Morrison-Knudsen Co. v. State

Hill and Donworth, JJ., and Ott, C. J.

(dissenting) — We dissent. We agree with the trial court that where contractors partially constructed, according to the state’s minute specifications, huge pontoons and anchor shells intended for use in the Hood Canal Bridge, concededly an integral part of the state’s highway system, using their own forces and materials, there is no logical or factual reason why such activities should be termed “manufacturing” and taxed as such.

Circumstances demonstrated that these partially constructed pontoons and anchor shells could not be used, as designed. There is nothing to indicate that these “orphans of the storm” constituted a “new, different or useful article of tangible personal property” nor were they a “substance of trade or commerce,” within the purview of RCW 82.04.120, and hence not subject to the manufacturer’s tax as levied by RCW 82.04.240.

As a “Public Road Contractor” the contractors here could only be liable to a claim for a manufacturing tax, if a “consumer” under RCW 82.04.190(3), “in respect, however, only to tangible personal property used or consumed in such business.” And under RCW 82.12.020 they could only be held liable for a compensating or use tax as to the use within the state “as a consumer” of the manufactured product.

In its memorandum opinion, the trial court said:

“Plaintiffs contracted to construct a bridge known as the Hood Canal Bridge. Plaintiffs never built the bridge for *94reasons which are too well known to require discussion here. Under the unusual and nearly unique facts of this case the plaintiffs were not ‘consumers’ as that term is defined in R.C.W. 82.04.190 in that they the plaintiffs did not ‘use’ or ‘Consume’ the pontoons and anchors. While it may well be that the pontoons and anchors were eventually ‘used or consumed’ in the building of the bridge, it was not by these plaintiffs. ...”

His logic seems, to us, inescapable.

The trial court correctly determined that the respondents were not engaged in “manufacturing” and that they were not “consumers” of the partially constructed pontoons and anchor shells. We would affirm the trial court.

May 26, 1964. Petition for rehearing denied.