225 F. 437 (W.D.Mich. 1915), Mitchell Bros. Co. v. Doyle

Citation:225 F. 437
Party Name:MITCHELL BROS. CO. v. DOYLE, U.S. Internal Revenue Collector.
Case Date:April 30, 1915
Court:United States District Courts, 6th Circuit, Western District of Michigan
 
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Page 437

225 F. 437 (W.D.Mich. 1915)

MITCHELL BROS. CO.

v.

DOYLE, U.S. Internal Revenue Collector.

United States District Court, W.D. Michigan, Southern Division.

April 30, 1915

At Law. Action by the Mitchell Bros. Company against Emanuel J. Doyle, as Collector of Internal Revenue for the Fourth Collection District of Michigan. Judgment for plaintiff.

Page 438

Norris, McPherson, Harrington & Waer, of Grand Rapids, Mich., for plaintiff.

Myron H. Walker, U.S. Atty., of Grand Rapids, Mich., for defendant.

SESSIONS, District Judge.

Plaintiff was incorporated in 1903, succeeding to and taking over the property of the former copartnership, Mitchell Bros. The property purchased and so taken over by the corporation consisted for the most part of timber, lands, and a large sawmill plant. Since its organization, plaintiff has been engaged in the lumber business, cutting and manufacturing its own timber into lumber and other forest products, and selling and marketing the same. In 1903, the average market value of its merchantable hardwood timber was $2.25 per thousand feet, of its pine timber $8 per thousand feet, and of cut-over or 'stump' lands $2 per acre. Timber suitable only for cordwood had no market value. Plaintiff then paid the amounts above stated for its timber and lands, and has since carried them upon its books at the same prices. The plaintiff also purchased from Mitchell Bros. an office building and lot in the city of Cadillac for $3,500, and two vacant lots in the city of Grand Rapids for $500. The prices so paid were at that time the fair market values of these parcels of land.

After its purchase, plaintiff's timber, lands, and other property, from natural and other causes, steadily increased in value. During the years 1909, 1910, 1911, and 1912, the average and actual market value of its standing merchantable hardwood timber was from $4.20 to $4.50 per thousand feet, and of its pine $20 per thousand feet. The actual market value of its stump lands varied from $4 to $12 per acre. The office building and lot in the city of Cadillac was fairly worth $5,000, and the two lots in the city of Grand Rapids more than $700. In 1906 a chemical and charcoal plant was located in the city of Cadillac, and thereafter timber suitable for cordwood had a market value of 25 cents per cord.

In compliance with the provisions of the Corporation Tax Act of 1909 (36 Stat. 112, c. 6, Sec. 38 (Comp. St. 1913, Sec. 6301)) plaintiff made a return in each of the years 1909, 1910, 1911, and 1912...

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