Wilson Simmons v. United States

468, p. 496, U.S. 71 S.Ct. “The ‘substantial said: L.Ed. any- evidence’standard is modified in way when the Board and its examiner

disagree.”

Applying the substantial evidence

test and examination of the entire record, this Court that there concludes support substantial evidence findings board’s and conclusions. petition and set aside review

the board’s order is denied and enforce-

ment of the order is decreed. Ward, Mestayer,

Thomas R. Roland J. Jr., Meridian, Miss., appellant. Sellers, Atty. Acting Abbott M. Asst. Jackson, Gen., Atty., Dept, Lee A. of Jus- SIMMONS,Appellant, Wilson tice, Atty. Oberdorfer, Louis F. Asst. Carolyn Just, Gen., R. Morton K. Roths- America, UNITED STATES of Washing- child, Attys., Dept, Justice, Appellee. ton, C., Ethridge, D. Thomas R. U. S. No. 18826. Oxford, Miss., Atty., Ray, Hosea M. U. S. appellee. Atty., for United Appeals States Court of Fifth Circuit. JONES, Before CAMERON Cir- Oct. Judges, DeVANE, cuit Judge.

CAMERON, Judge. Circuit by appellant, is a This suit hereinafter plaintiff, to as referred recover Federal imposed upon excise taxes by the him Internal Revenue Service for year 1950 in amount of $439.321 plus interest. Jurisdiction invoked un- provisions of 28 der the U.S.C. 1291. Point, is a Plaintiff resident of West Clay County, Mississippi; is now and during year engaged registered under the trade name Company M B & dealer in bam- began poles. Plaintiff boo cane in 1946 and this business has continued Jones, Judge, since. The in it ever dissented. parties plaintiff’s liability

1. The stated the oral that the case was to test very large money. sum of poles they suppliers, the on are some in solid cane if from even obtained straightened, scraped in other coun- and varnished. and some United States Department be- Japan. At seeks tries, The Internal particularly Revenue only ginning plaintiff em- operation upon poles to are of his collect taxes part- persons on a cut in such ployed or two and fitted with ferrules one employs they may Today into a manner as reunited time basis. his thirty persons full- approximately pole. on a solid cane bamboo time basis. When the filed to recover suit was began busi plaintiff this When paid 1950, plaintiff de- year for tax en operation consisted his ness jury question as to of manded a trial handling poles, were which tirely cane of fishing poles jointed whether the straightened var selected, sorted, “fishing within in fact rods” were 1950, observing year In nished. 3406(a) (1) of Internal § poles inexpensive cane for a market U.S.C.A. § Revenue Code 3406(a) fitted sections were cut into which therefore, subject (1) and, to him, to available ferrules was metal with This de- tax. the manufacturer’s excise his business. poles to this line of he added by mand was honored poles cutting of the is purpose The jury. con- At the case tried to was portable. solely more make them to trial, the clusion of the poles on the provision no made is There could that no factual issue decided They re are reel.2 for attachment presented and jury was be submitted to fishing poles garded by as cane the trade jury away dis- took the case as are the same use limited to by granting motion posed of it himself ferrules. and fitted are not cut which judg- for a for the of counsel Government this into entered time At the on the This action ment its favor. some of activity, he consulted additional assign- first constitutes the of the court in an competitors his accountant of error. ment should col- to determine whether effort on these excise judge lect realized that he trial The learned by his jointed poles. advised directing He was, jury find for to competitors by of his one proceeding accountant there appellee, a field where employed to confer counsel had who precedent: decisive was no Scott, Jr., the head of A. Walter Mr. is about an This “The Court: Jackson, at Tax Division Excise Sales Mississippi, entirely * * aspect of new the tax law. liable that he was * say that I am I cannot type poles. Fol- taxes on this excise my disposition all confident report of lowing advice, no he made this questions that have been raised jointed by him poles sold quantity of the prior brought being approach will even correct. In matter when this might fact, I I feel as if have reached by Rev- Internal a head * * * top center. dead Department, further out- will be enue lined infra. “Gentlemen, my opinion it is delegate Congress manufacturer’s excise tax laymen The was not did not (cid:127) today imposed time and responsibility interpreting at that loop By imposed affixed A metal end taxes which excise are on a large sporting goods which the line be tied. such number items importance is attached to No ei- “sold the manufacturer ** party. And the Commissioner did ther which it is claimed ruling, 58-425, plaintiff’s product “fisMng mention this in his rods, not infra, covers contributing appellant’s creels, reels, lures, baits, lia- and artificial bility therefore, is, noteworthy for the tax. It con- and flies.” in the statute, 900(5) de sidered minimis is not discussed first enactment of this hereafter. Rev.Act of underscored words “fishing rods and reels.” Congress, an upon, reported F.Supp. 227, ment wherein in 175 .Act * ‘fishing presented words rod’ was used. to the issues to it appeal. involved in that case my “It is further that Com- view were thus described the District merce Pacific v. United States of Judge (175 F.Supp. 228): “These arti- America in F.2d 651 is 278 [9 Cir.] cles come in from two to four sections persuasive authority the most for together. that can be fitted Each section question this Court basic of on the string wrapped has around the bamboo controversy what this article is. in near presumably the end [not so here] that, fact, I hold as a find in and I support purposes. At the of end the my view, it is uncontradicted question attached, smallest section a loop metal is, this article in within fishing where line is to be tied or run levy- contemplation

the ing statute through. The bamboo is treated with fishing tax, the rod and there- lacquer.” [Emphasis added.] * * fore taxable The perplexity attitude of under which legal court’s The effect of the Judge the District labored is illustrated Congress law, that, of intend- a matter as by 229): (175 F.Supp. p. statement fishing poles such ed to include bamboo you “When come the distinction be- plaintiff manVJacturer’s ex- sold in the you tween a rod, and a large of number cise tax levied run into a wall. brick Just when a articles, typical of which manufactured “ a rod or * * * becomes when a rod reverts ato helmets, harness football are: appears pole to me to be an insoluble uniforms, goals goals, and and basketball question.” sticks, golf bags clubs, balls and lacrosse footballs, baseballs, kinds, including of all tennis, Commenting by on a case relied pool golf, lacrosse, and billiard appellant, the then “The stated: balls, reels, fishing rods billiard expressed Customs Court view was in Na- tables, pool chess and checkerboards Carloading Corporation tional v. United * * dice, pieces, etc. States, Reports 36 Customs Court * * *. The Customs Court decided opinion in hold- In our erred court purposes of of Tariff Act fishing poles appel- ing such as that cane single poles, with a fitted phrase were included lant sold string joint wrapped around the reels,” “fishing the subse- [or rods support, ‘fishing bamboo for not were rods, “fishing creels, phrase reels quent ‘fishing rods’ were tackle’ but that, law; of as a matter . . least, .”] by The critical conclusion fact reached might minds have reasonable forth the District set Court these the article before as to whether differed F.Supp. 229): (175 words by what Con- a rod tested the court gress “At least the not the words it used. We over- meant proving by its burden advanced come feel preponderance us as to the effect evidence that before Government articles involved not v. United States were Commerce-Pacific ‘fish- rulings Cir., 1960, The America, 287 F.2d rods’. of the Com- great missioner Internal doubtless had Revenue are spurious and that it leading presumptively it to correct lower I on effect feel justify does evidence not their dis- was reached. conclusion which [Emphasis turbance.” added.] said in its de- the Ninth What Commerce-Pacific, (ib.) Court then went Inc. is limited on cision hold, an additional reason for the District Court its de- facts sitting judg- cision, the burden was decision it was tax- whose Appeals cases, to the in a number of adverted sioner 278 F.2d at Court of the Customs decision fact acquiesced in Commis- -was that, opinion, passed not liable their he was payer had to show (page tax. for the collection of the purchaser on tax 230) required to evidence the substantial upon, as was And we are not called presumption that natural overcome the accuracy Circuit, Ninth fact-findings, to test the passed was not introduced tax was in the case before because Again, plaintiff. evidence fact-finders, jury, us the the burden to sustain was not sufficient pass upon permitted vital important proof very consideration —a court, district as fact-finder since, such under 26 U.S.C.A. § against Commerce-Pacific, decided recovery. precedent to proof is a condition taxpayer. holdings two correctness of these The there court here that The lower held the Ninth was before of fact was all that sub- sufficientto warrant was no evidence solely engaged and that court was jury, that to and mission of the case the trying those two the correctness of question presented us. alone is the to holding legal findings. of its effect The findings as to lower that the court’s was appellant put on the stand two wit- clearly erroneous. were not the facts fishing who were manufacturers nesses held, interpreted Ninth Circuit What the equipment who that the and testified light it, before there- was in the fore, what sections, appellant as was such cut into support the action to does tend commonly selling, known and not militate trial here of the against pur- and the the sellers both trade appellant position be- fishing poles, as the users chasers and fore us. the words not embraced within and as by the point decided second As to the statute. These witnesses in the used case, stipulat- that, catalogs, poles is in that such in their showed appellant before us that carried in dif- appellant ed in case handled were charge pass it on to the different head- did not under sections and ferent ings upon for this fishing the reason purchaser, and that Both looked rods. good gave faith product he relied appellant’s that and as their was ranking rev- question upon the assurance was a opinions the article in that fishing readily to him fishing available officials rod.5 pole enue and not a produced fish- pole that he testified 5. Mr. Coats the nature of it other use oars, poles, paddles and boat boat ferrules? those than opin- already he who had obtained the it was He has said there Court: “The ”* Department Revenue the Internal ion no difference. is passed along appellant. Aldridge president to had been which was witness testimony typi- excerpt Sporting Company from his is This Goods Mid-South Mississippi Greenwood, cal: whose busi- at parts of five states. Some you covered Coats, produce ness do some Mr. “Q. testimony excerpts will from his you don’t cut into section? illuminating: found Yes, “A. sir. distinction if there is a “Q. Tell us is the difference between “Q. What goods sporting recognized in trade be- straight now, just long, a fishing fishing pole. rod and a a tween is varnished and the bands is. “A. There there and cut sections? aren’t us what that is. “Q. Tell You moan in use? “A. fishing pole generally prod- is A “A. The end use. “Q. nature, such bamboo. uct * * * same. “A. The piece pole, generally but in a one certain Why you put do “Q. metal ferrules piece poles instances, one are cut these on? transportation, rejoined, and transportation carry It’s more convenient “A. purposes. reason. complete device rod is a mechanical “A put guides line. Made “Q. After ferrules to retain the line with carry entirely exclusively, fishing make it convenient be used in always any ground, there real a reel. A rod is difference in combination game making to introduce Presumably, Plaintiff offered the determination. game Alabama, Commerce-Pacific, warden of the State he held either that the Mississippi, him, warden of the State Inc. case settled the operator goods sporting knowledge. of a store in or he relied his own Columbus, operator Mississippi, of We have indicated that we do not think goods sporting place boat dock and sales that the Ninth Circuit case can be con- Lake, settling law; Pickwick another witness strued as if occupation, with a similar a witness District edge, relied his own knowl- operated sporting goods who store in we assume that we could assume City stipulated It was Aberdeen. we are as well informed as was. testimony parties between the that the Plaintiff’s chief of each of the vir- witnesses would be up term rod is made of words tually testimony identical proof of art and all of the showed produced Aldridge. from the witness those familiar with the art were testimony opinion Some of this products received of the objection; portions against without other were which the excise tax was levied objected reserved. We were not rods. Defend- argues, think that the evidence hand, was admissible. ant on the other is clear all expressed from the evidence that the is statute in technical fishing there is a distinction between terms and “is addressed to the common poles fishing rods; and no and there was run of men therefore to under- be dispute appellee putting according all—the thing, stood to sense of the no ordinary witnesses—that line drawn right be- rely as the man has to certain, tween the ordinary two terms is not express. but on words” to Ad- Co., Cf. might people Holly is one about which differ. dison v. Hill Fruit Products testimony clearly, however, showed 607, 618, 322 U.S. 64 S.Ct. generally among those who manu- 88 L.Ed. 1488. It seems to us that factured, those who sold and distributed points a decision as between these or poles them, and rods and those who used problem. view would not solve our We there was a definite distinction upon between Supreme draw of classic words meanings pole ascribed to the illustrating word Court as this statement: rod the word both the men in the Congress “And where borrows laymen. and the common art in terms of which are accumu- legal meaning The trial in the case lated the tradition and us practice, presuma- not indicate the source or centuries of did sources of of it adopts bly information he relied knows in cluster of holding that, law, of as a matter ideas that were attached to each fishing poles body handled in borrowed word were learn- fishing ing rods under the statute. Nor from which was taken it and the meaning accepted convey indicated whether he or relied its use will it to the judicial the evidence introduced mind before him unless otherwise in- knowledge entirely case, or his own in In such structed. absence of equipped trig- adaptable fishing would not with reel seat also a be to your guard fingers.” casting: ger nature of rest Why you “Q. couldn’t cast with one of plaintiff’s product He identified in here poles you or rods these like do with a fishing pole, as and he ex- fly rod? catalog company of his hibited show- place, In “A. the first ing pole cut sections to be entirely fishing. are used for live bait If joined ferrules were identified in the you spring any way polos catalog as and that rods you your spring force, bait off. It’s separate catalog. in a section of the were good lifting out of the water and let objects the two He testified had dif- swing you drop right the bait uses, pointing ferent out that back.” contrary be the illusive direction taken denizens of waters accepted widely prob- from their satisfaction native from the habitat departure definitions, population from lem which faced rural gather Mississippi faring North them.” forth indulge merely sport a meal toor in a equally atti- And in words the classic along the creek “fish- banks and from the expressed: tude of defendant in’ holes” available to them. But “A estate claim for refund an meaning cannot, course, of the words ‘alleged tax to have been erroneous- be varied section to another. one ly illegally or assessed collected judge place It would seem that the first presented must be to the Commis- go search truth would in deter- years sioner within next after three mining meaning would words payment such tax.’ On catalogs testimony be to the and to it, requirement couch- face of those who in the business English, and, ordinary no since ed furnishing rods the trade with aids to construc- extraneous relevant use accustomed to and to those who were attention, have to our tion been called judge A would also so situated them. Congress evidently meant what nearby likely ex- to seek the aid convey.”7 ordinarily these words appointed perts statute construe the [Emphasis added.] give such evi- collect sight weight. of the fact must not lose We would These dence considerable searching intend- supply for the relevant we “extraneous seem Congress passed stat- it ed when adverted to construction” aids to us in 1918 and re-enacted supra. ute before quotation congressional history sheds No accepted aid to construc Another meaning light upon the intended meaning may of word is that “The a tion keep in also that mind We must words. by as those reference to be ascertained litigation in this tax involved the excise it,” a sociis.8 sociated with year —noscitur plaintiff’s for the covers are vital when we set Those 1950. dates levies under construction The statute meaning of the to discover about upon as- excise tax manufacturer’s controversy. in terms equipment sports. used items sorted assume, contended, the statute will reveal we It would examination An the om- practically or we have thir- that the below of the more than all that decide, prod- knowl- from our own ty in it9 consist of niscience included items manufacturing meaning edge experience, wherein art ucts they probably by dif- had Doubtless furnished nature terms. materials raw meanings something sections in different into en- ferent fabricated have been country. Perhaps on the tirely fisherman a what nature had different from England certainly reels, or provided. of New Land coast This is true region pre- of the midwest were with which the O’Lakes the items crucial word problems beguil- always closely with different sented associated in “rods” States, 1952, particular Morissette United 342 of a word 6. is doubt- 240, 249, particular obscured, 72 S.Ct. 96 U.S. L. or or where ful ex- singly pression inoperative, Ed. 288. when taken party intention who the frequently used it States, et al. v. United 7. Rosenman by looking be ascertained at 658, 661, 536, 537, 65 U.S. S.Ct. adjoining expressions words, or at occur- L.Ed. 535. parts ring in other same instru- Lawyers,” * * Maxwell, for “Latin Sweet & ment *.” Ltd., 1937, 716, page Maxim No. 208: 9. E. by g., rackets, tables, “It is a rule down laid Lord Bacon Badminton billiard together coupling clay pigeons traps throwing them, tlie of words shows they croquet balls, golf clubs, are to be in the understood balls and artifi- lures, same sense And *. where the cial etc. every ore, purely version of statute. Iron tions transport- for conveniencein nickel, plas- the chemicals which form grounds, it the tax does tics, many things subjected although apply, pieces other cut in cer- produce tainly to the art utility of the manufacturer to no has more fisher- reel, vastly man, and a probably reel serves a different less. purpose from that the raw material which When these relevant aids extraneous to- could furnish. utilized, construction judi- have been logical Here, then, seems to be the test cial can,, mind is instructed so that it determining applied to be gress Con- what difficulty, without delineate the bound- doing. levying It was an ex- should, jury aries of the test which the cise tax the sale of articles manufac- apply appellant’s product in determin- processes simple complex tured so ing wording whether it comes within the something produced would be usable statute. seems clear us that where it did not in the form which exist appellant the evidence offered re- Subjected nature test, to that had furnished. quires hold, least, that we plaintiff’s within were not rods granting court below erred in a directed meaning of When the the statute. verdict in favor of defendant. applied art was next Plaintiff contends the Gov- greater absolutely pole, it had no by equitable estoppel ernment is barred utility as nature than had 1108(b) buttressed of the Revenue- angler had no bet- it. The had fashioned imposing Act of upon the tax original fishing pole ter after the year plaintiff for 1950 and all’ pieces and reassembled had been cut subsequent years prior to It was cutting process had before the than he had stated in the that the tax begun. paid been since date collected accept seems to That Commissioner ruling copied supra was- when the usability ex- test of enhanced seems this emplified argues promulgated. Plaintiff private issued in entirely dif- manufacturer’s excise tax is evidently predi- formed the tax; that the law from an income ferent so assessment of for the cate collect the tax at forces manufacturers to per- years plaintiff had many after the they mer- sale of their time make the sought subject- to be the acts formed now adding price the tax to chandise excise tax.10 manufacturer’s ed to the merchandise; that it ille- also gal collect for the manufacturer manifestly of the defend- the idea It is passes on to the unless he it Govern- tax straightened be ant that ment. to a more usable to make it varnished incurring liability; without tax position fisherman His is further that the manu- addition, pole if, in is cut into see- but facturer is entitled to if know ishe lia- 10. Rev.Rul. together into sections presumably appears attitude but ly goods does not brief other means ruling which reads length The defendant straightened, does merely which are can have bamboo cane as of that * ^[*] apply 58-425, whereby to show they may and fitted with any to sales of bamboo excise tax on does scraped apply scraped, 1958-2 Cum.Bull. poles retroactive time to the the Commissioner’s not as follows: an to sales of which are mere- argue appendix varnished, ferrules or varnished, effect, be sporting joined to its “The cane 804, this full cut 11. “No tax shall be of this Act sale or taxable, there or sey, ownership porter, lected or sion.” Tomlinson, importer Treasury ruling, 5 was Cir., 1962, under if at the time of 26 U.S.C.A. manufacturer, and the lease of such article was not an of such regulation, on parted decision existing ruling, any was manufacturer, 308 F.2d 168. provisions levied, assessed, Director, article sold or leased article, Int.Rev.Acts. dealing. or producer, holding Treasury possession relying sale or of Title VI etc. regulation, producer, And cf. v. Mas or or col- upon lease deci- im- or

945 right any disposition to now ble for the tax before he has of our view of the case impose that, upon customers; point. it on another having prior to made all of his sales judgment of the District Court collecting 1958 without the tax and reversed and the case is remanded practices reliance Com- of the holdings another trial consistent our given by missioner and the advice above. In- the Excise Division of the Sales Tax Reversed and Remanded. cannot, Service, ternal Revenue he good conscience, pay it seven be forced to JONES, Judge (dissenting). years argues later. Plaintiff majority permit estoppel would an strongest appeal possible ease makes the against the United States did because application for equitable of the doctrine appellant, prior not inform the every estoppel, because he made assessed, time for which the tax was ascertain the attitude effort Estoppel its construction of the statute. entering Government into representation must be based con- or got business, and the advice cealment of facts and not as to matters that, opinion in Mr. that of Scott’s of law. First National Bank of Mont- ought associates, to be gomery States, United v. D.C.N.D.Ala. collected. 1959, F.Supp. 768, Cir., 176 aff. 285 5 It is well the doc settled that F.2d 123. equitable estoppel, proper cir trine of imposed by If, The tax is the statute. cumstances, appropriate and with cau appellant’s under the statute the pole tion, may against the United invoked rod, is a lack involving cases revenue States in internal by the Commissioner would ex- Joseph Eichelberger taxation. & Co. v. empt If, it from the tax. under the stat- Commissioner, Cir., 1937, 874; 5 F.2d 88 ute, appellant’s fishing pole is not Collector, Thomas, et al. Perkins 5 fishing rod, ruling of the Commissioner 1937, Cir., 954, affirmed, 86 F.2d 301 U.S. would not make it In so. neither case 911, 81 L.Ed. ef. S.Ct. 1324. And liability exemption would a tax result Commissioner, 1951, Stockstrom v. appellant’s knowledge from the or lack of U.S.App.D.C. 286, 190 F.2d knowledge ruling. aof Commissioner’s A.L.R,2d 443. question here, The exact I read argues privity Plaintiff further against record, decided the Government necessity equitable estoppel not a if against taxpayer was decided in Com- representation relied is made merce-Pacific, States, v. United 9th Inc. under such circumstances indicate as to opinion F.2d In Cir. that it was intended to and would reach court it said: citing others, Estoppel p. 31 C.J.S. 398. “In our district court cor- He further is com- view contends that it knowledge rulings jointed rectly mon decided bam- on excise questions usually generally here in cir- boo cane ‘fishing issue are among within the culated objects, of similar rods’ manufacturers Journal, Section 4161 the Internal Rev- of Taxation They (1960); of 1954. enue Code that the communication were there- n agent fore, properly judg- taxable the plaintiff’s competitor Commissioner’s lower him ment of the and from must be and clearly the rec- is affirmed.” 278 F.2d established practices. ord follows known trade distinguish majority Cir- Ninth persuasive and will each cuit case because there section pole, rod, string doubtless made wrapped before the upon a end, further trial. We do the bamboo near the around and here necessary string wrapping. my find it hope decide this there is no I majority think will brothers of the suggest that lacking respect if I me they string have rather tenuous hang I would distinction.

which to their There- case.

follow the Commerce-Pacific

fore I DISSENT. America, ex rel.

The UNITED STATES Jr., Appellant, WESTON, Emile Warden, SIGLER, Louisiana

Maurice Penitentiary, Appellee. State

No. 19402. Appeals

United States Court of

Fifth Circuit.

Oct. 20, 1962. Dec.

Rehearing Denied Dickinson, La., Rouge,

Joel B. Baton appellant. Atty. Gen., Walsh, Scallan E. Asst. La., Rouge, Gremillion, Jack F. Baton P. Cameron, Judge, dissented. Atty. Gen., Louisiana, Teddy State Atty. Airhart, Jr., Gen., Asst. Thom- W. Special McFerrin, Counsel, Baton as W. Rouge, La., appellee. JONES, CAMERON and

Before Cir- Judges, DeVANE, cuit District Judge. Judge. JONES, Circuit relator, Jr., Weston, ap- Emile judgment pealed from a Eastern District of Louisi-

Case Details

Case Name: Wilson Simmons v. United States

Court Name: Court of Appeals for the Fifth Circuit

Date Published: Oct 17, 1962

Citation: 308 F.2d 938

Docket Number: 18826

Court Abbreviation: 5th Cir.