Baltimore Foundry & Machinery Corp. v. Comptroller, 211 Md. 316

Summary

The Maryland Court of Appeals considered whether a foundry owed sales tax on patterns purchased for resale to customers and also used in manufacturing steel castings. The court held that the patterns fell within the statutory exclusion for property purchased for resale, notwithstanding the foundry's ancillary purpose of using them in production. The judgment was reversed and the case remanded for a refund.

Holdings

1. A purchaser's use of property to facilitate manufacturing does not defeat the statutory exclusion from retail sales taxation when the purchaser had a definite, contemporaneous purpose and commitment to resell the property in its original form at a real and profitable resale price.
2. The inability to establish that title passed before production began in every instance was not controlling where the purpose to resell was manifested and a resale price was quoted contemporaneously with each pattern order.

Questions Presented

1. Whether patterns purchased by the foundry for profitable resale to its customers were excluded from the statutory definition of a retail sale even though the foundry also used the patterns to manufacture castings.
2. Whether the patterns were taxable because title did not pass to the customers in every instance before the patterns were used in production.

Disposition

reversed_and_remanded