Hugo Neu Corp. v. County of Los Angeles

The issue presented in this appeal is whether certain scrap metal which was awaiting shipment to Japan had entered the export stream and thus was exempt under the export clause of the federal Constitution (art. I, § 10, cl. 2) from an ad valorem property tax levied by defendants.

In 1961 plaintiff Hugo Neu Corporation entered into a sales contract with a group of Japanese steel mills under which Hugo Neu Corporation agreed to ship to the Japanese group in Japan 20,000 long tons of “Proler Scrap” per month for five years, commencing not later than June 28, 1962. In 1962 Hugo Neu and Proler Steel Corporation formed a joint venture and began doing business under the name of Hugo Neu-Proler Company. A plant facility was constructed at Terminal Island, Los Angeles for the exclusive purpose of processing steel scrap for the contract. The plant was designed to produce about 20,000 long tons of Proler Scrap per month. Since operations commenced in January 1963, no scrap has been processed at the plant for domestic sale or use. The total output of the facility has been shipped to the Japanese group under the contract.

Plaintiffs obtain raw steel scrap for “prolerizing” from…