274 F. 960 | S.D.N.Y. | 1921
(after stating the facts as above).
In fact, our war taxes 'are not out of relation to the sums levied by other civilized nations faced with the same exigencies as the Great War imposed upon us. In critical periods of a nation’s life the power to tax may be necessary to preserve it, and perhaps there is no limit beyond which it may not subject the property within its reach to contribution. I need not go so far as that in this case; it is enough that the powers of Congress are to be interpreted, not by dialectical ingenuity, but by current practices of nations in the exercise of similar powers. It is true that these powers are limited, and that those limits must be observed, however little they circumscribe the analogous powers of other Legislatures. Yet when the question is of the interpretation of those broad counsels of moderation contained in the Fifth Amendment, we must interpret, the limitations themselves with an eye to the practices which have become tolerated elsewhere among civilized nations. Were it not so, we should be limited forever to the political usages of 1789, and those amendments which were intended to protect the individual against extravagant or invidious discrimination would become a strait-jacket upon the nation’s freedom.
An illustration will make clear what I mean. Suppose a man has certificate A, for ICO shares, bought at $100, certificate B, for 100, bought at $150, atid certificate C, for 100, bought at $200. Suppose, further, that a stock dividend of 50 per cent, is declared, and he gets one certificate I), lor 150 shares, without paying anything. If he sells certificate A, he would he deemed to sell, not the whole of his first purchase, but only two-thirds of it, and he could credit himself with only $6,666. If he sold certificate B, he would credit himself with $1(5,000, and if certificate C with $13,333. If he sold certificate D, he could credit himself with $15,000, made up of $3,333 from his first purchase, $5,000 from his second, and $6,666 from his third. If, on the other hand, he sold only a part of certificate D, some arbitrary rule of apportionment must be adopted, allocating the shares sold among his purchases. The most natural analogy is with payment upon an open account, where the law has always allocated the earlier payments to the earlier debts, in the absence of a contrary intention. Accordingly, if all the new shares were not sold at once, I think the first sales should be attributed to the first purchases still remaining unsold when the stock dividend was declared. I do not see that this method. will result in confusion in its application, and it carries into effect the underlying theory of Eisner v. Macomber, supra.
The tax at bar was not computed quite in this way, because all the purchases before the declaration of the stock dividend were brought into hotch-pot. This I think was inconsistent with the theory of the identity of the shares involved in each purchase. It must, therefore, be recalculated, which the parties have kindly consented to do, if they are told the rule. The credits will he computed as follows: Upon each certificate held on March I, 1913, two-thirds its value on that day; i. e,, $230. Upon each certificate bought at $100, $66%. Upon each certificate for stock dividend shares, if issued against any specified earlier certificate, the same credit per share as the shares of that certificate. If the certificate of new shares is not so earmarked, or if but one certificate was issued for the new shares, then credit will
The formal disposition of the demurrer will depend upon this calculation. If the tax -is less than that collected, the demurrer will be overruled, and the plaintiff will take judgment for the difference; if it is greater, or the same, the demurrer will be sustained, and the complaint dismissed, with costs.
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