Lederer v. Real Estate Title Insurance & Trust Co. of Philadelphia

• Decision Date: 08 February 1924
• Docket Number: 3071.
• Citation: 295 F. 672
• Parties: LEDERER, Collector of Internal Revenue, v. REAL ESTATE TITLE INS. & TRUST CO. OF PHILADELPHIA.
• Court: U.S. Court of Appeals — Third Circuit

295 F. 672

LEDERER, Collector of Internal Revenue, v. REAL ESTATE TITLE INS. & TRUST CO. OF PHILADELPHIA.

No. 3071.

United States Court of Appeals, Third Circuit.

February 8, 1924

S Duffield Mitchell, Asst. Sol. of Internal Revenue, of Washington, D.C. (George W. Coles, U.S. Atty., of Philadelphia, Pa., and Nelson T. Hartson, Sol. of Internal Revenue, of Washington, D.C., on the brief), for plaintiff in error.

Maurice Bower Saul, of Philadelphia, Pa. (Allen S. Olmsted, 2d, and Saul, Ewing, Remick & Saul, all of Philadelphia, Pa., on the brief), for defendant in error.

Before WOOLLEY and DAVIS, Circuit Judges, and LYNCH, District Judge.

WOOLLEY Circuit Judge.

The Act of Congress of October 22, 1914 (38 Stat. 750), then known as 'The War Revenue Law,' provided among other things that:

'Bankers shall pay (a special tax of) $1.00 for each $1,000 of capital used or employed, and in estimating capital surplus and undivided profits shall be included. ' Section 3.

The act was in effect from November 1, 1914, to December 31, 1916 and for taxation purposes its operation was divided into four periods. For all these periods the Real Estate Title Insurance & Trust Company (plaintiff below, defendant in error) was required to pay a tax on the full amount of its capital, surplus and undivided profits as though all were employed in banking and without regard to their use in its five entirely separate departments of title insurance, trusts, safe deposit, real estate and banking. Feeling aggrieved, it brought several suits to recover the several amounts it had at different times paid as taxes assessed on the parts of its capital which had not been used in banking.

The suit for the first period was selected as a test. At the trial the plaintiff offered evidence to show what part of its capital had not been used in banking. On the theory that the whole of its capital stood behind the credit of and therefore was used in its banking business, the trial court excluded the evidence and entered judgment of nonsuit. Real Estate Title Insurance & Trust Company v. Lederer, 229 F. 799. On appeal, this court, reversing the judgment, ruled that capital in certain cases was apportionable and that, accordingly, the plaintiff was taxable only on that part of its capital which it had used in banking. Real Estate Title Insurance & Trust Company v. Lederer, 263 F. 667. At the second trial the evidence excluded from the first was admitted and the plaintiff had a verdict. On appeal this court affirmed the judgment. 273 F. 933.

The Bureau of Internal Revenue, however, did not regard this decision as dispositive of the court's interpretation of the act or of the Government's right to assess a...