Morse Signal Devices, Inc. v. Donahue , 15 Ohio Misc. 126 ( 1967 )

Dissenting Opinion by

Member Edwin F. Sawicki

This member concurs in general with the views and conclusions expressed by his colleagues, but dissents from those views and conclusions which make an exception of the appellant’s “Central Station Alarm System” from the other alarm systems referred to in this case.

The reason for dissenting is that this member of the board believes that the conclusions and findings of the Board of Tax Appeals should be uniform in regard to all of appellant’s alarm systems because it is obvious that the primary and foremost objective of each subscriber is to. obtain from the contractor (Morse) the use of a suitable detection and alarm system which consists of certain items of Morse’s tangible personal property being carefully selected by Morse to fit the customer’s needs and then expertly installed on or about the subscriber’s premises by Morse, whose further responsibility entails the maintenance and repair of those select items of installed personal property whenever necessary.

In order to fulfill the primary and foremost objective of every detection and monitoring or alarm system, it is usually unimportant whether the monitoring signal or alarm be heard or noted on or about the subscriber’s premises or at a nearby fire or police station or at Morse’s Central Station. To detect and either monitor or alarm, are the most important and primary functions of the system.

It appears that many subscribers also have a secondary objective and that is to enhance the results of the detection and alarm system by contracting for the services of a staff of Morse’s highly trained experts in the field of protection and related accommodations through the use of Morse’s Central Station Alarm System.

The record in this case unequivocally establishes the fact that every subscriber must have Morse’s select items of personal property installed on his premises by Morse when he contracts for the benefits or use of any of appellant’s monitoring or alarm systems. These installations are of equal benefit or use to Morse, because without them, the appellant is unable to fulfill its contractual obligations to the subscriber, and therefore, Morse must transfer “possession” of said installed items to its subscribers. It is this transfer of “possession” for a consideration (monthly charge) which makes the transaction a “sale” by way of rental.

For the reasons above stated, it is clear that as to all monthly charges made by Morse to its subscribers (Appellant’s Exhibit No. 2) which have been subjected to sales tax by the Tax Commissioner, the Board of Tax Appeals should find that said charges are for the rental of tangible personal property and were properly subjected to Ohio sales tax for the reason that Morse is the “vendor” thereof, as that word is used in Section 5739.01(C), Revised Code.

It is also clear that the personal service supplied by Morse in connection with said rental of tangible personal property is the normal maintenance or repair service thereof which is usually done, for example, in connection with the rental of such items of personal property as typewriters, adding machines, computers and similar items, and that any such personal service, and the monitoring service and follow-up that is under some contracts furnished by Morse is inconsequential in fulfilling each subscriber’s primary and foremost objective which is to obtain the use of a suitabe detection and alarm system.

Giving effect to the observations and conclusions above noted, it is the opinion of this member of the Board of Tax Appeals that the final order of the Tax Commissioner herein complained of should be affirmed.