Court Opinion

ID: 6759544
Source: CourtListenerOpinion
Date Created: 2022-07-21 00:30:08.233912+00
Date Added: 2024-06-11T16:02:33.449872
License: Public Domain

Celebrezze, C.J.,
concurring in part and dissenting in part. Because the majority opinion remains virtually unchanged upon reconsideration of this cause, I incorporate herein my previous minority opinion published in OAMCO v. Lindley (1986), 24 Ohio St. 3d 124, 129.
Further, I re-emphasize that the majority’s daft ruling is a transparent exercise in judicial legislation. Like the amateur magician who is unable to perform a trick without revealing his sleight of hand, no one in this audience will be fooled by the majority’s pretension that it is not adopting the integrated plant theory.1
*11The premise of this theory is that the items of property involved are part of an integrated plant and that each item is essential to manufacturing or processing. Adoption of it “would in many instances except from taxation the sales of practically all instrumentalities used by manufacturers or processors, since it could always be said that each instrumentality plays some part in the manufacturing or processing.” Youngstown Bldg. Material & Fuel Co. v. Bowers (1958), 167 Ohio St. 363, 367 [5 O.O. 2d 3]. Time and again, this court has wisely rejected judicial adoption of the integrated plant theory because it is based on an interpretation of R.C. 5739.01(R) and 5739.01(E)(2) which has been found to be contrary to the General Assembly’s intent. See, e.g. Bowers, supra; Ohio Ferro-Alloys Corp. v. Kosydar (1973), 34 Ohio St. 2d 113 [63 O.O. 2d 195]; Southwestern Portland Cement Co. v. Lindley (1981), 67 Ohio St. 2d 417 [21 O.O. 3d 261].
The General Assembly has defined manufacturing, in R.C. 5739.01(R), as “the transformation or conversion of material or things into a different state or form from that in which they originally existed.” The Tax Code further provides that adjuncts used directly during and in production after manufacturing has commenced will be exempt from taxation. R.C. 5739.01(R).
In the instant case, the majority exempts equipment in a self-contradictory manner which spurns the mandates of R.C. 5739.01(R) and 5739.01(E)(2). While acknowledging that “it is readily apparent that the transformation or conversion of material or things into a different state or form occurs primarily in the drum mixer,” the majority also posits in its statement of the case that “[t]he manufacturing process commences once the taxpayer begins combination of the aggregates,” that is, at a stage which is preparatory to the change in state or form which occurs in the drum mixer. There is no way that equipment used exclusively to prepare material prior to a change in state or form can also be classified as equipment used in manufacturing or an adjunct directly used in the manufacturing process pursuant to R.C. 5739.01(R) and 5739.01(E)(2). By exempting equipment which is used in activities either preparatory or subsequent to the manufacturing process in the instant case, on grounds that this equipment is “essential” or “crucial” to manufacturing, the court has abandoned the statutory “change in state or form” test in favor of one based solely on essentiality. Thus, since it can always be said that each instrumentality is in some way essential to the overall manufacturing process, the majority has junked R.C. 5739.01(R) and 5739.01(E)(2) and gratuitously granted unforeseen and sweeping exceptions to Ohio’s Tax Code by rout of judicial enactment. In so doing, the majority has shaken our tripartite system of government by usurping a legislative function.
The framers of Ohio’s Constitution vested with the General Assembly the sole power to determine tax exemptions. As Justice Holmes, writing for the court in State, ex rel. Swetland, v. Kinney (1980), 62 Ohio St. 2d 23, 27 [16 O.O.3d 14], opined, “The General Assembly has ‘plenary’ power to *12determine exemptions from taxation, subject only to the Equal Protection Clause of the Ohio Constitution.” Chief Justice Taft’s instructive majority opinion in Denison University v. Bd. of Tax Appeals (1965), 2 Ohio St. 2d 17 [31 O.O.2d 10], concluded at 27 that “the people intended * * * to return to the General Assembly as part of its legislative power ‘the general power * * * to determine * * * exemptions’ from taxation subject only to the limitations set forth in Article I of the Ohio Constitution, the so-called Bill of Rights. * * *” Accord Dayton v. Cloud (1972), 30 Ohio St. 2d 295 [59 O.O. 2d 370], paragraph one of the syllabus.
For nearly twenty years the General Assembly has expressly defined manufacturing, and thus the scope of the tax exemption, by using the change in state or form test now contained in R.C 5739.01(R). The legislature is presumed to be cognizant of our past decisions, which have consistently interpreted and applied this test by exempting equipment only if it is directly used during and in the manufacturing process and not used at a stage either preliminary to or subsequent to a change in the state or form of the material or things. Bowers, supra; Ohio Ferro-Alloys Corp., supra; Southwestern Portland Cement Co., supra. Moreover, the General Assembly has, on numerous occasions subsequent to these past decisions, reenacted the statutory change in state or form test without modification.2 This is a strong indication of the legislature’s approval of our judicial interpretation of this statute. As stated in Doll v. Barr (1898), 58 Ohio St. 113, 121, “[t]he re-enactment of that section without change after that decision, * * * may be accepted as an unqualified recognition of the legislative intention as so judicially declared.” Accord Geiger v. Geiger (1927), 117 Ohio St. 451, 469; Seeley v. Expert, Inc. (1971), 26 Ohio St. 2d 61, 72-73 [55 O.O. 2d 120]. Clearly the legislature intends that exemptions be determined consistent with the change in state or form test articulated in R.C. 5739.01(R). Unfortunately, today’s majority has overridden this legislative intent by declaring that exemptions shall be determined based on the essentiality test central to the integrated plant theory.
It should be remembered that a majority of this court has adopted the integrated plant theory not in response to any constitutional challenge to R.C. 5739.01(R) and 5739.01(E)(2). Nor is there even a hint that the findings, of the Board of Tax Appeals, in applying those statutes, were unreasonable or unlawful. Instead, the majority presumes to dictate from the bench the tax policy of this state for no apparent reason other than to substitute its judgment and preference for that of the General Assembly.
This court does not sit in order to write what it considers to be better tax legislation. Rarely should judges substitute their own economic beliefs for the collective judgment of legislative bodies. It bears repeating that we *13are not constituted as a “super-legislature to weigh the wisdom of legislation.” Day-Brite Lighting, Inc. v. Missouri (1952), 342 U.S. 421, 423. Nor is it our task “to strike down state laws * * * because they may be * * * out of harmony with a particular school of thought.” Williamson v. Lee Optical of Okla. (1955), 348 U.S. 483, 488.
If there are to be more liberal exemptions for industrial taxpayers under an integrated plant theory, let that decision be made where intended — the General Assembly — and not by this court. The majority’s unrestrained substitution of its judgment for that of the legislature is arrogant, lawless, and imposed at great cost to the state treasury.3

 The legal reviews are being published with regard to this court’s reasoning as espoused in OAMCO v. Lindley (1986), 24 Ohio St. 3d 124. Because the reasoning in today’s decision remains virtually unchanged from that of the original ruling, the following scholarly analysis of that case is pertinent to OAMCO then and now:
“* * * The Board of Tax Appeals carefully examined each step in the manufacturing process applying the ‘physical change theory’ to determine which components were used directly in the manufacturing process * * *.
“Historically, case law has been very careful and precise in determining exactly when a manufacturing process begins and ends, and has only allowed a sales and use tax exemption for items and equipment used directly in the process of conversion after a manufacturing process has begun and before it has ended. The courts have consistently rejected the integrated plant theory and examined each piece of equipment and its precise function in the overall process, denying exemption for equipment used prior to or after the actual manufacturing process itself. The Board of Tax Appeals decided this appeal by scrupulously following Ohio case law on this issue. In this case, however, the high court went well beyond the established boundaries. " (Emphasis added.) 2 Belden & Schlather, Ohio State Taxation (September 1986), Current Developments, CD2-10.8-10.9, Section 62.03.
Additionally, the writer of this article noted that “the Court concluded that the control house was entitled to exemption to the extent and in the direct proportion that it controls exempt equipment at the plant, a point on which the taxpayer had failed to introduce any evidence before the Board of Tax Appeals. ” (Emphasis added.) Id. at CD2-10.9.
Tax experts are apparently not deceived by the majority’s feeble protest that it is not adopting the integrated plant theory in the instant case. In fact, the above commentary is captioned, “Is the Integrated Plant Theory Making a Comeback? [OAMCO v. Lindley, 24 Ohio St. 3d 124 (1986)].”

 R.C. 5739.01(R) was formerly R.C. 5739.01(S). With the exception of the change of the subsection letter, the statutory definition of manufacturing and processing contained in these subsections is identical.

 In its memorandum in support of its motion for rehearing of this case, the Department of Taxation estimates that approximately $170 million in state, county and regional transit authority revenue will be lost annually if the majority’s integrated plant theory is adopted. Surely, if tinkering with the state’s tax base is to take place, the modifications should result from the careful deliberative study, hearings and compromise which are hallmarks of the legislative function. Although the integrated plant theory may have merit, only the legislature is equipped to appraise the impact of any change and to enact counterbalancing measures to offset any adverse results. It would take very few per curiam opinions of this court to completely thwart the carefully crafted Tax Code of this state.