Commonwealth v. Juniata Coke Co.

Opinion by Mb. Justice Williams, This case involves a question not -settled by the Commonwealth v. Pottsville Iron and Steel Company [the preceding case], which has just been decided. In that case a power had been conferred upon a manufacturing company to mine its raw materials, but when the company came to make its investments and organize its business it discarded this power and arranged to supply itself with its materials and fuel by purchase. We held in that case that the mere possession of a power, ancillary to its manufacturing business, which had never been used and the use of which had been effectually declined by the character of its business organization, did not deprive a manufacturing company of the exemption- of its capital stock from taxation under the proviso in the act of 1889. In this case we have the power to mine coal for the manufacture of coke, and we have the continued use of this power as a means of providing itself with the coal from which the coke is made. The production of coke from coal is a process of manufacture. The production of coal by removing it from its bed and bringing it to the surface is a process of mining. They have no necessary connection. The legislature has seen fit to separate and classify corporate powers, and to confer upon one class of corporations an exemption from taxes which other classes are required to pay. Manufacturing companies must purchase their supplies in the market. It may be convenient for them to produce their raw material, as in the case of the appellant, and the denial of the power to-do so may work some inconvenience, and increase the cost of the manufactured article; but the exemption is conferred upon the manufacturer, as distinguished from the [511] mining, the transportation, the storage, or other business agency employed in handling the raw material, the fuel, and other supplies required by the manufacturer. It ought not to be extended so as to cover operations outside the legitimate processes of manufacturing. We are in this case to determine therefore, first, whether the appellant is a manufacturing company. Next, whether, if a manufacturing company, it is using any part of its capital in such a manner as to infringe upon the field occupied by corporations that are required to pay taxes on their capital stock. We understand from the findings of the court below, and from the evidence, that this company was organized as a manufacturing company, and has been steadily engaged in the manufacture of coke. We understand that it has the power to mine its own coal and has in fact done so from the first, and that it has in this way supplied itself in part with the raw material it has used. This as we have held in Commonwealth v. Pottsville Iron and Steel Company, supra, does not strip it of its character as a manufacturing company, or of the protection which the law has extended to manufacturers. But on the other hand the fact that its business is manufacturing will not enable it to bring under the protection of its privilege any ancillary line of business in which it may find it economical or convenient to engage, or cover the employment of its capital for any other than strictly manufacturing purposes. What then is the situation of the appellant? It is in name, in business purpose, and in product prepared for the market, a manufacturing company. In the conduct of its manufacturing business it seeks to cheapen its raw material, and thereby the cost of its product by mining the coal it consumes. This is not necessary to the process of manufacture, though it may be both economical and convenient for the manufacturer. It is therefore the employment of part of its capital for a purpose not within the letter or the spirit of the exemption. As to so much of its capital it is subject to taxation precisely as though no exemption existed. The use of the word “ exclusively ” in the proviso in the act of 1889, given the office we have assigned to it in the Pottsville Iron and Steel Company’s case, does not stand in the way of our conclusion in this case. It was intended, as we there held, to discriminate between com512 parties organized for the conduct of two or more lines of business simultaneously, and such as were organized for the purpose of manufacturing. A company incorporated for the latter purpose will not lose its character or its privileges, because of an effort to supply itself with what it needs for its manufacturing business in some cheaper way than by purchase. Such effort, and the reservation of the power to make it, are in aid of the purposes of the company as a manufacturer. Neither as to the public nor the commonwealth is it a change of organization or of business. Whether the appellant mines its coal, or buys it, makes no difference with its product except as to its cost. In either case it makes and it sells 'coke and nothing else. It is not a mining company. It neither sells coal nor offers it for sale. It simply seeks to provide itself by mining, instead of purchase, with the coal needed for its ovens. This, as we have seen, is such a use of a part of its capital as takes the sum so used out from under the exemption provided by the act of 1889, and subjects it to taxation in*the same manner and at the same rates that other capital so employed is subject to. This is a proper case for apportionment. The appellant is entitled to exemption as a manufacturing company. Upon so much of its capital as is employed in the effort to supply itself with coal it must pay taxes. The judgment is reversed and record remitted that the apportionment may be made. See also the preceding and following cases.