Helvering v. Stockholms Enskilda Bank, No. 10

CourtUnited States Supreme Court
Writing for the CourtSUTHERLAND
Citation79 L.Ed. 211,55 S.Ct. 50,293 U.S. 84
Decision Date05 November 1934
Docket NumberNo. 10
PartiesHELVERING, Commissioner of Internal Revenue, v. STOCKHOLMS ENSKILDA BANK

293 U.S. 84
55 S.Ct. 50
79 L.Ed. 211
HELVERING, Commissioner of Internal Revenue,

v.

STOCKHOLMS ENSKILDA BANK.

No. 10.
Argued Oct. 10, 11, 1934.
Decided Nov. 5, 1934.

Page 85

The Attorney General and Mr. Angus D. MacLean, Asst. Sol. Gen., of Washington, D.C., for petitioner.

Mr. Truman Henson, of New York City, for respondent.

Mr. Justice SUTHERLAND delivered the opinion of the Court.

Respondent, a foreign corporation having no office or place of business within the United States, received, during the year 1927, a refund of income taxes theretofore paid, including interest thereon in the sum of $8,683.91. In 1931, the Commissioner of Internal Revenue assessed against respondent in respect of this interest a deficiency of $1,172.32 upon its tax liability for the year 1927. The Board of Tax Appeals, upon petition for a redetermination, held that there was no deficiency and that the Commissioner was in error in so deciding. 25 B.T.A. 1328. Upon petition for review brought by the Commissioner, the court below sustained the action of the Board. 62 App.D.C. 360, 68 F.(2d) 407.

The case involves a consideration of certain provisions of the Revenue Act of 1926, c. 27, 44 Stat. 9. Section 233(b) of that act (26 USCA § 985(b) provides that, in the case of a foreign corporation, 'gross income' means only gross income from sources within the United States, determined in the manner provided in section 217 (26 USCA § 958) the pertinent provisions of which follow:

'Sec. 217. (a) In the case of a nonresident alien individual, * * * the following items of gross income shall be treated as income from sources within the United States:

'(1) Interest on bonds, notes, or other interest-bearing obligations of residents, corporate or otherwise, not including (A) interest on deposits with persons carrying on

Page 86

the banking business paid to persons not engaged in business within the United States and not having an office or place of business therein. * * *

'(c) The following items of gross income shall be treated as income from sources without the United States:

'(1) Interest other than that derived from sources within the United States as provided in paragraph (1) of subdivision (a). * * *'

The question for determination is whether the interest paid upon the amount of the tax refund falls within the classification 'interest on bonds, notes, or other interest-bearing obligations of residents, corporate or otherwise.' The contention of respondent before the Board of Tax Appeals and in the court below was, as it is here, that such interest payment was not within the reach of the provisions of section 217(a), because (1) it was not interest upon an interest-bearing obligation, and (2) the United States is not a 'resident' within the meaning of the phrase 'residents, corporate or otherwise.'

First. If the words 'interest-bearing obligations' stood alone, there would be no room for doubt as to their inclusive effect. Section 1111, 44 Stat. 115, title 26, U.S.C. App. § 149 (26 USCA § 149) authorizes the commissioner to refund and pay back all taxes illegally or erroneously collected. The decision of the Commissioner that a tax has been illegally or erroneously collected necessarily creates an obligation to make repayment. Section 1116(a) of the Revenue Act of 1926, c. 27, 44 Stat. 9, 119, Title 26, U.S.C. App. § 153 (26 USCA § 153 note), provides that interest at the rate of 6 per centum per annum from the date of the payment of the tax to the date of the allowance of the refund shall be allowed and paid. Obviously, an obligation upon which by express statutory direction interest must be paid is an interest-bearing obligation.

The point is made, however, that the word 'obligations,' as it occurs in another part of the act, has been

Page 87

given a narrower construction, and that this is persuasive of the restricted meaning contended for here. That much may be conceded, since 'there is a natural presumption that identical words used in different parts of the same act are intended to have the same meaning.' Atlantic Cleaners & Dyers v. United States, 286 U.S. 427, 433, 52 S.Ct. 607, 609, 76 L.Ed. 1204. But, since most words admit of different shades of meaning, susceptible of being expanded or abridged to conform to the sense in which they are used, the presumption readily yields to the controlling force of the circumstance that the words, though in the same act, are found in such dissimilar connections as to warrant the conclusion that they were employed in the different parts of the act with different intent. Id. The comparison sought to be made is between the words in section 213(b)(4) of the act, 26 USCA § 954(b)(4), and the same words in section 217(a), 26 USCA § 958(a). The former provides that the term 'gross income,' among other things, does not include interest upon 'obligations of the United States.' It is clear from a consideration of the entire section and of the subject-matter that the purpose of Congress, in thus excluding from gross income interest upon such obligations, was to aid the borrowing power of the federal government by making its interest-bearing bonds more attractive to investors. American Viscose Corp. v. Com'r of Int. Rev. (C.C.A.) 56 F.(2d) 1033. Compare United States Trust Co. of New York v. Anderson (C.C.A.) 65 F.(2d) 575, 577, 578, 89 A.L.R. 994. The scope of the word 'obligations' as there employed must be narrowed accordingly, and not extended to include interest upon indebtedness not incurred under the borrowing power, as the court in the Viscose Case properly held. But the use of the words 'interest on * * * interest-bearing obligations' in section 217(a) is for a different purpose; namely, to produce revenue, not to encourage loans in aid of the borrowing power. The intent of Congress, therefore, in the one case, is fulfilled by giving the phrase a construction within the narrow

Page 88

purposes of section 213(b)(4); and, in the other case, by a construction, if the phrase fairly admits of it, which will effect the obviously different statutory aim of section 217(a).

Atlantic Cleaners & Dyers v. United States, supra, was a suit brought to enjoin appellants from continuing an alleged conspiracy in restraint of trade and commerce in cleaning, dyeing, and otherwise renovating clothes contrary to section 3 of the Sherman Anti-Trust Act (15 USCA § 3). The defense was that appellants were engaged solely in the performance of labor and service in cleaning dyeing, and renovating wearing apparel, etc., and that this did not constitute 'trade' within the meaning of the act. The argument was that, since the words 'trade or commerce' in section 1 of the act (15 USCA § 1), which dealt with interstate commerce, must be construed not to include a business such as that carried on by appellant, the identical words used in section 3 dealing with restraint of trade or commerce within the District of Columbia should be given the same interpretation. Considering the subject-matter of the act, and the scope of the legislative power exercised in the one case as compared with...

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  • In re Inc., Bankruptcy No. HG 05–00690.
    • United States
    • United States Bankruptcy Courts. Sixth Circuit. U.S. Bankruptcy Court — Western District of Michigan
    • March 17, 2011
    ...words used in different parts of the same act are intended to have the same meaning.’ ”) (quoting Helvering v. Stockholms Enskilda Bank, 293 U.S. 84, 87, 55 S.Ct. 50, 51, 79 L.Ed. 211 (1934), in turn quoting Atlantic Cleaners & Dyers, Inc. v. U.S., 286 U.S. 427, 433, 52 S.Ct. 607, 609, 76 L......
  • In re Hechinger Inv. Co. of Delaware, Inc., No. 02-1917.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • July 18, 2003
    ...Sorenson v. Sec. of the Treasury, 475 U.S. 851, 860, 106 S.Ct. 1600, 89 L.Ed.2d 855 (1986) (quoting Helvering v. Stockholms Enskilda Bank, 293 U.S. 84, 87, 55 S.Ct. 50, 79 L.Ed. 211 (1934)). This canon logically has added force where identical words appear more than once in the same provisi......
  • National Feder. of Republican Assemblies v. U.S., No. CIV.A. 00-0759-RV-C.
    • United States
    • United States District Courts. 11th Circuit. United States District Court of Southern District of Alabama
    • May 31, 2001
    ...`identical words used in different parts of the same act are intended to have the same meaning.'" Helvering v. Stockholms Enskilda Bank, 293 U.S. 84, 87, 55 S.Ct. 50, 79 L.Ed. 211 (1934) (quoting Atlantic Cleaners & Dyers, Inc. v. United States, 286 U.S. 427, 433, 52 S.Ct. 607, 76 L.Ed. 120......
  • Weaver v. U.S. Information Agency, No. 94-5406
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • July 9, 1996
    ...v. Secretary of Treasury, 475 U.S. 851, 860, 106 S.Ct. 1600, 1606, 89 L.Ed.2d 855 (1986) (quoting Helvering v. Stockholms Enskilda Bank, 293 U.S. 84, 87, 55 S.Ct. 50, 51, 79 L.Ed. 211 (1934) (quoting Atlantic Cleaners))). The majority, however, brushes off this line of cases, saying that "[......
  • Request a trial to view additional results
300 cases
  • In re Inc., Bankruptcy No. HG 05–00690.
    • United States
    • United States Bankruptcy Courts. Sixth Circuit. U.S. Bankruptcy Court — Western District of Michigan
    • March 17, 2011
    ...words used in different parts of the same act are intended to have the same meaning.’ ”) (quoting Helvering v. Stockholms Enskilda Bank, 293 U.S. 84, 87, 55 S.Ct. 50, 51, 79 L.Ed. 211 (1934), in turn quoting Atlantic Cleaners & Dyers, Inc. v. U.S., 286 U.S. 427, 433, 52 S.Ct. 607, 609, 76 L......
  • In re Hechinger Inv. Co. of Delaware, Inc., No. 02-1917.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • July 18, 2003
    ...Sorenson v. Sec. of the Treasury, 475 U.S. 851, 860, 106 S.Ct. 1600, 89 L.Ed.2d 855 (1986) (quoting Helvering v. Stockholms Enskilda Bank, 293 U.S. 84, 87, 55 S.Ct. 50, 79 L.Ed. 211 (1934)). This canon logically has added force where identical words appear more than once in the same provisi......
  • National Feder. of Republican Assemblies v. U.S., No. CIV.A. 00-0759-RV-C.
    • United States
    • United States District Courts. 11th Circuit. United States District Court of Southern District of Alabama
    • May 31, 2001
    ...`identical words used in different parts of the same act are intended to have the same meaning.'" Helvering v. Stockholms Enskilda Bank, 293 U.S. 84, 87, 55 S.Ct. 50, 79 L.Ed. 211 (1934) (quoting Atlantic Cleaners & Dyers, Inc. v. United States, 286 U.S. 427, 433, 52 S.Ct. 607, 76 L.Ed. 120......
  • Weaver v. U.S. Information Agency, No. 94-5406
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • July 9, 1996
    ...v. Secretary of Treasury, 475 U.S. 851, 860, 106 S.Ct. 1600, 1606, 89 L.Ed.2d 855 (1986) (quoting Helvering v. Stockholms Enskilda Bank, 293 U.S. 84, 87, 55 S.Ct. 50, 51, 79 L.Ed. 211 (1934) (quoting Atlantic Cleaners))). The majority, however, brushes off this line of cases, saying that "[......
  • Request a trial to view additional results

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