Home/N.D. Ohio/Woodville Lime Products Co. v. United States

Woodville Lime Products Co. v. United States

263 F. Supp. 311, 10 Ohio Misc. 103, 39 Ohio Op. 2d 206, 19 A.F.T.R.2d (RIA) 649, 1966 U.S. Dist. LEXIS 9628
CourtDistrict Court, N.D. Ohio
DecidedDecember 30, 1966
DocketNos. 8131 and C 62-170
StatusPublished
Cited by1 cases

This text of 263 F. Supp. 311 (Woodville Lime Products Co. v. United States) is published on Counsel Stack Legal Research, covering District Court, N.D. Ohio primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Woodville Lime Products Co. v. United States, 263 F. Supp. 311, 10 Ohio Misc. 103, 39 Ohio Op. 2d 206, 19 A.F.T.R.2d (RIA) 649, 1966 U.S. Dist. LEXIS 9628 (N.D. Ohio 1966).

Opinion

Young, J.

During what geologists call the Silurian Period of the Paleozoic Era, a substantial portion of the north-central United States was covered by an inland sea. On the bottom of that sea lived minute organisms which extracted carbonate materials from the waters and secreted them in their own hard parts. The remains of these organisms — shells and skeletons — formed vast deposits of stone.

Some 350 million years later men began to quarry this stone for the production of lime, fluxing stone, refractory materials, fillers and agricultural and other materials. In 1951 Congress added numerous minerals to the percentage depletion statutes and since that time the interpretation and application of these statutes has been the subject of much litigation in this and other courts.

In this consolidated suit plaintiff Ohio Lime Company seeks refunds of excess profits taxes for the years 1950 through 1953, inclusive, and refunds of income taxes for the years 1950 through 1957, inclusive. Plaintiff Woodville Lime Products Company seeks refunds of income and excess profits taxes for the years 1951 through 1953, inclusive.

Initially these suits raised the interesting issue of the rate of depletion applicable to the taxpayers’ mineral product for the years 1950 through 1953. The taxpayers contended that [105]*105their products were chemical or metallurgical grade limestone and thus they were entitled to a depletion rate of 15 %. On September 25, 1963, Judge Frank L. Kloeb entered a partial summary judgment order adverse to the Ohio Lime Company, finding that the taxpayer’s product was dolomite as that term is used in Section 114(b) (4) (A) (ii) of the Internal Revenue Code of 1939, as amended, and thus a 10% rate of depletion is applicable. Ohio Lime Co. v. United States (N. D. Ohio 1963), 219 F. Supp. 146. A similar order was entered in the Wood-ville case on September 30, 1965.

As to the years subsequent to 1953, the rate question is moot. The 1954 Internal Revenue Code classifies all carbonate rocks at a 15% rate. 26 U. S. C. Section 613 (b) (6) (1964).

The remaining question for decision requires a determination of the “gross income from the property” of the taxpayers as those words are used and defined in Section 114 of the Internal Revenue Code of 1939, as amended,1 and Section 613 of the 1954 Internal Revenue Code, 26 U. S. C. Section 613 (1964).2 [106]*106This issue was tried to the court from February 23, 1966 to March 3, 1966. The case is now submitted to the court on the pleadings, two stipulations, the trial transcript comprising 1278 pages, 103 exhibits and voluminous post-trial briefs.

The taxpayers are integrated mining-manufacturers. Their quarries and plants are located within a mile and a half of each other in or near the village of Woodville, Ohio.

Ohio Limb Company

The Ohio Lime Company, known as the Ohio Hydrate and Supply Company prior to April 30,1954, is an Ohio corporation with its principal office in Woodville, Ohio. For the years in question the taxpayer’s quarry covered about 50 to 60 acres to a maximum depth of 70 feet.

Ohio Lime’s mining process begins by stripping from 6 to 8 feet of overburden from the stone deposit. The stone surface is then cleaned by means of brooms and other tools in order to avoid contamination of the mineral rock. A series of holes is drilled and filled with explosives, and a portion of the rock is then blasted to the quarry floor. Sometimes secondary blasting is required to reduce the larger pieces to manageable size. The stone is then transported by truck to the primary crusher. The subsequent processing which took place in the years 1950 through 1957 is described diagramatically in the following flow chart.

[107]

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Bluebook (online)
263 F. Supp. 311, 10 Ohio Misc. 103, 39 Ohio Op. 2d 206, 19 A.F.T.R.2d (RIA) 649, 1966 U.S. Dist. LEXIS 9628, Counsel Stack Legal Research, https://law.counselstack.com/opinion/woodville-lime-products-co-v-united-states-ohnd-1966.