Standard Oil Co. v. Glander

Decision Date14 March 1951
Docket NumberNo. 32060,32060
Citation98 N.E.2d 8,155 Ohio St. 61
Parties, 44 O.O. 86 STANDARD OIL CO. v. GLANDER, Tax Com'r et al.
CourtOhio Supreme Court

Syllabus by the Court.

1. The provisions of Section 5328, General Code, that 'all ships, vessels and boats, * * * defined in this title as 'personal property,' belonging to persons residing in this state * * * shall be subject to taxation,' and the provisions of Section 5325, General Code, defining 'personal property' as including 'every ship, vessel, or boat, of whatsoever name or description, used or designed to be used either exclusively or partially in navigating any of the waters within or bordering on this state, whether such ship, vessel, or boat is within the jurisdiction of this state or elsewhere, and whether it has been enrolled, registered, or licensed at a collector's office, or within a collection district in this state, or not,' authorize the taxation, at their true value, of boats and barges owned by an Ohio corporation and operated partly on the Mississippi river and partly on the waters of the Ohio river adjacent to the state of Ohio. The tax levied on such boats and barges, pursuant to such statutory provisions, is not violative of the provisions of the Fourteenth Amendment of the Constitution of the United States.

2. The provisions of Section 5325-1, General Code, that 'personal property shall be considered to be 'used' when employed or utilized in connection with ordinary or special operations, when acquired or held as means or instruments for carrying on the business, when kept and maintained as a part of a plant capable of operation, whether actually in operation or not,' authorize the taxation of personal property 'kept and maintained as a part of a 'plant' capable of operation.' The word 'plant' as used in such section is to be construed and applied as commonly understood in its ordinary acceptation and significance. Machinery and equipment designed for the production of gasoline, which are in the process of erection and construction as an addition to an operating oil refinery, constitute a part of 'a plant capable of operation' and are subject to taxation by virtue of the provisions of Section 5325-1, General Code, as property 'used in business.'

3. Where property, due to a change in business conditions, has become obsolete, it is unreasonable and unlawful, in determining the valuation of such property for taxation purposes, not to take into consideration that machinery especially designed and constructed during a war period for the manufacture of high octane aviation gasoline, but which machinery is no longer used for such purposes by reason of the fact that the demand for such aviation gasoline has ceased, was subsequently devoted to the manufacture of other motor fuels in which such machinery is inefficient and uneconomical in operation. Such facts are competent and pertinent evidence of obsolescence and functional depreciation and are essential factors in the determination of the value of the property for tax purposes. B. F. Keith Columbus Co. v. Board of Revision of Franklin County, 148 Ohio St. 253, 74 N.E.2d 359, approved and followed.

4. Where a taxpayer returns its tangible personal property at a valuation in excess of the book value thereof, although filing no claim for reduction from book value under Section 5389, General Code, in connection therewith, pays the tax theretofore determined thereon, and upon audit omitted property claimed by the taxpayer to be not subject to tax is added and assessed by the Tax Commissioner, from which assessment an appeal is taken under Section 5611, General Code, it is unreasonable and unlawful for the Board of Tax Appeals, upon finding that the taxpayer was entitled to a reduction in valuation in a sum which would not reduce the total value of the property assessed below the book value thereof, as shown by the taxpayer in his return, to refuse such reduction on the grounds that such tax has been paid and the time for issuance of the final amendment certificate by the Tax Commissioner has expired during such appeal. Wright Aeronautical Corp. v. Glander, Tax Comm'r, 151 Ohio St. 29, 84 N.E.2d 483, distinguished.

The appellant is The Standard Oil Company, an Ohio corporation, and the appellees are C. Emory Glander, Tax Commissioner of Ohio, and John A. Zangerle, auditor of Cuyahoga county.

This appeal from the Board of Tax Appeals involves the final orders and tax assessments made by the Tax Commissioner with respect to and on certain tangible personal property of the appellant for the tax years 1943, 1944, 1945 and 1946, respectively. Three separate appeals to the Board of Tax Appeals were prosecuted by the appellant which were consolidated in the hearing by that board. One of the appeals, involving the validity of a final assessment by the Tax Commissioner for the year 1945, was decided in favor of the appellant and no appeal was prosecuted to this court. The appeal to this court is limited to the decision of the Board of Tax Appeals in regard to Tax Commissioner's case No. 12488, which involves a final assessment certificate and an amendment thereof assessing taxes for the tax years 1943 and 1944 on a Houdry catalytic cracking unit which was in the process of construction on January 1, 1943, and on January 1, 1944, but which was not completed and not in operation on either of those taxlisting dates, and Tax Commissioner's case No. 14381, which is an appeal from final orders of the Tax Commissioner assessing taxes for the tax years 1945 and 1946, respectively, on certain towboats and barges of the appellant, the then finished and operating Houdry catalytic cracking unit above referred to and certain machinery and equipment in process of construction which were unfinished and not in operation on January 1, 1945, and January 1, 1946.

The decision of the Board of Tax Appeals affirmed in most respects the orders and assessments in each of these causes, and the appellant, by appeal to this court, presents the question whether the decision of the Board of Tax Appeals is unreasonable or unlawful.

McAfee, Grossman, Taplin, Hanning, Newcomer & Hazlett and Rufus S. Day, Jr., all of Cleveland, for appellant.

Herbert S. Duffy, Atty. Gen. and Donald B. Leach, Columbus, for appellee, Tax Commissioner.

MATTHIAS, Judge.

The appellant has assigned numerous errors with respect to each of the two appeals considered by the Board of Tax Appeals and which the board determined adversely to appellant. These assignments have been summarized in the brief of the appellant and will be discussed in the order therein stated.

The first questions of law presented are: Did the state of Ohio have jurisdiction, under Section 5325, General Code, to assess taxes for the years 1945 and 1946 upon certain boats and barges of the company which were not in use in Ohio and the use of which in waters bordering on Ohio was insubstantial, and is such assessment violative of the Fourteenth Amendment of the Constitution of the United States?

The record discloses that in its 1945 personal property tax return the appellant listed three towboats and 31 barges at a depreciated book value of $1,017,518, and in 1946 listed boats and barges having a depreciated book value of $726,733. The Tax Commissioner on audit raised the valuation of the boats and barges for 1945 to a true value of $1,322,863 and raised the valuation for 1946 to a true value of $1,303,907. Thereafter, within time, the appellant filed its application for review and redetermination for 1945 and 1946, contending, first, that its crude oil boats and barges, which carried crude oil from various points on the Mississippi river, up the Mississippi and Ohio rivers, to points in Indiana and Kentucky, were not taxable in Ohio under Section 5325, General Code, for the reason that they were not used in Ohio and their use in waters bordering on Ohio was insubstantial and, therefore, taxation of these boats and barges by the state was violative of the due process clause of the Fourteenth Amendment of the United States Constitution.

The crude oil boats and barges involved constituted the greater part of the valuation upon which the taxes assessed were based. The remainder of the assessed value represented gasoline boats and barges engaged in transporting gasoline to various points in Ohio. These latter boats and barges are not involved in the controversy.

The contentions of the appellant were rejected in their entirety by the Tax Commissioner on review and redetermination. Upon appeal the Board of Tax Appeals held that, under Section 5325, General Code, with the exception of one small boat valued at $3,500, the oil boats and barges of the appellant were taxable in Ohio. The board announced that, being an administrative tribunal, it had no jurisdiction to decide the constitutional question presented.

The facts upon which the appellant bases its claim of want of jurisdiction of the state to levy such tax are as follows:

These crude oil boats and barges, during 1944 and 1945, were engaged in transporting oil from various points on the lower Mississippi river to Mount Vernon, Indiana, and Bromley, Kentucky. The crude oil unloaded at Mount Vernon, Indiana, was moved from that point by pipe line to various destinations, and the oil unloaded at Bromley, Kentucky, was likewise moved to the appellant's refinery at Latonia, Kentucky.

The appellant introduced evidence to show the number of miles traversed and the number of barrels of oil carried by each boat on each routing during the years 1944 and 1945. This evidence showed that the greater bulk of the operation of these boats during each year was over three routes--Memphis, Tennessee, to Mount Vernon, Indiana, Memphis, Tennessee, to Bromley, Kentucky, and Baton Rouge or Gibson, Louisiana, to Bromley, Kentucky; and that of the total river-route mileage traversed by the appellant's crude oil boats and barges from the lower...

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7 cases
  • Standard Oil Co v. Peck
    • United States
    • U.S. Supreme Court
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  • Colorado & Utah Coal Co. v. Rorex
    • United States
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    ...becomes manifest, any decision as to value requires due allowance for such, as an ingredient of correct value. Standard Oil Co. v. Glander, 155 Ohio St. 61, 98 N.E.2d 8, rev. on other grounds, Standard Oil Co. v. Peck, 342 U.S. 382, 72 S.Ct. 309, 96 L.Ed. Regardless of terminology, whether ......
  • Red Top Brewing Co. v. Bowers
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    ...in Red Top's plant No. 2 were being used in business and were taxable during the tax years 1949 and 1950. See Standard Oil Co. v. Glander, 155 Ohio St. 61, 98 N.E.2d 8. The only basis claimed for classifying this property as idle property and valuing or listing it at 10 per cent of its orig......
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    • Ohio Court of Appeals
    • 20 September 1990
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