SALEMBIER & VILLATE INC. v. McElligott

• Decision Date: 16 August 1926
• Parties: SALEMBIER & VILLATE, Inc., v. McELLIGOTT, Acting Internal Revenue Collector. A. P. VILLA & BROS., Inc., v. UNITED STATES.
• Court: U.S. District Court — Southern District of New York

14 F.2d 984 (1926)

SALEMBIER & VILLATE, Inc., v. McELLIGOTT, Acting Internal Revenue Collector.

A. P. VILLA & BROS., Inc., v. UNITED STATES.

District Court, S. D. New York.

August 16, 1926.

Lord, Day & Lord, of New York City (Franklin Grady, of New York City, of counsel), for plaintiff and petitioner.

Emory R. Buckner, U. S. Atty., of New York City (Sherwood E. Hall, of New York City, of counsel), for defendants.

HAZEL, District Judge.

We are concerned in these cases with motions to dismiss the amended complaint in one case and the petition in the other on the ground that insufficient facts are alleged to constitute a cause of action. It appears that merchandise consisting of bails of raw silk were imported from Japan, consigned to plaintiff and petitioner respectively at New York City, on through bills of lading; the silk on arrival at San Francisco being loaded into cars for transportation and delivery. The collector of internal revenue, acting through the carrier of the merchandise, the New York Central Railroad, pursuant to sections 500, 503, of the War Revenue Act of Oct. 3, 1917, 40 Stat. 314, 315 (Comp. St. §§ 6309 1/8a, 6309 1/8d), assessed a tax for the transportation from San Francisco to New York of $23.68 in the one case and $7.48 in the other. These taxes were subsequently in March, 1919, paid by the respective consignees under protest, claims thereafter being duly filed for a refund, and, on disallowance, actions were brought for their recovery within the time limited by law.

It is contended that the tax imposed was in violation of section 500 of the Revenue Act; that its imposition was discriminatory and in contravention with existing treaties with Japan. It is argued that a transfer tax could lawfully be imposed only upon transporting property or freight consigned from one point in the United States to another, and since the merchandise in question was consigned in Japan the tax was unauthorized. The validity of the assessment and collection of the tax under the circumstances depends upon the proper interpretation of the provisions of the act under which it was imposed. Section 500 (Comp. St. § 6309 1/8a) reads as follows:

"Section 500. That from and after the first day of November, nineteen hundred and seventeen, there shall be levied, assessed, collected, and paid (a) a tax equivalent to three per centum of the amount paid for the transportation by rail or water or by any form of mechanical motor power when in competition with carriers by rail or water of property by freight consigned from one point in the United States to another."

It is broadly contended on behalf of the collector that shipping the goods from Japan to any place in the interior of the United States does not exempt the owners from paying the specified tax. I have reached a different conclusion. The words "consigned from one point of the United States to another" I believe to be words of limitation, and the inclusion therein of reloading the goods into railroad cars under through bills of lading — goods that were not reconsigned — would, in my judgment, give no point to the language of the act. No wording is contained therein warranting the inference that Congress intended to impose a transportation tax...