Home/Wisconsin Supreme Court/State Ex Rel. Beloit Iron Works v. City of Beloit

State Ex Rel. Beloit Iron Works v. City of Beloit

43 N.W.2d 473, 257 Wis. 422, 1950 Wisc. LEXIS 250
CourtWisconsin Supreme Court
DecidedJune 30, 1950
StatusPublished
Cited by3 cases

This text of 43 N.W.2d 473 (State Ex Rel. Beloit Iron Works v. City of Beloit) is published on Counsel Stack Legal Research, covering Wisconsin Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State Ex Rel. Beloit Iron Works v. City of Beloit, 43 N.W.2d 473, 257 Wis. 422, 1950 Wisc. LEXIS 250 (Wis. 1950).

Opinion

Fairchild, J.

A writ of certiorari was issued out of the circuit court for Rock county to review an assessment on a taxpayer’s personal property, which assessment was confirmed by the local board of review. The circuit court sustained the assessment. The law covering assessments is found in secs. 70.34 and 70.35, Stats. The statute covering the action of the board of review, sec. 70.47, provides in sub. (2) that there shall be an opportunity to challenge the *424 assessment as made by the assessor, and from the evidence before it the board shall determine whether the assessor’s valuation is correct: If too high or too low, it shall “lower or or raise the same accordingly.”

The assessor, under sec. 70.35, Stats., asked of the taxpayer the statement of its taxable personal property on hand May 1st. The taxpayer reported taxable property on hand valued at $616,671.86. The practice of equalizing and reducing estimated cash values obtains. There is allowed for heavy industry in Beloit an actual tax-equalization figure of thirty-seven per cent, to be used in arriving at the amount assessable against the taxpayer. In this instance the taxpayer used thirty per cent instead of thirty-seven per cent. This explains the difference between the figures $616,671.86 and $431,- 670.30, the latter figure appearing as the assessment valuation. The assessor was not satisfied with the taxpayer’s statement. In his own words, his opinion as to the correctness of the taxpayer’s report was arrived at in this way: “The report as submitted by the Beloit Iron Works showed a $431,670.30 inventory as of May 1st. This figure looked so ridiculously low that, in my opinion, it was not possible for them to operate and do the volume of business that they do on an inventory of that amount. . . . [That figure] did not appear, in my opinion, to be possible for the Beloit Iron Works to operate and do the volume of business they do on any such inventory, regardless of the amount of product or part of the product that may be purchased from manufacturers entirely outside of the state which I am willing to concede is done, of course. Consequently, we arrived at a figure of $1,402,725 which appeared to me as more of a reasonable-sized inventory for a firm in heavy industry.”

There is no dispute as to the applicable statutes or of the rules provided. It is unnecessary to enter into a discussion of “actual cash value” of the property to be assessed. As outlined in the briefs of the parties, it is understood that the Beloit Iron Works, engaged in the manufacture and sale *425 of large machines, carries on its operation in the following manner: The machines are large, and the appellant is usually engaged from eighteen to twenty-four months in producing all the parts for a complete machine. Only parts of a total machine are produced in the factory at Beloit. The parts are shipped to be assembled on the customer’s premises. The appellant has a limited space for storage. The evidence is that the plant is not large enough to hold all the parts which go into the final product. When a part or a section’ is completed, it is shipped to the customer and stored by him or put in process of erection. The manufacturer’s stock is thus shipped out as the sections or parts are ready to go to customers (and these constitute a portion of a total inventory). However, this total inventory made up at the end of the fiscal year includes items which have never been in the factory at Beloit. It appears that the customer is billed for the completed machine. Until completion and billing, the parts or sections shipped by the appellant remain in its inventory. In supplying its customers with parts for a completed machine, it also purchases substantial parts from outsiders which are shipped directly to the customers. These items therefore are included in the total inventory. The method leaves in the inventory items never on hand or not on hand May 1st.

The trial court was of the opinion that subtractions were made from the inventory thus compiled September 30th, but that the new material coming into the factory had not been added. This is an error, for the testimony clearly is to the contrary. The last physical inventory of appellant prior to May 1, 1949, was taken September 30, 1948, at the close of its fiscal year. The testimony before the board of review and the circuit court warrants the statement which we quote from the argument of the appellant:

“That inventory was taken and used by appellant in the preparation of its state and federal income tax returns, all reports to government agencies, state or federal, and the prep *426 aration of its annual financial statement. That such inventory was taken at cost or market, whichever is less, is unquestionable, because demanded by sound accounting practice and well-known business reasons. It showed a total manufacturer’s stock both in and out of Beloit of $5,566,-362.61. It is well-known common business practice, generally recognized and observed by assessors in making assessments, for all concerns in this state whose fiscal year does not close on April 30th, to start with the last previous physical inventory and extend it to May 1st by adding additions thereto and subtracting reductions therefrom in the interim. That is the only way in which the inventory for purposes of assessment on May 1st can be determined unless another physical inventory is taken on that date. Recognizing that common practice, both the assessor of Beloit and appellant started with the inventory of September 30, 1948. From that starting point, the inventory of manufacturer’s stock in Beloit on May 1, 1949, and its market value must foe determined.”

The increase and depletion of the inventory is disclosed in the table 1 submitted to the board of review and placed before the circuit court, and that table shows that, starting with the total inventory of September 30, 1948, the added purchases, with deducted shipments, produced the total of taxable personalty in the factory on May 1, 1949. The table set out in the footnote is a computation including raw materials and supplies before work thereon at the factory as well as materials and supplies, labor and burden expended on them in the process of manufacture into the finished machine.

It will appear from this general inventory there must be deducted not only shipments to customers between that date and May 1st, but also shipments to customers prior to September 30th which had been included in that inventory but not removed therefrom by billing to the customer before May 1st. It will be seen from a study of the table that deduc-

*427

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Bluebook (online)
43 N.W.2d 473, 257 Wis. 422, 1950 Wisc. LEXIS 250, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-ex-rel-beloit-iron-works-v-city-of-beloit-wis-1950.