This is an appeal by the State of Alabama from a final decree of the Circuit Court of Dallas County, in equity, vacating and setting aside a deficiency sales tax assessment covering the period from April 1, 1951, through March 31, 1954, and which was made by the State Department of Revenue against the Selma Foundry & Machine Company, a corporation, the appellee here.
Appellee is engaged in business in Selma, Alabama, as a foundry and mill supplier. The transactions under consideration are
These items are best described from the evidence so presented, as follows:
The saws, as distinguished from the so-called saw sharpening and knife grinding items, are used by the sawmills to cut logs into rough boards and lumber, and also to trim the lumber so cut. The planer machine knives and chipping machine knives are used respectively to dress the lumber or to produce wood chips. The saws and knives are admittedly parts of machines which are used in manufacturing or processing lumber and related products; and the sales thereof are conceded to fall within the exemption under Title 51, § 755(p), Code of Alabama 1940, as amended. No attempt then has been made by the appellant to tax the saws and the knives.
There is no contention made that the sales of the items of tangible personal property, which are above listed, when made by the appellee to the mills were not sales at retail and that the mills did not use the items and did not resell them; so, such sales will be treated as sales made by the appellee at retail. Moreover, no contention has been made that we can find that the various items of tangible personal property involved are not machines, and they will, for the purpose of this opinion, be so treated.
The only issue of consequence involved in this appeal is whether the state sales tax is due on the sale of said items when sold by the appellee to said mills, or whether such sales fall within the category of exempt sales under Subsection (p) of § 755, as amended, Title 51, Code of Alabama 1940. It is conceded by the appellee that these sales would be subject to the sales tax if they did not allegedly come within the exemption.
This subsection, in so far as it is applicable here, provides for an exemption as
It is not disputed that the saws and knives, which are reconditioned and sharpened by the saw sharpeners, knife grinders, and the other items involved in this appeal, are purchased as saws and knives from the manufacturer and are ready to be used on the rig or planer when purchased by the mills. The brochures published by certain of the manufacturers and which are in evidence as exhibits, together with the testimony presented at the trial, clearly show this to be true.
The two witnesses, Mr. Gentry and Mr. Sewell, who testified in behalf of the appellant, and who at least had some knowledge of or experience in the lumber business, testified that most of the saws which they had seen taken to the filing room from the mill for reconditioning had teeth on them, or in the case of knives when taken from the planer or the chipper to the grinding room, that the edges of the knives were not entirely worn off. Two witnesses, Mr. Horton and Mr. Hendon, who testified in behalf of the appellee, and who obviously had had considerable experience in this field, testified substantially to the same effect. It is true that both stated that they had known of cases where the saws, which had no teeth at all, were taken from the rig to the filing room, the teeth having been completely worn or broken off. On cross-examination, however, they both stated that such cases were exceptional. The usual case they said was for the saw to still have teeth under the circumstances, but that the teeth were in need of being reconditioned and resharpened before the saws could be used again. There is no material conflict then in the evidence, and the issue actually resolves itself as to whether the reconditioning and resharpening of the saws and the knives in the filing or the grinding constitutes "manufacturing" or "processing" within the meaning of the exemption statute, Title 51, §§ 755(p), as amended, supra.
The appellee first raised the point that as the final decree was not a unit decree, and as the appellant has argued all of its assignments of error in bulk, and as some of the assignment are not well taken, the rule is that this would make them all bad and no reversible error is made to appear. In this respect, appellee relies on the rules which are said to be stated in Moseley v. Alabama Power Company, 246 Ala. 416, 21 So.2d 305(1).
The record shows that, by a stipulation made between the parties, the issue in this case is confined to the items of tangible personal property which are referred to only in category 1, paragraph 5, of the bill of complaint. The items under categories 2, 3, and 4 were disposed of by a stipulation and by agreement between the parties. The final decree of the lower court disposed of categories 2, 3, and 4 by referring to the stipulation. This left only for decision by the circuit court the issue as it related exclusively to the items in category 1. Moreover, in the notice of appeal, the appellant has confined its appeal to the judgment and decision of the lower court as it relates only to the items listed under category 1 of the bill of complaint. The one remaining issue in the case is whether or not the sales of these items were sales of machines, or parts therefore, used in manufacturing
These things being considered, we do not agree with appellee's contention, as it appears, that not all of the assignments of error are related to the one issue in the case. The exception noted in White Dairy Company v. Sims, 230 Ala. 561, 161 So. 812(2), where all the assignments relate to a kindred question, is clearly applicable.
Appellee argues that as the circuit court found, from the oral testimony and the evidence, and as a matter of fact, that all the items designated in category 1 of the bill of complaint, as amended, were either machines, or parts or replacements therefor used directly or indirectly in manufacturing and processing tangible personal property; that under the rules stated in Fuller v. Blackwell, 246 Ala. 576, 21 So.2d 617(1), and other cases cited, that such findings of fact by the lower court are presumed to be correct and should not be disturbed unless found to be palpably wrong.
There is no material conflict in the evidence in this case. This court, on this appeal, is being called upon to determine whether the lower court took an erroneous view of the law as applied to facts substantially not in conflict. Under the circumstances, the rule relied upon by the appellee does not apply. Department of Industrial Relations v. Tomlinson, 251 Ala. 144, 36 So.2d 496(9).
This leaves for decision only the question of whether the saw sharpeners, swages, saw stretchers, knife grinders, emery wheels, jointer stones, and the other items of equipment used to recondition and sharpen the saws and knives for return to the production line in the sawmill, were machines coming within the purview of Title 51, § 755(p), as amended, Code of Alabama 1940. If so, the sales made by appellee of such items to the mills would not be subject to the sales tax under the exemption contained in the statute.
There is no contention made by appellant that the various items involved are not machines, and we reiterate that they will be so treated for sake of this opinion. The sole question then is whether or not they are used in the manufacturing and processing of tangible personal property within the meaning of the statute. These terms are not defined in the Act, so we must go to the generally accepted definitions to determine their meaning.
In State v. Joe H. Brady & Associates, 264 Ala. 397, 87 So.2d 852, 853(1), where we held the sales of the chain saws there involved not to come within the scope of this same exemption, we took into consideration the following factors in relationship to the meaning of the terms "manufacturing" and "processing" in making that determination:
These terms were considered in the case of Alabama Power Company v. State, 267 Ala. 617, 103 So.2d 780, 782. There under
The definitions of "manufacture" and "manufacturing," contained in the Century Dictionary and in Webster's New International Dictionary, Second Edition, and in Words and Phrases, Permanent Edition, Vol. 26, like the definition in the Brady case, supra, also suggest a complete change in the original substance or material.
See also the numerous references, and cases cited substantially to the same effect under "manufacture" and "manufacturing" in the same volume and in the Pocket Part.
We have carefully read the cases cited by both the appellee and the appellant on this point; but, we find from the numerous references contained in Words and Phrases that the great majority of the cases, both from the state and federal courts, are in agreement with the definition quoted above.
Appellee strongly relies upon our case of State v. Calumet and Hecla Consol. Copper Company, 259 Ala. 225, 66 So.2d 726, which relates mainly to parts and replacements for machines used in manufacturing tangible personal property, and holds that such parts and replacements come within the exemption. We do not, however, believe that the doctrine of that case can be extended to include the reconditioning and repairing of saws and knives which never lose their identity as such.
The definitions of the words "manufacturing" and "processing" contained in the Brady and Try-Me Bottling Company cases, supra, suggest, as to both, that the finished or ultimate product be integrated from the elements originally diverse in forms.
It does not appear in this case that the saws and the knives ever lose their identity as such. The machines involved act mainly on the teeth of the saws and the edges of the knives, and in reshaping and resharpening them for further use as saws and knives. A new article or object has not emerged. The saws and knives then have merely been reconditioned and repaired to enable them for continued use on such rig, planer or other machines in the mill. The sales of the items in category 1 of the bill of complaint by the appellee to the mills do not, for said reasons, come within the exemption, and are subject to the sales tax law.
On remandment of this cause, the trial court will enter a decree or judgment for appellant for the amounts appearing in paragraph 6 of the stipulation between the parties showing date of March 29, 1961.
For error on the part of the trial court in holding that the items listed in category 1 are exempt from the sales tax, the decree is due to be reversed and the cause remanded for conformity herewith. It is so ordered.
The foregoing opinion was prepared by B. W. Simmons, Supernumerary Circuit
Reversed and remanded.
LIVINGSTON, C. J., and LAWSON, COLEMAN, and HARWOOD, JJ., concur.