Grabler Mfg. Co. v. Kosydar, 74-777

• Decision Date: 09 July 1975
• Docket Number: No. 74-777,74-777
• Parties: , 72 O.O.2d 42 The GRABLER MANUFACTURING CO., Appellant, v. KOSYDAR, Tax Commr., Appellee.
• Court: Ohio Supreme Court

Page 75

43 Ohio St.2d 75

330 N.E.2d 924, 72 O.O.2d 42

The GRABLER MANUFACTURING CO., Appellant, v. KOSYDAR, Tax Commr., Appellee.

No. 74-777.

Supreme Court of Ohio.

July 9, 1975.

Syllabus by the Court

For personal property tax purposes, the best method of determining value is the actual sale of such property on the open market and at arm's length, between one who is willing to sell, but not compelled to do so, and one who is willing to buy, but not compelled to do so. (In re Estate of Sears, 172 Oho St. 443, 178 N.E.2d 240, approved and followed.)

Appellant, The Grabler Manufacturing Company ('herein referred to as Grabler), was a wholly owned subsidiary of Commercial Credit Company, a Maryland holding company which acquired Grabler in 1942. Grabler manufactured pipe fittings, frist in Cleveland, and, later, also in Tiffin, Ohio.

Although Grabler was originally a profitable operation, it began losing money about 1962, which led to the construction of the plant in Tiffin in the hope that a modern, automated plant would stem the losses. However, the losses continued and Commercial Credit Company ¹ decided to attempt a sale of Grabler in late 1967.

On March 31, 1969, due to the efforts of management personnel of Commercial Credit Management Company (another wholly owned subsidiary), Grabler sold its plants and real property (which are not in issue here), as well as equipment and machinery to Hayes-Albion Corporation. At the same time, Commercial Credit Corporation (still another wholly owned subsidiary) sold equipment and machinery to Hayes-Albion, to which it held title due to a purchase and lease-back agreement between it and Grabler, entered into after the purchase of new equipment and machinery by Grabler for its Tiffin plant.

On May 16, 1969, Grabler and Commercial Credit Corporation sold other machinery and equipment to Acme Equipment Company.

When Grabler filed its 1969 Ohio personal property tax return, it listed the depreciated book value of its personal property (all disposed of in the March 31st and May 16th sales). However, it also filed a claim for deduction from depreciated book value, claiming that the 'true value in money' of the property was equal to the amounts for which these items were sold to Hayes-Albion and Acme.

Grabler paid the tax based upon its true value claim. Then, before any final action by the Tax Commissioner, Grabler filed for a refund because of so-called mechanical errors in reducing the true values on the schedules filed. ²

Instead of allowing the $6,780 refund, the Tax Commissioner, basing his assessment solely on the depreciated book value of the property, issued final assessment certificates which increased Grabler's tax.

Upon appeal, the Board of Tax Appeals affirmed, and the cause is now before this court pursuant to an appeal as of right.

Glander, Brant Ledman & Newman, C. Emory Glander and James H. Ledman, Columbus, for appellant.

Willaim J. Brown, Atty. Gen., and John C. Duffy, Jr., Columbus, for appellee.

CELEBREZZE, Justice.

The issue before the court, as it was before the Tax Commissioner and the Board of Tax Appeals, is the proper determination of the 'true value in money' of the personal property sold by Grabler to Hayes-Albion and Acme.

R.C. 5711.18, in pertinent part, provides:

'* * * In the case of personal property used in business, the book value thereof less depreciation at such time shall be listed, and such depreciated book value shall be taken as the true value of such property, unless the assessor finds that such depreciated book value is greater or less than the then true value of such property in money. * * *'

The Tax Commissioner (assessor) found that the book value, minus depreciation, was the true value of the property. However, appellant argues that the sale price should be used, and that failure to use the sale price as value is unreasonable and unlawful.

In State, ex rel. Park Investment Co., v. Bd. of Tax Appeals (1964), 175 Ohio St. 410, 412, 195 N.E.2d 908, 910, this court determined that:

'* * * The best method of determining value, when such information is available, is an actual sale of such property between one who is willing to sell but not compelled to do so and one who is willing to buy but not compelled to do so. Paragraph two of the syllabus in In re Estate of Sears, 172 Ohio St. 443, 178 N.E.2d 240. This, without...