Gochneaur v. Kosydar
| Decision Date | 28 April 1976 |
| Docket Number | No. 75-395,75-395 |
| Citation | 46 Ohio St.2d 59,346 N.E.2d 320 |
| Parties | , 75 O.O.2d 142 GOCHNEAUR, Appellant, v. KOSYDAR, Tax Commr., Appellee. |
| Court | Ohio Supreme Court |
Hahn, Loeser, Freedheim, Dean & Wellnan and Randall D. Luke, Cleveland, for appellant.
William J. Brown, Atty. Gen., Maryann B. Gall and J. Elaine Bialczak, Columbus, for appellee.
Appellant's argument 1 is basically a reiteration of his 'position' before the board, that his horses are not subject to the Ohio use tax because (1) they are in the exclusive federal realm of interstate commerce 2 and (2) they qualify for an 'agricultural exemption.'
This record adequately supports the existence of a 'taxable moment' sufficient to remove the cloak of interstate immunity from state taxation. See Louisville Title Agency for N. W. Ohio v. Kosydar (1975), 43 Ohio St.2d 109, 330 N.E.2d 899; Federal Paper Board Co. v. Kosydar (1974),37 Ohio St.2d 28, 35-36, 306 N.E.2d 416; Consolidation Coal Co. v. Porterfield (1971), 25 Ohio St.2d 154, 267 N.E.2d 304.
We therefore direct our inquiry to appellant's assertions of an 'agricultural exemption' and whether the board properly excluded consideration of that issue.
Appellant asserts that his '(r)ace horses are exempt from the Ohio use tax by reason of the agricultural exemption, as provided by Section 5709.01 of the Ohio Revised Code * * *.'
R.C. 5709.01 provides that '* * * (a)ll personal property located and used in business in this state, and all domestic animals kept in this state and not used in agriculture * * * are subject to taxation * * *.'
Certainly, appellant's horses are included within the definition of 'personal property' (R.C. 5701.03), and they are 'domestic animals.' Red Fox Stables v. Porterfield (1972), 28 Ohio St.2d 239, 241, 277 N.E.2d 433. See Snow v. Courtright (1974), 38 Ohio St.2d 305, 313 N.E.2d 380; 2 Ohio Jurisprudence 2d 396, Animals, Section 3. Thus, if the horses are 'used in agriculture,' they are not properly assessable because only the items of tangible personal property contemplated by R.C. 5709.01 are subject to taxation in this state. Pittsburgh Steel Co. v. Bowers (1962), 173 Ohio St. 74, 76, 179 N.E.2d 915.
Despite the logic of appellant's proposition, it can not apply to this case because it misconstrues the incidence of taxation provided by R.C. 5709.01. That statute designates the items of property which may be levied upon qua property. The present case involves the levy of an excise tax which does not run against property. Rather, such tax finds its incidence in the storage, use or other consumption of tangible personal property (R.C Chapter 5741) and in retail sales of tangible personal property (R.C. Chapter 5739).
R.C. 5741.02 provides:
'(a) For the use of the general revenue fund of the state, an excise tax is hereby levied on the storage, use, or other consumption in this state of tangible personal property * * *.
'* * *
'(C) The tax does not apply to the storage, use, or consumption in this state of the following described tangible personal property, nor to the storage, use, or consumption in this state of tangible personal property purchased under the following described circumstances:
'* * *
'(2) Tangible personal property, the acquisition of which, if made in Ohio, would be a sale not subject to the tax imposed by sections 5739.01 to 5739.31, inclusive, of the Revised Code.
'* * *
'For the purpose of the proper administration of sections 5741.01 to 5741.22, inclusive, of the Revised Code, and to prevent the evasion of the tax hereby levied, it shall be presumed that any use, storage, or other consumption of tangible personal property in this state is subject to the tax until the contrary is established.'
R.C. 5739.02 provides:
'For the purpose of providing revenue with which to meet the needs of the state for poor relief in the existing economic crises, for the use of the general revenue fund of the state, for the purpose of securing a thorough and efficient system of common schools throughout the state, and for the purpose of affording revenues, in addition to those from general property taxes, permitted under constitutional limitations, and from other sources, for the support of local governmental functions, and for the purpose of reimbursing the state for the expense of administering sections 5739.01 to 5739.31 of the Revised Code, an excise tax is hereby levied on each retail sale made in this state.
'* * *
'(B) The tax does not apply to the following:
'* * * '(17) Sales to persons engaged in farming, agriculture, horticulture, or floriculture, of tangible personal property for use or consumption directly in the production by farming, agriculture, horticulture, or floriculture of other tangible personal property for use or consumption directly in the production of tangible personal property for sale by farming, agriculture, horticulture, or floriculture; of material and parts for incorporation into any such tangible personal property for use or consumption in production; and of tangible personal property for use or consumption in the conditioning or holding of products produced by and for such use, consumption, or sale by persons engaged in farming, agriculture, horticulture, or floriculture except where such property is incorporated into real property * * *.
'* * *
'For the purpose of the proper administration of sections 5739.01 to 5739.31 of the Revised Code, and to prevent the evasion of the tax, it is presumed that all sales made in this state are subject to the tax until the contrary is established.'
The taxing scheme envisioned by R.C. Chapter 5741 'does not apply' to the use, storage, or consumption of personal property, the sale of which is not subject to levy under R.C. Chapter 5739. Thus, the question becomes whether sales of the subject horses to appellant are sales to which the R.C. 5739 excise tax 'does not apply,' or more specifically: Would such sales satisfy the requirements of R.C. 5739.02(B)(17), supra?
Benken v. Porterfield (1969), 18 Ohio St.2d 133, 137, 247 N.E.2d 749, 751, examined the meaning of the term 'agriculture' by noting that its definition in Yoder Bros. v. Bowers (1959), 169 Ohio St. 211, 158 N.E.2d 518-'(t)he term 'agriculture' * * * is the art or science and labor of (1) cultivating the ground, (2) the planting, care of, and the harvesting of crops * * * and (3) the rearing, use of, feeding and management of livestock'-was 'unnecessarily restrictive' and adopted the dictionary definition as follows:
Appellant's horses satisfy both the latter, broader definition, and part three of the former definition, because his horses are undeniably 'livestock.' 3 Accordingly, appellant is engaged in agriculture. See Mentor Lagoons v. Zoning Bd. of Appeals (1958), 168 Ohio St. 113, 119-120, 151 N.E.2d 533; Harris v. Bd. of Appeals (1975), 44 Ohio St.2d 144, 338 N.E.2d 763.
Thus, the controlling question presented by R.C. 5739.02(B)(17) is whether appellant bought his horses 'for use or consumption directly in the production by farming * * * (or) agriculture * * * of other tangible personal property for use or consumption directly in the production of tangible personal property for sale by farming * * * (or) agriculture * * *'; i. e., were the subject horses bought with a view to using them for breeding activities?
Although the taxpayer in Red Fox Stables v. Porterfield, supra 28 Ohio St.2d 239, 277 N.E.2d 433, claimed that operation of a riding academy and horse stably constituted engaging in agriculture within the meaning of subsection (B) (17), the court noted that he did 'not engage in breeding and raising horses.' We need not now reexamine that case because such fact serves to plainly distinguish that case from the present...
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