Clarke v. Haberle Crystal Springs Brewing Co

• Decision Date: 27 January 1930
• Docket Number: No. 68,68
• Citation: 74 L.Ed. 498,50 S.Ct. 155,280 U.S. 384
• Parties: CLARKE, Internal Revenue Collector, v. HABERLE CRYSTAL SPRINGS BREWING CO
• Court: U.S. Supreme Court

280 U.S. 384

50 S.Ct. 155

74 L.Ed. 498

CLARKE, Internal Revenue Collector,

v HABERLE CRYSTAL SPRINGS BREWING CO.

No. 68.

Argued Jan. 9, 1930.

Decided Jan. 27, 1930.

The Attorney General and Mr. G. A. Youngquist, Asst. Atty. Gen., for petitioner.

Mr. Arthur A. Ballantine, of New York City, for respondent.

Mr. Justice HOLMES delivered the opinion of the Court.

A writ of certiorari was granted in this case on May 13, 1929 (279 U. S. 832, 49 S. Ct. 419, 73 L. Ed. 981), on account of a conflict between the judgment below (C. C. A.) 30 F.(2d) 219, reversing (D. C.) 20 F.(2d) 540, and Red Wing Malting Co. v. Willcuts (C. C. A.) 15 F.(2d) 626, 49 A. L. R. 459, certiorari denied, 273 U. S. 763, 47 S. Ct. 476, 71 L. Ed. 879, the latter case having been followed by Landsberger v. McLaughlin (C. C. A.) 26 F.(2d) 77, and Renziehausen v. Commissioner of Internal Revenue (C. C. A.) 31 F.(2d) 675, now pending here.

This is a suit brought by the respondent to recover income and profits taxes paid under protest, on the ground, as stated by its counsel, that it was not allowed to deduct from gross income 'a reasonable allowance for the exhaustion, including obsolescence, of its good will * * * it having become certain prior to that period that the useful life of the good will would be terminated by January 10, 1920 because of prohibition legislation.' The question turns of the Revenue Act of 1918 (Act of February 24, 1919), c. 18, § 234(a)(7), 40 Stat. 1057, 1078, allowing as deductions, inter alia, 'A reasonable allowance for the exhaustion, wear and tear of property used in the trade or business, including a reasonable allowance for obsolescence.' The good will was that of a brewery and is found to have been destroyed by prohibition legislation. The deduction claimed is for the fiscal year ending May 31, 1919, it having been apparent early in 1918 that prohibition was imminent, and the officers having taken steps to prepare for the total or partial liquidation of the Company. The amount of the deduction to be made is agreed upon if any deduction is to be allowed.

We shall not follow counsel into the succession of regulations or the variations in the law before the date of the Act that we have to construe. In our opinion the words now used cannot be extended to cover the loss in this case and it is needless to speculate as to what other cases it might include. It seems to us plain without help from Mugler v. Kansas, 123 U. S. 623, 8 S. Ct. 273, 31 L. Ed. 205,...