Wheeling Steel Corp. v. Porterfield

• Decision Date: 21 January 1970
• Docket Number: No. 69-194,69-194
• Citation: 21 Ohio St.2d 57,50 O.O.2d 135,255 N.E.2d 257
• Parties: , 50 O.O.2d 135 WHEELING STEEL CORP., Appellant, v. PORTERFIELD, Tax Commr., Appellee.
• Court: Ohio Supreme Court

Page 57

21 Ohio St.2d 57

255 N.E.2d 257, 50 O.O.2d 135

WHEELING STEEL CORP., Appellant, v. PORTERFIELD, Tax Commr., Appellee.

No. 69-194.

Supreme Court of Ohio.

Jan. 21, 1970.

Syllabus by the Court

Where contracts for the sale of goods manufactured in Ohio are made in out-of-state offices of a subsidiary corporation of the manufacturer for out-of-state customers, and nothing is done in relation to the transaction in Ohio except delivery of the goods to the carrier and the procurement of bills of lading consigning the goods either directly or indirectly to the customer, title to the goods passes to the customer at the time and place at which the seller completes his performance by physically delivering the goods to the carrier, and such elements of contract performance provide sufficient connection with Ohio to constitute 'business done' in Ohio under Section 5733.05, Revised Code.

We have before us an appeal as a matter of right by the Wheeling Steel Corporation, as successor to Wheeling Corrugating Company, from a decision of the Board of Tax Appeals which affirmed the Tax Commissioner's determination denying a refund of Ohio franchise taxes paid by Wheeling Corrugating Company for the years 1962 through 1966. During the years in question, Wheeling Corrugating Company was a separate and wholly owned subsidiary corporation of Wheeling Steel Corporation, but was later merger with Wheeling steel Corporation, appellant herein.

Dargusch & Day, Roger F. Day and Burr A. Horn, Jr., Wheeling, W.Va., for appellant.

Paul W. Brown, Atty. Gen., and W. Robinson Watters, Columbus, for appellee.

CORRIGAN, Judge.

The issue in this appeal revolves around sales of corrugated steel products made by the out-of-state selling offices of Wheeling Corrugating Company to its out-of-Ohio customers and filled by deliveries from Wheeling Steel Corporation's Ohio plant located at Martins Ferry, Ohio. In some instances, the goods sold were shipped by barge; in others, they were shipped by rail or motor freight carrier. Delivery to the common carrier was made in all of the sales in question at Martins Ferry. As to the goods shipped by land carrier, the parties stipulated that legal title to the goods passed from Wheeling Steel Corporation to Wheeling Corrugating Company and from Wheeling Corrugating Company to the customer of the latter when the goods were loaded on the carrier at Martins Ferry. The goods shipped by barge from Martins Ferry were on bills of lading in which Wheeling Steel Corporation designated itself as shipper and consignee. These goods shipped by barge were sent to an intermediate out-of-Ohio river terminal. After arrival at the river terminal, the goods were loaded on a land carrier and another bill of lading was issued by the land carrier showing Wheeling Corrugating Company as the shipper and the customer of Wheeling Corrugating Company as the consignee.

The record reflects that none of the goods were first stored in Ohio before shipment, but that they were shipped directly from the production line of Wheeling Steel Corporation, with the ultimate consignee being the customer.

Appellant contends that these 'direct sales' by Wheeling Corrugating Company cannot be considered as business done in Ohio for purposes of determining the Ohio franchise tax. It maintains that the predominant elements of 'direct sales' occurred outside Ohio. These elements essentially are that orders were solicited nd taken from out-of-Ohio customers by appellant's out-of-Ohio selling agencies; that the goods were physically delivered to customers outside Ohio; and that the customers paid for the goods at the out-of-Ohio selling agencies or directly by mail to appellant at its general office in West Virginia.

The case of Kelley Motors, Inc., v. Peck, 161 Ohio St. 186, is cited, wherein we held, at page 191, 118 N.E.2d 408, at page 410, that 'too much of this transaction occurred outside this state to hold that the purchase was completed in Ohio.' Kelley is distinguishable from the instant case for the reason that the property in that case was purchased outside Ohio for use in Indiana, and that the only Ohio part of the transaction was that the automobiles were moved through Ohio and the procurement of Ohio certificates of title.

The Tax Commissioner held that all 'direct sales' of Wheeling Corrugating Company accomplished by its 17 sales offices throughout the United States constituted business done in Ohio. The Board of Tax Appeals affirmed, stating:

'* * * the board finds that the sales by Wheeling Corrugating Company at issue were...