Fidelity Title Trust Co Pittsburgh, Pa v. United States, 208

• Decision Date: 29 May 1922
• Docket Number: No. 208,208
• Citation: 66 L.Ed. 953,259 U.S. 304,42 S.Ct. 514
• Parties: FIDELITY TITLE & TRUST CO., PITTSBURGH, PA., v. UNITED STATES
• Court: U.S. Supreme Court

259 U.S. 304

42 S.Ct. 514

66 L.Ed. 953

FIDELITY TITLE & TRUST CO., PITTSBURGH, PA.,

v UNITED STATES.

No. 208.

Argued April 21, 1922.

Decided May 29, 1922.

Messrs. George Sutherland, Simon Lyon, and R. B. H. Lyon, all of Washington, D. C., for appellant.

Mr. Assistant Attorney General Lovett, for the United States.

Mr. Justice BRANDEIS delivered the opinion of the Court.

This suit was brought in the Court of Claims by the Fidelity Title & Trust Company, of Pittsburgh, in July, 1918, to recover the sum of $10,028.94, assessed upon its whole capital and undivided profits and paid as bankers' special taxes under section 2 of the Spanish War Revenue Act (30 Stat. 448). That court entered judgment for the defendant, and the case is here on appeal. Appellant contends that nothing was payable as a tax, because none of the capital or undivided profits was used or employed in banking, and that the tax was, in no event, assessable on the undivided profits, because these were not a part of the capital within the meaning of the act. The government contends that the whole capital and undivided profits were taxable, and that, in any event, the action is barred by the two-year statute of limitations, because the application for refund had been made in November, 1913. In the main, the facts are similar to, and the questions of law are the same as, those considered in Fidelity & Deposit Co. v. United States, 259 U. S. 296, 42 Sup. Ct. 511, 66 L. Ed. ——, decided this day. For the reasons there stated we hold that the action was not barred. As bearing upon the merits material differences in the facts must be considered. In the case now under consideration, the businesses and the assets of the several departments were not separated, and there was not technically a surplus, but a fund designated as undivided profits.

The company carried on five classes of business, one of which was banking. An amount in excess of its capital was permanently invested in bonds and real estate, the latter including its office building. A schedule of these investments was carried on the books designated 'Schedule of Investments of the Capital Stock of One Million Dollars'; but there was no physical segregation of these assets from others belonging to the company. Nor was there segregation of the money received from the capital stock, or from investments made therewith, from the money derived from earnings of the several departments. No attempt was made to segregate or earmark investments as having been made for any particular department. All moneys received by the company, including bank deposits, were commingled, and from these general funds all investments were made, and all expenses and losses were paid. The office building was used by all the departments. All the earnings from the several departments were pooled, and went into the profit and loss account. There was carried in this account a credit representing undivided profits amounting in 1898 to $414,468.86, which increased from year to year, and was $948,074.56 in 1902. These undivided profits were not at any time during the period in question set apart in any way as a separate fund, and they were at all times subject to distribution by the board of directors as dividends and available for any department of the business. At a date subsequent to the period here in question additional stock was sold above par to form a surplus fund.

The burden lay on the plaintiff to establish that none of the company's capital, or that less of it than the amount for which it was assessed, had been used or employed in the banking department. It failed entirely to sustain that burden. The proportions of capital and accumulated profits used in the respective departments was not established by the evidence. There was no finding that the net profits of the banking department were received solely from the use of depositors' money; and there does not appear to have been any request for a finding of fact that no part of the capital and undivided profits was used in banking, or for a finding of acts from which the proportion so used, if any, could be determined. Therefore the Court of Claims properly denied recovery for any part of the taxes paid, unless we can say, as matter of law, that undivided profits, on which for the years 1898 and 1901 taxes were assessed as...