Williams v. Park , 72 N.H. 305 ( 1903 )

The statute under which the town acted in making the exemption to Park reads as follows: "Towns may by vote exempt from taxation for a term not exceeding ten years any manufacturing establishment proposed to be erected or put in operation therein, and the capital to be used in operating the same, unless such establishment has been previously exempted from taxation by some town." P. S., c. 55, s. 11. The establishment contemplated by the town's vote was to be equipped for furnishing steam and electric power and light and distributing the same, as well as for manufacturing lumber and wood. It was a single establishment, designed for two independent purposes. While it is possible that a boundary line might be discovered separating the portions of the building and machinery used for one purpose from the portions used for the other, and that the capital might be appropriated in definite shares to the several purposes, it is not possible to ascertain whether the vote would have been adopted if it had not provided that both kinds of business should be carried on at the establishment. Some of the voters may have been induced to favor the scheme by the promise of an electric light and power plant, and would have voted against it in the absence of such promise. Others may have voted for it because they were particularly interested in having a lumber mill established in the town, and were willing to subsidize an electric plant in addition to the mill to secure their wish. See Cox Needle Co. v. Gilford, 62 N.H. 503. The provision for having a light and power plant is a material part of the vote, and cannot be separated from the other provisions and treated as void, leaving the latter in force. The action of the town covered both subjects indiscriminately, and must stand or fall as a whole. It therefore is a fundamental question in the case whether an establishment designed for furnishing and distributing such power and lights is a "manufacturing establishment" within the meaning of the statute.

In attempting to answer the question, it must be borne in mind that the policy of the state requires the taxation of property as a general rule. "Every member of the community has a right to be protected by it in the enjoyment of his life, liberty, and property. He is, therefore, bound to contribute his share in the expense of such protection, and to yield his personal service when necessary, or an equivalent." Bill of Rights, art. 12; Const., art. 5. "It will never be assumed that the government intended to release any part of the property entitled to its protection from the burden incident to such protection, and it is the duty of those who assert that claim to show it in language which can admit of no other conclusion; and where doubt arises as to the meaning of the language used which it is claimed confers the exemption, it will be construed most strongly against those who maintain the exemption." Phillips Exeter Academy v. Exeter, 58 N.H. 306, 307; Boody v. Watson, 63 N.H. 320, 321; Kimball Carriage Co. v. Manchester, 67 N.H. 483, 484; Alton Bay Campmeeting Ass'n v. Alton, 69 N.H. 311, 312. The burden is upon Park to clearly show that the legislature intended by the statute to authorize the exemption from taxation of an establishment like his.

"Any manufacturing establishment" is a, phrase that may have a broad meaning; but was it used in the statute in its broadest sense? The earliest statutes specified the manufactures that were to have the benefit of exemption. Mills, etc., used for the manufacture of linseed oil (Laws, ed. 1792, p. 341), for slitting, rolling, or plating iron (Ib., p. 343), for the manufacture of sail cloth or duck (Ib., p. 347), and for the manufacture of malt and malt liquors (Laws, ed. 1797, p. 400), were exempted in the first decade after the adoption of the present constitution. By the act of June 18, 1819, the buildings, machinery, and capital of the Souhegan Nail, Cotton Woolen Factory, not exceeding in value $30,000, were exempted for a term of ten years. 7 N.H. 310. The preamble of the first act states the reason of its adoption as follows: "Whereas the manufacturing of oil from flaxseed, within this state, will furnish employment for poor persons, have a happy influence on the balance of trade, and greatly contribute to the wealth of the good subjects of this state: Therefore, to encourage the same, Be it enacted," etc. The prevention of a drain of money from the state to foreign countries is given as the reason for the enactment of other statutes. The object of them all was to promote the increase, industry, and prosperity of the inhabitants of the state. A careful examination has not brought to notice any statute upon the subject passed between 1819 and 1860. In the latter year an act was passed "to encourage manufactures," by which the machinery and capital used for the manufacture of "fabrics of cotton or wool, or of both cotton and wool," might, with the assent of the town, be exempted from taxation for the term of ten years after the passage of the act, — the town's assent to have "the force of a contract, and be binding for the full term above specified." Laws 1860, c. 2361, s. 1. By the General Statutes, enacted in 1867, the term of the exemption was made a period not exceeding ten years, to be fixed by the town granting the exemption. In other respects the statute continued the same in substance, although its form was changed. G.S., c. 49, s. 9. It seems that prior to 1871 exemption was sought for other industries aside from cotton and woolen manufactures. In 1869, Littleton was specially authorized to exempt an establishment for the manufacture of hoes, forks, shovels, or scythes. Laws 1869, c. 124, s. 1. Authority for the exemption of establishments generally engaged in such manufactures and the manufacture of fabrics from other materials was granted by the act of July 7, 1871. The subjects of exemption were described in this act as establishments for the manufacture of "fabrics of cotton, wool, wood, iron, or any other material." Laws 1871, c. 25, s. 1. Upon the compilation and revision of the statutes in 1891, the phrase "any manufacturing establishment" was substituted for "any establishment . . . for the manufacture of fabrics of cotton, wool, wood, iron, or any other material," but without an intention of changing the law. Comm'rs' Rep. P. S., c. 54, s. 11."Manufacturing," then, in the present statute, is used in the sense of working materials into a fabric or structure for use, as, for example, cotton into cloth, iron into tools, wood into carriages, etc. This is the ordinary meaning of the word, and, independently of the light thrown upon it by the history of the statute, would be regarded as the meaning which the legislature attached to it. The question then resolves itself into this: Whether the collection and distribution of electricity, for purposes of power and light, are manufacturing within this sense of the word? Machinery and manual labor are required in the process, but this fact alone does not bring it within the meaning of the word. The product of the machinery and labor must be a fabric or structure made from materials of some kind.

It has not yet been discovered what electricity is. Sir Oliver Lodge, an eminent English scientist, said in a lecture delivered in 1880: "We cannot assert that it is a form of matter, neither can we deny it; on the other hand, we certainly cannot assert that it is a form of energy, and I should be disposed to deny it. It may be that electricity is an entity per se, just as matter is an entity per se." In a lecture delivered the present year, he seems to give assent to the theory that it is matter in a fourth state, consisting of something very much smaller than atoms, — "ultra-atomic corpuscles," — which revolve about each other within atoms at tremendous speed. The knowledge of electricity thus far acquired certainly does not warrant one to speak of it as a manufacture. In common speech, an electric light and power plant is not spoken of as a manufacturing establishment. In enumerating the manufacturing industries of a town, the electric plant would not ordinarily be included. It is true that the collection of electricity is sometimes spoken of as manufacturing it; but in such cases other words are usually added, as generating, producing, supplying, — showing a consciousness that "manufacturing" does not correctly express the idea. Laws 1881, co. 233, 237, 241; Laws 1887, cc. 237, 243, 247, 287, 292. The charter of the Franklin Gas and. Electric Light Company probably describes the process more nearly correctly by the words "produce, collect, and store." Laws 1887, c. 261, s. 3.

There is direct evidence that the legislature did not intend by this statute to authorize the exemption from taxation of electric light plants. By an act approved March 25, 1897, a vote of the town of Franconia, "exempting from taxation an electric light plant, to be established in said town," was made legal and valid. Laws 1897, c. 208. of course, this vote would have been unnecessary if it had been understood that the general statute authorized the town to grant the exemption. If it be said that doubts existed whether the general statute authorized the vote, and the special statute was passed to remove them, the evidence in that view is scarcely less effective in establishing the proposition that the general statute does not authorize such exemption; for by the well established principle of law above mentioned, the doubts should be construed most strongly against the exemption.

A similar question has arisen in other jurisdictions, but the decisions are conflicting. In a recent Maryland case it was held that an electric light company does not carry on a "manufacturing industry," within the meaning of a city ordinance exempting from municipal taxation "the machinery and manufacturing apparatus of all manufacturing industries" located in the city. Frederick etc. Co. v. Frederick, 84 Md. 599. In New York it was held that such a company was a "manufacturing corporation," within the meaning of a statute exempting manufacturing corporations from taxation. People v. Wemple, 129 N.Y. 543. See, also, Commonwealth v. Power Co, 145 Pa. St. 105; Commonwealth v. Power Co., 170 Pa. St. 231, Commonwealth v. Power Co., 193 Pa. St. 245.

The real question is: What was the intention expressed by the language of the legislature in this case? In view of the ordinary meaning of the terms used in the statute, the policy of the state, and the evidence furnished by the history of the legislation on the subject and the action of the legislature in the Franconia case, it does not clearly appear, to say the least, that the legislature intended to authorize the exemption of property of this kind. As exemption of the electric plant is so connected with the exemption of the other property mentioned in the vote that it cannot be separated and treated independently, the entire vote must fail and be regarded as unauthorized and void.

This conclusion renders it unnecessary to consider the question of the constitutional power of the legislature to authorize towns to exempt property from taxation, and the other questions argued in the briefs. The petition should be granted so far as it relates to property situated in Warren. Boody v. Watson, 64 N.H. 162.

Case discharged.

PARSONS, C. J., did not sit: the others concurred.