Heath v. Midco Equipment Co.

John A. Fogleman, Justice,

dissenting. I consider the dump trucks in this case to clearly fall within the exemption. They are certainly machinery or equipment used directly in producing, assembling or finishing articles of commerce at a manufacturing or processing plant or facility. This would bring them within the purview of Ark. Stat. Ann. § 84-1904 (r) (2) (Supp. 1073), unless excluded by the clause “but only to the extent that such machinery is purchased and used for the purposes set forth in this subsection.” The only other applicable portion of the subsection is Ark. Stat. Ann. § 84-1904 (r) (2) (C). Under that subsection, in order to be exempt the machinery or equipment must be used directly in the actual manufacturing or processing operation between the initial stage through the completion of the finished article of commerce and the packaging of the end product. But the use of the term “directly” is intended only to limit the exemption to the machinery and equipment used in actual production during processing, fabricating or assembling raw materials or semi-finished material into the form in which personal property is to be sold in the commercial market. “Actual production” as used in the act seems to me to include every activity from the time the raw stone is blasted from the walls of the quarry until it has been crushed and screened to obtain a salable product.

In the sense used in the act, production is defined as: “ [a]ct or process of producing, bringing forth or exhibiting to view; as, the production of commodities, of a witness, or of a play” (Webster’s New International Dictionary, Second Edition); “the act or process of producing, bringing forth or making” “the creation of utility: the making of goods available for human wants” (Webster’s Third Edition).

Even though our lien statutes are strictly construed when determining whether a lien is created, it has been held that a laborer who cuts and rakes prairie hay, a natural product, was entitled to a lien because the cut and dried hay was “the production of the laborer who cuts and rakes it ... ” Emerson v. Hedrick, 42 Ark. 263. The night engineer of an ice plant, who operated machinery, handled the compressor, froze ice, “pulled it” and put it in the “dump room,” was held to be engaged in the production of ice. Couch v. Ward, 205 Ark. 308, 168 S.W. 2d 822.

The accepted definition of the word “actual” is “[¡Involving, pertaining to, or manifested in acts or actions; active” and is opposed to potential, possible, ostensible, virtual, speculative, conceivable, ideal, theoretical, hypothetical or nominal. (Webster’s Second Edition.) We have taken the word to mean “in fact.” Crossett Lumber Co. v. Johnson, 208 Ark. 572, 187 S.W. 2d 161; Life & Casualty Ins. Co. of Tennessee v. DeArman, 192 Ark. 11, 90 S.W. 2d 206.

If a laborer raking hay is engaged in production of hay, certainly these dump trucks are engaged in real and active production of the marketable stone. These dump trucks are motorized, wheeled and self-propelled conveyor belts, nothing more. If they are not exempt under this clause, neither is the conveyor belt which transports the stone to the “surg pile,” to the tertiary crusher, or to the finishing mill. Appellant argues that to be exempt “the machinery must be used directly in the extraction of the stone from the earth.” If this is so, how can the crushers be exempt? But the state not only does not contend that either the conveyor belts or crushers were not exempt, it seems to admit that they were. I submit that this construction, and that of the majority, passes beyond a strict one and becomes, if it is even a possible one, a very narrow one.

It must be remembered that this statute is considerably different, and the facts considerably differ, from those considered in Cheney v. Georgia-Pacific, 237 Ark. 161, 371 S.W. 2d 843. The exemption there considered did not apply to certain items, equipment and materials “which are incidental or useful in connection with the manufacturing or processing operations and not directly used in the primary production processing or manufacturing.” The conveyors there held not exempt transported waste materials from a storage bin at a lumber mill into a mechanism which fed a pneumatic conveyor, which, in turn, blew the waste material over to a paper mill, where it was used as a fuel for boilers. The towmotor and carrier held subject to tax transported material between processes in the plant. The key words in the statute then before the court were “incidental or useful” and “primary.” Certainly the particular items were incidental and useful in connection with the production but not directly used in the primary production. The words actual and primary are far from synonymous. “Primary” means “ [f] irst in order of time or development or in intention; primitive; fundamental; original; initial; . . . [f]irst in dignity or importance; chief; principal; as, primary effects, meanings; . . . [o]f the first order in successive divisions, combinations or ramifications; as, primary nerves, compounds ...” (Webster’s Second Edition). In Cheney, a machine was held to be a primary facility when its removal would cause the manufacturing operation to cease.

Thus, a machine could be incidental or useful to primary, but not secondary, production and still be utilized in actual production, whether primary or secondary. I submit that the General Assembly is presumed to have adopted the language in the 1968 statute now before the court with complete awareness of our 1963 decision construing the earlier act, and that it clearly intended the current exemption to be construed differently from that given by us in Cheney.

I am well aware of, and subscribe to, the rule of construction that doubts are to be resolved against exemption from a tax, but, to my way of thinking, the majority has imported a doubt into the construction of the statute in order to hold as it has by removing the doubt. This we must not do. Rules of construction cannot be used to import ambiguity into, a statute where none exists. 82 C.J.S. 527, Statutes, § 311; Inwall v. Transpacific Lumber Co., 165 Ore. 560, 108 P. 2d 522 (1941); New England Die Co. v. General Products Co., 92 R.I. 292, 168 A. 2d 150 (1961).

I agree with the Chancellor, and would affirm the chancery decree.

I am authorized to state that the Chief Justice joins in this dissent.