State ex rel. H. A. Morton Co. v. Board of Review, City of Milwaukee

• Decision Date: 09 January 1962
• Citation: 15 Wis.2d 330,112 N.W.2d 914
• Parties: STATE ex rel. H. A. MORTON CO., a Wisconsin corporation, Respondent, v. BOARD OF REVIEW, CITY OF MILWAUKEE et al., Appellants.
• Court: Wisconsin Supreme Court

Page 914

112 N.W.2d 914

15 Wis.2d 330

STATE ex rel. H. A. MORTON CO., a Wisconsin corporation, Respondent, v. BOARD OF REVIEW, CITY OF MILWAUKEE et al., Appellants.

Supreme Court of Wisconsin.

Jan. 9, 1962.

John J. Fleming, City Atty., John F. Kitzke, Asst. City Atty., Milwaukee, for appellants.

Michael J. Dunn, Carl F. Schetter, Milwaukee, for respondent.

BROADFOOT, Chief Justice

The issue here is whether merchandise imported for sale and kept on hand by the importer-wholesaler to meet current or anticipated business demand is protected by art. I, sec. 10, clause 2 of the United States constitution from the ad valorem personal property tax.

In United States Plywood Corp. v. City of Algoma, 2 Wis.2d 567, 87 N.W.2d 481, 358 U.S. 534, 79 S.Ct. 383, 3 L.Ed.2d 490, the United States supreme court affirmed the decision of this court and held that materials imported for use in manufacturing and stockpiled to supply the manufacturer's current operating needs were so taxable. The high court determined that the manufacturer had so acted upon the imported materials as to cause them to lose their distinctive character as imports by irrevocably committing them to use in manufacturing, the purpose for which they were imported.

The appellants here urge that the principles set forth in the United States Plywood Corp. Case, supra, be applied to the facts in this case. They contend that the following questions embrace the crux of that decision and that all four must be answered in the affirmative here:

1. Has the importation journey definitely ended?

2. Are the goods imported necessarily required to be kept on hand to meet the current needs?

3. Are the goods actually being used to supply the need?

4. Are indiscriminate portions of the whole actually being used to supply the daily operating needs?

It is not necessary to consider these contentions because the United States supreme court has to the present recognized, as must we, a distinction between goods imported for sale and goods imported for use in manufacturing. Beginning with Brown v. Maryland, 12 Wheat. 419, 25 U.S. 419, 6 L.Ed. 678, that court has held that the import-export clause of the constitution protects goods imported for sale while they are in their original packages and have not been sold or used by the importer. 'Use' by the importer of such goods does not include their storage preparatory to sale. Storage does not cause the goods to lose their character as imports. This is true even if the goods, such as the liquor here, will only be sold for delivery in Wisconsin.

In the United States Plywood Corp. Case, supra, the United States supreme court modified the 'original package' doctrine of the Brown Case, supra, as to unopened stocks of goods imported for use in manufacturing. However, it clearly indicated that it was not abolishing the 'original package' doctrine as applied to unopened stocks of goods imported for sale:

'Whatever may be the significance of retaining in the 'original package' goods that have been imported for sale (cases cited), goods that have been so imported for use in manufacturing are not exempt from taxation, though not removed from the 'original package,' if, as found here, they have been 'put to the use for which they [were] imported.'' (358 U.S. 548, 79 S.Ct. 391).

It may be argued that an ad valorem property tax should be allowed because the tax is not directed towards imports as such and consequently the goods imported are not subjected to any burden as a class. Rather, the imported goods are subjected equally with other domestic property in the state to the tax. This argument was answered in Low v. Austin, 13 Wall. 29, 80 U.S. 29, 34, 20 L.Ed. 517:

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