Berwind-White Coal Mining Co. v. Rothensies
| Decision Date | 15 May 1942 |
| Docket Number | No. 1459.,1459. |
| Citation | 45 F. Supp. 55 |
| Parties | BERWIND-WHITE COAL MINING CO. v. ROTHENSIES, Collector of Internal Revenue. |
| Court | U.S. District Court — Western District of Pennsylvania |
Barnes, Myers & Price, of Philadelphia, Pa. (Charles Myers, of Philadelphia, Pa., of counsel), for plaintiff.
Gerald A. Gleeson, U. S. Atty., and Thomas J. Curtin, Asst. U. S. Atty., both of Philadelphia, Pa. (Samuel O. Clark, Jr., Asst. Atty. Gen., and Andrew D. Sharpe and Donald J. Marran, Sp. Assts. to Atty. Gen., of counsel), for defendant.
Section 811 (b) (5) of the Social Security Act, August 14, 1935, c. 531, Title VIII, 49 Stat. 639, 42 U.S.C.A. § 1011, exempts from the scope of the Act "* * * Service performed as an officer or member of the crew of a vessel documented under the laws of the United States or of any foreign country; * * *."1
The issue here presented is:
Are "barge captains" employed by the plaintiff exempt from social security taxes "as an officer or member of the crew" within the exemption above stated?
The issue is raised by plaintiff's suit to recover $1,800.26, together with interest, paid to the defendant as Social Security taxes for the calendar years 1937, 1938, and 1939. The suit was instituted following the Commissioner's rejection of plaintiff's claim for refund.
The case was submitted to the court upon the pleadings, stipulation of facts, and additional testimony. A jury trial was waived.
Findings of Fact.
The stipulated statement of facts, which is hereby adopted as the findings of fact of this court, in part, is as follows:
1. Plaintiff at all times herein mentioned was, and now is, a corporation duly organized and existing under the laws of the Commonwealth of Pennsylvania.
2. At all times herein mentioned plaintiff was engaged in the business of mining, shipping and selling coal.
3. During the calendar years 1937, 1938, and 1939, plaintiff owned and operated certain coal barges, each of which was non self-propelled, and was enrolled at the Port of New York under the provisions of 46 U.S.C.A. §§ 251 to 254, and duly licensed to carry on the coasting trade under 46 U. S.C.A. § 262 — a consolidated certificate of enrollment and license pursuant to 46 U.S. C.A. § 260, having been issued for each of said barges by the Collector of Customs of the Port of New York. Attached to plaintiff's complaint, marked "Exhibit A", is a statement setting forth the barge number, official number, length, net tonnage, and date of enrollment of each of said barges.
4. During said years plaintiff employed a barge captain on each of said barges, who was in sole charge of said barge and its cargo.
5. On July 31, 1939, plaintiff filed with defendant at Philadelphia reports on Forms SS-1b and SS-1c setting forth the name of each of said barge captains, his social security number, the wages paid to him, and the period covered by said payment, together with a summary or recapitulation showing the total wages paid to said barge captains from January 1, 1937, to June 30, 1939. Copies of said reports marked "Exhibit B" are attached to plaintiff's complaint. During said period plaintiff paid its said barge captains total wages or compensation of $90,012.95.
6. On July 31, 1939, plaintiff paid to defendant the sum of $1,800.26 as the tax imposed by Title VIII, Sections 801 and 804 of the Act of Congress approved August 14, 1935, 42 U.S.C.A. §§ 1001, 1004, on said payments of $90,012.95 made to plaintiff's said employees.
7. On November 27, 1939, plaintiff filed with defendant a claim for refund of said tax of $1,800.26 paid by it as aforesaid on July 31, 1939, a copy of which claim for refund marked "Exhibit C" is attached to plaintiff's complaint. The Commissioner of Internal Revenue of the United States by a letter to plaintiff dated September 11, 1940, notified plaintiff that its said claim for refund was disallowed in full, a copy of which letter, marked "Exhibit D", is attached to plaintiff's complaint.
8. The said payment of tax of $1,800.26 cannot be adjusted under Sections 802 (b) or 805 of said Act of Congress of August 14, 1935, 42 U.S.C.A. §§ 1002 (b) and 1005.
In addition to the stipulated facts, the court makes the following special findings of fact:
9. During the years 1937, 1938 and 1939 the plaintiff owned and operated thirty-four barges and two tugs which it employed in transporting coal from its dock to various points in New York Harbor. The barges had no steering apparatus and were towed from place to place by the company's tugs. The trips taken by the barges were usually very short — no trip lasting more than six hours from dock to dock in the harbor.
10. The barge captains operated the barges alone in the course of transportation and were the only persons aboard the barges at the time of loading and unloading.
11. The duties of the barge captains consisted of supervising the loading and unloading of barges, watching for leaks, pumping bilge-water, and setting up and taking down running lights. The captains also checked on the tow lines between the barges and the tugs, and reported to the tugs if there was a break in the line in the course of transportation. In addition, the captains handled the lines with which the barges were attached to the tugs and the docks.
12. Plaintiff's barges varied in size, having a capacity of from 400 to 1600 tons of coal, and drew from 12 to 17 feet loaded. Each barge was equipped with running lights, bells, fog horn, life preservers and bilge pumps. The barges were used for taking coal to other vessels and industrial plants within the confines of New York Harbor. There were living accommodations consisting of two rooms on each barge, and some of the captains lived on board, while others lived on shore.
13. The barge captains were employed, and paid, by the month.
14. The barge captains employed by the plaintiff during the years 1937, 1938, and 1939 were usually men with some maritime experience, although a few of them had no such experience at the time of employment.
15. The barge captains had no responsibility for the navigation of the barges. The responsibility for the navigation of the barges was wholly upon the captain of the tug during the course of transportation, with the exception that the barge captain performed the duties hereinbefore mentioned with respect to the tow line, leaks, pumping of bilge-water, and the setting up and taking down of running lights.
In addition to the foregoing special findings of fact, the court affirms plaintiff's requests for findings of fact Nos. 1, 2, 3, 4, 5 and 6.
Discussion.
The facts are virtually undisputed. The controversy results from conflicting interpretations as to the meaning of the words, "officer or member of the crew".
The plaintiff contends that barge captains come within the meaning of the phrase; the defendant contends otherwise on the premise that the barge captains take no part in the navigation of the vessel and are merely employed as stevedores and caretakers of the barges.
The Commissioner of Internal Revenue, under authority conferred by the act, issued regulations on November 6, 1936 (Regulations 91) defining in Article 10 the meaning of Section 811(b) (5) of the Act.
Article 10 reads as follows:
Under the circumstances here the court is confronted then with a problem of statutory construction. The legislative history affords little aid in a determination of the question.
In the House report of the bill (published in Internal Revenue Cumulative Bulletin 1939 — Part 2, p. 600) there appears the following statement in explanation of the exclusion of officers and members of the crew:
It is interesting to note that the Senate attempted to amend the House bill by eliminating the exclusion of officers and members of the crew, but finally concurred in the House provision providing for the exclusion. The report of the Conference Committee (reported at p. 626 of the said Cumulative Bulletin) contains no further comment with respect to the exclusion for "officer or member of the crew" other than "the Senate recedes" from its position on this point.
The defendant vigorously contends that the phrase "officer or member of the crew" had acquired a definite and restricted meaning at the time of its inclusion in Title VIII of the Social Security Act; that the phrase was taken from the comparable exemption of "master or member of a crew" contained in the Federal Longshoremen's and Harbor Workers' Compensation Act, c. 509, 44 Stat. 1424, § 2(3), 33 U.S. C.A. § 902(3), and that this...
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