American Molasses Co. v. McGoldrick

22 N.E.2d 369, 281 N.Y. 269, 1939 N.Y. LEXIS 1009

• Court: New York Court of Appeals
• Decided: July 11, 1939
• Status: Published

Opinions

Lehman, J.

The question involved in these appeals is simple. The New York City Sales Tax (Local Law No. 20 [published as No. 21] of 1934, as amended) imposes a tax, with exceptions not here material, upon receipts from every sale in the city of New York of “ tangible personal property sold at retail.” The statute provides that “ a1 retail sale ’ or ‘ sale at retail ’ means a sale to a customer, or to any person for any purpose other than for resale in the form of tangible personal property.” Sugar and molasses sold at wholesale must be packed in containers. The packers must purchase the containers. They sell the sugar and molasses in the containers and title to the containers passes to the purchasers in bulk. The purchasers may use the contents in their own business or may parcel it out in small quantities to customers for home consumption. Then the container does not reach the ultimate consumer but is retained by the purchaser in bulk and usually resold as junk. The question here presented is whether the original sale of the container to the refiner or packer of sugar or molasses constitutes a “ sale at retail ” within the meaning of the statute.

There can be no doubt that the sale is made for the purpose of enabling the refiner or packer to put the sugar or molasses in the container and to sell the sugar and molasses with the container. The title to the container is transferred as well as title to the sugar or molasses. We may assume that the buyer of the contents acquires title to the container only because he cannot otherwise obtain title to the contents and that, when he removes the contents, he has no further use for the container. We may assume, too, that the refiner or packer of the sugar or molasses bought the containers only to facilitate the sale of the product packed in the container and not for the purpose of a resale of the container as an article of commerce. The resale of the container is purely an incident of the sale of the contents. Nevertheless, the container and contents are not inseparably connected. The container has not been consumed by the refiner or packer in performing services for another as was the case in Matter of Mendoza F. D. Warks, Inc., v. Taylor (272 N. Y. 275). The container remains “ tangible personal property ” after it has been filled by the refiner or packer and resold as an incident of the sale of the contents; it may be resold as tangible personal property by the purchaser of the contents who has no use for an empty container after the contents have been removed. The original sale to the refiner or packer was made for resale in the form of tangible property. Though such resale was purely an incident to the sale of the contents, and the original purchase would not have been made except for the purpose of reselling the container as such an incident to the sale of the contents; nevertheless the sale to the refiner was not a sale at retail within the letter or spirit of the law.

In the first above-entitled proceeding the order should be affirmed, without costs.

In the second above-entitled action the judgment should be affirmed, with costs.