Shoup Voting Mach. Corp. v. Bowers

• Citation: 172 Ohio St. 479,178 N.E.2d 593
• Decision Date: 13 December 1961
• Docket Number: 37038,Nos. 37037,s. 37037
• Parties: , 18 O.O.2d 1 SHOUP VOTING MACHINE CORP., Appellant, v. BOWERS, Tax Commr., Appellee. SHOUP VOTING MACHINE CORP., Appellee, v. BOWERS, Tax Commr., Appellant.
• Court: Ohio Supreme Court

Page 479

172 Ohio St. 479

178 N.E.2d 593, 18 O.O.2d 1

SHOUP VOTING MACHINE CORP., Appellant, v. BOWERS, Tax Commr., Appellee.

SHOUP VOTING MACHINE CORP., Appellee, v. BOWERS, Tax Commr., Appellant.

Nos. 37037, 37038.

Supreme Court of Ohio.

Dec. 13, 1961.

Syllabus by the Court

1. Where a foreign corporation conducts its business in the state of its incorporation but has produced for it and keeps 'stock in trade' in an independent werehouse in Ohio and ships its merchandise from that place on order to its customers both in and out of Ohio, such merchandise is used in business in Ohio within the contemplation of Sections 5709.01 and 5701.08, Revised Code, and is subject to the Ohio tangible personal property tax.

2. The additional charge imposed by the third paragraph of Section 5711.27, Revised Code, as amended in 1957, may not be imposed retroactively for a taxpayer's failure to file tax returns prior to the effective date of such statute.

Isadore Topper, R. Brooke Alloway, Columbus, Al N. Jappe, Cleveland, Douglas H. Thayer and Robert Ruben, New York City, for The Shoup Voting Machine Corp.

Mark McElroy, Atty. Gen., John J. Lokos, Columbus, and Robert J. Kosydar, Toledo, for Stanley J. Bowners, Tax Com'r.

ZIMMERMAN, Acting Chief Justice.

Appellant in case No. 37037, The Shoup Voting Machine Corporation, herein referred to as Shoup, seeks reversal of that part of the decision of the Board of Tax Appeals affirming an order of the Tax Commissioner assessing a personal property tax for the years 1957, 1958 and 1959 on certain voting machines located in Ohio and owned by Shoup. In case No. 37038, the Tax Commissioner prosecutes a separate appeal and seeks a reversal of the decision of the Board of Tax Appeals so far as it removes the additional charge imposed by him against Shoup under Section 5711.27, Revised Code, for failure to file tax returns on such personal property for the years 1956, 1957 and 1958. Returns were eventually filed on September 9, 1958.

As concerns case No. 37037, it appears from the record that Shoup is a New York corporation licensed to do business in Ohio and is engaged exclusively in marketing and selling voting machines used in governmental elections and manufactured for it by a manufacturing concern in Canton, Ohio, under patents held by Shoup and with tools, dies and jigs supplied by it. The manufacturing concern shipped the completed machines either directly to customers of Shoup on its order from New York or to an independent warehouse in Akron, Ohio, for storage. In issue here are the machines in storage on which the Ohio tax assessment was made.

At the times involved, Shoup maintained its place of business in New York city, a service department in Philadelphia and a statutory office in Cleveland at which latter place it had no employees. At the manufacturing plant in Canton, Shoup employed from two to five persons engaged in inspecting the machines produced there. All orders for the machines were accepted or rejected at the main office in New York city, and all accounts, records, etc., were kept there. Shoup had no salesmen or showrooms in Ohio or elsewhere, and the machines were sold or leased with options to purchase by orders coming to the New York office. On directions from Shoup's New York office, the machines were shipped from the storage warehouse to the purchasers or lessees thereof in and out of Ohio and were kept at the warehouse for such disposition. The Akron warehouse was the exclusive storage place for Shoup's machines during the period involved here, and the machines in controversy were not listed for taxation in any other state.

It is the contention of Shoup, which contention was rejected by both the Tax Commissioner and the Board of Tax Appeals, that the voting machines stored in the independent warehouse at a location different from the place where manufactured were not 'used in business' in Ohio by Shoup, which was domiciled in New York, and were, therefore, not taxable as tangible personal property in Ohio.

Section 5709.01, Revised Code, provides in part:

'* * * All personal property located and used in business in this state * * * are subject to taxation, regardless of the residence of the owners thereof.'

So far as pertinent here, Section 5701.08, Revised Code, defines the term, 'used in business,' as follows:

'(A) Personal property is 'used' within the meaning of 'used in business' when employed or utilized in connection with ordinary or special operations, when acquired or held as means or instruments for carrying on the business * * * or when stored or kept on hand as material, parts, products, or merchandise; * * * merchandise * * * shipped from outside of this state and held in this state in a warehouse or a place of storage * * * for shipment outside of this state are not used in business in this state.'

Here, the voting machines were manufactured in Ohio and were sometimes shipped on order of Shoup directly from the manufacturing plant to Shoup's customers. Those completed machines sent to the Akron warehouse from...