Youngstown Sheet & Tube Company v. Bowers

PETITIONER: Youngstown Sheet & Tube Company
RESPONDENT: Stanley J. Bowers, Tax Comissioner of Ohio
LOCATION: Youngstown Sheet and Tube Co.

DOCKET NO.: 9
DECIDED BY: Warren Court (1958-1962)
LOWER COURT:

CITATION: 358 US 534 (1959)
ARGUED: Nov 12, 1958 / Nov 13, 1958
DECIDED: Feb 24, 1959
GRANTED: Jan 06, 1958

ADVOCATES:
Carlton S. Dargusch, Sr. - for the appellant in 9
Edwin Larkin - for the respondent in 44
John M. Tobin - for the appellee in 9
Roger C. Minahan - for the petitioner in 44
William Saxbe - for the appellee in 9

Facts of the case

These are two consolidated cases concerning the tax consequences of importing goods from foreign countries that are then used for manufacturing in the United States.

In 9, Youngstown Steel and Tube Co. imported ores for manufacturing, which were stored at its plant in Ohio. Under the U.S. Constitution, imports are not taxed. Youngstown took the ore needed for each day of manufacturing from the storage piles to stock bins. The state of Ohio assessed property tax on the ore because Youngstown had changed the ore from an import to a manufacturing supply. Youngstown argued that the ore kept in storage bins was not taxable because it was held for storage only. Youngstown also argued that the tax violated equal protection because it applied to residents of Ohio, but not to non-residents who had property in the state. After exhausting administrative proceedings, the Supreme Court of Ohio upheld the tax.

In 44, Plywood Corp. imported lumber and veneers for manufacturing. Plywood piled the lumber in a yard in Algoma, Wisconsin for storage and drying. The City of Algoma taxed half of the stored supplies on the theory that at least that amount was destined for manufacturing. Plywood paid the tax and sued for a refund. The trial court and the Supreme Court of Wisconsin upheld the tax.

Question

Did the manufacturers act on the imported supplies significantly enough to change their status from imports to taxable property?

Media for Youngstown Sheet & Tube Company v. Bowers

Audio Transcription for Oral Argument, Part 2: Youngstown Sheet & Tube Company v. Bowers - November 12, 1958 (9) in Youngstown Sheet & Tube Company v. Bowers
Audio Transcription for Oral Argument, Part 1: United States Plywood Corporation v. City of Algoma - November 12, 1958 (44) in Youngstown Sheet & Tube Company v. Bowers
Audio Transcription for Oral Argument, Part 2: United States Plywood Corporation v. City of Algoma - November 13, 1958 (44) in Youngstown Sheet & Tube Company v. Bowers

Audio Transcription for Oral Argument, Part 1: Youngstown Sheet & Tube Company v. Bowers - November 12, 1958 (9) in Youngstown Sheet & Tube Company v. Bowers

Earl Warren:

Number 9, Youngstown Sheet & Tube Company, Appellant, versus Stanley J. Bowers, Tax Commissioner of Ohio.

We'll wait -- we'll wait a moment.

Carlton S. Dargusch, Sr.:

Yes, Mr. Chief Justice.

Earl Warren:

Mr. Dargusch, you may proceed now.

Carlton S. Dargusch, Sr.:

The Court please, Youngstown Sheet & Tube Company versus Bowers, is Number 9.

And Allied Stores of Ohio Inc. versus Bowers is Number 10, are appeals from the Supreme Court of Ohio.

The Youngstown Sheet & Tube case involved the question of the Ohio State taxation of imported ores and storage merchandise held by a resident manufacturer.

The Allied Stores case involves only the question of the Ohio State Taxation of storage merchandise held by a resident retail merchant.

Since the facts in the two cases differ somewhat, I'll argue first the Youngstown case and then the Allied case.

More specifically, the questions presented in the Youngstown case are, may an Ohio State statute constitutionally impose an ad valorem tax upon both iron ores, which have been imported from foreign countries and which were stored in the same form as imported and not commingled with other property of the taxpayer.

As to the second question of the taxation of storage merchandise, does an Ohio State statute Section 5701.08, Revised Code of Ohio deny residents to the State the equal protection of the laws under the Constitution of United States by imposing an ad valorem property tax upon resident storage merchandise held for storage only, while at the same time accepting the storage merchandise of non-residents when similarly held for storage only.

Those are the two questions, if the Court please, in the Youngstown case.

Felix Frankfurter:

Mr. Dargusch, you will tell us, in particularity, the fact before you get off the floor.

Carlton S. Dargusch, Sr.:

Yes, sir.

I plan to do so.

Felix Frankfurter:

(Inaudible)

Carlton S. Dargusch, Sr.:

The constitutional questions involved, first, Article I, 10, cl.2, "No state shall without the Consent of Congress, laid any Impost or Duties".

That has been construed to include taxes on imports or exports except that which may be necessary -- absolutely necessary for executing its inspection laws.

The second constitutional provision involved is Section 1 of the Fourteenth Amendment, "No state shall deny to any person within its jurisdiction the equal protection -- the equal -- the equal protection of the law."

Basically, the laws of Ohio and I'm referring specifically to 5709.01 Revised Code, lay a tax on personal property which is located in Ohio and used in business in that State.

At this point, it might be well, if I explain the provisions of the old Section 5701.08 Revised Code, which are in issue in this case.

That section was amended effective September 30, 1955, but we are concerned here with the statute as it read before that date.

That -- that section imposed a tax upon the storage of property or upon property stored.

With the proviso, but agricultural products and merchandise belonging to a non-resident and held in the storage warehouse for storage only in the State, are not used in business.

So the property of the non-resident was excluded by that provision, while the property of the resident was taxed by the general provision taxing property held for storage.

The section as I said is since been amended with distinction between resident and non-resident withdrawn by the general assembly and a further limitation provided in that for a property to qualify as being stored in Ohio and excepted from taxation, it must've been shipped from without the State, held for storage in the State and destined for shipment outside.

That issue was not in the -- the case, but I wanted to point out to the Court, the statute has been amended.

The history of this case is the Tax Commissioner for the year 1954, assessed the imported iron ore and storage merchandise of the taxpayer.

On appeal to the State Board of Tax Appeal, the Ohio State Board of Tax Appeals, The imported iron ore was excluded from taxation and the storage merchandise was taxed.

On this appeal of the Supreme Court of Ohio, both the imported iron ore and the storage merchandise were held taxable.