King Estate Winery, Inc. v. Department of Revenue

RIGGS, J.,

dissenting.

I respectfully dissent. Although I agree with the majority that neither Oregon’s land use laws nor Craven v. Jackson County, 308 Or 281, 779 P2d 1011 (1989), bears on the resolution of this case, I disagree with the majority’s interpretation of ORS 307.400(3)(c).

ORS 307.400(3)(c) provides that “[f]arm machinery and equipment used primarily in any other agricultural or horticultural use * * * or any combination thereof’ shall be exempt from taxation.1 (Emphasis added.) ORS 307.400(3)(a) and (b), which contain categories of activities in which the farm machinery and equipment used are exempt, must be considered when interpreting the words “any other,” as well as “farm machinery and equipment” and “agricultural or horticultural use.” See PGE v. Bureau of Labor and Industries, 317 Or 606, 611, 859 P2d 1143 (1993) (noting that in examining context of statutory provision, courts must include other provisions of same statute); Vannatta v. Keisling, 324 Or 514, 533, 931 P2d 770 (1997) (“Under the doctrine of ejusdem generis, a nonspecific or general phrase that appears *425at the end of a list of items in a statute is to be read as referring only to other items of the same kind.”).

The simple growing and harvesting of crops and the simple raising and managing of animals are not the only activities listed in ORS 307.400(3)(a) and (b). ORS 307.400(3)(b) expressly lists “[f]arm machinery and equipment used primarily * * * for dairying and the sale of dairy products” as an exempt category. (Emphasis added.) The dictionary defines “dairying” as “the business of conducting a dairy.” Webster’s Third New Int’l Dictionary, 570 (unabridged ed 1993). “Dairy” is defined in part as “the department of farming or of a farm that is concerned with the production of milk, butter, and cheese.” Id. Thus, ORS 307.400(3)(b) exempts all farm machinery and equipment used for processing raw milk. The wording “the sale of dairy products,” as well as “[the] sale of, or the produce of, livestock, poultry, fur-bearing animals or bees” in ORS 307.400(3)(b) exempts all farm machinery and equipment used in the sale of and, in my view, the promotion of those items.

The majority attempts to limit the processing and selling references in ORS 307.400(3)(b) to animals and animal products. The majority reasons that ORS 307.400(3)(a) (which the majority finds is a more narrowly written statute) pertains to crops, whereas ORS 307.400(3)(b) pertains to animals and animal products. Thus, the broader range of uses that the majority views is allowed in ORS 307.400(3)(b) does not carry over to crop uses under ORS 307.400(3)(c).2 Under that view, however, there is little need for ORS 307.400(3)(c).

In ORS 307.400(3)(b), the legislature included equipment used in processing raw farm products and in the sale of the end products as exempt property. That cannot be ignored when interpreting what farm machinery and equipment is exempt under the phrase “any other agricultural or horticultural use * * * or any combination thereof in ORS 307.400(3)(c). (Emphasis added.) By expressly including *426equipment used in processing and selling, the legislature has indicated that such activities are “other agricultural or horticultural” uses. Processing milk into cheese, in my mind, cannot be distinguished meaningfully from processing grapes into wine. Both activities involve taking a raw farm product and converting it into a marketable good. Both activities definitionally and necessarily involve farm machinery and equipment used for farming, processing, and selling farm products. Accordingly, ORS 307.400(3)(c) should be interpreted to exempt the inventory used in producing, harvesting, processing, and selling farm products if the taxpayer conducts those activities on farm premises.

There is, in my view, an equally compelling flaw in the majority’s interpretation. The majority assumes without discussion that “farm” modifies both “machinery” and “equipment” in the phrase “farm machinery and equipment.” King Estate Winery v. Dept. of Rev., 329 Or at 419. That is incorrect. The failure to insert the word “farm” before “equipment” evinces a legislative intent for a broader exemption than the majority contemplates. See ORS 174.010 (providing that courts may not insert what has been omitted from statute). The exemption of mere “equipment,” unmodified by the word “farm,” is consistent with the statute’s references to selling livestock and dairy products, because equipment used in selling products would include nonfarm items, such as computers, cash registers, and, perhaps, decorative items that are used to sell the farm products on-site. Because I believe that the plain reading of ORS 307.400(3) leads to the conclusion that the legislature did not intend for “equipment” to be modified by “farm,” I need not inquire farther. See PGE, 317 Or at 611 (stating that further inquiry is unnecessary when legislature’s intent of statute is clear from text and context). If, on the other hand, my reading of the statute creates an ambiguity, then the majority’s task is incomplete. It should consider legislative history to complete its statutory analysis. See id. at 611-12 (mandating consideration of legislative history when interpreting ambiguous statute).

The parties do not dispute that the ultimate purposes of the equipment for which taxpayer seeks an exemption were to process and to sell wine. Nor do the parties dispute that the taxpayer used that equipment on farm *427premises. For the reasons explained above, I would hold that, under these facts, the equipment used in the wine making here is exempt from ad valorem taxation under ORS 307.400(3)(c). I therefore dissent.

The majority correctly notes that ORS 307.400 does not define the terms “farm machinery and equipment” and “agricultural or horticultural use.”

The majority suggests that the legislature could rewrite ORS 307.400 to include wine making and wine selling as specific exemptions, thus avoiding the problem at issue here. Of course that is true. That another sort of legislative fix might conceivably be available does little to inform the statutory interpretation required in this case.