NATIONAL COMMERCIAL TITLE & MORTG. GUAR. CO. v. Duffy
| Decision Date | 30 December 1941 |
| Docket Number | No. 1262.,1262. |
| Citation | 42 F. Supp. 844 |
| Parties | NATIONAL COMMERCIAL TITLE & MORTGAGE GUARANTY CO. v. DUFFY et al. |
| Court | U.S. District Court — District of New Jersey |
Lindabury, Steelman, Zink & Lafferty, and James L. R. Lafferty, all of Newark, N. J., for plaintiff.
Charles M. Phillips, U. S. Atty., of Trenton, N. J., and Paul R. Russell, Sp. Asst. to the Atty. Gen., for defendant.
The facts are:1
1. This action arises under an act of Congress providing for internal revenue, namely, the Act of June 16, 1933, 48 Stat. 195, as amended.
2. Plaintiff is a corporation of the State of New Jersey organized under an act entitled "An Act to provide for the regulation and incorporation of insurance companies and to regulate the transaction of insurance business in this state," approved April 3, 1902, and known as Ch. 134 of the Laws of 1902 of the State of New Jersey, as amended, N.J.S.A. 17:17-1 et seq.
3. The certificate of incorporation was dated January 25, 1926, approved by the Attorney General on January 26, 1926, filed in the office of the Department of Banking and Insurance on January 28, 1926, and the company commenced business on March 9, 1926. At all times plaintiff has been under the direct supervision and control of the Commissioner of Banking and Insurance for the State of New Jersey.
4. In February, 1935, the Commissioner of Internal Revenue assessed the plaintiff a capital stock tax for the period July 1, 1932, to June 30, 1933, in the amount of $6,034, together with interest in the amount of $1,142.44, making a total assessment of $7,176.44.
5. The Commissioner of Internal Revenue, in making such assessment, purported to act under the provisions of Section 215 of the Act of June 16, 1933, the National Industrial Recovery Act, 48 Stat. 207, as amended, and assessed said tax upon the theory that the plaintiff was not entitled to the exemption from capital stock tax provided for companies which qualified under the applicable revenue statute as insurance companies. On January 23, 1935, the Commissioner of Internal Revenue denied plaintiff's claim for exemption from the provisions of said Section 215 of the Act of June 16, 1933, the National Industrial Recovery Act, as amended, which denial was affirmed by letter of August 5, 1935.
6. On August 22, 1935, plaintiff paid, under protest, said assessment of $6,034, together with interest and penalties in the amount of $1,735.68, making a total payment of $7,769.68, to Charles V. Duffy, defendant's testator, who was at that time the Collector of Internal Revenue of the United States for the Fifth District of New Jersey.
7. On August 15, 1939, claim for refund of said capital stock assessment was filed by plaintiff with the Collector of Internal Revenue of the United States for the Fifth District of New Jersey.
8. On December 17, 1935, the said Charles V. Duffy died a resident of Passaic County, leaving a last will and testament wherein and whereby he appointed Margaret Duffy executrix, which will was thereafter duly admitted to probate by the Surrogate of Passaic County and letters testamentary thereon issued to Margaret Duffy who duly qualified.
9. In August, 1935, the Commissioner of Internal Revenue made a capital stock assessment against the plaintiff for the period July 1, 1933, to June 30, 1934, in the amount of $6,122, together with interest in the amount of $781.93, making a total assessment of $6,903.93.
10. The Commissioner of Internal Revenue, in making such assessment purported to act under the provisions of Section 215 of the Act of June 16, 1933, the National Industrial Recovery Act, as amended, and Section 701 of the Revenue Act of 1934,2 and assessed said tax upon the theory that the plaintiff was not entitled to the exemption from capital stock tax provided for companies which qualified under the applicable revenue statute as insurance companies.
11. On December 7, 1935, plaintiff paid, under protest, said assessment of $6,122, together with interest and penalties in the amount of $1,140.75, making a total of $7,262.75, to the said Charles V. Duffy, the defendant's testator, who was at that time the Collector of Internal Revenue of the United States for the Fifth District of New Jersey.
12. On December 2, 1939, claim for refund of said capital stock assessment was filed by plaintiff with the Collector of Internal Revenue of the United States for the Fifth District of New Jersey.
13. In May, 1938, the Commissioner of Internal Revenue made a capital stock assessment against the plaintiff for the period July 1, 1934, to June 30, 1935, in the amount of $5,915, together with interest in the amount of $1,061.38, making a total assessment of $6,976.38.
14. The Commissioner of Internal Revenue, in making such assessment, purported to act under the provisions of Section 215 of the Act of June 16, 1933, the National Industrial Recovery Act, as amended, and Section 701 of the Revenue Act of 1934,3 and assessed said tax upon the theory that the plaintiff was not entitled to the exemption from capital stock tax provided for companies which qualified under the applicable revenue statute as insurance companies. On April 8, 1938, the Commissioner of Internal Revenue denied plaintiff's claim for exemption from the provisions of said Section 215 of the Act of June 16, 19334.
15. On July 5, 1938, plaintiff paid, under protest, said assessment of $6,915, together with interest and penalties in the amount of $1,061.38, making a total payment of $6,976.38, to Thomas C. Smith, who was at that time the Acting Collector of Internal Revenue of the United States for the Fifth District of New Jersey.
16. On December 2, 1939, claim for refund of said capital stock assessment was filed by plaintiff with the Collector of Internal Revenue of the United States for the Fifth District of New Jersey.
17. In March, 1938, the Commissioner of Internal Revenue made a capital stock assessment against the plaintiff for the period July 1, 1935, to June 30, 1936, in the amount of $3,500, together with interest in the amount of $365.53, making a total of $3,865.53.
18. The Commissioner of Internal Revenue, in making such assessment, purported to act under the provisions of Section 215 of the Act of June 16, 1933,5 and assessed said tax upon the theory that the plaintiff was not entitled to the exemption from capital stock tax provided for companies which qualified under the applicable revenue statute as insurance companies. On April 8, 1938, the Commissioner of Internal Revenue denied plaintiff's claim for exemption from the provisions of said Acts.
19. On May 16, 1938, plaintiff paid, under protest, said assessment of $3,500 together with interest and penalties in the amount of $365.53, making a total payment of $3,865.53, to the said Thomas C. Smith, defendant, who was at that time the Acting Collector of Internal Revenue of the United States for the Fifth District of New Jersey.
20. On December 2, 1939, claim for refund of said capital stock assessment was filed by plaintiff with the Collector of Internal Revenue of the United States for the Fifth District of New Jersey.
21. In March, 1938, the Commissioner of Internal Revenue made a capital stock assessment against the plaintiff for the period July 1, 1936, to June 30, 1937, in the amount of $1,946, together with interest in the amount of $86.48, making a total assessment of $2,032.48.
22. The Commissioner of Internal Revenue, in making such assessment, purported to act under the provisions of Section 215 of the Act of June 16, 1933,6 and assessed said tax upon the theory that the plaintiff was not entitled to the exemption from capital stock tax provided for companies which qualified under the applicable revenue statute as insurance companies. On April 8, 1938, the Commissioner of Internal Revenue denied plaintiff's claim for exemption from the provisions of said acts.
23. On May 16, 1938, plaintiff paid, under protest, said assessment of $1,946, together with interest and penalties in the amount of $86.48, making a total payment of $2,032.48, to the said Thomas C. Smith, defendant, who was at that time the Acting Collector of Internal Revenue of the United States for the Fifth District of New Jersey.
24. On December 2, 1939, claim for refund of said capital stock assessment was filed by plaintiff with the Collector of Internal Revenue of the United States for the Fifth District of New Jersey.
25. On September 25, 1940, the claims for refund hereinbefore referred to were disallowed by the Commissioner of Internal Revenue.
26. At all times the plaintiff had the charter powers of an insurance company but the greater part of its income during the years in controversy was derived from non-insurance sources.
27. Plaintiff on March 6, 1933, commenced liquidating its affairs and it has continued liquidating its affairs since that date and it has not carried on or done business after March 6, 1933.7
Discussion.
The questions are:8
(a) Whether the taxpayer was an insurance company within the meaning of the federal revenue statutes so that it was entitled to exemption from capital stock taxes for the fiscal years June 30, 1933, to June 30, 1937, inclusive?
(b) Whether plaintiff's complaint and its claim for refund are adequate to raise the point argued in its brief, that it was not liable for capital stock taxes for the years June 30, 1934 to June 30, 1937, inclusive because it was not engaged in business subsequent to March 1, 1933?
(c) In the event the Court has jurisdiction to consider the question, whether plaintiff was engaged in business so that it was liable for capital stock taxes for the fiscal years ended June 30, 1934 to June 30, 1937, inclusive?
(d) Is William H. Kelly a proper party defendant?
The plaintiff has the burden of establishing that during the period in question it was an insurance company within the meaning of Section 204 of the Revenue Act of 1932, and the corresponding...
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