PH & FM ROOTS CO. v. United States
Decision Date | 23 February 1927 |
Docket Number | No. 3796.,3796. |
Citation | 17 F.2d 337 |
Parties | P. H. & F. M. ROOTS CO. v. UNITED STATES. |
Court | U.S. Court of Appeals — Seventh Circuit |
W. W. Hammond, of Indianapolis, Ind., and Jas. Walton, of Pittsburgh, Pa., for plaintiff in error.
Albert Ward, of Philadelphia, Pa., for the United States.
Before ALSCHULER, EVANS, and ANDERSON, Circuit Judges.
Plaintiff brought this action to recover sums alleged to have been erroneously collected by the United States as a part of plaintiff's income tax for the years 1917 and 1918. In 1917, plaintiff paid $6,618.90 as its 1917 income tax. It paid $41,468.23 as its 1918 income tax. The Commissioner of Internal Revenue caused an audit to be made of the returns upon which these taxes were based, and levied further taxes, which were paid under protest.
Plaintiff filed claims based largely upon the failure of the Commissioner of Internal Revenue to allow, as part of the capital invested, the sum of $380,234.97, which sum was paid by it to a predecessor corporation in 1893 for the transfer of certain patents and good will, and which amount was from the date of such transfer, down to and including March 3, 1917, carried on plaintiff's books as part of its valuable assets. Plaintiff's counsel states the issue thus:
This statement fairly and squarely states the issue as presented by the pleadings. Inasmuch as the rate of taxation was dependent upon the ratio of earnings to "invested capital," it was necessary to ascertain the total value of "invested capital." The refusal to allow any sum for patents and good will, is assigned as error. The evidence taken on the trial is omitted, and we are confronted with a record consisting of the pleadings, to which are attached certain exhibits, the findings of fact, the judgment, and plaintiff's exceptions.
The judgment is assailed, however, because the court before whom the cause was tried, failed to make the necessary and proper findings of fact and conclusions of law as provided by rule 38 of the United States Supreme Court, adopted June 8, 1925,1 and likewise, failed to comply with the provision of section 7, chapter 359, of the Act of March 3, 1887 (Comp. St. § 1577).2 In other words, error is predicated upon the failure of the court to file a written opinion, and also on its failure to make proper findings of fact covering the controverted issues.
The court made certain findings of fact and conclusions of law (17 of the former and 2 of the latter), which cover too many pages to be here fully reproduced. No separate written opinion was filed, however. While the statute requires a written opinion, and the rule of court calls for formal findings of fact, we have no doubt that the District Court may comply with both requirements in a single document. In other words, the formal findings of fact and conclusions of law may in and of themselves constitute such an opinion as will meet the requirements of the statute. Likewise that which may be deemed an opinion may also embody all of the necessary findings of fact.
In many states similar statutes may be found, which necessitate special findings of fact and conclusions of law, where a jury is waived or where the suit is one in equity. The wisdom of such practice, irrespective of any statutory requirement, has been thoroughly demonstrated. While not required under the federal statute, many District Judges have followed this commendable practice of making special findings and conclusions when the responsibility for trying issues of fact is, through a waiver of the jury, imposed upon the court. The Congress, no doubt, recognized the desirability of such practice, when it insisted that it be followed in these actions, where the taxpayer seeks to recover excess taxes collected from him.
In the instant case there was a bona fide effort made by the District Judge to comply with the requirements of the Supreme Court rule. Plaintiff, however, insists that these findings are mere general conclusions, and do not comply with the rule as the courts have interpreted it. This brings us to a consideration of the rule and a study of the particular findings.
Bearing in mind that the controverted issue was the value of the patents and good will acquired by plaintiff on March 11, 1893, the following findings are significant:
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