Concentrate Mfg. Corporation v. Higgins
| Decision Date | 07 June 1937 |
| Docket Number | No. 397.,397. |
| Citation | 90 F.2d 439 |
| Parties | CONCENTRATE MFG. CORPORATION v. HIGGINS, Collector of Internal Revenue. |
| Court | U.S. Court of Appeals — Second Circuit |
Evarts, Choate, Curtin & Leon (Maurice Leon, of New York City, of counsel), for appellant.
Lamar Hardy, U. S. Atty. (Clarence E. Dawson, Sp. Asst. to the Atty. Gen., William F. Young, Asst. U. S. Atty., of New York City, of counsel), for appellee.
Before L. HAND, AUGUSTUS N. HAND, and CHASE, Circuit Judges.
This is an appeal from a decree in a suit in equity denying an injunction pendente lite, and dismissing the bill for insufficiency in law. The suit was to enjoin the defendant, the collector of internal revenue, from distraining upon the plaintiff, under a deficiency assessment levied under sections 603 and 619 of the Revenue Act of 1932 (26 U.S.C.A. c. 20 note). The plaintiff was a New York corporation organized on March 20, 1933, all of whose shares were held by the well-known French company, Parfumerie Roger et Gallet. Its business is to manufacture perfumes and other toilet preparations according to the formulæ of the French company and to dispose of them as hereinafter stated. Between 1926 and 1933 the French company had done its American business, through the intervention of another New York corporation, Roger et Gallet, Inc., of whose shares it held 86 per cent., and to which it sent the concentrates or essences which were the foundation of its preparations, and which Roger et Gallet, Inc., compounded with alcohol, put into bottles or boxes, and sold under the trade-marks of the French company. Roger et Gallet, Inc., had a manufacturing plant for this purpose, including machinery and a staff of employees. After the incorporation of the plaintiff, Roger et Gallet, Inc., conveyed this plant to the French company in payment of some of its indebtedness to that company, and the French company at once transferred the plant to the plaintiff in consideration of all its shares. The ensuing practice was for the plaintiff to manufacture the toilet preparations in this country, including the essences or concentrates, and to sell finished products in bulk to Roger & Gallet, Inc., which put them up in bottles or boxes and sold them under the trademarks of the French company, which the plaintiff was not authorized to use. The plaintiff contracted with Roger et Gallet, Inc., not to sell to any one else, except with its consent; the prices at which it sells are more than the fair market price of similar products sold generally by other perfumers.
Section 603 of the Revenue Act of 1932 (26 U.S.C.A. c. 20 note) imposes an excise of 10 per cent. of the sale price upon perfumes and the like; section 619 (26 U.S. C.A. c. 20 note) prescribes the method by which the sales price shall in special instances be computed. Subdivision (b) provides that, if the article is "sold (otherwise than through an arm's-length transaction) at less than the fair market price, the tax * * * shall * * * be computed on the price for which such articles are sold, in the ordinary course of trade, by manufacturers or producers thereof, as determined by the Commissioner." In assessing the tax against the plaintiff, the Commissioner refused to use the prices at which it sold to Roger et Gallet, Inc., and in their stead used the much higher prices at which Roger et Gallet, Inc., sold to the public under the French company's trademarks. The plaintiff insisted that it should not be charged with the added price due to the trade-marks, and filed its return upon the prices at which it sold to Roger et Gallet, Inc. The Commissioner thereupon assessed the tax and the collector gave notice that he would distrain upon the property of the company for some $70,000; the suit is to enjoin this distress. The supposed equity of the bill lies in the fact that the plaintiff's quick assets are only about $60,000, and that its net worth, including its capital, only about $100,000. The bill alleges, and the fact may be assumed, that if the distress proceeds, the business will be destroyed, unless the French company intervenes. The judge concluded that the case was not within any of the implied exceptions to R.S. § 3224 (26 U.S.C.A. § 1543), denied an injunction, and dismissed the bill.
It is true that the apparently unconditional language of R.S. § 3224, is subject to exceptions. In Dodge v. Brady, 240 U.S. 122, 36...
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...Injunctions against enforcements of distraint in excise taxes have also been refused in many cases, such as: Concentrate Mfg. Corporation v. Higgins, 2 Cir., 1937, 90 F.2d 439; Jacoby v. Holey, 2 Cir., 1936, 86 F.2d 108; Burke v. Mingori, 10 Cir., 1942, 128 F.2d 996; Matcovich v. Nickell, 9......
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...and necessity as a common carrier jeopardized, Motion to dismiss admitted facts well pleaded, relief warranted; Concentrate Mfg. Co. v. Higgins, 2 Cir., 1937, 90 F.2d 439. Communist Party U. S. A. v. Moysey, D.C.N.Y.1956, 141 F.Supp. 332; Sanders v. Andrews, D.C.Okl.1954, 121 F.Supp. 584 re......
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