L. J. Minor Corporation, Appellant, v. Breitenbach, Cleveland Tax


Administrator, Appellee.


 [Cite as L. J. Minor Corp. v. Breitenbach (1996),        Ohio St.3d        .]


Taxation -- Municipal income taxes -- Food products company

      operating a manufacturing plant in city of Cleveland and a

      warehouse and shipping facility in city of Brecksville not required

      to pay municipal income taxes to Cleveland on sales resulting

      from purchase orders received in Cleveland from customers

      located outside Cleveland when products that filled those orders

      were shipped to the customers from inventory stored in

      Brecksville -- R.C. 718.02(A), applied.

      (No. 95-1774 -- Submitted October 8, 1996 -- December 18, 1996.)


      APPEAL from the Court of Appeals for Cuyahoga County, No. 67885.


      From 1984 through 1988, appellant, L. J. Minor Corporation (“Minor”),


owned and operated a manufacturing plant in the city of Cleveland and a


warehouse and shipping facility in the city of Brecksville. Minor produced


food products at the Cleveland plant and shipped those products to the


Brecksville warehouse to be stored in inventory pending the receipt of purchase


orders from customers. Purchase orders received at the Cleveland plant were
forwarded to the Brecksville warehouse. Minor employees working at the


Brecksville warehouse then filled the orders from the Brecksville inventory and


shipped the orders via common carrier from Brecksville to Minor’s customers.


         For tax years 1984 through 1988, Minor calculated and paid net profit


tax (“income tax”) to Cleveland by treating all shipments of goods made from


the Brecksville warehouse as Cleveland sales. For tax years 1984 through


1987, Minor also paid municipal income tax to the city of Brecksville, treating


the same shipments of goods from the Brecksville warehouse as Brecksville


sales.


         Minor later sought a tax refund from Cleveland for overpayment of


income taxes from 1984 through 1988. Minor did not dispute that taxes were


payable to Cleveland for products shipped from Brecksville to customers


located in Cleveland. Minor maintained, however, that taxes were not payable


to Cleveland for products shipped from Brecksville to customers located


outside Cleveland. The Cleveland Tax Administrator denied Minor’s request


for a tax refund.




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      Minor appealed the Tax Administrator’s decision to the Cleveland Board


of Review, which upheld the decision of the administrator on the theory that


the intent of the relevant tax legislation was to attribute sales to the city where


“a significant part of the activity comprising the entire sales process occurs[.]”


The board concluded that because a “significant portion of activity with respect


to the sales of the products” occurred in Cleveland and because the Brecksville


warehouse was “little more than a way station, *** sales of Minor’s food


products shipped from its Cleveland plant/general offices are ‘sales made in the


City’ for purpose of taxation[.]”


      The Common Pleas Court of Cuyahoga County affirmed the board of


review.   The Court of Appeals for Cuyahoga County in a split decision


affirmed the court of common pleas, finding that the board’s decision was not


unreasonable, arbitrary or unsupported by the evidence.


      The cause is now before this court upon the allowance of a discretionary


appeal.


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      Jones, Day, Reavis & Pogue and Roger F. Day, for appellant.


      Sharon Sobol Jordan, Cleveland Law Director, and Debra D. Rosman,


Assistant Law Director, for appellee.


      Paul A. Grau, Brecksville Director of Law, and Ross S. Cirincione,


urging reversal for amicus curiae, city of Brecksville.


      Vorys, Sater, Seymour & Pease, Raymond D. Anderson, Eric A. Pierce


and Kevin M. Czerwonka, urging reversal for amici curiae, Borden, Inc. and


The Limited, Inc.




      COOK, J. The issue before this court is whether Minor was required to


pay municipal income taxes to the city of Cleveland on sales resulting from


purchase orders received in Cleveland from customers located outside


Cleveland when the products that filled those orders were shipped to the


customers from inventory stored in Brecksville.


      The portion of a company’s net profits subject to a particular municipal


corporation’s income tax is calculated by utilizing an apportionment formula




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that compares the company’s property, payroll, and sales within the boundaries


of that municipal corporation to the company’s total property, payroll, and


sales. R.C. 718.02(A). The resulting ratio is then applied to the taxpayer’s


total net profits to calculate that portion subject to the municipal corporation’s


tax.


       The “sales” portion of the apportionment formula is defined as “[g]ross


receipts of the business or profession from sales made and services performed


during the taxable period in such municipal corporation to gross receipts of the


business or profession during the same period from sales and services,


wherever made or performed.” R.C. 718.02(A)(3).          R.C. 718.02(B) defines


“sales made in a municipal corporation” as:


       “(1) All sales of tangible personal property which is delivered within


such municipal corporation regardless of where title passes if shipped or


delivered from a stock of goods within such municipal corporation;


       “(2) All sales of tangible personal property which is delivered within


such municipal corporation regardless of where title passes even though




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transported from a point outside such municipal corporation if the taxpayer is


regularly engaged through its own employees in the solicitation or promotion


of sales within such municipal corporation and the sales result from such


solicitation or promotion;


      “(3) All sales of tangible personal property which is shipped from a place


within such municipal corporation to purchasers outside such municipal


corporation regardless of where title passes if the taxpayer is not, through its


own employees, regularly engaged in the solicitation or promotion of sales at


the place where delivery is made.”


      The court of appeals affirmed the denial of Minor’s refund request on the


basis that “[t]he emphasis in this legislation is plainly upon the sales aspect of


the activity, not upon the physical act of loading the goods upon a truck or train


whose final destination is the customer.” A plain reading of R.C. 718.02(B)


establishes, however, that the place of shipment and the place of delivery


determine the municipal corporation to which a sale is attributable for taxing


purposes. Under the facts and circumstances of this case, the only situation in




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which products shipped from Minor’s Brecksville warehouse may be


attributable to Cleveland is where the products are shipped to customers


located in Cleveland. R.C. 718.02(B)(2) and (3).


      The sales at issue here involve only products shipped from Brecksville to


customers located outside Cleveland. Under R.C. 718.02(B)(3), such sales are


deemed to have been made in Brecksville. Because R.C. 718.02(B)(3) plainly


and unambiguously states that sales of products shipped from within a


municipal corporation to purchasers outside that municipal corporation are


deemed to have occurred at the place of shipment so long as the taxpayer is not,


through its own employees, regularly engaged in the solicitation or promotion


of sales at the place where delivery is made, taxing authorities and the courts


may not interpret R.C. 718.02(B)(3) as embodying a contrary legislative intent.


“An unambiguous statute is to be applied, not interpreted.”              Storer


Communications, Inc. v. Limbach (1988), 37 Ohio St.3d 193, 194, 525 N.E.2d


466, 467; Sears v. Weimer (1944), 143 Ohio St. 312, 28 O.O. 270, 55 N.E.2d


413, paragraph five of the syllabus.




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      The judgment of the court of appeals is reversed, and the Cleveland Tax


Administrator is hereby ordered to refund to Minor that portion of net-profit


taxes paid by Minor to Cleveland for tax years 1984 through 1988 as the result


of sales of products shipped from Brecksville to customers located outside the


city of Cleveland.


                                                        Judgment reversed.


      MOYER, C.J., DOUGLAS, RESNICK, F.E. SWEENEY, PFEIFER and


STRATTON, JJ., concur.




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