"Manufacturing," as used in the Bankrupt Act of 1898, has no
meaning from adjudication as used in former laws, nor has it any
technical meaning. In construing the act, the intention of Congress
to include corporations engaged in manufacturing will be regarded
by giving the term a liberal, rather than a narrow, meaning.
A corporation organized to construct railroads, buildings and
other
Page 216 U. S. 450
structures, whose principal business is making and constructing
arches, walls, bridges and other buildings out of concrete, and
which buys and combines together raw materials in making the
concrete and supplies labor, machinery and materials at the place
that the contracts call for, is a corporation engaged principally
in manufacturing within the meaning of § 4 of the Bankrupt Act as
amended February 5, 1903, c. 487, 32 Stat. 797.
158 F. 593 reversed.
The Monongahela Construction Company, a corporation organized
under the law of Pennsylvania, was, in an involuntary proceeding,
adjudged a bankrupt in the District Court for the Western District
of Pennsylvania. Upon a petition for review, filed by a judgment
creditor, the adjudication was set aside upon the ground that the
construction company was not "a corporation engaged principally in
manufacturing," as found by the bankrupt court. The opinion of the
circuit court of appeals is reported in 158 F. 593.
From the agreed statement of facts it appears:
1st. That the Monongahela Construction Company's charter sets
out that it was organized
"for the purpose of constructing, erecting, and repairing
railroads, traction lines, duly incorporated, and streets, roads,
buildings, structures, works or improvements of public or private
use or utility."
2d. That its principal business had been "making and
constructing arches, walls, and abutments, bridges, buildings,
etc., out of concrete."
3d. That,
"in carrying on its business, it buys and combines together raw
materials, such as cement, gravel, and sand in the making of
concrete, and supplies labor, machinery, and appliances necessary
for the proper carrying on of said business, of constructing and
erecting concrete arches, piers, buildings, and structures, and
excavating therefor at such time and place as its contracts call
for."
4th. It has no permanent shop or factory, but has a
warehouse.
Page 216 U. S. 453
MR. JUSTICE LURTON, after stating the facts as above, delivered
the opinion of the Court.
Section 4 of the Bankrupt Act, as amended by the Act of February
5, 1930, 32 Stat. 797, c. 487, reads thus:
"Any natural person, except a wage earner, or a person engaged
chiefly in farming or the tillage of the soil, any unincorporated
company, and any corporation engaged principally in manufacturing,
trading, printing, publishing, mining or mercantile pursuits, owing
debts to the amount of one thousand dollars or over, may be
adjudged an involuntary bankrupt upon default or an impartial
trial, and shall be subject to the provisions and entitled to the
benefits of this act. Private bankers, but not national banks or
banks incorporated under state or territorial laws, may be adjudged
involuntary bankrupts."
The single question is whether the Monongahela Construction
Company, upon the facts stated above, was a corporation principally
engaged in the business of "manufacturing," within the meaning of
the act. If it was, the adjudication should stand.
The corporate powers of the company were very broad. It
Page 216 U. S. 454
is possible that it might have so limited its functions as not
to have come under any reasonable definition of manufacturing; but
at last the question of whether it was principally engaged in
manufacturing must turn more upon what it was actually doing than
upon what it was authorized to do.
It must be conceded that the word "manufacturing," as used in
the Bankrupt Act, has no definite legislative meaning by reason of
adoption from other Bankrupt Acts, as is the case with the words
"trader" or "trading," and perhaps other words with well understood
common law meanings.
Though British Bankrupt Acts were in existence from the time of
Henry VIII.; they applied only to "traders" until 1860, when they
were extended to other persons. Our own original act, that of 1800,
applied only to traders, bankers, brokers, and underwriters. The
act of 1841 added "merchants." The act of 1867 extended practically
to all persons and corporations. That of 1898 limited the wide
application of the act of 1867 to the class of business
corporations enumerated. Thus it is that the words "manufacture"
and "manufacturing" have no meaning derived from adjudications of
any former law.
Undoubtedly Congress intended that that class of business
corporations engaged in any class of manufacturing, as its
principal business, and not as a mere minor incident to some larger
work, should be subject to the law, and this intention should be
regarded by giving to doubtful words and terms a liberal, rather
than a narrow meaning. "Manufacturing" has no technical meaning. It
is not limited by the means used in making, nor by the kind of
product produced.
In Kidd v. Pearson, 128 U. S.
1,
128 U. S. 20, Mr.
Justice Lamar said that "manufacture is transformation -- the
fashioning of raw materials into a change of form for use."
In
Tide Water Oil Company v. United States,
171 U. S. 210,
171 U. S. 216,
Mr. Justice Brown, referring to the expansion of the meaning of the
word "manufacture," said that "the word is now ordinarily used to
denote an article upon the material of which labor has been
expended to make the finished product."
Page 216 U. S. 455
Concrete is an artificial stone. It is a product resulting from
a combination of sand or gravel or broken bits of limestone, with
water and cement; a combination which requires ordinarily the use
of both skill and machinery. It is not denied that, if concrete in
a shape adapted to use and in finished form is supplied to others
for the making of a house, bridge, pier, arch, or abutment, that
the corporation making such blocks or shapes would be, in the most
narrow sense, one engaged in manufacture. But it is urged that this
corporation made these blocks or shapes at the place where used,
and that, as finished, they became a part of a principal structure
and affixed to the realty, and that therefore they were not engaged
in manufacturing, which, say counsel, is a business confined to
those who make articles which may be "transported and sold at some
other place than that, where made."
The production of concrete arches or piers or abutments is the
result of successive steps. The combination of raw material -- the
sand, the limestone, the cement, and the water -- produced a
product which undoubtedly was "manufactured." This concrete had
then to be given shape. That required the manufacture of moulds,
which remain in place until hardening occurs. If the concrete is
reinforced, as is the case where great strength is required, then
the adjustment of the bars of steel within the moulds was another
step. Do all of these steps, each a step in "manufacturing," cease
to be "manufacturing" because the moulds into which the concrete is
poured, when in a fluid state, are upon the spot where the finished
product is to remain? That the operation of making and shaping the
concrete is done at the place used seems rather a matter of
convenience, due to the quick hardening in moulds and difficulties
of transportation. But, as we may take notice, the operation which,
in the end, is to produce an arch or abutment or pier or house is
not necessarily a single operation, but one of successive
repetitions of the process. The business is not identical with that
of a mere builder or constructor who puts together the brick or
stone or wood or
Page 216 U. S. 456
iron, as finished by another. If the builder made his brick,
shaped his timbers, and joined them all together, he would plainly
be a manufacturer as well as a builder, and if the former was the
principal part of the business, he would be within the definition
of the Bankrupt Act. To say that one who makes, and then gives form
and shape to the product made, is not engaged in manufacturing
because he makes his product and gives it form and shape in the
place where it is to remain is too narrow a construction.
In a case styled
In re First National Bank, 152 F. 64,
the Circuit Court of Appeals for the Eighth Circuit, in an opinion
by Sanborn, Circuit Judge, sustained an adjudication of bankruptcy
against a precisely similar corporation.
In
Columbia Ironworks v. National Lead Company, 127 F.
99, the Sixth Circuit Court of Appeals adjudged that a corporation
engaged principally in the business of building and repairing large
steel ships for sale and upon order, who prepared and gave shape to
much of the raw material, was engaged in manufacturing.
The judgment of the circuit court of appeals must be
reversed and that of the district court affirmed.
