Mayes v. United States Trust Co.
| Decision Date | 04 April 1922 |
| Docket Number | 3549. |
| Citation | 280 F. 25 |
| Parties | MAYES, Collector of Internal Revenue, v. UNITED STATES TRUST CO. |
| Court | U.S. Court of Appeals — Sixth Circuit |
W. V Gregory, U.S. Atty., of Louisville, Ky. (Gordon Auchincloss Sp. Asst. Atty. Gen., on the brief), for plaintiff in error.
Percy N. Booth, of Louisville, Ky. (Booth, McDowell & Conner, of Louisville, Ky., on the brief), for defendant in error.
Before KNAPPEN, DENISON, and DONAHUE, Circuit Judges.
Subdivision 1 of section 3 of the War Revenue Act of October 22, 1914 (38 Stat.c. 331, p. 750), imposed upon bankers an annual tax of $1 for each $1,000 of capital used or employed including surplus and undivided profits. The term 'banker' was made to include 'every person, firm or company * * * having a place of business where credits are opened by the deposit or collection of money or currency, subject to be paid * * * upon draft, check, or order, or where money is * * * loaned on * * * bonds, * * * bills of exchange, or promissory notes. * * * ' Plaintiff was incorporated in the year 1902 under the laws of Kentucky, with authority, not only to carry on a 'general trust and finance business,' but also (among other things) to receive money on deposit and pay interest thereon, and to loan money upon such securities as it may approve. The trust company, which was plaintiff below, not only carried on a general trust business, but received deposits subject to check, as well as on certificates, and made loans secured by collateral or mortgage. For the fiscal year 1915 plaintiff was assessed $312, being two-thirds of what would be the annual tax upon its entire capital, surplus, and undivided profits. [1] For the first half of the fiscal year 1916 it was assessed $230.50, being one-half of the annual tax. This suit against the collector is to recover (with interest) the amount of these taxes, paid under protest. At the close of the testimony each party moved for a directed verdict in its favor. Verdict was thereupon rendered for plaintiff, under the direction of the court, for one-half the amount sued for, and judgment was entered accordingly
Defendant alone seeks review. The record indicates that its motion for directed verdict was unaccompanied by request for specific instructions in case the request for directed verdict was denied. By these mutual requests for directed verdict the parties submitted to the trial judge the determination of the inferences proper to be drawn from the facts submitted, and upon this review the court's conclusion of fact must stand, if the record discloses any substantial evidence to support it. Williams v. Vreeland, 250 U.S. 295, 298, 39 Sup.Ct. 438, 63 L.Ed. 989, 3 A.L.R. 1038, and cases there cited, including American National Bank v. Miller (C.C.A. 6) 185 F. 338, 341, 342, 107 C.C.A. 456. And see Moore v. Fain (C.C.A. 6) 251 F. 573, 574, 163 C.C.A. 567; and La Crosse Co. v. Pagenstecher (C.C.A. 8) 253 F. 46,[2] 165 C.C.A. 644.
It clearly appears from what has already been said that plaintiff was engaged in banking, and so was subject to the tax upon its capital employed in that business. (We shall use the term 'capital' as including surplus and undivided profits.) That plaintiff had some amount of capital employed in banking is equally clear. The fact, as asserted by plaintiff, that an amount equal to its capital, surplus, and undivided profits was permanently invested in its office building and in public securities has no tendency to show that its capital was wholly withdrawn from the banking business. These permanent investments equally secure plaintiff's creditors in the trust business and the banking business. Plaintiff was thus liable to taxation on the amount of capital employed in the banking business; and, at least in the absence of proof of a more satisfactory method, the capital so employed was properly measured by the ratio which the assets employed in the banking business bore to the assets employed in the aggregate business. Anderson v. Farmers' Loan & Trust Co. (C.C.A. 2) 241 F. 322, 327, 328, 154 C.C.A. 202; Real Estate, etc., Co. v. Lederer (C.C.A. 3) 263 F. 667; Germantown Co. v. Lederer (C.C.A. 3) 263 F. 672. The difficulty lies in apportioning the assets between the trust and the banking businesses. The assessment was presumptive evidence of its correctness. It was open to the plaintiff, however, to show the contrary; but the burden rested upon it to do so, and, if it failed, it was not entitled to recover.
Upon this record, it is obvious that less than plaintiff's entire capital was employed in banking. To show with absolute...
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