630, 631, 60 L. Ed. 835. Ct. S.

54 by taxpayer. “In

come is received Storen v. J. D. 343, 348, Mfg. Adams 212 7 N. E. Co. Ind. (rev’d 307, (2d) grounds, 941 on other 304 58 U. S. 913, 1365), Ed. rate S. Ct. 82 L. it was said that ‘the depend upon tax the business in which the does engaged, upon payer activity from primarily is but ” gross received.’ each item income is which Department Treasury (1941), 219 Ind. Oster v. 528, 318, supra. N. 2d Freeman E. See also 91 L. Ed. 329 U. Ct. Hewit S. S. inquiry here under If an item of this transaction 265. escape retail, conclusion that I cannot is a sale at (1) of one (I/2) to one-half is entitled by prescribed (c), Burns’ per rate as cent §64-2603 provides: Replacement, which gross part “(c) respect of the With person every retail merchant who selling act which is received defined this equal of one retail, one-half shall be tax at income.” cent such [%%] Replacement, (k) Burns’ 1951 of §64-2601, Clause provides: “ (k) ‘retail The term merchant’ means in- only by- cludes a transaction a ‘retail merchant’ tangible ownership personal property transferred, conditionally otherwise, consideration, when such transfer is made in ordinary regularly con- course the transferer’s a fixed established ducted business .business,

place acquired and is the transferee designated by purpose than those other (a) of -3 of this act.” sec. subsection [§64-2603] nothing Income definition in Gross There this Sales Act in conflict with the Uniform Tax which -is Replacement, 58-101, even Burns’ 195Í Act. Section *24 though act not call the “consideration” the tax does “price.”2 for the sale the 64-2604, Replacement, evidences Burns’ 1951

Section legislative taxpayer shall have intent that the a clear by classifying any items the the benefit of lower rate applies. lower rate This section states: which the gross receiving “Any person at income taxable provisions act rates under the of this different gross upon subject entire to shall be taxation highest any part applicable to at rate income the segregate gross the income he shall of such unless parts gross rates at different of his taxable which he files upon his and in the returns records segre- pursuant provisions the this act. Such to of depart- gation subject the to review of shall be the provided.” ment hereinafter mean providing does not The sentence for review last right have Tax collectors Income the Gross statutes, only change by the but to the law as enacted subject correc- to taxpayer’s the classification the law. in fact under tion if erroneous Appellant’s deficient its brief is statement so present necessary evidence “as is ac- much the understanding ques- curately concisely a full the However, appellees presented.” do the not seek tions ground, judgment on this an but have affirmance set in their brief recital of evidence forth answer concerning Briefly nature of the transactions. is, may taxpayer, stated, question presented a who regularly repair work at a established does electrical business, cus- place make his contracts with his them retail neces- that he sells at tomers so transfers called “A sale price.” property goods Section goods 58-101(2), an agreement Burns’ 1951 buyer whereby consideration Replacement. seller sary operate radio and be taxed at one-half of is the retail rate? [%%], one cent great importance question to hundreds is one of segregating in- taxpayers are now who to thousands from the transfer of title come received of various used of mechanical devices. machinery, mechanical accessories and items of sep- billing usage the customer The custom itemizing retail arately parts as sales properly general court can charges this so labor Wigmore, Evidence judicial thereof. notice take Ed.), (3rd §2580. *25 appellant case discloses that in this

The record charges parts from the labor separately itemized testing part to determine the defective in involved parts. with new The replacing the defective presumed to have contracted with must be customers customary according to his manner of appellant right to restrict doing business, court has no and this saying by he cannot do business liberty contract Ark. 134 way. Brunson v. Cromwell In threshing machine operator of a 605, 204 S. W. grain threshed customarily as toll one-tenth took years under a 1915 and 1916 In the farmers. charged cents ten special he contract contract, special was no there In 1917 bushel. appellant, in held the Supreme Arkansas Court of contract, by the special was bound of a the absence charge. in Steidtmann v. customary As stated toll 84, 88, 89, 84 N. E. Joseph 234 Ill. Lay Co. ordinary entering into contract person a “A presumed have done so business course usage existing general any or custom relat reference (Collins v. Ice Cream Co. ing business. to such 200; Beaman Machine Stephens, Ill. Chisholm 189 v. Co., 101; Leavitt v. Kennicott, supra.) 160 id. And (Samuels this is so whether he not. knew of custom or . 181; v. Oliver, 73; Taylor Bailey, v id. Ill. v. Lyon Dunham, Culbertson, 33; v. Doane id. 79 id. ” 131; also, Bailey Bensley, 556.) See 87 id. 3 Willis ton, (Rev. Ed.) p. Contracts 1902. §661, require any expert

It does not on to know radios tubes, coils, that radio condensers and could resistors economically themselves be satisfactorily or re paired by repairman. a radio Each of such new required when a fit radio would other radio of just the same being make model as well as one repaired. only involved, ascertaining The labor after part, inserting the defective would inbe the new tube socket, unsoldering or its a connection to the de coil, resoldering fective or condenser resistor and part. entirely connection to the new The situation different than that involved for instance in the generator rewinding. of a motor or which needs same, generator motor is the and the defective being exception is the same with the rewound. Clearly the work involved in of radios is totally professional involved in work such unlike drafting lawyer complicated trust as done cents.3 paper deed worth but a few *26 professional The distinction between services mechan and appeal Supreme in this well noted ical labors involved was the in v. Cohn 184 La. Court of Louisiana State profession, ‘“Very a as follows: in definition of So. its employed referring calling generally as in the term is to special knowledge, acquired professes to have some which one instructing, guiding, advising by way or or others used employ art; employment, especially serving an and them in some education; occupation properly requiring an ment a learned equivalent mental, rather education or its involves a liberal profes- labor, especially manual, the three learned one than appeal, appel-

In this the came to customers who goods shop lant’s to radio received a transfer of title operate which went into their radios make them to satisfactorily. They separately these were billed for usage prices appellant’s as at retail was custom doing any new expended on business. No labor was any repaired part old to make it usable nor was again. price for the so it The retail could be used guarantee receipt clearly on the was stated given parts passed to the Title to the the customer. selling consideration, at buyer for the named (k), Burns’ retail the clear terms of under §64-2601 say liberty not at to Eeplacement. We are manner in this appellant not make contracts could “selling out The exhibit set qualify retail.” as price for appellees’ brief shows answer The situation job $8.00, labor as $2.00. a radio dry clean- entirely from the presented different here is bookbinding business, enameling business, ing repair of profession, or the business, optometry nothing Income Tax in the Gross coats. There is fur having prevents any person from in one con- that' Act goods, wares and mer- provision for the sale of tract separate provision for labor and another chandise The consideration for thereto. with reference goods separately stated. of title transfer required to make transfer all that This is goods the facts in this record. under title to sale rate the tax allowed have been should parts used the radio cent on of one one-half special occupation involving sions; calling or mental discipline, editing, engi- special acting, as other attainments implies neering, authorship. professed attainments The word skill; distinguished special knowledge mere intellectual from occupation distinguished an skill as used ” commodities; production . . or sale *27 operating condition. We are put the radios n (cid:127) any remedy by course of giving “due property”4 “injury . . done to him law” his.. (k), construction, nullify we, by judicial when §64-2601 suggest remedy is Replacement, and his Burns’ 1951 Assembly. take the statutes with the General We right them, any taxpayer should have the find we written, rely and make his contracts them as forbidden manner not with customers public policy. statute

Note.—Reported in 106 E. 2d N. 797.

Long v. State of Indiana. 28,911. Filed June [No. 1952.] Indiana Constitution. Article Section