Standard Oil Co. v. Combs

• Citation: 96 Ind. 179
• Decision Date: 17 June 1884
• Docket Number: 11,309
• Parties: The Standard Oil Company v. Combs, Treasurer
• Court: Supreme Court of Indiana

96 Ind. 179

The Standard Oil Company v. Combs, Treasurer

No. 11,309

Supreme Court of Indiana

June 17, 1884

From the Perry Circuit Court.

Judgment affirmed.

R. S Taylor and H. J. May, for appellant.

C. H Mason, for appellee.

OPINION

Elliott C. J.

On the 20th day of March, 1880, the appellant contracted with J. A. McGregor for the purchase of 3,000,000 staves, and on the 20th day of September following for 1,000,000 more. The contracts, as originally written, provided that McGregor should manufacture the staves and deliver them at the landing in Pittsburgh, Pennsylvania, where they were to be inspected and paid for, but a modification of the contracts was subsequently made, by which it was agreed that McGregor should deliver to the appellant, at its stave yards in Perry county, Indiana, the staves contracted for, where they were to receive a finishing process called "bucking," and when "bucked" they were to be shipped to the appellant at Pittsburgh. The original contracts provided that on inspection at Pittsburgh the staves should be paid for at the rate of $ 26 per 1,000, and the contracts as modified provided that when the staves were cut and piled up the appellant should advance on the purchase price $ 12 per thousand for the staves in the rough, and $ 4 more when they were "bucked." The term "bucking" signifies that part of the process of manufacture in which the rough staves are put through a machine called a "bucker," and by which they are cut to a uniform thickness, the surface partially smoothed and a slight convexity of form produced. Under these contracts the staves were in the appellant's yards in Perry county on the 1st day of April, 1881, and taxes were assessed upon them.

The appellant's counsel thus state the question presented by the record: "Were the staves, of which the appellant had thus become the owner, and which happened to be in Perry county on the 1st day of April, 1881, subject to taxation in that county under the laws of Indiana?"

Property in the course of transit through this State, and here only for the purpose of transportation, is not subject to taxation. Standard Oil Co. v. Bachelor, 89 Ind. 1; State v. Carrigan, 39 N.J.L. 35. If, however, the property is here for a different purpose, it may be subject to taxation by our laws, although its owner may reside in another State. There is a difference between property of a tangible nature and choses in action, for property of the former character is liable to assessment wherever it has a situs; while taxes on choses in action are, as a general rule, leviable against the owner under the laws of the State of his domicile. Herron v. Keeran, 59 Ind. 472; S. C., 26 Am. R. 87; Burroughs Tax., section 40; Cooley Tax. 14; Dyer v. Osborne, 11 R.I. 321.

The property of the appellant was of a tangible nature, and was in this State for the purpose of undergoing, while here, a partial finishing process, and it can not be regarded as having been in the course of transit, nor as here for a mere temporary purpose. Property within the State for the purpose of undergoing any part of the process of manufacture is here for more than a temporary purpose connected with its transportation. The situs of the property does not depend upon the extent of the work that is to be done upon it, for, if it is here to be put through any of the stages in the process of manufacture, it is here for a purpose which legitimately subjects it to taxation. It can not be justly asserted that property within the State for the purpose of undergoing a part of the process of manufacture is here for a mere temporary purpose, or for the purpose of transportation. The conclusion we have stated seems clear upon principle, but authorities are not wanting. In Rieman v. Shepard, 27 Ind. 288, the court said: "In the case under consideration, the property was not in transit through the county of Vigo. It was brought there, not for immediate re-shipment, but that money, labor and skill might be there expended upon it, to enhance its value and change its condition as a merchantable commodity. While there, and undergoing this change in its condition, it, as property, had a situs within the State and was under the protection of its laws."

The case of Powell v. City of Madison, 21 Ind. 335, holds, as does the preceding case, that property while within this State for the purpose of undergoing a process to prepare it for market in an improved or changed form, is subject to taxation. Speaking of goods in transitu, the Supreme Court of Illinois says: "Goods or property are, technically, in transitu when they are passing from one place to another, which was not the case with this grain. It had not commenced its transit from one place to another;" and it was held that grain bought by an agent on commission was subject to taxation. Walton v. Westwood, 73 Ill. 125. In the case of Ogilvie v. Crawford County, 7 F. 745, the court held, as we did in Standard Oil Co. v. Bachelor, supra, that property ready for transportation should be regarded as in transitu, and exempt from taxation, but said: "There must be in my judgment a purpose to ship immediately, or at least as soon as transportation can be conveniently obtained, followed by actual shipment in a reasonable time, in order to exempt the property from taxation."

The Supreme Court of California, in People v. Niles, 35 Cal. 282, said that cattle brought into a county for pasturage were not there transiently, but were there for such a purpose as subjected them to taxation. A similar doctrine was declared in Hardesty v. Fleming, 57 Tex. 395.

There is, as is obvious from what we have said, a radical difference between this case and the case of Standard Oil Co. v. Bachelor, supra, for, in that case, nothing was to be done to the property in this State it was ready for shipment and the owner intended to ship it as soon as means of transportation could be procured; while in the present case the property was not ready for shipment, nor was it intended to be shipped until subjected to a process changing its form and enhancing its value. The question of intent is a material one, for great abuse would grow up if property might be accumulated without the intention to ship at once, or as soon as, by reasonable diligence, means of transportation could be obtained. The materiality of the intention to ship was noted in Ogilvie v. Crawford County, supra, where it was said: "This allegation of intention is essential, because otherwise a purchaser might crib his corn on a railway with no purpose of immediate shipment, but for the purpose of awaiting the future course of the markets, or with intent to evade taxation; in which cases the transit would, in my opinion, be treated as at an end, for the time being at least." The intention of the buyer in this case was to keep the property within this State for a definite purpose, and not to ship it until that purpose had been accomplished. While it was here awaiting the execution of that purpose, it was within the protection of our laws, and must bear its share of the public burdens. Judge Story says: "A nation within whose territory any personal property is actually situate, has as entire dominion over it while therein, in point of sovereignty and jurisdiction, as it has over immovable property situate there." Story Conflict of Laws, section 550. The authorities sustain this doctrine. Ames...