B.F. Goodrich Co. v. Peck

• Decision Date: 17 March 1954
• Docket Number: No. 33628,33628
• Citation: 53 O.O. 91,118 N.E.2d 525,161 Ohio St. 202
• Parties: , 53 O.O. 91 B. F. GOODRICH CO. v. PECK.
• Court: Ohio Supreme Court

Page 202

161 Ohio St. 202

118 N.E.2d 525, 53 O.O. 91

B. F. GOODRICH CO. v. PECK.

No. 33628.

Supreme Court of Ohio.

March 17, 1954.

Syllabus by the Court

1. In the absence of the expression of a contrary legislative intention, a corporation incorporated under the laws of a foreign state will generally be included by the use in a statute of the word 'nonresident.'

2. Property may be held 'for storage only' even though its owner intends at some subsequent time to sell it or to use it as manufacturing material. General Cigar Co., Inc., v. Peck, 159 Ohio St. 152, 111 N.E.2d 265, followed.

3. It is a general rule that, if there is any ambiguity in a statute defining the subjects of taxation, such ambiguity must be resolved in favor of the taxpayer; and this rule of construction generally applies with respect to provisions of a statute stating that certain potential objects of taxation shall not be considered to be included within specified subjects of taxation. Paragraph three of the syllabus in Cleveland-Cliffs Iron Co. v. Glander, 145 Ohio St. 423, 62 N.E.2d 94, and paragraph two of the syllabus in National Tube Co. v. Glander, 157 Ohio St. 407, 105 N.E.2d 648, distinguished.

4. A reported decision, although in a case where the question might have been raised, is entitled to no consideration whatever as settling, by judicial determination, a question not passed upon at the time of the adjudication.

Appeal from the Board of Tax Appeals.

Appellee, The B. F. Goodrich Company, herein referred to as Goodrich, is a New York corporation authorized to do business in the state of Ohio. It did not return certain tangible personal property for taxation for the years 1948 and 1949. The property involved was held in storage warehouses in Ohio. One of these was leased and operated by Goodrich. The Tax Commissioner issued final assessment certificates of valuation including the property involved as personal property subject to taxation. On appeal to the Board of Tax Appeals that board rendered a decision holding that the property involved was not subject to taxation.

The Tax Commissioner has appealed to this court pursuant to Section 5611-2, General Code.

C. William O'Neill, Atty. Gen., Everett H. Krueger, Jr., Cleveland, W. E. Herron, Columbus, and Ralph N. Mahaffey, Ashville, for appellant.

E. A. Cole, Akron, and George, Greek, King & McMahon, Columbus, for appellee.

TAFT, Judge.

The property involved, if 'subject to taxation,' was so subject only because it was 'personal property located and used in business in this state'. See Section 5328, General Code. It was located in Ohio. Whether it was 'used in business' in Ohio depends upon the provisions of Section 5325-1, General Code, reading:

'Within the meaning of the term 'used in business,' occurring in this title, personal property shall be considered to be 'used' when employed or utilized in connection with ordinary or special operations, when acquired or held as means or instruments for carrying on the business, when kept and maintained as a part of a plant capable of operation, whether actually in operation or not, or when stored or kept on hand as material, parts, products or merchandise; but merchandise or agricultural products belonging to a nonresident of this state shall not be considered to be used in business in this state if held in a storage warehouse therein for storage only. Moneys, deposits, investments, accounts receivable and prepaid items, and other taxable intangibles shall be considered to be 'used' when they or the avails thereof are being applied, or are intended to be applied in the conduct of the business, whether in this state or elsewhere. 'Business' includes all enterprises of whatsoever character conducted for gain, profit or income and extends to personal service occupations.' (Emphasis added.)

Appellant contends that Goodrich was not a 'nonresident' within the meaning of the foregoing statute. It may be that Ohio can treat a foreign corporation qualified to do business in Ohio, such as Goodrich, as a resident of Ohio for purposes of taxation. However, the question here is whether, in the absence of the expression of a contrary legislative intention, a corporation incorporated under the laws of another state will or will not generally be described by the use in a statute of the word 'nonresident.' In our opinion, it will. See Humphreys v. State, 70 Ohio St. 67, 70 N.E. 957, 101 Am.St.Rep. 888, 65 L.R.A. 776; Cleveland-Cliffs Iron Co. v. Madigan, 17 Ohio Cir.Ct.R., U.S., 340, 32 Ohio Cir. Dec. 177, affirmed without opinion 88 Ohio St. 533, 106 N.E. 1067; National Cash Register Co. v. Evatt, 145 Ohio St. 597, 603, 62 N.E.2d 327; National Distillers Products Corp. v. Glander, 150 Ohio St. 229, 80 N.E.2d 863; C. F. Kettering, Inc. v. Evatt 144 Ohio St. 419, 59 N.E.2d 370. A similar contention was made by the Tax Commissioner in General Cigar Co., Inc., v. Peck, 159 Ohio St. 152, 111 N.E.2d 265, but no reference to that contention was made in the majority opinion apparently because it was regarded as having so little merit. Appellant concedes that there is no express statutory guidepost with respect to that word as used in Section 5325-1, General Code.

Appellant next contends that the property involved was not held 'for storage only' within the meaning of Section 5325-1, General Code, because Goodrich was holding some of it for sale and some of it for use as material in manufacturing tires. In support of this contention, it is argued that Section 5325-1, General Code, should be construed in pari materia with Section 5370, General Code.

It may be observed that property is never placed in storage by its owner unless the owner intends to use it in some way later on. Therefore the statutory provision involved would be meaningless if given a construction such as contended for by appellant. Likewise, we believe the decision of this court in General Cigar Co., Inc., v. Peck, 159 Ohio St. 152, 111 N.E.2d 265, necessarily disposes of any such contention.

Appellant concedes that all the property involved, except certain tire cord, was 'merchandise' within the meaning of the so-called exception from the definition of 'used in business' in Section 5325-1, General Code. The word 'merchandise' could describe this tire cord if that word is not given a restricted meaning, because the tire cord was in saleable form, although it would generally be purchased only by tire manufacturers such as Goodrich and was apparently held by Goodrich for use in its manufacturing operations both in and out of Ohio.

Section 5325-1, General Code, does state that 'personal property shall be considered to be 'used' * * * when stored or kept on hand as material, parts, products or merchandise'. Obviously, this tire cord was 'personal property * * * stored [and] kept on hand as material * * * [or] products' even though it might also be said to be 'stored or kept on hand as * * * merchandise'. Although the statute thereafter states that 'merchandise or agricultural products belonging to a non-resident * * * shall not be considered to be used in business * * * if held in a storage warehouse * * * for storage only', that part of the statute says nothing about 'material' or nonagricultural products, and is silent as to whether the word 'merchandise,' as used in this so-called exception, should include merchandise which could be described also as material or as products. As we view it, whether 'merchandise' is so construed, will depend upon whether that word is to be construed in favor of or against the taxpayer.

It has often been said on effect that, if there is any ambiguity in a statute defining the subjects of taxation, such ambiguity must be resolved in favor of the taxpayer. Shafer v. Glander, 153 Ohio St. 483, 92 N.E.2d 601; Caldwell v. State, 115 Ohio St. 458, 461, 154 N.E. 792; Donkel v. Evatt, 138 Ohio St. 76, 32 N.E.2d 841. Thus in paragraph one of the syllabus in McNally v. Evatt, 146 Ohio St. 443, 66 N.E.2d 633, it is said:

'A statute which authorizes the levying of a tax will be construed strictly against the taxing authority. The intention to tax must be clearly expressed, and any doubt as to such intention will be resolved in favor of the taxpayer.'

This rule of construction has also been applied generally with respect to exceptions which may be specified in defining such subjects of taxation. Stephens v. Glander, 151 Ohio St. 62, 84 N.E.2d 279; Zangerle v. Standard Oil Co., 144 Ohio St. 506, 520, 60 N.E.2d 52; Bowman v. Tax Commission, 135 Ohio St. 295, 304, 20 N.E.2d 916; Kroger Grocery & Baking Co. v. Glander, 149 Ohio St. 120, 129, 77 N.E.2d 921.

If the tire cord involved in the instant case was subject to taxation, it must be because of the provisions of Section 5328, General Code, reading:

'* * * All personal property located and used in business in this state * * * shall be subject to taxation'. (Emphasis supplied.)

Whether this tire cord was 'used in business' within the meaning of Section 5328, General Code, depended in turn upon whether it came within the meaning of those words as defined in Section 5325-1, General Code.

Since, as hereinbefore mentioned, there is an ambiguity in the statute, so far as it relates to the meaning of the word 'merchandise' in the so-called exception specified in defining the words 'used in business,' it would seem to follow that that ambiguity should be resolved in favor of the taxpayer Goodrich.

Howev...