Bald Mountain Mining Co. v. Welsh , 65 S.D. 117 ( 1937 )

We concur in the opinion of Judge POLLEY to the extent that we believe the process of extracting the gold and silver from the ore is manufacturing or processing within the meaning of paragraph (a) of section 2, chapter 184, Session Laws of 1933. On the other hand, the business of taking the ore from the ground is not manufacturing or processing but is simply mining. The facts alleged establish that the plaintiff is engaged in two separate and distinct businesses: First, that of mining the ore; and, second, that of processing the ore by extracting therefrom its gold and silver content. Such was the situation in the case of Commonwealth v. Juniata Coke Company, 157 Pa. 507, 27 A. 373, 22 L.R.A. 232, wherein it was disclosed that a single company mined coal and then manufactured or processed the coal it had mined into coke. The question presented to the Pennsylvania court was whether that company was engaged exclusively in manufacturing, and by reason of such fact exempt under Pennsylvania law from taxation. The court held that the company was engaged in two separate businesses, and that so much of its capital as was used exclusively for the manufacturing of coke was exempt from taxation, but that that part of its capital used in mining was not. In the case before us, we should apply a rule similar to that applied by the Pennsylvania court. A portion of the income of this plaintiff is derived from mining the ore; another portion of the income is derived from processing that ore and extracting therefrom the gold and silver content. The income derived from mining is subject to a tax at a higher rate than the income derived from the manufacturing. Upon a proper showing the trial court should allocate a portion of the income of this plaintiff to the business of mining the ore and a portion to the business of processing this ore. So much of the income as is derived from the mining should pay the tax provided in paragraph (e) of section 2 of said chapter 184, and so much of the income as is derived from processing the ore should be taxed at the rate provided in paragraph (a) of this section.

The case is here on demurrer to the complaint. From what has been said it follows that the trial court correctly overruled the demurrer. If plaintiff establishes the allegations of its complaint, it is entitled to recover, but not on the basis that its entire income is derived exclusively from manufacturing or processing. There should be presented a showing establishing the portion of the income derived from mining and the portion from processing.

The order should be, and is, affirmed.

ROBERTS and WARREN, JJ., concur in the opinion of RUDOLPH, P.J.

SMITH, J., not sitting.