Robertson v. Mississippi Packing Co.

Anderson, J., delivered the opinion of the court. Appellant, Robertson, state revenue agent, sought in the manner provided by statute to back-assess property of appellee, Mississippi Packing Company, for taxes for the years 1913 to-1918, inclusive. The board of supervisors of Adams county, in which county appellee’s plant is situated, entered an order refusing to approve the back assessment by appellant. Froih this order appellant took an appeal to the circuit court of Adams county, where there was a trial and a judgment rendered by that court refusing to approve said back assessment. From that judgment appellant prosecutes this appeal. The question involved is whether or not appellee, a corporation engaged in the business of meat packing, is entitled to the exemption authorized by chapter 146, Laws 1910, as amended by chapter 100, Laws 1916, (sections 6878 and 6879, Hemingway’s Code), and chapter 183, Laws 1918 (section 6878, Hemingway’s Supplement 1921). Said statute provides, among other things, that [843] plants engaged in the meat packing business — “now in the course of establishment or shall be hereafter established in this state . . . shall be exempt from all state, county and levee taxes for a period of five years. . . . Such exemption to commence from the date of the charter, or if not chartered, then from the date of the commencement of operation.” The question arises out of the following state of facts: The Natchez Packing Company was chartered under the laws of this state; its charter being approved on February 21, 1910. In January, 1911, proceeding under said statute, the Natchez Packing Company secured from the state auditor a certificate to the effect that it was entitled to exemption from state and county taxes for a period of five years. This concern established its factory and engaged in the meat packing business during the year 1911 and perhaps a part of the year 1912. It became insolvent. Its property was mortgaged. It ceased to do business, and the mortgage was foreclosed and the entire plant bought in for the mortgages. The plant stood idle until 1914, when it was purchased from the vendee at said mortgage sale by appellee, Mississippi Packing Company, a Virginia corporation. Appellee was an entirely new corporation. It had no connection with the Natchez Packing Company. Appellee simply bought the meat packing plant formerly owned and operated by the Natchez Packing Company. Appellee made some additions to the plant in the way of repairs, and extended its operations to the canning of vegetables and fruits in addition to the meat packing business. Conceiving that it was also entitled to the five years’ exemption • provided by said statute, appellee in August, 1914, obtained from the state auditor a certificate of exemption from all taxes for a period of five years beginning October 24, 1913, and ending October 24, 1918. Appellee’s charter was dated October 24, 1913. Appellant contends that the statute in question has no application to appellee’s plant which had already received [844] the benefit of five years’ exemption under said statute, that the purchase by appellee of the plaint was not the establishment of a meat packing plant in the sense of said statute, but simply the rehabilitation of a plant already established, and which had received the benefit of. the exemption provided by said statute, and that therefore appellee is not entitled to the exemption for another five-year period. On the other hand, appellee contends: That the plant and business established by the Natchez Packing Company ceased to be. It became bankrupt. As a result the business terminated. The plant and machinery stood idle for a long period. That notwithstanding appellee purchased said plant and machinery it established a new business, based on new capital under an entirely different management and owned by entirely different stockholders. That in the sense of said statute this amounted to the establishment of a meat packing plant. The purpose of the statute was to induce the “establishment” in this state of the character of manufacturing and other enterprises therein enumerated. The language of the statute directly pertinent is: “Which are now in course of establishment or shall be hereafter established in this state,” etc. Was the meat packing plant now owned by appellee established in 1910 by the Natchez Packing Company, or was it established in 1914 when appellee came into the ownership of the property and began its operation? The legislature.had in mind, in the enactment of said statute, not the personnel of the stockholders or owners of the enterprise nor the officers and employees operating the same. The controlling thought was to encourage- the establishment in this state of certain kinds of manufacturing and' other enterprises. In order to induce their establishment, there was granted five years’ exemption from taxes. That was the consideration offered by the state for the public benefit which was supposed to flow from the establishment and operation of such enterprises. [845] Victor Cotton Oil Co. v. City of Louisville, 149 Ky. 149, 148 S. W. 10, we think is directly in point. The Constitution of Kentucky authorized the legislature to permit any incorporated town or city to exempt manufacturing establishments from municipal taxes for five years. The legislature passed an act which conferred that power on cities of the first class. The city of Louisville, pursuant to the statute, passed an ordinance exempting manufacturing establishments for five years from the time of their location. A new corporation, composed in part of the stockholders of the original corporation an insolvent company, purchased its plant. The court held that the new corporation was not entitled to the exemption. In discussing the question, the court among other things said: “There is no doubt that the Globe Refinery Company had ceased to do business finally, and, but for the reorganization of the Victor Cotton Oil Company, the plant would have been dismantled, or passed into other hands. While it is true that the plaintiff was a wholly new corporation, and some new capital was invested in it, the old business was simply revived; and it cannot be said that the manufacturing establishment was brought to Louisville by reason of the inducement of immunity from taxation for five years. If an exemption was sustained under such circumstances, as the chancellor well said, less scrupulous men .would avail themselves of immunity from taxation indefinitely, by shutting down at the end of every five years and reorganizing in the name of a new corporation.” We are of opinion that it is wholly immaterial whether the stockholders in the Natchez Packing Company own any stock in appellee company or not. The ownership of the stock is not determinative as to when the plant of appellee was established, nor is the ownership of the property. The question is, When was the plant — the buildings and property, that which was subject to taxation — established and located? It is not who the own [846] ers are or have been. Nor whether the operation of the business has ceased and begun again. We hold that appellee’s plant in the sense of the statute was established on February 21, 1910, the date of the charter of the Natchez Packing Company. The Natchez Packing Company was entitled to the exemption from the date of its charter, February 21,1910, for a period of five years, which therefore ended on February 21, 1915, and appellee, as the owner of the plant, is entitled to the benefit of that exemption up to the latter date. From the expiration of that exemption, appellee’s property was subject to taxes as other property in Adams county. Reversed and remanded. Sykes and Holden, JJ., dissent.