Grinnell Corp. v. Bowers

• Decision Date: 05 February 1958
• Docket Number: T,35237,35245,BOWER,Nos. 35236,35243,35242,35251 and 35252,35246,35249,35248,s. 35236
• Citation: 167 Ohio St. 267,147 N.E.2d 657
• Parties: , 4 O.O.2d 311 GRINNELL CORP., Appellee, v. BOWERS, Tax Com'r, Appellant. PHILIP MORRIS, Inc., Appellee, v. BOWERS, Tax Com'r, Appellant. JOWEPH E. SEAGRAM & SONS, Inc., Appellee, v. BOWERS, Tax Com'r, Appellant. NATIONAL DISTILLERS PRODUCTS CORP., Appellee, v. BOWERS, Tax Com'r, Appellant. SUN OIL CO., Appellee and Cross-Appellant, v. BOWERS, Tax Com'r, Appellant and Cross-Appellee. AMERICAN CAN CO., Appellant, v. BOWERS, Tax Com'r, Appellee. CHAMPION SPARK PLUG CO., Appellant, v. BOWERS, Tax Com'r, Appellee. The HIGBEE CO., Appellant, ax Com'r, Appellee. COPELAND REFRIGERATION CORP., Appellant, v. BOWERS, Tax Com'r, Appellee. HOLLAND FURNACE CO., Appellant, v. BOWERS, Tax Com'r, Appellee.
• Court: Ohio Supreme Court

Page 267

167 Ohio St. 267

147 N.E.2d 657, 4 O.O.2d 311

GRINNELL CORP., Appellee, v. BOWERS, Tax Com'r, Appellant.

PHILIP MORRIS, Inc., Appellee, v. BOWERS, Tax Com'r, Appellant.

JOWEPH E. SEAGRAM & SONS, Inc., Appellee, v. BOWERS, Tax Com'r, Appellant.

NATIONAL DISTILLERS PRODUCTS CORP., Appellee, v. BOWERS, Tax Com'r, Appellant.

SUN OIL CO., Appellee and Cross-Appellant, v. BOWERS, Tax Com'r, Appellant and Cross-Appellee.

AMERICAN CAN CO., Appellant, v. BOWERS, Tax Com'r, Appellee.

CHAMPION SPARK PLUG CO., Appellant, v. BOWERS, Tax Com'r, Appellee.

The HIGBEE CO., Appellant,

Nos. 35236, 35237, 35242, 35243, 35245, 35246,

BOWERS, Tax Com'r, Appellee.

COPELAND REFRIGERATION CORP., Appellant, v. BOWERS, Tax Com'r, Appellee.

HOLLAND FURNACE CO., Appellant, v. BOWERS, Tax Com'r, Appellee.

Nos. 35236, 35237, 35242, 35243, 35245, 35246, 35248, 35249, 35251 and 35252.

Supreme Court of Ohio.

Feb. 5, 1958.

Syllabus by the Court.

Property cannot be considered as 'held in a storage warehouse for storage only' within the meaning of Section 5701.08, Revised Code, as it read prior to September 1955, in those instances where it is located at the place where it is to be used in manufacturing or at the place where it was manufactured into a product or at the place from which it is in effect to be delivered by the taxpayer directly to a customer.

Vorys, Sater, Seymour & Pease, Carl H. Tangeman and William W. Ellis, Jr., Columbus, for appellee in case No. 35236.

George, Greek, King & McMahon, Columbus, for appellee in case No. 35237.

Isadore Topper and R. Brooke Alloway, Columbus, for appellees in case Nos. 35242 and 35243.

Eastman, Stichter & Smith, Toledo, for appellee and cross-appellant in case No. 35245.

Graydon, Head & Ritchey and Bruce I. Petrie, Cincinnati, for appellant in case No. 35246.

Marshall, Melhorn, Bloch & Belt and Lynn H. Gressley, Toledo, for appellant in case No. 35248.

Carlton S. Dargusch, Carlton S. Dargusch, Jr., and Jack H. Bertsch, Columbus, for appellant in case No. 35249.

Harry K. Forsyth, Sidney, Carlton S. Dargusch, Carlton S. Dargusch, Jr., and Jack H. Bertsch, Columbus, for appellant in case No. 35251.

George, Greek, King & McMahon and Charles E. Shanklin, Columbus, for appellant in case No. 35252.

William Saxbe, Atty. Gen., John M. Tobin, Columbus, and Chester Hummell, Reynoldsburg, for appellant in cases Nos. 35236, 35237, 35243 and for appellee in case No. 35252.

William Saxbe, Atty. Gen., and John M. Tobin and Gerald A. Donahue, Columbus, for appellant in case No. 35242.

William Saxbe, Atty. Gen., and John M. Tobin, Columbus, for appellee in cases Nos. 35245, 35246, 35248, 35249 and 35251.

TAFT, Judge.

These ten appeals from the Board of Tax Appeals, one of which also involves a cross-appeal, are sequels to the decisions of this court in General Cigar Co., Inc., v. Peck, 159 Ohio St. 152, 111 N.E.2d 265, herein referred to as the General Cigar case, and B. F. Goodrich Co. v. Peck, 161 Ohio St. 202, 118 N.E.2d 525, ¹ herein referred to as the Goodrich case.

The Board of Tax Appeals apparently held in effect in cases Nos. 35245, 35246, 35248, 35249 and 35251 that property, either produced or to be used by the taxpayer in a county where stored, can not be described by the words found in Section 5701.08, Revised Code, ² and reading, 'merchandise * * * belonging to a nonresident * * * held in a storage warehouse for storage only.' It apparently believed that such a conclusion was required by a reading of Sections 5711.16 and 5711.22 in pari materia with Section 5711.08, Revised Code. In our opinion the provisions of Sections 5711.16 and 5711.22 do not require such a conclusion.

In reguing for affirmance of those decisions, the Tax Commissioner has advanced certain other reasons not given by the Board of Tax Appeals, although some were considered and apparently approved of in case No. 35252, and has argued that those other reasons will sustain those decisions of that board. In doing so, the Tax Commissioner has made certain contentions, which he has also advanced as reasons for reversal of some of the other decisions of the Board of Tax Appeals that are being considered in this opinion. As will appear in our subsequent discussion of those contentions, some of those reasons are necessarily dependent upon the determination of questions of fact or mixed questions of law and fact. Where the decision of the Board of Tax Appeals indicates that it has not yet passed upon such a question of fact or that it may not have applied correct principles of law in determining such a mixed question of law and fact, we do not believe that we should do so and then rely upon any such reason as a basis for affirmance.

In cases Nos. 35246 and 35248, the Tax Commissioner advances as reasons for affirmance, other than those given by the Board of Tax Appeals, the contention that the property involved was not 'merchandise' because the taxpayers did not contemplate its eventual sale. That contention was considered in and rejected by our decision in the Goodrich case (161 Ohio St. at page 205, 118 N.E.2d 525, and paragraph two of the syllabus).

In cases Nos. 35242 and 35243, the Tax Commissioner contends that, since whiskey is kept in charred oak barrels for the purpose of maturation and mellowing, the storage of such whiskey in such barrels during such period of maturation and mellowing cannot be considered as a holding 'for storage only' within the meaning of those words in Section 5701.08, Revised Code. Our decision in the General Cigar case (159 Ohio St. at page 156, 111 N.E.2d 265,) requires tha rejection of any such contention.

The principal contention of the Tax Commissioner, advanced as a reason for reversing the decisions in cases numbered 35236, 35237, 35243 and 35245 and as a reason (other than those given by the Board of Tax Appeals) for affirming the decisions in cases numbered 35246, 35248, 35249, 35251 and 35252 and for rejecting the cross-appeal in case No. 35245, is that part or all of the property involved in each of those cases merely represented property maintained as an ordinary working inventory for use in the ordinary course of the taxpayer's business, and that therefore it cannot reasonably be considered as held 'for storage only.'

So far as pertinent, Section 5701.08, Revised Code, reads:

'Personal property is 'used' within the meaning of 'used in business' * * * when stored or kept on hand as material, parts, products, or merchandise; but merchandise or agricultural products belonging to a nonresident of this state is not used [the section of the General Code considered in the Goodrich case stated, 'shall not be considered to be used'] in business in this state if held in a storage warehouse for storage only.'

Obviously property may be 'stored * * * as material, parts, products, or merchandise' although not 'kept on hand as material, parts or merchandise.' Keeping property 'on hand' necessarily means keeping it readily available. Merely storing it does not require any such meaning. Thus, the words 'stored' and 'kept on hand' apparently describe two different situations. When it undertook to provide against having property 'held for storage only' considered as property 'used in business,' the General Assembly said nothing about any such treatment for property 'kept on hand.' By what it said, it apparently contemplated such treatment only for property merely 'stored.' Although it might reasonably be argued that property 'kept on hand' could sometimes be considered as 'held * * * for storage only,' we believe that the General Assembly, in its provision for property 'held * * * for storage only,' did not express an intent to limit the words 'kept on hand' but only an intent to limit the word 'stored.' Thus, where property is 'kept on hand as material, parts, products, or merchandise,' it can not be considered as 'held * * * for storage only.'

If material or parts are kept in a warehouse at a manufacturing plant where they are to be used or so close to such plant that it is not even necessary to go onto a public highway in order to get them to the place where they will be used in manufacturing, it is apparent that they are 'kept on hand as material, [or] parts.' If however they are to be used in manufacturing at some other distant plant, even though one belonging to the taxpayer, they cannot be considered as 'kept on hand as material [or] parts.' In such instance, it would be more accurate to consider them as merely 'stored.' We do not mean to suggest that there may never be a keeping on hand instead of a mere storing if it is necessary to transport the material or parts on the public highway some slight distance, although generally the necessity of transportation on a public highway before use would be a strong indication of no keeping on hand.

As to 'products,' they may reasonably be...