8 575. The New York statute. In New York manufacturing corporations to the extent only of the capital actually employed in the State in manufacturing and in the sale of the product of such manufacturing are exempt from taxation on capital stock.17 Under this provision if the corporation, even if organized only for a manufacturing purpose, carries on another business in addition to or in connection with the business of manufacture, it is not entitled to any exemption whatsoever; 18 and so a corporation engaged in the manufacture of asphaltum compound and in laying pavements from it, not being engaged entirely in manufacturing, is not entitled to exemption.19 Though part of the business only is done within the State, if in fact the sole business done in the State is manufacture, the exemption applies.20 § 576. The Pennsylvania statute. In Pennsylvania so much of the capital stock of corporations, limited partnerships and joint stock associations, organized for manufacturing purposes, as is invested in and actually and exclusively employed in carrying on manufacturing within the State (except companies engaged in brewing or distilling of spirits or malt liquors, and such as enjoy and exercise the right of eminent domain) is exempt from the tax on capital stock, but so much of the capital stock of said companies so organized as may be invested in any property or business not strictly incident or appurtenant to their manufacturing business is subject to the tax.21 Under this provision the purpose expressed in the charter 55, 25 Atl. 329; Edison United P. Co. v. Assessors, 57 N. J. L. 520, 31 Atl. 1019; Electric S. B. Co. v. Assessors, 60 N. J. L. 66, 36 Atl. 1090. 17 N. Y. 1896, ch. 908, § 183. 18 P. v. Roberts, 158 N. Y. 162, 52 N. E. 1102; P. v. Roberts, 158 N. Y. 168, 52 N. E. 1104. 19 People v. Morgan, 59 App. Div. 302, 69 N. Y. S. 263. 20 People v. Wemple, 133 N. Y. 323, 31 N. E. 238. 21 Pa. P. L. 1889, p. 431, § 21. must be manufacture alone; but if in fact it carries on another business in addition to that for which it was organized, it does not forfeit its exemption so far as its capital employed in manufacture is concerned. This was so held in the case of a corporation organized to manufacture coke, which in fact mined its own coal for its raw material. The court said: "What, then, is the situation of the appellant? It is in name, in business purposes, and in product prepared for the market, a manufacturing company. In the conduct of its manufacturing business it seeks to cheapen its raw material, and thereby the cost of its product, by mining the coal it conIt was intended . . . to discriminate between companies organized for the conduct of two or more lines of business simultaneously and such as were organized for the purpose of manufacturing. A company incorporated for the latter purpose will not lose its character or its privileges because of an effort to supply itself with what it needs for its manufacturing business in some cheaper way than by purchase." 22 sumes. If part of the capital is invested in a non-manufacturing business, and even if the corporation merely owns property outside that used in business, as an investment of its surplus, the exemption does not extend to that portion of the company's property so invested, as for instance in dwellings for its workmen.23 § 577. What is manufacture: assembling materials. How far assembling materials and combining them into a new product is manufacturing has been much discussed. "The process of manufacture" as the New York Court of Appeals has said, "is supposed to produce some new article 22 Williams, J., in Com. v. Juniata Coke Co., 157 Pa. 507, 27 Atl. 373, 22 L. R. A. 349. 23 Adams v. Tombigbee Mills, 78 Miss. 676, 29 So. 470; Com. v. Mahoning R. M. Co., 129 Pa. 360, 18 Atl. 135; Com. v. Westinghouse A. B. Co., 151 Pa. 276, 24 Atl. 1111. by the application of skill and labor to the raw material." 24 On this principle it has been held that shells cleaned by acid, and then ground on an emery wheel, and some of them afterwards etched by acid, and all of them intended to be sold as ornaments, as shells,-are not manufactures of shells; 25 and that cutting grass, converting it into hay, pressing it in bales, and transporting it to market, did not result in the production. of a manufactured article.26 "Water might be improved by filtration, fruit by judicious pruning of tree or vine, or protection by glass, sand and gravel by screening, cobblestones by selection, and coal by breaking, and each by various processes stored until the season of demand, when, having been 'collected, stored, preserved, and prepared for sale,' the natural article, and no other, would be put upon the market." 27 And it was accordingly held that mixing teas and roasting, mixing and grinding coffee so as to form a "combination" tea or coffee which was saleable in the market was not manufacturing. "The combination of teas, and the roasting, grinding, and mixing of coffee, are processes which result in no new article, as it is still coffee and tea that is placed upon the market.” 28 So it has been held that purchasing sheep, slaughtering them, pulling the wool from the hides, selling it and the hides, converting the offal into fertilizer, reducing the carcasses to a temperature which will retard decomposition and shipping them to the place of delivery in refrigerator cars, does not constitute "carrying on manufacture.” " 29 On the other hand, where raw materials were assembled and combined by a secret process at a high temperature to form asphalt for paving, the process was held to be one of 24 Bartlett, J., in P. v. Roberts, 145 N. Y. 375, 40 N. E. 7. 25 Hartranft v. Wiegmann, 121 U. S. 609, 30 L. ed. 1012. 26 Frazee v. Moffitt, 20 Blatch. 267, 18 Fed. 584. 27 Danforth, J., in P. v. Knickerbocker Ice Co., 99 N. Y. 181, 183, 1 N. E. 669. 28 P. v. Roberts, 145 N. Y. 375, 40 N. E. 7. 29 P. v. Roberts, 155 N. Y. 408, 50 N. E. 53. manufacture. "The compound is made of different raw materials, to which are applied labor and skill, with the aid of machinery and mechanical appliances, resulting in the production of a new and distinct substance. None of the raw materials alone are of any value for the purpose for which the compound is to be used. The natural products are entirely changed by artificial combination and extreme heat, making a well-known and commonly used material. We are of the opinion that the production of the compound by the relator is manufacturing." 31 11 30 So the making of paint by a secret process, combining, mixing and grinding by machinery the raw materials, is manufacture. "None of the separate ingredients can be used for any of the purposes for which the mixed paint is used. The article thus produced by the relator is a commercial article of value, recognized by a specific and distinctive name,—a result of the use of capital, labor, and machinery. It is a new article, different from any of its ingredients, fitted for sale, use, and consumption, and is within the definitions of what constitutes a 'manufactured article,' and the making of it manufacturing." So where the corporation bought and assembled the parts of a fountain pen, and then by machinery and skilled workmen fitted them together according to a patented process, it was held to be a manufacturing corporation. "Whoever creates a useful thing by mechanical labor is entitled, usually, to be called a 'manufacturer.' The fact that he purchases, rather than makes, some of the parts, does not destroy that character. A boiler maker is a manufacturer, although he purchases the boiler plates rolled into form, and purchases also the tubes and the rivets. So with a cabinet maker, who buys the wood he uses in polished form or carved, and buys the cloth, hair, and leather he uses. No manufacturer of the finished product in this age works up the raw material. That is done by specialists all along the line. The practical manu 30 Chase, J., in P. v. Morgan, 61 App. Div. 373, 70 N. Y. S. 516. facturer assembles the material he needs from all quarters in its most finished condition, and does the rest himself. The relator is not the manufacturer of the rubber fountain,—not wholly; nor is he of the gold pens wholly. But I think he may properly claim to be the sole manufacturer of the 'L. E. Waterman,' or 'Ideal,' fountain pen." 32 Finally in the strongest case a corporation which was engaged in sawing slabs into kindling wood and compressed the wood into bundles of a specific size and shape to be used thus for kindling was held to be engaged in manufacture. "The article produced by the relator is a commercial article known and recognized by a specific and distinctive name, a product the result of capital and labor, and different in form and condition from the material out of which it is made; it is obvious that neither the tree from which the wood comes nor the slabs of wood could be used in their original form as kindling wood, and that the relator has, by the use of machinery, skill, capital and labor, produced a new article, different in form, quickly inflammable, with a distinctive name, and fitted for sale, use and consumption, which, within the definitions, constitutes a manufactured article, and the business of producing it that of manufacturing." 19 33 § 578. What is manufacture: controlling natural forces. How far can a corporation which is engaged in so directing and controlling natural forces as to make them serviceable be regarded as a manufacturing corporation? This question was much discussed in the case of a corporation organized and operated to generate and supply electric light and power. It was argued that this was simply the collection and supply of a natural force, and not the creation of a new substance by human labor, which alone could be called manufacture. But the court held that the question was not so technical a one. The court said: 32 Kellogg, J., in P. v. Morgan, 48 App. Div. 395, 63 N. Y. S. 76. 33 Herrick, J., in P. v. Roberts, 20 App. Div. 514, 47 N. Y. S. 122. |