113 F. 244 | 3rd Cir. | 1902
The plaintiff below (and here) is a corporation erected under the law oí Pennsylvania for the purpose “of refining sugar, which will involve the buying of the raw material therefor and selling the manufactured products, and of doing whatever else should be incidental to the said business of refining.” The defendant is the collector of internal revenue for the First district of Pennsylvania. The action was brought to recover certain sums of money which he had exacted under section 27 of the war revenue act of 1898, and which the plaintiff had paid under protest. That section is as follows:
“That every person, firm, corporation, os company carrying on or doing the business of refining petroleum, or refining sugar, or owning or controlling any pipe line for transporting oil or other products, whose gross annual receipts exceed $250,000, shall he subject to pay annually a special excise tax equivalent to one quarter of one per centum on the gross amount cf all receipts of such persons, firms, corporations, and companies in their respective business in excess of said sum of $250,000. And a true and accurate return of the. amount of gross receipts as aforesaid shall be made and rendered monthly by each of such associations, corporations, companies, or persons to the collector of the district in which any such association, corporation or company may be located, or in which such person has his place of business.”
The parties agreed upon a special verdict, the material portions of which are set out in the opinion of the court below (109 Fed. 76), and need not be here repeated.
1. The first and most important question raised by the assignment of errors is whether the above section is unconstitutional. This question, however, the learned judge of the circuit court declined
2. The use which the plaintiff really made of its wharves was in “carrying on or doing the business of * * * refining sugar.” They were part of the plant of that business, and, as it was actually conducted, they were an essential condition'of it. Consequently their receipts were its receipts, and as such they were properly comprised in the assessment. Adams Exp. Co. v. Ohio State Auditor, 165 U. S. 194, 17 Sup. Ct. 305, 41 L. Ed. 683.
3. The interest received by the plaintiff upon its corporate funds, either deposited in bank or invested in income-producing securities, was also rightly included. The special verdict states that it was “interest upon its investments of moneys and property as explained by the testimony of Mr. Ball”; and it appears from that testimony that the only business of the plaintiff was sugar refining, and that this interest was received by it upon investments or deposits of such part of the capital of that business as at the time being was not in active use therein. Mr. Ball, it is true, also testified that it did not have anything to do with sugar refining; but the question for our decision is not whether this interest was derived from the refining of sugar, which, of course, it was not, but whether or not it was received in the business of sugar refining, and upon this very different question the facts found are conclusive. The funds of the corporation, however any portion of them may have been temporarily applied or held, were all embarked in the sugar refining business, and to it, therefore, all receipts which those funds produced necessarily belonged. Any diminution of them would certainly have been its loss, and it seems to be equally clear that their augmentation, however occasioned, must have been its gain. Except in connection with and as incidental to that business, the plaintiff was neither an investor nor a depositor,- and therefore, by becoming either the one or the other, it did not engage in an additional and separate business.
4. The learned judge, in deciding that the collector had been justified in demanding monthly payments, said:
“The tax is, no doubt, an annual tax, in the sense that it is- paid each year; and, if provision for its assessment and collection had been made by the act, such provision' would have been obligatory, both upon the government and upon the refiner.”
But he was of opinion that the act contained no such provision, and that therefore the regulation of the commissioner of internal revenue directing its monthly assessment and collection was authorized by section 3447 of the Revised Statutes. We are unable to concur in the construction which was thus given to section 27 of the act of June 13, 1898. It is, of course, a possible one, but its correctness is- at ieast so questionable as to render it inadmissible to-impose a duty upon a citizen. Hartranft v. Wiegmann, 121 U. S.
Solely upon the ground that the circuit court erred in holding that the plaintiff was required, to pay the tax in question otherwise than annually, its judgment is reversed, and the cause is remanded to that court for further proceedings to be there taken in conformity with this opinion.
Agreeing with the opinion of the court as written in paragraphs 1, 2, and 4, I am compelled to dissent from that expressed in paragraph 3, to the effect that the interest received by the plaintiff in error upon its deposits in bank, and as dividends from investments in shares and other securities, should be included in the amount of gross receipts in its business of sugar refining, returned for assessment and taxation. Keeping in mind the well-settled rule that the citizen is exempt from taxation unless the same is imposed by clear and unequivocal language, and that, where the construction of a tax law is doubtful, the doubt is to be resolved in favor of those upon whom the tax is sought to be laid, I cannot assent to the affirmance of the judgment of the court below in this respect. I do not think that the income derived from such investment of funds is in any proper sense receipts in the business of sugar refining. The very term “gross receipts” in “the business” would seem to exclude all such receipts as the interest upon investments here referred to.