TAXATION - ASSESSMENT OF PERSONAL PROPERTY ‑- SEED PEAS ‑- EXEMPTION

TAXATION ‑- ASSESSMENT OF PERSONAL PROPERTY ‑- SEED PEAS ‑- EXEMPTION.

(1) Seed peas in the hands of a seed company on the first day of January are exempt from property taxation under RCW 84.44.060 where theseed peas are grown and harvested during the preceding year by a farmer pursuant to a joint venture or bailment contract with the seed company.

(2) Seed peas which are designed and used for seed purposes cannot qualifyfor the property tax exemption provided by RCW 84.36.140-84.36.162.

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                                                                     July 1, 1965

Honorable Philip H. Faris
Prosecuting Attorney
Whitman County
116 Spring Street
Colfax, Washington

                                                                                                                Cite as:  AGO 65-66 No. 27

Dear Sir:

            By a previously acknowledged letter you have requested our opinion on three questions which we paraphrase as follows:

            1. Are seed peas in the hands of a seed company on the first day of January exempt from property taxation under the provisions of RCW 84.44.060 where the seed peas were grown and harvested during the preceding year by a farmer pursuant to a contract with the seed company?

            2. Can seed peas qualify for a property tax exemption under RCW 84.36.140-84.36.162?

            3. If the answers to the first two questions are in the affirmative, does this result in seed peas being exempt from property taxation for two successive years?

            We answer your questions in the manner set forth in our analysis.

             [[Orig. Op. Page 2]]

                                                                     ANALYSIS

            1. The pertinent portion of RCW 84.44.060 reads as follows:

            ". . . All agricultural and horticultural products other than forest products, livestock and fowls, ownership of which remains in the original producer thereof on the first day of January next succeeding the harvesting thereof shall be exempt from assessment for taxation for the said year."

            Seed peas are an agricultural or horticultural product and under the facts as presented to us they were in the ownership of the seed company at all times including the first day of January next succeeding their harvesting.  The answer to the first question, then, depends upon an analysis of the contract between the seed company and the farmer to determine whether the seed company was the original producer.

            Under the terms of the contract (a typical example has been furnished for our consideration) the seed company supplied the seed stock to the farmer for the growing of seed peas on the farmer's land.  Title to all of the seed furnished and the crop grown remained at all times in the seed company.  The farmer was obligated to sow, cultivate, harvest the crop and deliver the same to the seed company.  The farmer was paid an agreed price per pound for the crop delivered, less an amount for the seed furnished.  The company had the right to perform certain acts of cultivation on the growing crop.

            The relationship between the farmer and the seed company was in the nature of a joint venture or bailment with each having certain rights and duties in respect to producingseed peas.  In view of the provisions of the contract we are of the opinion that the seed company was the "original producer" as that term is used in RCW 84.44.060 and that the seed peas, having on the first day of January next succeeding the date of harvesting remained in the ownership of the company, qualify for the exemption provided by the statute.

            2. In answer to your second question, RCW 84.36.140-84.36.162 provide a property tax exemption for specified types of property under certain conditions.  RCW 84.36.140 reads:

            "All grains and flour, fruit and fruit products, vegetables and vegetable products,  [[Orig. Op. Page 3]] and fish and fish products, while being transported to or held in storage in a public or private warehouse shall be exempt from taxation if actually shipped to points outside the state on or before April 30th of the first year for which they would otherwise be taxable:  Provided, That proof of shipment be furnished as required in RCW 84.36.150."

            Under the provisions of RCW 84.36.150 the assessor is required to list and assess all such property as of January 1st of each year, but shall cancel such assessment if proof is furnished that the products were shipped out of the state on or before April 30th of such year.

            To qualify for the exemption seed peas must first fall within one of the definitions contained in RCW 84.36.160 which reads:

            "For the purposes of RCW 84.36.140, 84.36.150, 84.36.161 and 84.36.162:

            "The term 'grains and flour' shall mean and include all raw whole grains in their usual marketable state; and grain flour in the hands of the first processor; but not any other grain product.

            "The term 'fruit and fruit products' shall mean and include all raw edible fruits and berries; and all processed products of fruits or berries, suitable and designed for human consumption, while in the hands of the first processor.

            "The term 'vegetables and vegetable products' shall mean and include all raw edible vegetables, such as peas, beans, beets, and other vegetables; and all processed products of vegetables, suitable and designed for human consumption, while in the hands of the first processor.

            "The term 'fish and fish products' shall mean and include all fish and fish products suitable and designed for human consumption, excluding all others.

             [[Orig. Op. Page 4]]

            "The term 'processed' shall be construed to refer to canning, barreling, bottling, preserving, refining, freezing, packing, milling or any other method employed to keep any grain, fruit, vegetables or fish in edible condition or to put them into more suitable or convenient form for consumption, storing, shipping or marketing."  (Emphasis supplied.)

            Of all the categories in RCW 84.36.160, only the term "vegetables and vegetable products" could be applicable to seed peas.

            We are advised that when the seed peas are delivered by the farmer to the seed company they are edible and suitable for human consumption.  However, they are not intended to be used as food, primarily because the premium price they bring as seed leaves no market for use as food.

            A reading of the statutes in question discloses a legislative intent to extend the exemption only to those commodities which are being transported to or held in storage with the ultimate purpose of being used as food for humans.  Webster's Third New International Dictionary (1961) defines a vegetable as an

            ". . . herbaceous plant . . . that is cultivated for an edible part which is used as a table vegetable . . . an edible part of a plant that is used for human food . . ."

            InState v. Hurst, 149 Ore. 519, 41 P.2d 79 (1935), the court construed a statute defining the term "produce":

            "In defining the term 'produce' to include 'fruits, vegetables, live and dressed poultry, dressed veal, pork, mutton and beef,' the Legislature unquestionably had reference to food products."

            In determining that "onion sets" which are used primarily for propagation, were not within the statutory definition, the court said:

            "An onion set is, therefore, not such 'vegetable' as indicated by that word when used  [[Orig. Op. Page 5]] in ordinary parlance.  It is, in the broadest sense in which the word may be used, a vegetable indeed, as is any plant.  But it is not such vegetable as evidently intended to be meant by the section of the act here in question."

            We are also advised that immediately prior to being shipped out of the state on or before April 30th, as they must be to qualify for the exemption, seed peas would be treated with a chemical which renders them totally unfit as food.  This is further evidence thatseed peas are not "vegetables and vegetable products" as defined.

            We conclude that seed peas do not qualify for the property tax exemption granted by RCW 84.36.140,et seq.

            3. Having answered the second question in the negative, an answer to your third question is unnecessary.

            We trust the foregoing will be of assistance to you.

Very truly yours,

JOHN J. O'CONNELL
Attorney General

HENRY W. WAGER
Assistant Attorney General