In re Rutland Realty Co.

• Decision Date: 21 March 1907
• Citation: 157 F. 296
• Parties: In re RUTLAND REALTY CO.
• Court: U.S. District Court — Southern District of New York

157 F. 296

In re RUTLAND REALTY CO.

United States District Court, S.D. New York.

March 21, 1907

HOUGH District Judge.

The point principally argued under the demurrer, i.e., whether the allegation that the Rutland Realty Company 'is engaged in the business and was incorporated for the purpose of building houses,' brings the alleged bankrupt within the scope of the act of 1898, raises a question of considerable doubt which requires, and will some time receive, the attention of the appellate tribunals.

The question ought not to be left on demurrer. Evidence should be taken before such a question is decided; but, as this matter stands, the demurrer must be decided in accordance with familiar principles, i.e. (1) that every intendment of a pleading shall be taken against a demurrer, and (2) that section 4b of Act July 1, 1898, c. 541, 30 Stat. 547 (U.S Comp. St. 1901, p. 3423), in so far as it enumerates the classes of corporations subject thereto, is to be strictly construed. In re N.Y. & New Jersey Ice Lines, 147 F 214, 77 C.C.A. 440.

Acting under the first principle, I understand the allegation of the petition to mean that the alleged bankrupt did not build its own house, but built, or tried to build, or intended to build, houses generally, to be sold. The most philosophical definition of 'manufacture' known to me is the language of Justice Brown in Tidewater Oil Co. v U.S., 171 U.S. 216, 18 Sup.Ct. 837, 43 L.Ed. 139, viz that the word is now 'ordinarily used to denote an article upon the material of which labor has been expended to make the finished product. ' It is hard to conceive of any human action more accurately corresponding to this description or definition than the building of a house; and one of the definitions of 'build,' found in the Century Dictionary, is to 'form by uniting materials into a regular structure. ' Turning to the decisions, the Columbia Iron Works v. National Lead Co., 11 Am.Bankr.Rep. 340, 127 F. 99, 62 C.C.A. 99, 64 L.R.A. 645,

and In re Marine Construction & Dry Dock Co., 11 Am.Bankr.Rep. 640, 130 F. 446, 64 C.C.A. 648, certainly hold that shipbuilding is manufacture; while In re Niagara Contracting Co. (D.C.) 11 Am.Bankr.Rep. 643, 127 F. 782, distinctly holds that 'the construction of buildings and bridges' is within the act.

Remembering the second canon of construction, i.e., that the enumeration of corporations is to be strictly construed, I cannot but think that where a statute declares that all corporations shall be taxed except manufacturing corporations that the word 'manufacturing' should be construed as strictly in favor of the tax as any one could desire the construction of the same word under the act of 1898. Yet under a Pennsylvania act of this nature bridge building companies have been held to be manufacturing companies (Commonwealth v. Pittsburgh Bridge Co., 156 Pa. 507 27 A. 4; Commonwealth v. Keystone Bridge Co., 156 Pa. 500, 27 A. 1); so, also, of the disposing of garbage with incidental production of fertilizers (Southern Chemical, etc., Co. v. Board of Assessors, 48 La.Ann. 1475, 21 So. 31); the production and distribution of electricity, although the generation of electric current is but the guiding into a new channel of a natural element...