
    No. 11,117.
    Electric Traction Company vs. City of New Orleans.
    1. In case it appears that the capital and machinery of a manufacturing establishment has only been actually employed for a part of a year, and not employed for a part of the year, an assessment for the whole of the year is erroneous.
    2. The products of a manufactory being a mere form into which the capital employed in business has temporarily passed, same are exempt from taxation as part of the capital employed in the manufacture.
    APPEAL from the Civil District Court for the Parish of Orleans. Rightor, J.
    
    
      Farrar, Jonas & Kruttschnitt for Plaintiff and Appellant.
    
      F. A. O’Sullivan, City Attorney, and H. C. Cage for Defendant and Appellee.
   The opinion of the court was delivered by

Fenner, J.

The plaintiff was at one time engaged in the manufacturing of electric traction cars and of machinery adapted thereto, and its capital, machinery, etc., were, no doubt, exempt from taxation under Art. 207 of the Constitution, which exempts “the capital, machinery and other property employed in the manufacture of ” sundry named articles, including “ machinery” and “ articles of wood.” But in March, 1891, the company closed its business and has not since been engaged in any manufacturing business. At the time of closing, it had on hand twenty-three cars which it had manufactured and which remained unsold. In 1892 these cars were assessed for taxation, and the sole question in this case is whether they are exempt under Art. 2 7.

While the business of manufacturing continued, it might well have been claimed that the unsold products were a mere form into which the capital employed in the business had temporarily passed and were therefore exempt as part of the capital employed in the business of manufacturing.

But when the business of manufacturing ceased, we fail to see how these ears, or any other capital, machinery or property which had been employed therein, could be any longer exempt. They are certainly no longer “ capital, machinery and property employed in the manufacture ” of anything. The Constitution does not say that “capital, machinery and property” which was once employed in manufacture shall be exempt as long as it has not been sold. The title to and motive for an exemption rests on the fact of actual employment in manufacturing. Hardly any one would claim that the land and building formerly employed in the business would be exempt after the business ceased; and we do not see how the machinery or other capital or property could have any greater claim to exemption. They all rest on the same basis, and we are clearly of opinion their exemption ceased with the cessation of their employment in manufacturing.

It is to be borne in mind that these cars were never exempt because of their being manufactured products; if they had been, the exemption might continue until they had been disposed of. But they had no claim to exemption, except on the ground that they Mrere a part of the capital employed in manufacturing. When the business of manufacturing ceased, there was no longer any capital so employed, and these cars, like the rest of the capital, property and machinery, lost their exemption and passed into the domain of taxable property.

It is therefore adjudged and decreed that the judgment appealed from be avoided and reversed, and that there be judgment against the plaintiff and in favor of defendant dissolving the injunction and rejecting plaintiff’s demand at its cost in both courts.

On Rehearing.

Watkins, J.

In our original opinion it is erroneously stated that assessment complained of was made in the year 1892 — the suppression of the plaintiff’s business having occurred in March, 1891. This error was possibly superinduced by a statement to that effect which appears in the city attorney’s brief — the averment of plaintiff’s petition being that the property that is alleged to be exempt was assessed for taxes during the year 1891.

On theory of our opinion the unsold products of plaintiff’s manufacture, being11 amere form into which the capital employed in business had temporarily passed, were therefore exempt, as pare of the capital employed in the business of manufacturing;” at least so long as the employment continued. Therefore, inasmuch as the business of manufacturing cars ceased only in the month of March, 1891, the xemption continued- to that date at least.

Consequently we Rave a question of tax exemption that is res nova —liability for taxes existing for one portionof the year 1891, and the property being exempt for a portion of the year. There is no means of determining such a question provided by the law. But, inasmuch as it appears from the record that the plaintiff used diligent efforts, immediately subsequent to the suspension of its business, to dispose of the cars, we think it but just and reasonable that the exemption of same should be extended to the remainder of the year 1891.

Certainly an assessment of this property for the year 1890 was erroneous, and a portion of the year 1891; and we think under the circumstances of this case the ends of justice would be best subserved by sustaining the exemption and perpetuating the plaintiff’s injunction. This conclusion results necessarily in overruling our former decree — though not changing the principles of law announced in the opinion.

It is therefore ordered, adjudged and decreed that the judgment and decree heretofore rendered be set aside and annulled; and it is now ordered and decreed that the judgment appealed from be affirmed.  