Limbach v. Hooven Allison Company

• Decision Date: 18 April 1984
• Docket Number: No. 83-96,83-96
• Citation: 104 S.Ct. 1837,466 U.S. 353,80 L.Ed.2d 356
• Parties: Joanne LIMBACH, Tax Commissioner of Ohio, Petitioner v. The HOOVEN & ALLISON COMPANY
• Court: U.S. Supreme Court

466 U.S. 353

104 S.Ct. 1837

80 L.Ed.2d 356

Joanne LIMBACH, Tax Commissioner of Ohio, Petitioner

v The HOOVEN & ALLISON COMPANY.

No. 83-96.

Supreme Court of the United States

Argued Feb. 22, 1984.

Decided April 18, 1984.

Syllabus

Respondent manufacturer of cordage products, in filing its Ohio ad valorem personal property tax returns for 1976 and 1977, deducted from the total value of its inventory the value of imported fibers that were stored in their original packages for future use in the manufacturing process. In taking this deduction, respondent relied on Hooven & Allison Co. v. Evatt, 324 U.S. 652, 65 S.Ct. 870, 89 L.Ed. 1252 (Hooven I), a case involving the same tax and the same parties as the instant case, as well as similar property, and wherein it was held that subjecting the property in question there to the Ohio personal property tax would violate the Import-Export Clause. Petitioner Ohio Tax Commissioner disallowed the deduction and accordingly increased the assessments, relying on Michelin Tire Corp. v. Wages, 423 U.S. 276, 96 S.Ct. 535, 46 L.Ed.2d 495, where the assessment of a State's nondiscriminatory ad valorem property tax on an inventory of imported tires maintained at a wholesale distribution warehouse was held not to be within the Import-Export Clause's prohibition against States' levying "any Imposts or Duties on Imports." The Ohio Board of Tax Appeals reversed, ruling that petitioner was collaterally estopped by the decision in Hooven I from levying the increased assessments, and rejecting respondent's argument that Michelin implicitly overruled Hooven I. The Ohio Supreme Court affirmed.

Held:

1. The assessment of the Ohio personal property tax on the original-package imported fibers in question does not violate the Import-Export Clause. This Court in Michelin specifically abandoned the concept that the Import-Export Clause constituted a broad prohibition against all forms of state taxation of imports, and changed the focus of Import-Export Clause cases from whether the goods have lost their status as imports to whether the tax sought to be imposed is an "Impost or Duty." Hooven I, having been decided under the original-package doctrine, was among the progeny of Low v. Austin, 13 Wall. 29, 20 L.Ed. 517, which was expressly overruled in Michelin. Thus, Hooven I is inconsistent with Michelin, and although not expressly overruled in Michelin, must be regarded as retaining no vitality since the Michelin decision, and accordingly is overruled to the extent that it espoused the original-package doctrine. Pp. 357-3612 2. Petitioner is not barred by collateral estoppel from levying the increased assessments. Pp. 361-363.

(a) Collateral estoppel was applied here as a matter of federal, not state, law, and thus the case is not insulated from review in this Court on the asserted ground that because Michelin did not expressly overrule Hooven I, state-law principles of collateral estoppel bar imposition of the Ohio tax on respondent's imported fibers. The case concerns federal issues and a contention that a state court disregarded a federal constitutional ruling of this Court. Pp. 361-362.

(b) While the parties, the tax, and the goods imported in their containers are the same here as in Hooven I, the years involved are not. Because of this difference in tax years, the case is controlled by Commissioner v. Sunnen, 333 U.S. 591, 68 S.Ct. 715, 92 L.Ed. 898, a federal income tax case wherein it was held that an earlier decision of the Board of Tax Appeals involving the same facts, questions, and parties, but different tax years, was not conclusive under the collateral-estoppel doctrine because certain intervening decisions of this Court made manifest the error of the result reached by the Board. Failure to follow Sunnen's dictates would lead to the very tax inequality that the admonition of that case was designed to avoid. Pp. 362-363.

4 Ohio St.3d 169, 447 N.E.2d 1295, vacated and remanded.

Richard C. Farrin, Columbus, Ohio, for petitioner.

Michael Nims, Cleveland, Ohio, for respondent.

Justice BLACKMUN delivered the opinion of the Court.

In Hooven & Allison Co. v. Evatt, 324 U.S. 652, 65 S.Ct. 870, 89 L.Ed. 1252 (1945) (Hooven I), this Court passed upon the constitutionality of Ohio's application of a nondiscriminatory ad valorem personal property tax to imported fibers still in their original packages. The result there was unfavorable to the State. In this case, the Tax Commissioner of Ohio asks us to sustain the application of the same nondiscriminatory ad valorem personal property tax to like fibers, still in their original packages, imported by the same manufacturer. The case thus presents, primarily, an issue of preclusion framed in terms of collateral estoppel.

I

The Hooven & Allison Company (Hooven) is a domestic manufacturer of cordage products made from natural fibers. These fibers—hemp, sisal, jute, manila, and the like—are not grown in the United States and must be imported. Upon their arrival in this country, the imported fibers are transported by rail to Hooven's plant in Xenia, Ohio, where they are stored in their original packages for future use in Hooven's manufacturing process.

In accord with Ohio Rev.Code Ann. § 5711.16 (1980), Hooven timely filed personal property tax returns for 1976 and 1977. In those returns, Hooven listed these original-package imported fibers as "imports," but deducted their value from the total value of its manufacturing inventory. The following written explanation was given:

"The inventories represent fibers imported by the taxpayer from foreign countries, held in the original packages in its warehouses in Xenia prior to being used in manufacturing cordage, and when they are removed therefrom or placed in the production line in the factory, such imported fibers so used, or removed from the original package, are thereupon transferred to the Goods in Process and are included in the taxable inventories in Xenia City." Joint Record in the Supreme Court of Ohio 11.

In taking this deduction, Hooven relied expressly on this Court's 1945 decision in Hooven I. In that decision, the Court, by a closely divided vote, ruled that subjecting Hooven's imported original-package raw materials to Ohio personal property taxation would be in violation of the Import-Export Clause of the United States Constitution, Art. I, § 10, cl. 2.

The Tax Commissioner of Ohio, however, for each of the two years in question, disallowed the deduction and added back into Hooven's taxable manufacturing inventory the imported raw materials held for future use in manufacturing. Hooven's asserted property tax liability for each of those years, accordingly, was increased.

Upon application for review, the Tax Commissioner sustained the increased assessments. She rejected federal constitutional arguments advanced by Hooven, as well as an additional argument that, by the decision in Hooven I, she was collaterally estopped from levying the increased assessments. The Tax Commissioner in so ruling relied on Michelin Tire Corp. v. Wages, 423 U.S. 276, 96 S.Ct. 535, 46 L.Ed.2d 495 (1976).

Hooven then appealed to the Ohio Board of Tax Appeals, advancing the same collateral-estoppel and federal constitutional issues. That Board reversed the Tax Commissioner. App. to Pet. for Cert. A-10. It ruled that the Commissioner was collaterally estopped by the decision in Hooven I. It noted that the parties were the same as those in Hooven I; that the issue as to the taxability of original-package raw materials was also the issue in Hooven I; that the raw materials and the type of taxation were identical to those involved in Hooven I; that Hooven I has not been "reversed" by this Court "and thus, has the force and effect of law"; and that, under the doctrine of collateral estoppel, litigation of the issue was barred "and the exemption from taxation was improperly held to be unavailable." App. to Pet. for Cert. A-23. The Board rejected the Tax Commissioner's argument that the decision in Michelin implicitly had overruled Hooven I. The Board did not reach or consider the constitutional issues, observing that it lacked jurisdiction to do so. App. to Pet. for Cert. A-20; see S.S. Kresge Co. v. Bowers, 170 Ohio St. 405, 166 N.E.2d 139 (1960), appeal dism'd, 365 U.S. 466, 81 S.Ct. 712, 5 L.Ed.2d 704 (1961).

Hooven and the Tax Commissioner each filed a notice of appeal to the Supreme Court of Ohio, the taxpayer doing so in order to preserve the constitutional issues, and the Tax Commissioner pressing the collateral estoppel issue. The Supreme Court of Ohio affirmed the ruling of the Ohio Board of Tax Appeals. Hooven & Allison Co. v. Lindley, 4 Ohio St.3d 169, 447 N.E.2d 1295 (1983). That court, in a unanimous per curiam opinion, ruled that principles of collateral estoppel prohibited the Tax Commissioner from assessing personal property taxes upon Hooven's imported raw materials held in the original containers for future use in manufacturing. It acknowledged the presence of Michelin but noted that this Court had not overruled Hooven I in Michelin, although it had not hesitated expressly to overrule Low v. Austin, 13 Wall. 29 (1872). Thus, the Ohio court observed, this Court's "action—or inaction—must be accorded conclusive effect, at least in regard to its intent in reappraising its earlier ruling in Hooven I." 4 Ohio St.3d, at 172, 447 N.E.2d, at 1298. The court then "decline[d] to address the [federal] constitutional issues raised by Hooven in its appeal." Id., at 173, 447 N.E.2d, at 1299.

We granted certiorari. 464 U.S. 813, 104 S.Ct. 66, 78 L.Ed.2d 81 (1983).

II

In Low v. Austin, supra, this Court, in an opinion by Justice Field, unanimously enunciated the "original-package" doctrine, although perhaps not for the first time, see Brown v. Maryland, 12 Wheat. 419, 442, 6 L.Ed. 678 (1827). It held that, under the Import-Export Clause, goods imported from a foreign country are not subject to state...