Louisville Title Agency for N. W. Ohio, Inc. v. Kosydar

• Decision Date: 09 July 1975
• Docket Number: No. 74-516,74-516
• Parties: , 72 O.O.2d 61 LOUISVILLE TITLE AGENCY FOR N. W. OHIO, INC., Appellant, v. KOSYDAR, Tax Commr., Appellee.
• Court: Ohio Supreme Court

Page 109

43 Ohio St.2d 109

330 N.E.2d 899, 72 O.O.2d 61

LOUISVILLE TITLE AGENCY FOR N. W. OHIO, INC., Appellant, v. KOSYDAR, Tax Commr., Appellee.

No. 74-516.

Supreme Court of Ohio.

July 9, 1975.

Appellant, Louisville Title Agency for N. W. Ohio Inc., through its president, Edwin Martin, purchased a boat made in Florida and delivered in the state of Delaware 'around July 9' in 1972. The boat was taken to Brenner Marine in Toledo, where 'the engines were gone over and repaired' and additional equipment was added during a period of 'ten days to two weeks.' This additional equipment included new heads and holding tanks. The boat was then taken to the Toledo Yacht Club for 'two or three days' and after that 'was in Michigan and the Georgian Bay area for the balance of the summer * * *.' Before the boat was taken to its permanent dock at Key Largo, Florida, a stop was made at Catawba Marina in Ohio, where repairs were again made and more equipment was installed. This added equipment included an automatic pilot and an additional depth finder. This work took ten days to complete and the boat 'left for Florida approximately the last week of September.' In Florida, the boat was used for business entertainment purposes.

The Tax Commissioner ordered an assessment against appellant of sales tax of $3.83 for the purchase of a boat cover, and $5,522.97 use tax on the boat, plus penalties, the total assessment being $6,355.82.

The Board of Tax Appeals affirmed the Tax Commissioner's order and the cause is now before this court upon an appeal as of right.

Eastman, Stichter, Smith & Bergman, Richard D. Stichter and Morton Bobowick, Toledo, for appellant.

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

PER CURIAM.

The first proposition of law presented by appellant is: To subject a vessel, although owned by an Ohio corporation, which is only in Ohio for repairs and maintenance work, to Ohio use taxation would violate Section 8, Article I of, and the due process clause of the Fourteenth Amendment to, the United States Constitution because such vessel has not acquired a taxable situs in Ohio.

This court finds, on the record before it, that appellant's contention is not well taken. Although appellant asserts that the vessel was 'only in Ohio for repair and maintenance work,' the record shows that in Ohio something more than repair and maintenance work was done to the boat. In Toledo, during a stay of ten days to two weeks, new equipment was installed consisting of new heads and holding tanks. After a summer cruise in Canadian waters, the boat returned to Catawba Marina and was there for ten days, during which time, in addition to repairs, additional new equipment consisting of an automatic pilot and an additional depth finder were installed. This court is of the opinion that the installation of the new equipment during the time the boat was in dock was an exercise of a right or power incidental to the ownership of the thing used and constitutes a taxable event. Woman's Bowling Congress v. Porterfield (1971), 25 Ohio St.2d 271, 267 N.E.2d 781.

The second proposition of law urged by the appellant is that the decision of the Tax Commissioner was unreasonable and unlawful because it was not supported by any probative evidence of record. It is the opinion of a majority of this court that there is probative evidence in the record to support the decision of the Board of Tax Appeals.

Appellant cites Consolidation Coal Co. v. Porterfield (1971), 25 Ohio St.2d 154, 267 N.E.2d 304, in support of its argument that 'the boat in question was within interstate commerce at all times,' and that the '* * * fact that warranty, repair and maintenance work was done while the boat was in Ohio does not take the boat out of interstate commerce because the boat's temporary stay within the state * * * (was) 'reasonable and in furtherance of the intended interstate transportation.''

In that case the following relevant statements appear at pages 157 and 158, 267 N.E.2d at page 306:

'* * * The states have been denied the power to levy a tax on articles of commerce in continuous interstate transit, even though such articles might be at rest temporarily in the state, provided that the interruption of the passage is reasonable and in furtherance of the intended interstate transportation.

'* * *

'The touchstone of a break in the continuity of transit is the existence of a 'taxable moment,' i. e., a determination that interstate commerce is at an end. When the property sought to be reached under the use tax is no longer intergrated in the flow of interstate commerce, a tax upon the privilege of exercising ownership rights in respect thereof does not run afoul of the prohibition against state taxation of the operation of interstate commerce. The fact that, subsequent to the 'taxable moment,' the property is newly inserted into interstate commerce does not...