Powhatan Min. Co. v. Peck

• Decision Date: 23 December 1953
• Docket Number: No. 33546,33546
• Citation: 116 N.E.2d 426,160 Ohio St. 389
• Parties: , 52 O.O. 246 POWHATAN MINING CO. v. PECK.
• Court: Ohio Supreme Court

Page 389

160 Ohio St. 389

116 N.E.2d 426, 52 O.O. 246

POWHATAN MINING CO. v. PECK.

No. 33546.

Supreme Court of Ohio.

Dec. 23, 1953.

Syllabus by the Court.

1. Where the principal use of property claimed to be used 'directly in' a particular activity is in transportation to or from that activity, as distinguished from transportation which is a part of that activity or between essential steps of that activity, such use is not 'directly in' such activity within the meaning of Sections 5546-1 and 5546-25, General Code.

2. Specially designed trucks used only in transporting a useless by-product from a coal cleaning plant and tipple are not used directly in the production of tangible personal property by processing or mining within the meaning of Section 5546-25, General Code, even though it is necessary to use such trucks to remove such by-product in order to continue such processing or mining.

This is an appeal from a decision of the Board of Tax Appeals affirming assessments by the Tax Commissioner of taxes upon the use of certain trucks purchased by appellant outside Ohio.

The facts are not in dispute.

Appellant is engaged in the business of producing and mining coal. As part of its operations, appellant maintains and operates a large tipple and cleaning and processing plant. This plant processes raw coal by separating the marketable coal from the incombustible slag, rock and slate or, as it is generally called in the industry, gob.

The raw coal comes from three sources. Part is brought to the cleaning plant by conveyor belt from a deep mine located immediately adjacent to the cleaning plant. Part is transported five miles by truck from a second mine. The balance is brought by rail from a third mine located three miles away.

The cleaning plant employs three separate processes. Batteries of vibrating screens separate out all lumps of raw coal larger than eight inches in size and all lumps smaller than three-eighths of an inch in size. So far as possible, gob is separated by hand pickers from the raw coal lumps larger than eight inches. These hand-picked lumps of gob are placed on steel conveyors and carried into a steel gob bin or chute. The large lumps of raw coal remaining are crushed to an eight-inch size. All raw coal less than eight inches but greater than three-eighths of an inch in size is washed hydraulically. The gob separated by the washing process is conveyed to a second gob chute. All raw coal of less than three-eighths of an inch is washed by a stream of air and the fine gob separated from coal by this pneumatic process moves by conveyor to a third gob chute. The cleaned coal moves by conveyor to railroad cars or barges for transportation.

The three gob bins or chutes through which the gob passes each have a capacity of about 25 tons. They are built sufficiently high off the ground to permit large trucks to drive beneath, and they open at the bottom to allow the gob to fall by gravity into the trucks.

The trucks involved in this proceeding are gob trucks used exclusively to continue the flow of the gob from the raw coal through the gob chutes to the dumping areas. They are ten-ton GMC trucks with specially designed dump bodies without tailgates and were purchased by appellant for this sole use. Continuously, as the gob moves into the three gob chutes, gob trucks are driven under the chutes, filled by gravity, driven to the dumping area, dumped and immediately driven back for other loads.

Formerly, in the days of hand loading, coal was loaded by hand at the face and the minor picked out most of the impurities at the working place. These impurities he stored in the cavities from which he had already mined the coal. He was paid on a piecework basis calculated on the tonnage of clean coal which he loaded and sent to the surface and, consequently, relatively little gob left the mine. Only gob for which there was no room available in the mine was loaded in a separate car and sent to the surface to be disposed of.

Under the full seam mining system used by appellant, the entire seam is cut and shot down preparatory to loading and all the coal and refuse shot together is loaded mechanically and sent to the surface. Thus, the raw coal produced and sent to the surface contains large quantities of rock, slag, slate and other refuse which would in large part have been left in the mine under older mining methods.

Appellant's cleaning plant, when operating as it is now on a two-shift basis, handles approximately 9,000 tons of raw coal a day. The material brought to the surface is composed of approximately 75 per cent clean coal and 25 per cent separable refuse. Of the 9,000 tons of raw coal now handled daily, approximately 2,200 tons are gob. The gob itself is completely useless and the coal completely unmarketable until the gob has been removed. If the trucks should fail to remove the gob, the entire plant would shut down in ten minutes.

Jones, Day, Cockley & Reavis, Cleveland, Bayless Manning, Euclid, and Thornburg & Lewis, St. Clairsville, for appellant.

C. William O'Neill, Atty. Gen., Paul Tague, Jr., and Jack Bertsch, Columbus, for appellee.

TAFT, Judge.

The question to be determined is whether specially designed trucks purchased outside Ohio by appellant solely for use in hauling gob from its coal-cleaning plant and tipple are, within the meaning of Section 5546-25, General Code, used 'directly in the production of tangible personal property for sale by * * * processing, * * * [or] mining'.

In recent years, this court has been required to determine whether, in numerous diverse factual situations, 'the purpose of the consumer' was 'to use * * * the thing transferred directly in the production of tangible personal property for sale by manufacturing, processing * * * mining * * * farming, agriculture * * *; or directly in making retail sales or directly in the rendition of a public utility service; * * * or to use * * * the thing directly in industrial cleaning of tangible personal property', within the meaning of those words as set forth in Sections 5546-1 and 5546-25, General Code. See, for example, Saunders Mills, Inc., v. Evatt, Tax Com'r, 139 Ohio St. 227, 39 N.E.2d 526; Bailey v. Evatt, Tax Com'r, 142 Ohio St. 616, 53 N.E.2d 812; France Co. v. Evatt, Tax Com'r, 143 Ohio St. 455, 55 N.E.2d 652; Dye Coal Co. v. Evatt, Tax Com'r, 144 Ohio St. 233, 58 N.E.2d 653; Pioneer Linen Supply Co. v. Evatt, Tax Com'r, 146 Ohio St. 248, 65 N.E.2d 711; Huron Fish Co. v. Glander, Tax Com'r, 146 Ohio St. 631, 67 N.E.2d 546; Kroger Grocery & Baking Co. v. Glander, Tax Com'r, 149 Ohio St. 120, 77 N.E.2d 921; Fyr-Fyter Co. v. Glander, Tax Com'r, 150 Ohio St. 118, 80 N.E.2d 776; Terteling Bros., Inc. v. Glander, Tax Com'r, 151 Ohio St. 236, 85 N.E.2d 379; Tri-State Asphalt Corp. v. Glander, Tax Com'r, 152 Ohio St. 497, 90 N.E.2d 366; Mead Corp. v. Glander, Tax Com'r, 153 Ohio St. 539, 93 N.E.2d 19; Jackson Iron & Steel Co. v. Glander, Tax Com'r, 154 Ohio St. 369, 96 N.E.2d 21; W. E. Anderson & Sons Co. v. Glander, Tax Com'r, 154 Ohio St. 561, 97 N.E.2d 29; Crowell-Collier Publishing Co. v. Glander, Tax Com'r, 155 Ohio St. 511, 99 N.E.2d 649; National Tube Co. v. Glander, Tax Com'r, 157 Ohio St. 407, 105 N.E.2d 648; Athens Home Telephone Co. v. Peck, Tax Com'r, 158 Ohio St. 557, 110 N.E.2d 571; American Compressed Steel Corp. v. Peck, Tax Com'r, 160 Ohio St. 207, 115 N.E.2d 153.

In each of those instances this court has been called upon to determine what the General Assembly meant by the word 'directly' as used in that statute, or more specifically, whether, in the particular case, there was a direct use in a particular...