dissenting.
The majority opinion disposes of this appeal upon the technical ground that the State Tax Commission has inadvertently stipulated itself out of court. This manner of disposing of the case will come as a surprise to counsel for both plaintiff and defendant because that point was not made as a basis for deciding the case, either in the Tax Court or in the briefs or in oral argument on appeal. Counsel for both parties argued the case both here and below on the assumption *103that the outcome would rest upon the interpretation of ORS 307.810.
The pertinent parts of the stipulation upon which the majority rely to foreclose the Tax Commission from arguing the substantive question of the interpretation of the statute are as follows:
“At all times material herein, the Subject Property was held in private storage in segregated lots, was designated as being ‘in transit’ upon the books and records of the warehouse wherein the same was located, and, while being so held, was assembled, bound and joined to railroad ear frames manufactured by plaintiff and destined for sale in the ordinary course of trade or business.
“The Subject Property was not changed in form or in shape by plaintiff in the process of assembling, binding and joining the same to the railroad car frames. For example, the physical characteristics of the wheels and axles remained the same after they were assembled, bound and joined as aforesaid.
u # #
“At all times material herein, plaintiff manufactured railroad cars for railroad companies, including Southern Pacific Company, Union Pacific Railroad Company, Great Northern Railway Company, and St. Louis Southwestern Railway Lines. Title to the railroad cars was transferred to financial institutions, whose offices were located outside the State of Oregon. All of the railroad cars, including the Subject Property which was assembled, bound and joined thereto, were delivered by plaintiff to the railroad company on the tracks at plaintiff’s plant in Portland, Oregon. The railroad cars, including the Subject Property which was assembled, bound and joined thereto, were destined for shipment and were forthwith shipped to out-of-state destinations [other than the counties of *104origin of the Subject Property] by the railroad company to whom plaintiff delivered the same.”
In interpreting this stipulation it is to be remembered that the boxcars consist of two major components: (1) the trucks and (2) the frames. The frames are concededly subject to taxation. The only issue is the taxability of the trucks. In the stipulation the Tax Commission recognizes that the trucks are “assembled, bound and joined” to the frames. That process of conjoining the two principal parts of the boxcars is of no significance in deciding the issue in this case. The question in the present case is whether the trucks alone are formed by the process of the component parts being “assembled, bound and joined” within the meaning of the statute. The stipulation does not constitute a concession that the component parts of the trucks were joined by a process of being “assembled, bound and joined,” but merely a concession that the trucks are “assembled, bound and joined” to the frames.
Even if the stipulation is read to mean that the trucks are formed by assembling, joining and combining the component parts, the stipulation should not be interpreted to preclude the Tax Commission from presenting the issue of the applicability of the statutory exemption.
Plaintiff would concede that the exemption would not apply in every case where the taxpayer assembles, joins and combines various items into a new unit. The exemption applies only to personal property in transit and when the property is destined for sale outside the state.
Even if the stipulation is taken as a concession that the parts of the truck are assembled, bound and *105joined to form the trucks, the stipulation should be construed as a concession only that they were so conjoined under circumstances not falling within the intendment of the statute exempting goods in transit.
Considering, then, the issue argued on this appeal, I would hold that the trucks did not fall within the statutory exemption. As stated in Freightliner Corp. v. Dept. of Rev., 3 OTR Adv Sh 577, 581:
“* * * The purpose of the act [free port statute] was to promote Oregon as a storage and distribution center for goods brought into this state for transshipment out of state.”
Plaintiff is not in the business of warehousing goods; it is in the business of manufacturing boxcars. The statute was not intended to provide an exemption for goods shipped into Oregon for the purpose of manufacturing them into a finished product in Oregon. The present case cannot be distinguished from Freight-liner Corp. v. Dept. of Rev., supra. In that case parts were shipped into the taxpayer’s plant where they were assembled into motor trucks. In holding that the statutory exemption did not apply, the Tax Court said:
“The evidence clearly establishes that plaintiff is in the business of manufacturing trucks; it is not in the business of warehousing or being a storage and distribution center for goods brought into this state for transshipment out of state. Although the statute provides that the exemption is not lost because the goods are assembled, bound or joined while in the warehouse, the plaintiff’s business of building trucks starting with a frame rail and ending with a completed truck ready for delivery goes beyond the type of assembling, binding or joining contemplated by the free port statute. * * & *
“If the plaintiff as a manufacturer of trucks is entitled to the benefit of the free port act, then *106every manufacturer in Oregon who purchases parts from out of state and assembles them into a unit for shipment out of state is entitled to exemption. This is not the warehousing, storing and distributing that was intended by the act.” 3 OTE Adv Sh at 582.
The foregoing language is applicable to the present case.
I see no essential difference between the character of the process employed by Gunderson Bros, in assembling the boxcar trucks and the process employed by Freightliner in assembling the motor trucks. The fact that the assembly process in Freightliner was somewhat more complicated is not controlling — the important factor is the character of the taxpayer’s activity in assembling the goods. It is clear in both cases that the taxpayer assembled the parts into a finished product as a part of its business of manufacturing a product for sale and not as a part of a warehousing or storage business.
The judgment should be reversed.
Holman and Schwab, JJ., join in this opinion.