{ "id": 8526566, "name": "IN THE MATTER OF: THE APPEAL OF MITCHELL-CAROLINA CORP. FROM THE ASSESSMENT OF AD VALOREM TAXES ON ITS INVENTORY BY MECKLENBURG COUNTY FOR 1982", "name_abbreviation": "In re Appeal of Mitchell-Carolina Corp.", "decision_date": "1984-04-03", "docket_number": "No. 8310PTC307", "first_page": "450", "last_page": "455", "citations": [ { "type": "official", "cite": "67 N.C. App. 450" } ], "court": { "name_abbreviation": "N.C. Ct. App.", "id": 14983, "name": "North Carolina Court of Appeals" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "69 S.E. 2d 505", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1952, "pin_cites": [ { "page": "511" } ], "opinion_index": 0 }, { "cite": "235 N.C. 203", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8622519 ], "year": 1952, "pin_cites": [ { "page": "210" } ], "opinion_index": 0, "case_paths": [ "/nc/235/0203-01" ] }, { "cite": "212 S.E. 2d 381", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1975, "pin_cites": [ { "page": "386" } ], "opinion_index": 0 }, { "cite": "286 N.C. 488", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8568958 ], "year": 1975, "pin_cites": [ { "page": "496" } ], "opinion_index": 0, "case_paths": [ "/nc/286/0488-01" ] }, { "cite": "173 S.E. 2d 765", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1970, "pin_cites": [ { "page": "773" } ], "opinion_index": 0 }, { "cite": "276 N.C. 535", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8562463 ], "year": 1970, "pin_cites": [ { "page": "547" } ], "opinion_index": 0, "case_paths": [ "/nc/276/0535-01" ] } ], "analysis": { "cardinality": 522, "char_count": 12261, "ocr_confidence": 0.801, "pagerank": { "raw": 5.6322777456879506e-08, "percentile": 0.3519842276518824 }, "sha256": "10da5771f068bf2d192bd6fbfb1575f25de27fa9593aff1304d0a9f81deb5925", "simhash": "1:a42d9cd275b3c0b0", "word_count": 1960 }, "last_updated": "2023-07-14T17:10:21.361774+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Judges WHICHARD and BECTON concur." ], "parties": [ "IN THE MATTER OF: THE APPEAL OF MITCHELL-CAROLINA CORP. FROM THE ASSESSMENT OF AD VALOREM TAXES ON ITS INVENTORY BY MECKLENBURG COUNTY FOR 1982" ], "opinions": [ { "text": "ARNOLD, Judge.\nThe sole issue before this Court is whether Mitchell-Carolina Corp. (hereinafter Taxpayer) is required to list and value its inventory for tax purposes as of the end of its fiscal year or as of 1 January. Both the North Carolina Property Tax Commission and Mecklenburg County contend that the established principles of statutory construction as well as common sense mandate that Taxpayer is subject to the provisions of G.S. 105-285(c) and is required to value its property at the end of its fiscal year on 31 October. Taxpayer argues that the clear and ordinary meaning of the words in the 1973 revision of this statute requires Taxpayer to value its inventory as of 1 January. We hold, upon application of the elementary rules of statutory construction to the stipulated facts, that the County correctly valued Taxpayer\u2019s inventory as of the end of Taxpayer\u2019s fiscal year and the Commission properly affirmed this assessment.\nTaxpayer is the North and South Carolina distributor of heating and air conditioning equipment and parts which are manufactured by the Bryant Heating and Equipment Company. At its principal place of business in Mecklenburg County, Taxpayer receives and warehouses the equipment and parts in the original cartons and resells the same to its dealers. Small parts may be sold in less than carton quantities. The equipment and parts constitute inventory and are delivered by motor freight or picked up by local dealers at the city counter. Taxpayer does not manufacture, modify or install accessories to items of inventory.\nSince prior to 1973, Taxpayer\u2019s fiscal year has begun on 1 November and ended on 31 October. Prior to the 1982 tax year, and since 1973, when G.S. 105-285(c) was enacted, Taxpayer reported the value of its inventory to the Mecklenburg County Tax Supervisor as of the end of its fiscal year. The value of its other assets was reported as of 1 January of each year.\nOn 31 October 1981, Taxpayer owned an inventory of heating and air conditioning parts and accessories having a market value of $1,534,878. On 11 December 1981, a fire caused a substantial portion of Taxpayer\u2019s inventory to be damaged or destroyed. After the fire, on 1 January 1982, the market value of all inventory at Taxpayer\u2019s place of business was reduced to $815,816.\nThe provisions governing the listing, appraisal and assessment of Taxpayer\u2019s property and collection of its property taxes are compiled in the Machinery Act, G.S. 105-317.1 et seq. For purposes of this appeal the pertinent portion of the Act is G.S. 105-285. Date as of which property is to be listed and appraised.\nPrior to 1973, G.S. 105-285(b) provided:\n(b) Except as otherwise provided in this subsection (b), the values and ownership of personal property, both tangible and intangible, shall be determined annually as of January 1. The value of inventories and other goods and materials held and used in connection with the mercantile, manufacturing, processing, producing, or other business enterprise of a taxpayer whose fiscal year closes at a date other than December 31 shall be determined as of the ending date of the taxpayer\u2019s latest completed fiscal year. . . .\nIn 1973, G.S. 105-285 was amended as follows:\n(b) Personal Property; General Rule. \u2014 Except as provided in subsection (c) below, the value, ownership, and place of taxation of personal property, both tangible and intangible, shall be determined annually as of January 1.\n(c) Business Inventories. \u2014 The value, ownership, and place of taxation of inventories held and used in connection with the mercantile manufacturing, processing, or producing business enterprise of a taxpayer having a place of business in this State, whose fiscal year closes at a date other than December 31, shall be determined annually as of the ending date of the taxpayer\u2019s latest completed fiscal year. . . .\nTaxpayer now contends that since the Legislature deleted the comma between the words \u201cmercantile\u201d and \u201cmanufacturing\u201d in the 1973 revision of G.S. 105-285, the plain and ordinary meaning conveyed by the statute has changed. Taxpayer suggests that the statute now requires only a mercantile manufacturing, mercantile processing or mercantile producing enterprise to list its inventory for tax purposes at the end of its fiscal year; and that the revision excludes a strictly mercantile business enterprise such as Taxpayer. The County responds that the omission of the comma in the revision of G.S. 105-285 constitutes a clerical error. We agree that this punctuation was inadvertently omitted, and hold that Taxpayer\u2019s contentions would lead to consequences that are both absurd and inconsistent with the manifest purpose of the statute.\nThe rules of statutory construction provide that \u201cthe language of a statute will be interpreted so as to avoid an absurd consequence. . . .\u201d State v. Spencer, 276 N.C. 535, 547, 173 S.E. 2d 765, 773 (1970). \u201cWhere a literal reading of a statute \u2018will lead to absurd results, or contravene the manifest purpose of the Legislature, as otherwise expressed, the reason and purpose of the law shall control and the strict letter thereof shall be disregarded.\u2019 (Citation omitted.)\u201d Taylor v. Crisp, 286 N.C. 488, 496, 212 S.E. 2d 381, 386 (1975).\nA literal reading of G.S. 105-285(c), with the omission of the comma between \u201cmercantile\u201d and \u201cmanufacturing,\u201d gives rise to the nonsensical terms \u201cmercantile manufacturing business enterprise,\u201d \u201cmercantile processing business enterprise,\u201d and \u201cmercantile producing business enterprise.\u201d The word \u201cmercantile\u201d means \u201chaving to do with trade or commerce or the business of buying and selling merchandise.\u201d Black\u2019s Law Dictionary 1138 (rev. 4th ed. 1968). The buying and selling of goods is an entirely different activity from either manufacturing, processing or producing goods; and it is therefore illogical to assume that \u201cmercantile\u201d was meant to represent a category of these three activities.\nMoreover, as the Commission noted in its decision, Taxpayer\u2019s interpretation of the statute would require a business taxpayer who both manufactures goods and buys finished goods for resale to determine the value of its manufactured goods at their fiscal-year-end value, while the value of its finished goods held for resale would be determined as of 1 January. Clearly the Legislature did not intend such harsh results.\nThe intent of the Legislature can be collected from the language in G.S. 105-285 and other sections of the Machinery Act.\n[A] provision in a statute must be construed as a part of the composite whole and must be accorded only that meaning which other modifying provisions and the clear intent and purpose of the act will permit. Its meaning must sound a harmonious \u2014 not a discordant \u2014 note in the general tenor of the law.\nWatson Industries v. Shaw, Comr. of Revenue, 235 N.C. 203, 210, 69 S.E. 2d 505, 511 (1952).\nThe second paragraph of G.S. 105-285(c), as revised in 1973, provides:\nFor purposes of this section, the word \u201cinventories\u201d means goods held for sale in the regular course of business, raw materials, and goods in process of manufacture or processing, it also means other goods and materials that are used or consumed in manufacture or processing or that accompany and are sold with the goods manufactured or processed.\nWhen this second paragraph is read in conjunction with the first paragraph of the statute, it is clear that the Legislature intended that goods \u201cheld for sale in the regular course of business\u201d should refer to the following phrase in the first paragraph: \u201cinventories held and used in connection with the mercantile . . . business enterprise of a taxpayer. . . .\u201d The other items of \u201cinventories\u201d listed in the second paragraph of G.S. 105-285(c) refer to \u201cinventories held and used in connection with the . . . manufacturing, processing, or producing business enterprise of a taxpayer. . . .\u201d G.S. 105-285(c).\nThe parties on appeal stipulated that Taxpayer\u2019s inventory consisted of heating and air conditioning equipment and parts which are received and warehoused by Taxpayer until they are resold. This inventory constitutes \u201cgoods held for resale in the regular course of business. G.S. 105-285(c). A finding that Taxpayer\u2019s inventory is not covered by section (c) would contradict a portion of the definition of \u201cinventories\u201d and make its inclusion within the statute meaningless.\nThe language in G.S. 105-317.1 of the Machinery Act provides further support for the conclusion that the Legislature inadvertently omitted a comma in G.S. 105-285(c). G.S. 105-317.1 lists the elements to be considered in appraising personal property. In particular, subsection (b) of this statute reads:\n(b) In determining the true value of inventories and other goods and materials held and used in connection with the mercantile, manufacturing, producing, processing, or other business enterprise of any taxpayer, the persons making the appraisal shall consider the valuation of such property as reflected by the taxpayer\u2019s records and as reported by the taxpayer to the North Carolina Department of Revenue and to the Internal Revenue Service for income tax purposes. . . .\nHere we find a comma between the words \u201cmercantile\u201d and \u201cmanufacturing.\u201d The Commission concluded, and we agree, that if the Legislature intended to omit the comma in G.S. 105-285(c), then it is logical to assume that they would have omitted it here.\nFinally, in the Institute of Government\u2019s 1973 Supplement to the Annotated Machinery Act of 1971, the revised Act was reprinted with a comma inserted in brackets between the words \u201cmercantile\u201d and \u201cmanufacturing\u201d in G.S. 105-285(c). Id. at p. 76. In his comments to subsection (c), the annotator, Henry W. Lewis, wrote:\nAs rewritten, the statute provides that, \u201cThe value, ownership, and place of taxation of inventories held and used in connection with the mercantile, manufacturing, processing, or producing business enterprise of a taxpayer having a place of business in the State, whose fiscal year closes at a date other than December 31, shall be determined annually as of the ending date of the taxpayer\u2019s latest completed fiscal year.\u201d The words in italics denote alterations from the 1971 version.\nId. at 78. This language clearly indicates that the comma was inadvertently omitted when the statute was revised.\nSince the revision of G.S. 105-285(c) in 1973, Taxpayer has consistently valued its inventory as of the end of its fiscal year as required by the language of this revised statute. The fact that the value of Taxpayer\u2019s inventory was substantially reduced by fire after its fiscal-year-end and prior to 1 January, has no effect upon the clear meaning and application of this statute.\nThe decision of the North Carolina Property Tax Commission is affirmed in all respects.\nAffirmed.\nJudges WHICHARD and BECTON concur.", "type": "majority", "author": "ARNOLD, Judge." } ], "attorneys": [ "Hasty, Waggoner, Hasty, Kratt & McDonnell, by William J. Waggoner, for appellant Mitchell-Carolina Corp.", "Ruff, Bond, Cobb, Wade & McNair, by Hamlin L. Wade, for appellee Mecklenburg County." ], "corrections": "", "head_matter": "IN THE MATTER OF: THE APPEAL OF MITCHELL-CAROLINA CORP. FROM THE ASSESSMENT OF AD VALOREM TAXES ON ITS INVENTORY BY MECKLENBURG COUNTY FOR 1982\nNo. 8310PTC307\n(Filed 3 April 1984)\nTaxation \u00a7 25.5\u2014 time for listing inventory for tax purposes \u2014 end of fiscal year as opposed to calendar year \u2014 distributor of heating and air conditioning equipment and parts covered by statute\nA 1973 amendment to G.S. 105-285 did not exclude a strictly mercantile business enterprise such as the taxpayer in this case, a distributor of heating and air conditioning equipment and parts, from its terms. The omission of a comma between the words \u201cmercantile\u201d and \u201cmanufacturing\u201d in G.S. 105-285(c) did not give rise to the nonsensical term \u201cmercantile manufacturing business enterprise\u201d but rather indicated that the comma was inadvertently omitted when the statute was revised, and taxpayer, after having chosen the end of its fiscal year as the time it listed inventory for tax purposes, was required to list its inventory as of that date and not as of the end of the calendar year.\nAppeal by taxpayer from the final decision of the North Carolina Property Tax Commission entered 26 January 1983. Heard in the Court of Appeals 14 February 1984.\nHasty, Waggoner, Hasty, Kratt & McDonnell, by William J. Waggoner, for appellant Mitchell-Carolina Corp.\nRuff, Bond, Cobb, Wade & McNair, by Hamlin L. Wade, for appellee Mecklenburg County." }, "file_name": "0450-01", "first_page_order": 482, "last_page_order": 487 }