Certified Credit Corp. v. Bowers

Decision Date06 March 1963
Docket NumberNo. 37500,37500
Citation188 N.E.2d 594,174 Ohio St. 239
Parties, 22 O.O.2d 282 CERTIFIED CREDIT CORP., Appellant, v. BOWERS, Tax Com'r, Appellee.
CourtOhio Supreme Court

Syllabus by the Court.

1. The amount of 'capital employed in this state' (for the purpose of determining the dealer-in-intangibles tax under Section 5725.13 et seq., Revised Code, upon the shares of shareholders of a corporation which acts principally as such dealer and maintains separate offices within and without this state) shall bear the same ratio to the entire capital of the corporation, wherever employed, as the gross receipts from its small-loan business at the Ohio office or offices bear to the entire gross receipts of such dealer from the small-loan business, wherever arising.

2. The dealer-in-intangibles tax under Section 5725.13 et seq., Revised Code, does not contravene the due process or interstate commerce clauses of the Constitution of the United States.

Certified Credit Corporation, appellant here, was incorporated in 1951 in Ohio for the purpose of engaging in the small-loan and consumer financing business. In 1955, appellant decided to enter the life insurance and real estate investment business. As of December 31, 1958, appellant had $1,663,760.97 invested in ten out-of-state subsidiaries; as of December 31, 1959, after acquisition of substantial assets located in Mississippi and Texas by merger with two non-Ohio corporations, it had $4,334,907.42 invested in 18 out-of-state subsidiaries; and as of December 31, 1960, having also entered the motel business, it had $7,986,019.35 invested in 24 out-of-state subsidiaries. The record does not disclose the precise value of the various kinds of property held and business engaged in by appellant or the amounts of each allocable to Ohio.

On its dealer-in-intangibles tax return for 1959 and previous years, appellant arrived at the percentage of its capital employed in Ohio by determining the relationship between receipts from its small-loan and consumer finance business within Ohio and its total gross receipts from such business and expressing the relationship as a percentage. In preparing its 1960 and 1961 dealer-in-intangibles tax returns, appellant arrived at a percentage of capital employed in Ohio by determining the ratio between capital assets located in Ohio and its total capital assets and expressing the result as a percentage. Appellant's 1959 return reported the proportion of capital employed in Ohio as 94.3 per cent of the total, whereas appellant's 1960 and 1961 returns reported the propertion of capital employed in Ohio as 36.29 per cent and 45.94 per cent, respectively. The 1960 and 1961 returns also reported that receipts from appellant's Ohio small-loan and consumer finance business constituted 95.4 per cent and 98.45 per cent, respectively, of its total small-loan and consumer finance receipts in each year.

The Tax Commissioner issued an increased assessment certificate against appellant for the year 1960, reflecting a total net worth of $5,508,661.49, with 95.41 per cent thereof being attributable to appellant's shares of stock allocable to and taxable in Ohio. For the year 1961, he issued an increased assessment certificate reflecting a total net worth of $5,760,671.75, with 98.45 per cent thereof being attributable to appellant's shares of stock allocable to and taxable in Ohio. The appellant appealed to the Board of Tax Appeals, which affirmed the Tax Commissioner's assessments.

Devennish & Hague and James C. Thompson, Columbus, for appellant.

Mark McElroy, Atty. Gen., and John J. Dilenschneider, Columbus, for appellee.

GIBSON, Judge.

The first question in this case is whether for the purposes of the Ohio dealer-in-intangibles tax the capital employed in this state by an Ohio corporation, which acts principally as such a dealer and maintains separate offices within and without this state, is to be determined by ascertaining the ratio of corporate assets within and without the state or by ascertaining the ratio that gross receipts from the corporation's small-loan business in Ohio bears to the entire gross receipts from its small-loan business. The answer to this question is to be found by reading Sections 5725.01(B) and 5725.13 et seq., Revised Code.

There being no question that appellant is a dealer in intangibles, principally engaged in the business of lending money or discounting loans, and that it maintains separate offices within and without this state, we turn to a consideration of the statutory provisions imposing the property tax. Section 5725.13 provides that the 'fair value' of the shares of shareholders of a dealer in intangibles having an actual place of business in this state shall be taxed 'to the extent represented by capital employed in this state.' Section 5725.15 provides that, unless the book value of the capital is greater or less than the fair value of such capital at the time of assessment, the aggregate book value of the capital, surplus, and undivided profits of a dealer shall be the fair value for such purpose.

Having prescribed a method of ascertaining the fair value of the dealer's capital, Section 5725.15 then sets forth a method of allocating such capital to Ohio for tax purposes. The section provides that, where the dealer has separate offices within and without this state, the amount of capital employed in Ohio shall bear the same ratio to the entire capital of the corporation, wherever employed, as the gross receipts of the Ohio office or offices bear to the entire gross receipts of such dealer, wherever arising. Section 5725.14 defines 'gross receipts', for the purpose of allocation in the case of a dealer engaged principally in the business of lending money or discounting loans, as the aggregate amounts of loans effected or discounted.

By reading Sections 5725.13, 5725.14 and 5725.15 in pari materia, it is clear that the tax on the shares of shareholders of a dealer in intangibles is assessed at the fair value of the capital employed in this state, allocated on the basis of the ratio of...

To continue reading

Request your trial
4 cases
  • Akron Trading Co. v. Bowers
    • United States
    • Ohio Supreme Court
    • March 6, 1963
    ...located in a foreign state this did not constitute the employment of capital in the foreign state. In Certified Credit Corp. v. Bowers, Tax Com'r, 174 Ohio St. 239, 188 N.E.2d 594, decided today, we had the situation where a dealer, who had separate business offices physically located in ot......
  • City of Toledo v. Crews
    • United States
    • Ohio Supreme Court
    • March 6, 1963
    ... ... , and, pursuant to Section 6 of Article IV of the Constitution, certified the record to this court for review and final determination ... ...
  • Household Finance Corp. v. Porterfield
    • United States
    • Ohio Supreme Court
    • October 7, 1970
    ...property and assets of HFC other than its real estate situated in Ohio. R.C. 5725.26. 4 HFC contends that Certified Credit Corp. v. Bowers (1963), 174 Ohio St. 239, 188 N.E.2d 594, is not dispositive of the first question involved in this case, because there appellant was an Ohio corporatio......
  • Sun Finance & Loan Co. v. Kosydar
    • United States
    • Ohio Supreme Court
    • March 17, 1976
    ...gross receipts of such dealer, wherever arising.' Both parties rely upon two prior decisions of this court, Certified Credit Corp v. Bowers (1963), 174 Ohio St. 239, 188 N.E.2d 594, and Household Finance Corp. v. Porterfield (1970), 24 Ohio St.2d 39, 263 N.E.2d 243, in support of their resp......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT