Herlihy Mid-Continent Co. v. Nudelman

I cannot agree with the majority of this court. The opinion states that even if a substantial portion of an occupation is the selling of tangible personal property for use or consumption, such an occupation is not necessarily taxable, and that "further refinements must be made." This idea is sought to be supported byPeoples Gas Light and Coke Co. v. Ames, 359 Ill. 152. The basis of that decision was that the General Assembly did not intend to include public service companies in the act, and not that they did not deal in or make transfers of title to tangible personal property for use or consumption and not for resale. That decision, therefore, made no refinement of occupations which involve, as a major fraction of the business done in them, the transfer of tangible personal property for use or consumption, which related to such transfers. Next, after admitting that several sales may be made before an article reaches the hands of the ultimate purchaser or user, and that it is the purpose for which the property is sold that is determinative, it is held that the contractors are the ultimate consumers or users of the cement, sand, gravel, steel and other materials that went into the construction of sewers and other improvements on the property of the sanitary district. It is true that in mixing concrete, the sand, cement and gravel change their form and become a solid mass, but this is no greater metamorphosis than was dealt with in the food stuffs prepared and sold by the tax-payer in BrevoortHotel Co. v. Ames, 360 Ill. 485. Some of the distinctive *Page 607 features of our holding in the last named case are that the customer, and not the hotel, is the user of the food within the meaning of the act; that in almost every sale of tangible personal property there is a strong element of service, but the food, clothing, shoes, hat or other personal property bought is the substance of the transaction, and such a transfer of the title to the food is a transfer or sale within the meaning of the act, although, at common law, innkeepers were said to "utter" rather than sell victuals and fodder for man and beast, respectively.

Although our decision in Blome Co. v. Ames, 365 Ill. 456, is expressly overruled, the majority opinion lets stand what was decided in Bradley Supply Co. v. Ames, 359 Ill. 162, because in the latter case the plumbing fixtures and supplies used in installing plumbing largely retained their original form. In this connection the majority say: "Its design, no doubt, was subject to specifications made by the purchaser, and its use by the contractor was similar to that by the landscape architect, of his shrubs and plants, in Swain Nelson Sons Co. v. Department ofFinance, 365 Ill. 401."

In my opinion, neither the Blome Co. decision nor the BradleySupply Co. decision should be overruled, but if either is to be expressly overruled, both should fall. Plumbing contractors are not distinguishable in their occupation from any other sort of contractors doing construction work. Whether their sales are of fixtures, pipe, lead or what-not, that has a great or a small value or no value as salvage, and whether their sales are of fabricated or unfabricated tangible personal property has no bearing upon the reasoning that should be applied to the occupations these persons engage in. The refinements that have crept into our decisions based on the fact that printing is said to be "one of the graphic arts;" that blueprint paper, when printed upon, is of no value to any one other than the purchaser; that letter-heads cannot be sold and are also of no value to any one except the customer who buys them; that electrotypes *Page 608 have little salvage value, and that an optometrist may branch out from the professional part of his occupation and engage in the sale of spectacle frames, lenses, cases for glasses, etc., are all, in my opinion, wide of the mark. None of these sales are any the less transfers of tangible personal property for use or consumption and not for resale.

In my opinion, better reasoning is contained in Cusick v. Com.260 Ky. 204, 111 A.L.R. 940, where the contention of a photographer was that his business consisted entirely of labor and was one of personal service, requiring science, skill and talent rather than an occupation involving the transfer of title to tangible personal property for use or consumption. In that case the Kentucky court said: "Coming to the argument that a photographer is engaged in selling service, and that service is not taxable, it must not be overlooked that the chief value of many articles consists in the cost of the service and skill by which they are produced, rather than the cost of materials out of which they are made. Moreover, the situation is not the same as if the patron took an article to another to be repaired and paid only for the service rendered. One who desires a photograph of himself or his family does not contract simply for service. He desires the finished article, and that is what he buys and what the photographer sells. It is true that the photograph is of a particular person, and that the market is limited, but that is more or less true in every case where clothing or other articles are made to order for a particular person, or a particular purpose, and are not regularly kept on hand."

What salvage value would there be, for example, in a suit of clothes made for and worn by any member of this court, after the suit had been worn, or in a partly eaten meal served to one of our number, or even in a photograph of any one of us?

In People v. Graves, 246 A.D. 130, 284 N.Y. Supp. 906, the court said: "Here the relator was conducting the *Page 609 business of putting on paper figures or designs, and offering sketches for sale, and each had an intrinsic value, albeit perhaps possessing an artistic quality or principle. The service expended was not of a personal nature, as the relator employed others to provide it; and the drawings were subsequently devoted to a useful industrial purpose. The relator was a purveyor of fabric designs, and its business was not different in principle from those who furnished special thread, implements or coloring dyes, or engraved plates, to meet the needs of industry."

In holding taxable the occupation of a construction contractor, and that there was a sale of the materials furnished to a municipal corporation in the construction of a dam, intake tower, settling basin, and filtering house, as part of the municipality's water-works system, the Supreme Court of Arkansas, in Wiseman v. Gillioz, 96 S.W.2d 459, said: "The city of Fort Smith unquestionably acquired this property from the contractor, and acquired it for the purpose of consumption and use, and not for resale. It is argued by appellees that the contractor was not selling any property. They refer to the Louisiana case as holding that the contractor does not sell cement, gravel, or sand, and they say that no title to personal property ever passed to the city. The title to the property was in the contractor, and the city of Fort Smith acquired title to that property. It acquired it for a consideration. Merely because the price of the property and the price of the labor were estimated together does not in any way affect the transaction so as to prevent its being a transfer of personal property to the city."

By placing the tax on those occupations engaged in by persons, firms and corporations making the last sale for use or consumption, the General Assembly wisely sought to protect, and intended to protect, dealers in every sort of materials used and consumed by the ultimate purchaser thereof. This protection is against competitors in like occupations who do an interstate business, which occupations are *Page 610 expressly exempted. The majority opinion moves the incidence of the tax one step backward from the goal set up by the General Assembly, and the retail dealers must suffer loss because of the advantage given to competitors who do an interstate business, if the majority opinion remains the law.

For these reasons, I must dissent.