Court Opinion

ID: 9516107
Source: CourtListenerOpinion
Date Created: 2023-08-06 23:35:02.520024+00
Date Added: 2024-06-11T09:14:33.742867
License: Public Domain

Danhof, J.
(dissenting). I agree with the majority that on the facts the rule of City & County of Denver v Denver Publishing Co, 153 Colo 539, 387 P2d 48 (1963) should be applied. However, I must dissent from the way in which the majority applies that rule.
The majority purports to distinguish Beall Pipe & Tank Corp v State. Tax Commission, 254 Or 195; 458 P2d 420 (1969), Knight Newspapers, Inc v Detroit, 16 Mich App 438 (1969), and Orr Felt & Blanket Co v Schneider, 3 Ohio St 2d 14; 209 NE2d 150 (1965), on the ground that those cases involved manufacturers whose sole source of supply was foreign. Assuming for the moment that this is a valid distinction, I cannot agree that it is the case. In Beall and Knight it is clear that the manufacturers satisfied at least a small part of their requirements from domestic sources. The opinion in Orr Felt does not make it clear whether or not any of the particular type of wool involved was obtained domestically. Moreover, even if those cases had involved manufacturers using only foreign raw materials, I do not see why that fact should serve to distinguish this case. We are here considering the taxable status of the plaintiff’s foreign inventory, and I cannot see why the fact that the plaintiff satisfies some of its needs domestically should make any difference.
If this case is to be distinguished from the previously cited cases it seems to me that the distinction must be based on the fact that the plaintiff receives its foreign steel over an inland *706water route and that the navigation season was over on tax day. I do not regard this as a viable distinction. The majority seems to assume that this is a case where foreign resupply has been rendered impossible. Whatever may be the proper rule to apply in that case this is not such a case. The plaintiff could have the steel shipped to an ice-free port and then transported to its warehouse by rail.
The majority seems to assume that after December 31 the plaintiff will use its foreign steel and add a comparable amount of domestic steel to its inventory. There is nothing in the record to support this assumption. Indeed from this record one must conclude that the plaintiff’s practice is to replenish its inventory of foreign steel with more foreign steel. It appears from the parties’ stipulation of facts that on December 31 of the years in question the plaintiff had on hand enough foreign steel to meet its requirements for foreign steel until after April 1, the date the parties have stipulated for the opening of the seaway. If the plaintiff ordered foreign steel on December 31 they could expect delivery in about 3 months as opposed to the stipulated 2-1/2 months average lag time. If we assume that the seaway is closed by December 1, there is still only a four-month lag time. The plaintiff is able to, and in fact does, stockpile enough inventory of foreign steel to meet its needs for foreign steel during the time the seaway is closed. When the seaway is open it receives more foreign steel. It seems to me that it is highly artificial to say that only two weeks inventory should be taxed because the plaintiff hypothetically could replenish its foreign inventory with domestic in two weeks.
In Orr Felt & Blanket Co v Schneider, 3 Ohio St *7072d 14, 24; 209 NE2d 150, 156 (1965), the court dealt with an argument regarding alternative sources of supply in the following words:
"This court is also of the opinion that although the evidence indicates that the taxpayer could have secured a new supply of imported grease wool from eastern importers within 30 days, the taxpayer chose to import its own grease wool from foreign countries for the valid reasons that it could reduce its inventory cost by six to twelve per cent and insure the obtaining of a better quality and a more uniform grease wool.
"The taxpayer having made this choice, the rule applied to the taxpayer should be that that amount of grease wool removed from the bonded warehouse and in inventory which is required to meet ’current operational needs’ for the length of time it takes to secure an additional supply from the foreign source which the taxpayer has selected to supply its grease wool is taxable.”
As I view the case the plaintiff has made its choice. Now let it pay its taxes. I would reverse and remand.