Wessels v. Weiss (Pa.)..

(156 Pa. St. 500)

COMMONWEALTH ▼. KEYSTONE

BRIDGE CO.

(Supreme Court of Pennsylvania. July 19, 1893.)

TAXATION-MANUFACTURING CORPORATION-EXEMPTION OF CAPITAL STOCK.

A bridge company whose only business is to buy, in a rough and unfinished condition, all the necessary lumber, iron, and other materials, and, at its own shops, finish, shape, design, and make such materials suitable for use, and put the same together in the erection of bridges, roofs, and other structures and machinery, is a corporation "exclusively for manufacturing purposes," within the meaning of act of 1889, (P. L. p. 429, § 21,) exempting such corporations from taxation on their capital stock.

Appeal from court of common pleas, Dauphin county; John B. McPherson, Judge. Proceeding by the commonwealth of Pennsylvania against the Keystone Bridge Company to assess for taxation defendant's capital stock. From the judgment rendered, plaintiff appeals. Affirmed.

Following is opinion filed in the court of common pleas by McPherson, J.:

"This case was tried without a jury, under the provisions of the act of 1874. We find the facts to be as follows: (1) The defendant was originally incorporated under the act of 1863, (P. L. 1864, p. 1102,) relating to corporations for mechanical, manufacturing, mining, and quarrying purposes, but its present charter is to be found in the special act of 1872, (P. L. p. 505,) which is hereby made part of this finding. It has a capital stock of $652,100. (2) During the tax year ending the first Monday of November, 1890, it declared a dividend of thirteen per cent., whereupon a tax of six and onehalf mills was laid by the settlement now in question under the twenty-first section of the act of 1889, but was mistakenly levied upon $682,100, instead of upon the true amount, $652,100. (3) During said year the defendant was exclusively engaged in making and selling iron and steel bridges, building roofs, viaducts, turntables, and other articles and machinery composed wholly or in part of wood, iron, steel, or other suitable v.27A.no.1-1

material. The process is as follows: It buys from others, in a rough and unfinished form, all the necessary lumber, iron, steel, and other metals; finishes, shapes, frames, designs, and makes suitable for use the said material at its own shops in the city of Pittsburgh; sells the finished material for such use as may be intended or appropriate; and often frames, puts together, and erects the said material into bridges, roofs, and other structures or machinery. (4) During said year the actual value of all defendant's property was $836,801.73, in which is included $15,000, the value of certain houses and lots which it did not use in its corporate business. (5) It is not engaged in the brewing or distilling of spirits or malt liquors, and does not enjoy and exercise the right of eminent domain.

"Conclusions of Law.

"The defendant's corporate authority is to be found in the first and second sections of the act of 1872, and we have examined them with care. Without quoting them at length, we think that all the powers which they contain are either direct powers to manufacture, or, such as are added thereto, not as independent franchises, but expressly to aid the manufacturing purpose. Thus, in the first section, the defendant is authorized to 'purchase, acquire, and hold in fee simple or for any less estate property, real and personal;' but it must be such property as is 'necessary and proper for the purpose of carrying on and corducting their business.' In the second section power is given 'to acquire, hold, use, and apply inventions, plans, and devices secured by letters patent of the United States;' but this may only be done 'when deemed necessary or needful to the success, promotion, and purposes of their said business.' So, also, the defendant may 'contract with any person or corporation within any of the states or territories of the United States or elsewhere, or be contracted with in this state by any corporation of any of the states or territories of the United States or elsewhere;' but such contracts must be 'for and in respect to the manufac

"It is quite true that in common speech we do not say that a bridge or viaduct or house or roof is manufactured, but built or erected or constructed, and it might perhaps be true that a corporation whose only business was the erection of such structures after the parts had been fashioned and fitted by others would not be accurately described as engaged in manufacturing.' However that may be,-and the question is not free from doubt, the case before us is very different. The defendant is unquestionably a manufacturing company up to the point when the various parts-beams, girders, rods, bolts, and the rest-are ready to be put together in order to form the complete structure for which they were intended. The preparation of these parts from material, either raw or unfinished, is clearly *manufacturing,' within any accepted definition of the word; and if in all cases the transaction was finished by a sale of the parts to a purchaser who would himself put them together, and thus complete the structure for use, the exclusively manufacturing character of the corporation could not be questioned. Is this character destroyed simply because the delendant, after having manufactured the various parts of a contemplated bridge or viaduct or turntable or roof, goes one step further, and finishes the structure? Upon reason, we think this question ought to be answered in the negative, and especially because the separate parts are comparatively useless, and are made for no other purpose than to be put together. In the case of such a corporation as this, the power to build or erect (if, indeed, it ought to be considered as a distinct and separate power) is a proper, and perhaps a necessary, incident to the powers which are unquestionably manufacturing. In other words, if a corporation may frame and fashion all the parts of a bridge, it has an implied power to put the parts together in their intended seat. If it may build the bridge or the roof experimentally in its

'P. L. p. 429, § 21.

to see why it becomes necessary to divide a business which seems to be a natural unit, and to regard it as incapable of being carried on unless two distinct franchises are given, one to prepare the material, and the other to erect the structure. It seems to us more reasonable to hold that, if a corporation may manufacture a bridge in parts, it may under the same franchise put the parts together, and deliver the bridge as a whole in place to the purchaser; and that it is exclusively manufacturing as truly when it is finishing the work as when it is only beginning. We see no escape from the conclusion if the subject is to be examined from this point of view. And the same result is indicated by the decision in Com. v. Northern Electric Light & Power Co., 145 Pa. St. 105, 22 Atl. Rep. 839, if the point of view there taken is to be adopted. Mr. Justice Williams says, on page 117, 145 Pa. St., and page 840, 22 Atl. Rep., that the meaning of the word 'manufacture' 'has expanded with the advance of the arts and sciences until it has come to mean as a verb the making of anything by human art or skill, and as a noun anything made by art or skill.' Accordingly, if the case had required it, the court would have been led to the conclusion that a corporation which produced or generated electricity in order thereby to furnish light or power to its customers was a manufacturing company. If the definition just quoted is to be applied to the present defendant, then putting a bridge or roof together is a making of something by art or skill, and is manufacture as truly as preparing the constituent parts. In this event, the exclusively manufacturing character of the defendant cannot be successfully questioned. But the case referred to was decided upon another ground, which also requires us to holu that the defendant is an exclusively manufacturing corporation. The court held that when the act of 1885 exempted the capital stock of manufacturing companies from taxation, it meant those companies only which had been built up into a statutory class under the act of 1849 and succeeding acts; and that these statutes must be looked to, rather than definitions and dictionaries, to discover what the legislature meant by a 'manufacturing corporation.' This test (which excluded electric light and power companies) is to be applied also to the corporations claiming exemption under the act of 1889, now before us, for this act simply continues the policy of the act of 1885. It somewhat narrows the statutory class by requiring that the corporation must be organized exclusively' for manufacturing purposes, but it makes no change in the legislative definition of such purposes, and this remains as above declared by the court.

"Turning, then, to the acts of assembly,