State v. Gardner Jacob Co. , 176 La. 221 ( 1932 )

This is a rule taken by the state for an additional license (occupational tax). Defendant resists the claim on the ground that:

The purpose of said rule is to force respondent to pay a wholesale license for the privilege of engaging in manufacturing; in which business respondent is also engaged. That respondent is a manufacturer of boiled ham; purchasing pork legs, putting the raw material through a soaking and curing process, then boiling, then packing.

That it (respondent) employs considerable equipment and labor in such process; and is a manufacturer of the said product.

That the present license law of Louisiana not only fails to impose a license tax upon manufacturers, but said License Act, to wit, Act No. 205 of 1924, as amended by Act No. 132 of 1928, specially exempts from license tax manufacturers who sell their product exclusively to dealers for resale; and your respondent so disposes of its product. The trial judge sustained this defense, and the state appeals.

I We quote in full the entire evidence taken in the case, thus:

Louis E. Jacob, being duly sworn by the minute clerk, testified as follows:

By Mr. Sneed:

"Q. What is your connection with the Gardner Jacob Company? Ans. Secretary-Treasurer.

"Q. How long have you been connected with them? Ans. Ever since they existed.

"Q. Are you active in the business, and [do you] know its affairs? Ans. Yes, sir.

"Q. This is a rule for additional license. The question is whether or not an amount of fifty and odd thousand dollars is from the sale of manufactured products. What process, if any, does your company employ from the time they buy pork legs to the time they are turned over to the purchaser? Ans. First, they are soaked in a tank, between 4 1/2 and 5 hours; then, they are put in the smoke house and stay there all night; and next day they are put in a boiling tank and boiled 4 1/2 to 5 hours; then, they are cooled off and wrapped in ham wrappers.

"Q. In the smoke house, what is done to them? Ans. They are hung up and smoked with burned mahogany dust.

"Q. They go through a process of curing? Ans. Yes, sir.

"Q. After that the packages are made — of the hams? Ans. Yes, sir.

"Q. How are the hams sold? Ans. As boiled hams; to the grocery stores; no families at all.

"Q. You don't sell to the consumer at all? Ans. No, sir; to retail trade only.

"Q. Is your corporation a member of the Louisiana Manufacturers' Association? Ans. I think it is.

"Q. What equipment do you use in connection with the processing of the hams? Ans. We have soaking tanks; a regular smoke house, with trolleys to it to hang the hams on and roll them in; and a boiling tank.

"Q. How about the wrapping? Ans. That is done by hand, the wrapping; that is the only thing."

II In the "Creole Cook Book," Second Edition (1920), published by the Old New Orleans Picayune, we find the following useful household recipes (page 114):

"Pickled Pork: (Ingredients: 25 Pounds of Pork; 1 Ounce of Saltpetre; Coarse Salt sufficient to make a Brine; 12 Bay Leaves; 2 Dozen Onions; 12 Cloves; 6 Allspice.)

"Pork should be pickled about twenty hours after killing. It is pickled always in sufficient quantity to last some time, for, if proper care be taken, it will keep one year after pickling; but it may also be pickled in smaller quantities, of three or four pounds at a time, reducing other ingredients in the recipe according to quantity of pork used. To twenty-five pounds of pork allow one ounce of saltpetre. Pulverize thoroughly and mix with a sufficient quantity of salt to thoroughly salt the pork. Cut the pork into pieces of about two pounds, and slash each piece through the skin, and then rub thoroughly with the salt and saltpetre mixture till the meat is thoroughly penetrated through and through. Mash the cloves very fine, and ground the allspice; chop the onions. Take a small barrel and place at the bottom a layer of salt, then a layer of coarsely chopped onions, and sprinkle over this a layer of the spices and minced bay leaves. Place on this a layer of the pork; pack tightly; then place above this a layer of the salt and seasonings, and continue with alternate layers of pork and seasonings till the pork is used up. Conclude with a layer of the minced herbs and spices, and have a layer of salt on top. Cover the preparation with a board, on which a heavy weight must be placed. It will be ready for use in about ten or twelve days.

"Boiled Ham: (Ingredients: A Ham; 2 Blades of Mace; 1 Dozen Cloves; 4 Bay Leaves; Black Pepper and Parsley to garnish.)

"Wash the ham well in cold water, scraping off all portions of mold or salt. Have a large boiler of water on the stove; or, better still, the furnace. Throw in two blades of mace, a dozen cloves, and three or four bay leaves. Put the ham in the water, and let the fire be slow, allowing the water to heat gradually. Do not permit it to come to a boil for two hours at least, and be careful to skim carefully, so that all rejected substances may not impregnate the ham. Keep it simmering gently, allowing twenty minutes to every pound. When done, let the ham cool in its own liquor, and then put the ham on a board; cover with another board, and lay a weight over it. Leave under weight several hours; this will enable you to cut the ham in thin slices after removing the weight. Then carefully remove the skin without taking off the fat. Sprinkle it in patches with black pepper and ornament the shank bone with quilled paper, or a paper frill. Serve it cold, with a garnish of parsley. Cold boiled ham should be sliced very thin, and served with pickles and mustard."

Except for the overnight smoking with burned mahogany dust and the use of trolleys leading to the smokehouse to hang the hams on and roll them in, and the wrapping, the processes involved in these two recipes seem to be more elaborate, to involve more painstaking, and to require longer than those used by defendant. And eliminating the trolleys and wrapping, which could not of themselves alone make the process a manufacturing process if it were not otherwise so, we think that the overnight smoking of the raw meat with burned mahogany dust cannot even be said to be "really [only] an elaboration of the time-honored method of preparing and curing in the grimy little smokehouse of the farmer." (Quotation from Commonwealth v. Weiland Packing Co., 292 Pa. 447, 141 A. 148, 150.)

III In his monumental and epoch-marking work on the "Wealth of Nations" Doctor Adam Smith, the Father of the Modern Science of Political Economy, says (Book II, Chapter 3):

"There is one sort of labor which adds to the value of the subject upon which it is bestowed; there is another which has no such effect. The former, as it produces a value, may be calledproductive; the latter unproductive labor. Thus the labor of a manufacturer adds generally to the value of the materials which he works upon that of his own maintenance and of his master's profit. The labor of a menial servant, on the contrary, adds to the value of nothing. Though the manufacturer has his wages advanced to him by his master, he in reality costs him no expense, the value of those wages being generally restored, together with a profit, in the improved value of the subject upon which it is bestowed. But the maintenance of a menial servant never is restored. A man grows rich by employing a multitude of manufacturers; he grows poor by maintaining a multitude of menial servants. The labor of the latter, however, has its value and deserves its reward as well as that of the former. But the laborof the manufacturer fixes and realizes itself in some particularsubject or vendible commodity, which lasts for some time at leastafter that labor is passed. It is, as it were, a certain quantityof labor stocked and stored up, to be employed, if necessary,upon some other occasion. That subject, or what is the same thing, the price of that subject, can afterwards, if necessary, put into motion a quantity of labor equal to that which had originally produced it. The labor of the menial servant, on the contrary, does not fix or realize itself in any particular subject or vendible commodity.His services generally perish in the very instant of theirperformance, and seldom leave any trace of value behind them forwhich an equal quantity of service could afterwards be procured. (Italics by this writer.)"

IV Hence, "it is not every employment of labor which will make the thing upon which it is employed a manufacture." City of New Orleans v. New Orleans Coffee Co., 46 La. Ann. 86, 14 So. 502, 503. For the essential difference between manufacturers and mere servants is in the result accomplished by their labor and not in the method by which it is accomplished. The labor of the servant perishes with its rendition; that of the manufacturer lives afterward — lives in the article which was produced by him, and which lasts, without sensible deterioration, at least some appreciable time after those services have ceased.

And a thoughtful study, as distinguished from a mere superficial reading, of the many cases in which this court has considered the question of manufacturer vel non, must convince any one that at bottom its whole long line of jurisprudence thereon, excepting only some isolated case or cases, seemingly out of line, is (emphatically) not just "hap-hazard," but thoroughly sound and consistent, and based fundamentally on that very distinction, even though never mentioned tot verbis.

V Thus, the mere use of machinery, great or small, does not ipso facto make one a manufacturer. State v. New Orleans Ry. Lt. Co., 116 La. 144, 40 So. 597, 7 Ann. Cas. 724; Brooklyn Cooperage Co. v. City of New Orleans, 47 La. Ann. 1314, 17 So. 804; City of New Orleans v. Mannessier, 32 La. Ann. 1075.

Thus also, makers and vendors of ice cream, and bakers and venders of bread, are not ipso facto manufacturers. City of New Orleans v. Mannessier, 32 La. Ann. 1075; State v. Eckendorf, 46 La. Ann. 131, 14 So. 518.

But a maker of ice cream, whose product can be, and is (owing to modern progress in chemistry and refrigeration), shipped into outside states and sold there, has rightly been held to be a manufacturer. State Tax Coll. v. Brown, 140 La. 928, 74 So. 253. And a baker of "crackers, biscuits, etc.," making "from 160 to 175 varieties," also "soup paste" and "fancy paste," but "no bread, such as is commonly known as baker's bread," all such products being evidently intended not for mere immediate consumption but to be "shipped over a territory of 2500 square miles," has justly been held to be a manufacturer. State v. American Biscuit Mfg. Co., 47 La. Ann. 160, 16 So. 750.

VI We say "rightly" and "justly" held to be manufacturers. For although, for instance, the business of a maker from day to day and itinerant "peddler of ice cream," is not "manufacturing," and any attempt to "magnify a confectionery into a manufactory" and "cooks and pastrymen into manufacturers" must fail (City of New Orleans v. Mannessier, 32 La. Ann. 1075), yet there is sound reason for distinguishing, "36 years later," between such a business and that carried on by a great industrial plant whose product can be, and is, regularly shipped into outside states and sold there; a new business, born of modern engineering and chemical progress, and having only casual similarity to the former; — a business impossible "36 years" earlier. For —

"It will hardly do to say, because pork, beef, soups, vegetables, and fruits may be prepared, in any of the forms in which they are used, in the kitchens of private houses, restaurants, and hotels, that there can be no such things as packing and canning establishments, or that Menier and Huyler [international and interstate shippers of chocolates and chocolate candies made by themselves] any the less manufacture chocolate into various forms and combinations because the same thing may be done as an incident to the business of an ordinary confectioner. A few children may make as good candy as the world can produce, in a single tin cup, but, if they grow up, engage in the making of candy as a business, place their product on the market, and, perhaps, ship it to all parts of the world, no one will deny that they become manufacturers in every known and accepted sense in which that word is used." State Tax Coll. v. Brown, 140 La. 928, 935, 74 So. 253, 256.

VII Therefore in practically every case, if not indeed in absolutely every case but one, in which one has been held to be a manufacturer, his product has been such as had some appreciable degree of permanence. A few examples only will suffice.

In City of New Orleans v. Le Blanc, 34 La. Ann. 596, "The record shows that they [the defendants] are coopers, mechanics who employ assistants; that they make barrels, hogsheads from rough logs and splits. * * *"

In City of New Orleans v. Ernst, 35 La. Ann. 746, defendants were "carrying on the rice milling business. * * * The milling of it [rice] is effected by different processes, during which it passes from its original roughness to conditions in which it is fit for different uses [though still continuing only rice, just simply rice, and still intended and fit for the one same and only use to which it had always been put since the very foundation of the world of man, towit, as food for the human race]." But "deprived of its outer shell, and of the silica enveloping the denuded grain, it becomes an object of marketable value [just as it always had been; but the labor bestowed upon it had made it more attractive, more palatable, and hence more desirable, and therefore that much more valuable]." And rice, if properly stored and cared for, will last from season to season, or longer.

The process of sugar refining and the result thereof, mutandis mutatis, are exactly the same as in rice milling; that process being nothing more nor less than cleaning the raw sugar, just as rice milling is nothing else but rice cleaning. But refined sugar is far more palatable, more attractive, more permanent than raw sugar, and therefore far more desirable and more valuable. Hence, a sugar refiner is a manufacturer; just as is a rice miller. State v. American Sugar Refining Co., 108 La. 603, 32 So. 965.

The making of burlap bags is simply the making of bags out of burlap bagging instead of out of other cloth or out of paper; but the bags when made have a permanent value far greater than mere burlap bagging. So a maker of burlap bags is a manufacturer. State v. Bemis Bro. Bag Co., 135 La. 397, 65 So. 554.

Creosoted poles and timber are, of course, almost everlasting, and immensely more valuable after the processing than before. Cf. State v. American Creosote Works, 163 La. 547, 112 So. 412.

Cottonseed oil and any other vegetable oil will keep for ages in sealed containers. Cf. State v. Southern Cotton Oil Co.,164 La. 225, 113 So. 825.

State v. Dupre, 42 La. Ann. 561, 7 So. 727, seems "out of line." A mere newsprint is read or glanced over and then consigned to oblivion or worse. Publishers and venders of newsprints are not manufacturers of "stationery" or books, but at most of news; and news ceases to be news within the hour. Cf. Nicholson v. Parker, Tax. Coll., 44 La. Ann. 76, 10 So. 403.

On the other hand, a maker of ice cream for immediate consumption, a baker of bread for immediate use, are not manufacturers; nor yet a producer and distributor of electricity (which perishes instantly as it is produced), even though it operates a large "plant," and "consumes upwards of 33,000 tons of coal annually in operating its said plant." City of New Orleans v. Mannessier, 32 La. Ann. 1075; State v. Eckendorf, 46 La. Ann. 131, 14 So. 518; State v. New Orleans Ry. Light Co., 116 La. 144, 40 So. 597, 7 Ann. Cas. 724.

Nor are commercial printers and stationers manufacturers, who only cut, rule, and print letterheads, billheads, forms, and account books for their customers to supply their immediate and individual needs. Patterson v. City of New Orleans, 47 La. Ann. 275, 16 So. 815.

Neither does a "coffee roaster" become a manufacturer by simply "manipulating" green coffee and thereby merely giving the same coffee "different and recognizable tastes and flavors." City of New Orleans v. New Orleans Coffee Co., 46 La. Ann. 86, 14 So. 502.

The obiter dicta in Lake v. Guillotte, Tax Coll., 48 La. Ann. 870, 19 So. 924, seems to be slightly "out of line" the otherway; though justifiable, perhaps, on the ground that "the work done in Louisiana is infinitesimal" as compared with the work done elsewhere. But the case itself correctly holds that the assembler, or maker, or manufacturer (if you will), of "umbrellas and parasols," made of wood and metal and cloth, is not a manufacturer of "textile fabrics" and "articles of wood"; no more than is one engaged in cutting and making coats and pants, out of jeans cloth made by another, a manufacturer of "textile fabrics." Cohn v. Parker, Tax Coll., 41 La. Ann. 894, 6 So. 718.

VIII The conclusion we have reached is that the product of this defendant's operations is not of that character which entitles it to be classed as a manufacturer. It may come near, but it does not come near enough, to the precedents established in State v. American Biscuit Mfg. Co., 47 La. Ann. 160, 16 So. 750, and State v. Brown, 140 La. 928, 74 So. 253, but it does come quite within the precedents established in City of New Orleans v. Mannessier, 32 La. Ann. 1075, and State v. Eckendorf, 46 La. Ann. 131, 14 So. 518. It is not, and does not claim to be, a producer of pickled pork, though its product goes through a short process of pickling and curing before it is finally prepared for delivery to the retailer ready for the consumer; a process, however, far less elaborate than that which goes on at times in domestic kitchens. It is, and it claims to be, only a producer of boiled hams. For this it has a method which enables it to produce "boiled ham" directly from fresh pork legs instead of from the more expensive "cured" product. Its method saves for the retailer of boiled ham the long and laborious effort of preparing his own ham which he serves to his trade. But there is nothing which shows, after all is said and done, that what the retailer gets is anything but boiled ham no different from the boiled ham of the domestic kitchen. Decree. For the reasons assigned the judgment appealed from is reversed, and it is now ordered that the state have judgment against the defendant as prayed for, and at defendant's cost in all courts.

ODOM, J., concurs in the decree.

BRUNOT, J., dissents.