Court Opinion

ID: 6761952
Source: CourtListenerOpinion
Date Created: 2022-07-21 00:32:31.257388+00
Date Added: 2024-06-11T16:02:36.797711
License: Public Domain

Wright, J.,
dissenting. I respectfully suggest that the so-called Bailment Stock Plan initiated by the Ohio Department of Liquor Control (“ODLC”) is nothing more or less than a contract to sell goods at a future time, and in certain circumstances a sale and return. The undisputed facts in this case militate for such a finding.
It is beyond dispute that the sales involved in this case are commercial transactions and that the law as codified in R.C. Title 13 is controlling. Among the provisions of the Uniform Commercial Code relevant to this controversy are R.C. 1302.01(A)(1) and (A)(4), which respectively define the terms “buyer” and “seller” as “a person who buys or contracts to buy goods” or “sells or contracts to sell goods.” (Emphasis added.) R.C. 1302.01(A)(11) states:
“ ‘Contract’ and ‘agreement’ are limited to those relating to the present or future sale of goods. ‘Contract for sale’ includes both a present sale of goods and a contract to sell goods at a future time. A ‘sale’ consists in the passing of title from the seller to the buyer for a price. A ‘present sale’ means a sale which is accomplished by the making of the contract.”
R.C. 1302.39 provides:
“(A) Unless otherwise agreed, if delivered goods may be returned by the buyer even though they conform to
the contract, the transaction is:
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“(2) a ‘sale or return’ if the goods are delivered primarily for resale.
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“(D) Any ‘or return’ term of a contract for sale is to be treated as a separate contract for sale within section 1302.04 of the Revised Code and as contradicting the sale aspect of the contract within the provisions of section 1302.05 of the Revised Code.”
The Tax Commissioner has suggested that the aforementioned stock plan imposed by the ODLC is not a contract to sell goods at a future time. The commissioner fails, however, to explain why she has adopted such a posture. Regardless of the label affixed to a certain fact situation by the commissioner or indeed the taxpayer, it is the duty of this court to scrutinize the nature of the particular relationship and reach a conclusion about that relationship’s legal implications. I agree with the appellants that it is obvious that, by the arrangement which led to the transshipment of spirituous liquor to warehouses located in Ohio and designated by the ODLC, it was contem*95plated by both the taxpayers and by the ODLC that stocks placed in such warehouses under the plan would be ultimately sold by the department and by the department only, either through its wholesaler or its retail stores. It was clearly contemplated that these alcoholic beverages would be exchanged for money, and were not shipped into Ohio for storage only and for ultimate return to the vendor. The appellant is quite correct that a bailment, by definition, requires the return of the bailed goods to the bailor in the form in which they were delivered to the bailee. These transactions clearly constituted a contract for a future sale coupled with delayed payment of the price at the will of the ODLC. See Bluebell Importing Corp. v. Myers (App. 1938), 27 Ohio Law Abs. 377, 13 O.O. 124, 31 N.E. 2d 227.
The plan adopted by the ODLC is the primary method by which the vendor may sell its products in Ohio. The ODLC negotiates and executes the contracts with the various warehouse-men throughout the state and the vendor has no contractual relations with any of the warehousemen. Further, the vendor must use the warehouses designated by the department as a designated termination and storage point for the stocks brought into Ohio for sale to the ODLC. Further, the record indicates that the vendor ships the goods to the warehouses with the ODLC in effect paying for the freight. Under the plan the department continually adjusts the price to the vendors keyed to the end of paying said freight. On arrival at the warehouses, a vendor’s products are stored in a location convenient to the state and held for the exclusive purpose of being applied to withdrawal orders issued by the ODLC. The warehousemen may not honor any order of removal except those which come from the liquor department, with sole custody of the stock resting in the warehousemen and sole right of disposal resting in the ODLC.
Finally, it should be noted that the vendor surrenders all rights to control or dispose of any part of the stock while it remains in the warehouse and may not withdraw such stock for shipment out of state or transfer the stock from one warehouse to another without the authorization of the department. I respectfully suggest that this court should apply the provisions of the Uniform Commercial Code to this transaction and, if it does so, the court will have no other alternative but to reverse the posture adopted by the Tax Commissioner.
For all the reasons noted above, the decisions of the Board of Tax Appeals should be reversed.
Holmes and Douglas, JJ., concur in the foregoing dissenting opinion.