2 F. Supp. 41 | W.D. Pa. | 1932
The Big Lake Oil Company has brought suit against the Collector of Internal Revenue to recover $1,565,875.84, with interest, which is alleged to have been erroneously assessed and collected as income taxes for the years 1924, 1925, 1926, and 1927. The parties have agreed upon the facts and the only question before us is whether or not the income of the plaintiff obtained from oil and gas leases in the state of Texas is subject to an income tax by the United States.
The stipulated facts in the instant caso are identical with those appearing in Group No. 1 Oil Corporation v. Bass, Collector, 283 U. S. 279, 51 S. Ct. 432, 75 L. Ed. 1032. In that case, as in this, the state of Texas had
The Supreme Court in its opinion in the. Group No. 1 Case based its decision upon varying views of the state courts of Texas and Oklahoma in respect to oil and gas leases of the nature of those under consideration. In Texas the state courts have held such leases as present sales to the lessees upon execution of the leases of the oil and gas in place. The courts of Oklahoma hold that such leases do not transfer to the lessee title to such oil and gas until it has been brought to the surface.
The learned justice who wrote the opinion in the Group No. 1 Case, and who, with other members of the court, dissented in the Coronado Case, in the latter ease receded from the position taken in the opinion in the Group No. 1 Case, stating, in effect, that he was of opinion that the distinction so urged between Gillespie v. Oklahoma, supra, and Group.No. 1 Case did not furnish a sound basis for the difference in results. In his opinion and in the opinion of several of his associates, it was the duty of the Supreme Court to overrule Gillespie v. Oklahoma. The majority of the court disagreed with his contention, reciting, however, “We are disposed to apply the doctrine of Gillespie v. Oklahoma strictly and only in circumstances closely analogous to those which it disclosed.” The majority opinion, following its declaration as to its intention to circumscribe Gillespie v. Oklahoma, went on to discuss Group No. 1 decision without any criticism of it. In mew of the nature of the dissenting opinion it seems plain to us that the majority intended to adhere to the Group No. I’ decision.
In Burnet v. Harmel, 53 S. Ct. 74, 77 L. Ed. —, decided November 7, 1932, reversing decision of Court of Appeals, Harmel v. Commissioner of Internal Revenue, 56 F.(2d) 153, opinion by Mr. Justice Stone, Group No. 1 Oil Corporation v. Bass was discussed in such manner as to plainly indicate that it was regarded by the Supreme Court as being in full force and effeet. We feel that we are controlled by it, and that judgment must be entered for the defendant.