Cory Corporation and Mitchell Manufacturing Company, Delaware Corporations v. Ernest J. Sauber

fair consideration under case jurors different reach could minded Saporito’s conduct to whether clusions deliberate; measure act door would of how

consciousness the time that until the fact in view of posi- always remained

the accident prop been removed had

tion after Saporito had and as to whether course.

known alternative safe judgment will be of the trial court for new remanded and the ease

reversed

trial. Mitchell Man

CORY CORPORATION corporations, ufacturing Company, Delaware iffs-Appellees, Plaint

v. Defendant-Appellant. SAUBER,

Ernest J.

No. 12479. Appeals Court of States

United Circuit. Seventh 21, 1960.

Nov. Rehearing En Banc

Petition 6, 1961.

Denied Jan. Court, trolley 593, 597, cross street front of N.J. ed going speed). at full 49 where it 152 A.2d was said: “ * * * Seipel also cited v. course of Holland-America action taken App.Div.1958, leaving Sevek, N.J.Super. plaintiff directly his car accident, first A.2d 705. There the court held that after considered totality leaving plaintiff’s light act of his car circumstances existing, highway after an accident cannot be said to constituted then have re jury contributory negligence as a matter claim the area moved his appears, however, (Emphasis supplied.) lato. consideration.” the de Jersey reversed cision was the New Tieken, Atty., Ill., Chicago, ert U. S. appellant. Rothschild, Edwin A. Stanford Clin ton, Chicago, Ill., appellees. HASTINGS, Judge, and Before Chief SCHNACKENBERG, DUFFY and Cir- Judges. cuit Judge. SCHNACKENBERG, Circuit Following (266 58, our reversal F.2d 802) judgment 267 F.2d of the dis Cory Corpora trict court favor of tion, corporation, a Delaware in con solidated suits for refund of excise taxes collected sales air conditioners in 1955, 1954 and the United States Su preme Court, U.S. S.Ct. court, 4 L.Ed.2d reversed this held, page at 80 S.Ct. 1333 horsepower permissible test one and rulings that the revenue which were force from 1948 to 1959 were not void. mentioned, page The 712, page 80 S.Ct. at 1333 that the dis “Among trict had found that en gineers, of a motor does horsepower rating not mean its nominal but means actual continuously will motor deliver under pointed its full normal load”. out did that we not reach that finding review that in view of our con clusion that the test valid. The case was remanded court for consideration of that and questions may remain. Accordingly, record, on this we ac- cept the valid. The question then arises whether the Com- missioner, applying test, adopted engineers’ definition of the horse- power of a motor as the actual horse- power which the motor will deliver con- tinuously load, under full its normal rating. its nominal We to these shall refer measurements as the horsepower” and “actual “rated horse- respectively. power” tests September 26, 1947, date Under Atty. Rice, Commissioner, having Gen., K. Asst. solicited Charles the views Atty., Wiprud, industry, Depart U. S. W. Grant received Justice, Washington, C., Conditioning Air D. Rob a letter ment Association, Machinery components Refrigerating ical in a sin- housed gle give reading, part, as follows: cabinet. To interpretation effect is one “The term ‘self-contained’ air-conditioning term ‘self-contained a broad and some- has had which unit’ could defined follows: be a connotation as trade what loose “ ‘A self-contained air-condition- industry. has been in the It term ing meaning unit within sec- small, portable applied air 3405(c) tion Revenue the Internal conditioner, used to and it has been assembly Code is an encased a thousand-horsepower cen- describe trifugal refrigeration condensing com- unit with other is unit such as ponents which serves as a means conditioning purposes. for air used cooling, ventilation and dehu- writing that, probable seems midifying, cleaning, circulating 3405(c) Rev- Section the Internal air.’ 3405(c)], U.S.C.A. [26 enue Code Congress used the term ‘self-con- foregoing “The definition does not attempting tained air conditioner’ into take consideration addi- portable, plug-in elec- describe the tional factors to whether the unit appliance tric known as rooma may be installed in the room to be conditioner, general similar in may conditioned and be used without commonly-used cept to the household duets for the distribution or return refrigerator. of the conditioned air. One principal way purposes taxation, “For difficulties is it formulating a definition which desirable that there be available give definition, would effect to possible, these additional as exact as which, time, subject factors at the same the article to tax. The susceptible truly would be of fair and ‘self-contained air conditioner’ easily application being understood today, marketed so far as we industry variety know, is the of condition- is the room air conditioner *” * * ing (room units cooler). manufactured and the varied claims made manufac- Deputy On December Com- respect with turers the function- missioner Bliss Corpora- wrote the York ing produced by and use of the units tion, a manufacturer of air conditioners: general, however, them. it is be- “ * * * The Bureau has recent- lieved from the information avail- ly had occasion to re-examine its able these additional factors position respect with scope fairly may be reduced to a test ex- the tax on ‘self-contained air-condi- pressed in terms of the rated horse- tioning imposed units’ under section capacity power compressor 3405(c) of the Internal Revenue air-conditioning motor used determining with a Code view to unit. If these additional factors are possible whether it would be to for- be taken into consideration in fix- legally mulate a sound ing definition of scope the term the term simply which ap- could be air-conditioning ‘self-contained unit’ plied and which would have uniform defined could be as follows: throughout application the air-con- “ ‘A’ self-contained air-condition- ditioning industry. meaning ing within the unit sec- 3405(c) “From a consideration of the Internal of section tion Revenue- 3405(c), appears assembly an the law encased Code could, justification condensing unit with other com- without regard factors, (1) interpret- compressor ponents be has a ed scope motor, capacity to include within its which air-conditioning less, assembly p. (2) h. serves as so constructed that all of its for ventilation and meehan- means for cool- pacity cleaning, in a dehumidifying, self-contained condi- ing, tioning unit. circulating air.’ “ * * * special extend we attended desires to “The Bureau meeting industry opportunity industry called of members problem express at which time the was dis- its views heard and to fully. Accordingly, Bureau cussed matter. receiving appreciate a state- would sug- “The definition have that we your earliest ment of practicable views at gested unanimously adopted letters Similar date. attended, all who was formu- being each manufactur- addressed to lated the realization of the ad- air-conditioning which of units er of problems involved as ministrative office.” is a record in this there well as the of fundamental (Italics supplied.) air constitutes a self-contained what conditioning unit as the term com- Replying letter, York Cor- to that monly among understood those who January

poration to wrote on produce equipment.” letter, of- the fering a detailed Commissioner self-contained a definition Acting April Commission- meaning conditioner, air within the Conditioning er wrote to Air Sherwood 3405(c): Machinery Refrigerating Associa- and tion, “ ** * ‘A self-contained air referring confer- “to various meaning conditioner, you representa- within held with and other ences 3405(c) air-conditioning industry,” Rev- section of the Internal of the tives Code, factory following made en- enue is a definition and that “the stated designed assembly primarily posi- cased formulated indicate has been delivery air, free and for in- type units of the Bureau as tion properly scope in a window or in front stallation within to be included containing window; of a means for 3405(c): of” § moving through its outside air air-conditioning “A self-contained having denser; for ven- and means * * * (3) unit, total motor has a cooling, dehumidify- tilation and horsepower than one horse- of less cleaning, circulating ing, the air cooling capacity of power a total room; having a total motor per 10,000 hour BTU’s than less horsepower less than one horse- Society of Re- American standard cooling capacity power or a total Engineers frigerating test condi- 10,000 per than Btu’s hour at less Circular in ASRE set forth as tions Society American standard Re- June, 1940.” 16 dated No. Engineers frigerating test condi- foregoing that convinced areWe forth in as set ASRE Circular tions Commissioner that the established facts 16 dated June 1940.’ No. in- given assurance had been suggested believe defini- “We horsepower dustry motor rated that a sufficiently scope broad in tion is its less-than-one-horsepower, to use test exception without all to include self- sufficiently York, “is broad words conditioning air units contained exception scope include without in its are now manufactured. which units all self-contained gives recognition definition The being manufactured”, since are not that some units function fact engineering from an not feasible “it than electric motor means employ greater standpoint motor of horsepow- compressors. The driven capacity horsepower in a self-contained pur- limitation inserted for er conditioning unit.” facilitating administration, pose hardly presumed not that it is feasible from It can the in- inasmuch dustry engineering standpoint employ intended to mislead Commis- knowing have, sioner, greater horsepower as it that must ac- motor of ca- might vary adopted by ap- horsepower aof motor tual manufacturers which peared plates than on one units less to more affixed to the particular motor sold depending and was on the actual determined must, industry employed. output. the therefore, recommenda- have made its Moreover, prior issuing mo- tions rated ruling ruling which revised the 1948 assigning to were tor manufacturers respects here, not material the Commis- clear, and their motors at time. sioner held a representa- conference with prac- found, it is the court below tives Conditioning Refrig- of the Air industry conditioner for air tice eration Institute. We have examined the horsepower of manufacturers to list stipulated facts as to said conference household-type horse- unit as the subsequent correspondence and do not assigned power by the motor manufac- they find any way change show a turer1 not the actual interpretation ruling of the 1948 applied thinking That Commissioner was self-con- tained air out conditioners. of rated is borne terms by the that in his of December fact letter interpretation Our of the 1948 and sug- Corporation 1947 York he rulings 1954 practical makes en- for gested capacity” a “rated that units with of 3405(c), ultimately forcement § horsepower subject to of five or less imposes upon a tax purchaser the retail rulings finally the tax. as While of an air conditioner. Whether or not promulgated omitted the reference such an individual is to bear a tax any capacity, rated failure to set forth purchase his by readily can be established determining procedure for other horsepower, or test inspection of the manufacturer’s carefully although a test was horsepower rating tag affixedthereto. If cooling designated determining converse were true and a test suggests capacity absorption types, of horsepower for actual of the motor in to follow the the Commissioner intended operation would reveal whether recognized industry practice taxable, purchaser ditioner is would be capacity apply the rated test. The practically unable to make such a deter- gives necessary horsepower uni- mination. formity industry the Com- which the In foregoing, view of the we con seeking fa- in order to missioner were rulings clude that his 1948 and 1954 simplify administration cilitate and adopted Commissioner the rated 3405(c). rating test and made that the Commissioner It is obvious less-than-one-horsepower the line de ratings accepted nominal used in taxability marcation between and non industry. re- not even He did solicit taxability. The reference of the Com ports which would reveal actual on tests missioner to pacity the rated ca existing engineering horsepower under compressor motors used in each unit on the market. conditioning standards the air units indicate that rulings information tendered was his Neither were meant to conform with by manufacturers in air- prevalent to him industry. views of the industry. conditioning This corrobo- apparent While it that there taxability complete unanimity that industry our conclusion rates in the as to ratings by horsepower views,2 these determined there sufficient basis for rating plates pub- is affixed to 1. fastened air Such conditioners. This association’s compressor the exterior hous- lications state that the existence of an ings. any NEMA standard “does not re- spect preclude member or non-mem- the field manufacturers electric 2. manufacturing selling prod- generators, ber from or private motors and there is conforming known ucts not to the standard”. association as National trade Association, district that within found Electrical Manufacturers plaintiff’s range NEMA for 1 rat- make motors for whom some rulings The district court found: interpreting of the Commis- adoption thereof. sioner a formal as successor, “5. Defendant’s present Internal said, hold Director of District we have Because of what we Revenue, Chicago, court, in has assessed finding district Cory, against proposes clearly assess erro- inseparable parts, several substantially Pearce, Mitchell It reads: neous. fed- more million than one dollars show fails to “The evidence eral excise the sales taxes the Commis- it was the intention units similar ofor Revenue sioner Internal paragraphs 3 and those described in drafting subordinates, in ruling, ruling to refer and the 1954 ratings to nominal conditioning units “6. The air prescribed NEMA standards paragraphs described in man- motor individual selected com- those described appear ufacturers, does plaints, de- and the similar units his subordi- the Commissioner paragraph some- scribed 5 are taxability make nates intended collectively re- hereinafter times ratings upon such nominal turn plaintiff’s condi- ferred to as upon actual rather than tioners. ” * * * output. stipu- “7. been heretofore has with matters now deal 2. We parties and lated found “any other may properly be included present court that the consoli- remain”, F.2d may 284 questions which prototype civil action is dated whether case to determine test plaintiff’s directly involved The amount are sub- air conditioners $29.93, of the total case bar is at ject to excise tax.” payments on the collected tax two excise a matter That court also concluded as conditioning units sold of sales two alia: inter find- 1955, referred to in and in 1954 ings as The By stipulations 4 of the district court. and reason of “3. 3405(c) In- herein, of the on were based § taxes heretofore entered orders this civil action brings U.S.C.A. Revenue Code ternal this before imposed on tax 3405(c), which for determination the issue court 10% air-conditioning units.” simi- “[s]elf-contained whether units bringing for re- qualify their suit To in com- lar to those described plaint, the alleged taxes, their plaintiffs in fund on which federal excise tax stipulated in the complaints, and it have been made and are assessments McKy and court, by that Keith proposed district be made defendant to testified, if have Carlin would Thomas as District Di- successor bought they witnesses, Chicago, that each Revenue, as called rector of Internal a written subject unit executed such a excise tax.” are federal copy refund, of which a claim for sent majority opinion, the In the ap- complaint. attached said, page 711, 363 U.S. at S.Ct. separate opinion Mr. pears from the page at 1332: herein, in which the Chief Clark Justice joined, much said in the briefs “There is Black Mr. Justice Justice argument lawyer in oral about this case purchasers were a these that It is said that taxes as a test case. plaintiffs. an accountant interpreted district court also found that mo- The ing, motor manufactur- as required NEMA, manufacturers are not tor comply the are members who ers .of rating plaintiff’s with NEMA standards and are proper depart from free to them. NEMA would under standards motors 1be 50,000 stipulation parties to on the about units of the sale of ” ** * prototype turn on decision. effect that this is a or test this support case is not sufficient to the dis remandment, are there we parties rict court’s conclusion. While immediately fore confronted action, they to a civil have plaintiffs shown of whether have interest, generally may up set two cases now before court prototype court determination a or test money content, ac with their small case, public they fit, in such form as see tually “prototype cases so as test” protection interest of the federal justify of the effect extension overriding revenue is an consideration result herein other cases not before adjudication which bars a blanket court. The record does show large claims, total of tax refund based 50,000 “about taxes the sale privately es contrived cases they paid. units” have If have not been pecially purpose. Moreover, for that paid, for a been is no basis suit there case, “test” which is intended serve brought in the for refund such as was 50,000 release of disbursements Even if taxes were bar. cases treasury, the federal lacks bona fide validity paid reliance buyers act, consents of supra, requires. which the refund litigation rulings, revenue now be utterly fore court fails show right recovery by taxpayers in similar Hocking Valley Ry. In Swift & Co. v. court, the cases not before the because Co., 281, 289, 243 U.S. 37 S.Ct. showing consents there no 61 L.Ed. said: taxpayers have been obtained said stipulation “If the is to be treated required by 6416(a) (3), 26 U.S.C.A. § agreement concerning legal as an 1954 Code. facts, effect of admitted is ob- allegations facts in Neither viously inoperative; since the court stipulations, complaints or by agreement cannot be controlled introduced, plaintiffs evidence did estab- subsidiary question counsel on a that, lish as a district court matter ” * * * law. law, pro- of fact or of the cases at bar are totypes of the in sale cases involved the large or Whether not a multitude 50,000 of about units which are not be- by is to cases be controlled at case Similarity fore the has not been court. prototype a bar as or test case is hence duty shown. It our therefore becomes stipu a law to which the judgment to limit the effect of of the binding parties upon lation is not parties district court to the named in the Gubelman, Cir., the court. In re 2 10 judgment 11, 1958, entered on June in 926, F.2d To the same effect is Cory Corporation plaintiff was and Davis v. Commissioner of Internal Reve Sauber, as Ernest J. former district di- nue, Cir., 7 241 F.2d 701. revenue, Chicago, rector of internal public This case involves the rev defendant. important an enue to In extent. such a that, We find for the reasons hereinbe- case, parties stipulate are not free findings forth, 5, fore set 6 and 7 of the rights away public. prin of the This court, they district insofar as find that ciple forcibly applied is in National Bank present prototype action is a or test Murphy, 61, page 384 Ill. 64, v. at 50 plaintiffs’ case whether to determine 748, 749, N.E.2d where the court said: subject tax, conditioners are clearly to excise “ * * * erroneous we set aside said stipulation No valid or findings respect. in agreement, questions We hold that as to of law brought by legal plaintiffs the said civil action facts, effect be can made * * * prototype a by parties. is not test case and not Neither can given legal they stipulate be effect as such the district effect of ad- ” * * * court (Citing mitted facts. 774 Ry. Valley public a Hocking in the stipulation interest. & v. This

Swift Co. court on June And, costs must court, arising Co., supra.) ^[*] is also true as to For “The decision judgment # at these rest page 65, -»» favor of parties uninfluenced from the facts reasons, 11, entered or their counsel. plaintiff, 50 N.E.2d 1958 for legal conclusions questions we determine judgment Cory Corpora- stipulations at $29.93 involved. page lawof district This 750: can be no tioning fact and opinion. and for all repeated in the above civil actions.” ulations Rather parties agreed binding. same issue should be units similar to those designed trials of the same issue. law than public of law as indicated related try numerous interest that present avoid the same try repeated trials the issue case. proceedings, “air condi- held valid described issue demands in There Stip- once our against defendant, tion, order- Davison, In United D.C.W.D. States v. ing thereon, no effect is to have execution Lewellyn 465, Pa., 1 F.2d v. affirmed cases, as claims or Davison, whatsoever Cir., 3 9 F.2d certiorari adjudication prototype or test denied, L. U.S. S.Ct. case. bar, Ed. as in the case the Gov at stipulated ernment had decision that the stated, hereinbefore For the reasons in one tax deci case should control the judgment the district aforesaid involving in other tax same sion cases court is reversed. approved factual situation. Judgment reversed. stipulation stating, page 470 of greatly F.2d. “It was interest Rehearing Banc. en Petition for parties of both action that involving cases, ques score of the same Judge. DUFFY, Circuit disposed tions of fact and should be majority this of the members A adjudication and final trial deny service has voted active Court single agreed case. This both sides rehearing en petition herein to.” granting As I voted favor of banc. my view, the decision of my petition, a brief statement of wrong equating in or- would therefor seem to reasons say nominal We der. or not such an “Whether individual Court, motion, and on its own This purchase bear a tax can read- any request party, has either without ily inspection be established stipulation the basic invalidated horsepower rating the manufacturer’s litigation proceeded in has tag affixed thereto.” years. more than for three courts three Nominal is not same has made no effort Government The rated agreement Nominal horse- it made. repudiate the assigned solely power is in the uncon- the Government had June discretion trolled various motor plain- for a continuance to which asked Actual manufacturers. objected. days After eleven of ne- tiffs standardized, meas- gotiation the Internal Revenue" easily urable ascertainable. Nomi- Department Justice, and the Service arbitrary nal and un- stipulation was entered into. No one standardized. stipulation suggested unfair, has inadequate misrepresenta- induced Court The directed this Court findings mistake. Government review the District does Court’s tion “among it has been over-reached. to what meant as gineers.” en- not claim stipulation disregard- to me that Our Court has It seenis now engineering cri- concepts ed and selects compressor plates on

teria derived housings tags. of this Court

Inasmuch the decision

in this case is a considerable based to degree argued upon questions neither briefed, I have concluded Court, sitting banc, en should consider

the issues. Myerson, Meinhard H. Jacksonville, Wayne Fla., Ripley, Jacksonville, Fla., E. ROBINSON, Appellant,

Daniel appellant. v. Briggs, Atty., John L. Asst. U. S. America, UNITED STATES Jacksonville, Fla., Appellee. Madsen, E. Coleman Atty., Miami, Fla., U. S. appellee. No. 18085. RIVES, Judge, Before Chief Appeals United States WISDOM, Judges. TUTTLE and Circuit Fifth Circuit. Nov. WISDOM, Judge. Circuit The United States indicted Daniel Robinson, appellant, separate on two illegal possession occasions for the gallons concealment of 400 nontaxpaid

whiskey. The two indictments are iden- tical, except assigned as to the numbers the cases. The first indictment was a reported result information Attorney’s United States office Jack- police officer, a local sonville Anderson. whiskey had Anderson seized the on a warrant, Robinson, search arrested proceedings against initiated criminal Robinson in the Florida courts. The adopted United States the Florida case. The district court dismissed the first in- “grounds public policy”: dictment on government slowly the federal acted too case; adopting the state it would be unseemly for both the state and federal governments to move forward at against time same same man for what amounted to the same crime.1 1953, by states, part: City 1. The order dismissal a Police Officer of the appears Jacksonville; “In case it that a State search warrant September day search was filed executed on the same warrant and the

Case Details

Case Name: Cory Corporation and Mitchell Manufacturing Company, Delaware Corporations v. Ernest J. Sauber

Court Name: Court of Appeals for the Seventh Circuit

Date Published: Jan 6, 1961

Citation: 284 F.2d 767

Docket Number: 12479_1

Court Abbreviation: 7th Cir.