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Canteen Co. v. Bowers

Supreme Court of Ohio
Mar 12, 1958
148 N.E.2d 684 (Ohio 1958)


No. 35345

Decided March 12, 1958.

Taxation — Listing personal property — Equipment used in manufacturing — Person making and dispensing beverages by automatic machine a manufacturer — Sections 5711.16 and 5711.22, Revised Code.

APPEAL from the Board of Tax Appeals.

The appellees, the Canteen Company and the Miami Valley Canteen Company, wholly owned subsidiaries of the Automatic Canteen Company of America, lease from the latter company and, under commission contracts, place in various industrial and other locations carbonated-beverage machines and hot-coffee machines. These machines are controlled, serviced, and maintained by the appellees.

There are different models of the carbonated-beverage machines, some dispensing but one flavor of beverage and others various flavors. These machines automatically prepare and deliver a carbonated-beverage drink in a cup. The ingredients of the drink are water, carbon dioxide and syrup.

A coin, inserted in the machine by the purchaser or consumer of the beverage, actuates a vend switch. This energizes an electrical relay which sets the machine up to allow a selection of flavor through a selector button. When this button is pressed, electrical circuits are set up and the machine is allowed to operate through one complete cycle. At the start of the cycle, the cup-actuating motor is energized through cam action, and a cup is dispensed into position to receive the beverage. Carbonated-water and syrup valve solenoids are energized by mechanical cam action. When the carbonated-water valve solenoid is energized carbonated water is allowed to flow into a restrictor and ultimately into the cup. When the syrup valve solenoid is energized, syrup under pressure is allowed to flow to the syrup spout which directs the flow of the syrup into the stream of carbonated water. When the proper amounts of carbonated water and syrup have been dispensed, the water and syrup switches, by their respective cams, and released, closing the water and syrup solenoids and stopping the flow of water and syrup. Near the end of the cycle, necessary switches, through cam action, are released to open the circuits to previously energized electrical circuits, thus setting the unit up for the next cycle.

Each machine is connected with a water supply line. Incoming water passes through a strainer, water solenoid valve, and water regulator to the pump, which forces the water at high pressure through cooling coils into the carbonator. The carbonator mixes the carbon dioxide and water, causing a chemical reaction resulting in carbonic acid. Each machine is provided with an electrical outlet for power to operate the electrical components, including the refrigeration system. The refrigeration system consists of a compressor, cooling coils, expansion valve, dehydrator and condenser. The syrup used is highly concentrated and not palatable in the form in which it is placed in the machine. The approximate cost of the ingredients used in the carbonated-beverage machine is 32 per cent of the sale price of the final product.

The hot-coffee machine, at the insertion of a coin, automatically prepares and delivers a cup of hot coffee, the ingredients of which are water, instant coffee, powdered cream, granulated sugar and cornstarch.

The purchaser or consumer of the coffee makes his selection of coffee with or without cream or sugar by setting a selector cam and knob assembly to determine the ingredients to be mixed. By the insertion of a coin, a timer motor is started by a series of switches and a solenoid is initially actuated. By means of cam-actuated switches, the timer motor energizes the cup-dispensing mechanism, which deposits a cup for the reception of the coffee, and energizes the hot-water valve solenoid, allowing a controlled quantity of hot water from the hot-water tank to flow into the mixing bowl which is designed in such a manner that the water swirls in a circular motion. Simultaneously, the proper amounts of powdered coffee, powdered cream, and sugar, depending on the purchaser's selection, are deposited in the swirling hot water and mixed. When thoroughly mixed, the contents of the mixing bowl flow into the cup.

Each coffee machine is connected with a water supply line to provide water for the hot-water tank and is provided with an electrical outlet to furnish current for the operation of the timer motor, product motors, solenoids and heating elements for the hot-water tank. The highly concentrated powder used in the coffee machine is not palatable in the form in which it is placed therein and must be reduced two or three hundred to one. The approximate cost of the ingredients used in the coffee machine is 34 1/2 per cent of the selling price of the final product.

In making their personal property tax return, appellees returned the above-described machines as manufacturing equipment, taxable at 50 per cent of their true value in money.

The Tax Commissioner determined that the machines constitute property used in merchandising and are subject to listing and assessment at 70 per cent of their true value in money.

Upon appeal, the Board of Tax Appeals reversed the order of the Tax Commissioner.

An appeal from the decision of the Board of Tax Appeals brings the cause to this court for review, presenting the questions whether the appellees are "manufacturers" of beverages within the meaning of Section 5711.16, Revised Code, and whether the machines above described are used in manufacturing and should be assessed at 50 per cent of their true value in money, as provided in Section 5711.22, Revised Code.

Messrs. Wright, Harlor, Purpus, Morris Arnold and Mr. C. Emory Glander, for appellees.

Mr. William Saxbe, attorney general, and Mr. Gerald A. Donahue, for appellant.

This court is of the opinion that the appellees, in their beverage business as above described, are "manufacturers" within the meaning of that term as used in Sections 5711.16 and 5711.22, Revised Code, and are entitled to have their above-described machines, used in such business, listed, for the purpose of taxation, at 50 per cent of their true value.

The decision of the Board of Tax Appeals is affirmed on authority of Jer-Zee, Inc., v. Bowers, Tax Commr., 163 Ohio St. 31, 125 N.E.2d 195.

Decision affirmed.


Summaries of

Canteen Co. v. Bowers

Supreme Court of Ohio
Mar 12, 1958
148 N.E.2d 684 (Ohio 1958)
Case details for

Canteen Co. v. Bowers

Case Details


Court:Supreme Court of Ohio

Date published: Mar 12, 1958


148 N.E.2d 684 (Ohio 1958)
148 N.E.2d 684

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