Brady v. Anderson

• Decision Date: 08 February 1917
• Docket Number: 149.
• Parties: BRADY et al. v. ANDERSON. [1]
• Court: U.S. Court of Appeals — Second Circuit

240 F. 665

BRADY et al. v. ANDERSON. ^[1]

No. 149.

United States Court of Appeals, Second Circuit.

February 8, 1917

Joline Larkin & Rathbone, of New York City (John M. Perry, of Brooklyn, N.Y., and Charles A. Doolittle, Jr., of New York City, of counsel), for plaintiffs in error.

H Snowden Marshall, U.S. Atty., of New York City (Ben. A Matthews, Asst. U.S. Atty., of New York City, of counsel) for defendant in error.

Before WARD, ROGERS, and HOUGH, Circuit Judges.

WARD Circuit Judge.

This is an action against the collector of internal revenue by the executors of Anthony N. Brady, deceased, to recover taxes assessed by the Commissioner of Internal Revenue and paid by them under protest upon income received by Brady during his lifetime before the Income Tax Act of October 3, 1913, imposing a tax, had been passed.

The Sixteenth Amendment, by virtue of which the statute was enacted, was ratified February 28, 1913, and the Supreme Court has for that reason held that Congress had power to make it retroactive to March 1, 1913. Brushaber v. Union Pacific R.R. Co., 240 U.S. 1, 20, 36 Sup.Ct. 236, 60 L.Ed. 493.

Anthony N. Brady died July 22, 1913, and his executors, in accordance with the requirement of the Commissioner of Internal Revenue, made a return of the income received by him between March 1, when the act went into effect, and July 22, 1913, when he died. The Commissioner assessed a tax of $61,654.72.

The case having come on for trial before Grubb, J., and each side having moved for the direction of a verdict, he directed a verdict for the defendant. This is a writ of error to the judgment entered thereon.

The questions presented are purely of law, involving only the construction of the statute. We confine ourselves to the consideration of the provisions relating to citizens and residents of the United States.

Section II of the act reads as follows:

'A. Subdivision 1. That there shall be levied, assessed, collected and paid annually upon the entire net income arising or accruing from all sources in the preceding calendar year to every citizen of the United States, whether residing at home or abroad, and to every person residing in the United States, though not a citizen thereof, a tax of 1 per centum per annum upon such income except as hereinafter provided; and a like tax shall be assessed, levied, collected, and paid annually upon the entire net income from all property owned and of every business, trade, or profession carried on in the United States by persons residing elsewhere. * * *

'D. The said tax shall be computed upon the remainder of said net income of each person subject thereto, accruing during each preceding calendar year ending December thirty-first: Provided, however, that for the year ending December thirty-first, nineteen hundred and thirteen, said tax shall be computed on the net income accruing from March first to December thirty-first, nineteen hundred and thirteen, both dates inclusive, after deducting five-sixths only of the specific exemptions and deductions herein provided for. On or before the first day of March, nineteen hundred and fourteen, and the first day of March in each year thereafter, a true and accurate return, under oath or affirmation, shall be made by each person of lawful age,

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