88 F. Supp. 583 | E.D. Pa. | 1950
This is a suit -for a refund of taxes upon manufactured sugar in the sum of $58,-253.86, assessed by the Commissioner of Internal Revenue under Section 3490 of the Internal Revenue Code, 26 U.S.C.A. §• 3490, and paid by the taxpayer, a partnership, in the year 1945. The plaintiff is a Pennsylvania corporation which is successor in interest to the partnership. The Collector moves for a summary judgment under Rule 56, Federal Rules of Civil Procedure, 28 U.S.C.A.
In support of its motion, the Collector has filed the plaintiff’s formal admissions made under Rule 36, the depositions of two of the taxpayer’s partners, and various other documents, for the purpose of establishing (1) that the taxpayer was the manufacturer of the product taxed, and (2) that the product taxed was sugar. In opposition, the plaintiff has filed the deposition of a chemical engineer, Kreh; an affidavit of one of the, taxpayer’s partners, Decker (alleging that he believes the product to be syrup of cane juice, and stating further that plaintiff expects to have at the trial of the cause evidence, counter to that of the defendant, sufficient to warrant the submission of the issues in this case to a jury); and a copy of an opinion of Judge Porterie in the case of LeBlanc v. Chandler Laboratories, D.C., 89 F.Supp. 32. The Collector subsequently moved to strike the Decker affidavit and the copy of Judge Porterie’s opinion, on the ground that neither document complies with the requirement of Rule 56(e). The motion is granted as to the Decker affidavit, 'but denied as to the copy of Judge Porterie’s opinion since the Court may take judicial notice of the proceedings in other Federal courts.
It is clear from the admissions and the depositions of the taxpayer’s copartners alone, that the plaintiff was the manufacturer of the ■ product taxed. The evidence is specific and voluminous and leaves no issue of material fact. The main contention of the plaintiff (set forth- in its brief) is that the product was manufactured by four independent mills under a contract arrangement with the . taxpayer. The contracts (which were "leases), the management contract with LeBlanc, the duties áhd powers of the fiscal agent Snyder, the duties of the shipping expediter Barrow, the ownership by taxpayer of both raw material and manufactured product, and much additional evidence similar in nature, when examined together, fail utterly to support the plaintiff’s contention.
Even if manufacture by independent contractor were established, however (and there is nothing to indicate that it' could be), the result would not be altered. “The Government may look at actualities and upon determination that the form employed for doing business or carrying out the challenged tax event is unreal or a sham may sustain or disregard the effect of the fiction as best serves the purposes of the tax statute.” Higgins v. Smith, 308 U.S. 473, 477, 60 S.Ct. 355, 358, 84 L.Ed. 406. With respect to the purposes of the tax here in question, the position of counsel for the defendant is sound. Section 3490 of the Internal Revenue Code was first enacted as a part of the Sugar Act of 1937, c. 898, 50 Stat. 913, Sec. 402(a). The meaning, of the term “manufacturer”, therefore, must be under
Finally, the taxpayer is now barred by the principles of equitable estoppel from denying that it manufactured the product taxed. In an action in this Court, by the United States Price Administrator, to enjoin the taxpayer from violating the sugar regulations under wartime rationing orders, Porter v. Barrett et al., D.C., 89 F.Supp 35, the taxpayer succeeded in establishing its contention that it was the manufacturer of the same product as is here involved (denying, however, that it was sugar). On the basis of this contention, one count of the complaint was dismissed, the Court reasoning that where the manufacturer and the industrial user were one and the same person, there could be no delivery of sugar to itself and consequently there was no necessity to surrender up ration coupons to itself. The taxpayer may not now change its position as against the United States. See Davis v. Wakelee, 156 U.S. 680, 689, 15 S.Ct. 555, 39 L.Ed. 578; Michels v. Olmstead, 157 U.S. 198, 15 S.Ct. 580, 39 L.Ed. 671; Sinclair Refining Co. v. Jenkins Petroleum Process Co., 1 Cir., 99 F.2d 9, certiorari denied 305 U.S. 659, 59 S.Ct. 362, 83 L.Ed. 427; Wood v. Franklin Life Ins. Co., 5 Cir., 17 F.2d 80; Chicago S. S. & S. B. R. R. v. Fleming, 7 Cir., 109 F.2d 419; Queenan v. Mays, 10 Cir., 90 F.2d 525, certiorari denied 302 U.S. 724, 58 S.Ct. 45, 82 L.Ed. 559.
With respect to the second issue raised by the plaintiff, the defendant has clearly established that the product upon which the tax was assessed was sugar. The depositions of individuals who actuallj' made or supervised the manufacture of the product, the depositions of Government investigators who analyzed the product, the depositions of mill owners and others,
The plaintiff’s essential effort, in opposing summary judgment, is devoted to the plea that it may not be “¡blasted out of court without a trial”, and to the contention that it will be able, at a trial, to develop its case sufficiently for the jury’s consideration. But this contention is not in accord with the basic function of a motion for summary judgment. Such a motion is intended “to permit ‘a party to pierce the allegations of fact in the pleadings and to obtain relief by summary judgment where facts set forth in detail in affidavits, depositions, and admissions on file show that there are no genuine issues of fact to be tried.’ * * * If one may * * * reserve one’s evidence when faced with a motion for summary judgment there would be little opportunity ‘to pierce the allegations of fact in the pleadings’ or to determine that the issues formally raised were in fact sham or otherwise unsubstantial. It is hard to see why a litigant could not then generally avail himself of this means of delaying presentation of his case until the trial. So easy a method of rendering useless the very valuable remedy of summary judgment is not suggested in any part of its history or in any one of the applicable decisions.” Engl v. Aetna Life Ins. Co., 2 Cir., 139 F.2d 469, 472-473. The mere demand of a jury trial by the plaintiff, on the ground that it expects to be able to prove its general allegations and formal denials later, is insufficient to preclude a grant of summary judgment to the defendant. The burden rests upon the plaintiff to meet the defendant’s evidence with a present showing of facts, in detail and with precision, sufficient to raise a genuine issue of material fact. The plaintiff here has' not met that burden.
Accordingly, the defendant being entitled to judgment as a matter of law, an order will be entered granting defendant’s motion for summary judgment.