McCaughn v. Electric Storage Battery Co.

• Decision Date: 31 January 1933
• Docket Number: No. 4752.,4752.
• Citation: 63 F.2d 715
• Parties: McCAUGHN v. ELECTRIC STORAGE BATTERY CO.
• Court: U.S. Court of Appeals — Third Circuit

63 F.2d 715 (1933)

McCAUGHN v. ELECTRIC STORAGE BATTERY CO.

No. 4752.

Circuit Court of Appeals, Third Circuit.

January 31, 1933.

Edward W. Wells, U. S. Atty., and T. J. Curtin, Asst. U. S. Atty., both of Philadelphia, Pa. (C. M. Charest, Gen. Counsel, Bureau of Internal Revenue, and E. F. McMahon, Sp. Atty., Bureau of Internal Revenue, both of Washington, D. C., of counsel), for appellant.

Charles C. Norris, Jr., Philip Dechert, Wm. Barclay Lex, and Charles J. Hepburn, all of Philadelphia, Pa., for appellee.

Before BUFFINGTON and DAVIS, Circuit Judges, and NIELDS, District Judge.

DAVIS, Circuit Judge.

This is an appeal from a judgment of the District Court holding that the tax was illegally levied, assessed, and collected on the batteries made and sold by the appellee by virtue of section 900 of the Revenue Acts of 1918 and 1921, 40 Stat. 1122, 42 Stat. 291. This section provides:

"That there shall be levied, assessed, collected, and paid upon the following articles sold or leased by the manufacturer, producer, or importer, a tax equivalent to the following percentages of the price for which so sold or leased —

"(1) Automobile trucks and automobile wagons, (including tires, inner tubes, parts, and accessories therefor, sold on or in connection therewith or with the sale thereof), 3 per centum;

"(2) Other automobiles and motorcycles, (including tires, inner tubes, parts, and accessories therefor, sold on or in connection therewith or with the sale thereof), except tractors, 5 per centum;

"(3) Tires, inner tubes, parts, or accessories, for any of the articles enumerated in subdivision (1) or (2), sold to any person other than a manufacturer or producer of any of the articles enumerated in subdivision (1) or (2), 5 per centum."

The appellee made and sold to persons other than the manufacturer or producer of automobiles batteries, some of which were used in automobiles and others were used otherwise, and the question is whether or not these batteries were "parts" or "accessories" of the vehicles mentioned in subdivisions (1) and (2) of the above section within the meaning of subdivision (3) thereof.

Subdivisions (1) and (2) contemplate that the parts and accessories mentioned therein will be sold with the vehicle by its manufacturer, and, where this is done, the tax is paid by him. In subdivision (3) it is contemplated that the parts and accessories will be sold separately from the vehicle by their manufacturer and the tax is to be paid by the manufacturer of the parts and accessories.

Articles primarily adapted for use in motor vehicles and not equally adapted to other uses are to be regarded as parts and accessories within the meaning of subdivision (3), quoted above. Universal Battery Co. v. United States, 281 U. S. 580, 50 S. Ct. 422, 74 L. Ed. 1051.

Were the batteries in question, on which the tax was levied and paid, primarily adapted for use in motor vehicles and not equally adapted to other uses for which they were made, advertised, and sold?

The learned trial judge found that, "as to the specific articles upon the sale of which the taxes were imposed, beyond the fact that they were electric storage batteries there is no evidence as to their characteristics or what they were ultimately used for." He further expressly found:

"3. That the parts of the electric storage batteries upon which the taxes in suit were paid were exactly the same as the parts of the storage batteries manufactured by the plaintiff in 1893 or 1894, and the only changes in the parts themselves are the changes naturally due to the refinement in art of manufacturers developed during that period and to competition in price. None of these refinements made the batteries peculiarly adapted to use on automobiles, but they continued to be equally adapted to use on any device where the duty requirements were the same.

"4. That the uses of electric storage batteries manufactured by the plaintiff and upon which the taxes were paid, other than the use on automobiles, were not incidental to the use of automobiles.

"5. That the storage batteries manufactured by the plaintiff, and upon which the taxes in suit were paid, were not peculiarly adapted only to automobiles, but were equally well adapted to use in stationary engines and marine engines, and for other purposes where the duty required was the same, and were so used.

"6. That the storage batteries manufactured by the plaintiff, and upon which the taxes in suit were paid, were not primarily adapted to use only on automobiles.

"7. That the storage batteries manufactured by the plaintiff, and upon which the taxes in suit were paid, were interchangeable for use in connection with automobiles or for use in connection with other devices where the duty requirements were the same.

"8. That the storage batteries manufactured by the plaintiff, and upon which the taxes in suit were paid, were widely and extensively advertised for purposes other than for use on automobiles.

"9. The duty required of storage batteries for use in automobiles was also required in other uses and the batteries which were applied to these other uses were identical in design with the batteries used in connection with automobiles."

These findings, if supported by the evidence, are, under the law, declared in the case of Universal Battery Company v. United States, supra, decisive of this case.

The first question, therefore, is whether or not these findings are supported by the evidence.

The electric storage battery long antedated the automobile. About this there is no dispute, and so it cannot be said that these batteries, as such, were primarily adapted to automobile use as regards time. The word "primary" means, "in the first order of time; original; first in the order of development." It also means "first in rank; dignity or importance; chief; principal." Webster's New International Dictionary. It is true that the testimony shows that certain batteries were used for certain types of cars, but this is because they were of the size which best suited the needs of that particular motor or the size of the battery fitted the box or space in that particular car.

But the testimony unequivocally shows that any one of these batteries would be equally applicable to any other use where the requirements of the circuit were the same, and there are many circuits whose requirements are the same as those of automobiles. These requirements are supplied by the electric storage batteries of the appellee. The electric storage battery was used for starting internal combustion engines before it was used in the automobile. These same batteries which are adapted to, and used in, automobiles, are also used for starting and lighting motorboats, "for starting the engine and for lighting the boat and for ignition." Identically the same battery is used on an automobile as on a boat. These same batteries are still used on internal combustion engines and also on road rollers, road graders, and on tractors. In other words, there is nothing peculiar in the use of an electric storage battery on an automobile. It performs or may perform the same functions there that it does in many other uses to which it is put. It is argued that because some of these batteries are made of a size and strength required for a particular type of automobile, they are "primarily adapted for use in the automobile," but assuming, without admitting, that they are, then in order to be taxable under the case of Universal Battery Company, supra, they must not be equally adapted to any one of the other many uses to which they are put. In other words, they may be primarily adapted to use and be used on automobiles, but, to be taxable under this act, they must not be equally adapted to other uses, but the testimony is positive that they are equally well adapted to many other uses.

The fact that automobiles are the largest users of storage batteries is not decisive of the case. That they are the largest users is a fact, but taxability of a battery under this statute depends, not upon the quantity used, but upon whether or not it is primarily adapted for use in an automobile and not equally adapted to any other use requiring the same load. Unless it fulfills these two requirements, it is not a "part or accessory" within the meaning of this statute. Judge Kirkpatrick, who saw the witnesses and heard all the testimony, has expressly found it is not and the testimony, fairly interpreted, as a whole and not fragmentarily, abundantly supports his findings. These findings, being supported by the evidence, are, under the facts of this case, conclusive upon us. Philadelphia & Reading R. Company v. United States (C. C. A.) 247 F. 466; Dooley v. Pease, 180 U. S. 126, 21 S. Ct. 329, 45 L. Ed. 457; United States v. United States Fidelity & Guaranty Co., 236 U. S. 512, 35 S. Ct. 298, 59 L. Ed. 696.

Is recovery barred by section 424 (a) of the Revenue Act of 1928 (26 USCA § 2424) which provides that:

"No refund shall be made of any amount * * * collected from any manufacturer of parts for automobiles * * * unless either —

"(1) Pursuant to a judgment of a court in an action duly begun prior to April 30, 1928; or

"(2) It is established to the satisfaction of the Commissioner that such amount was in excess of the amount properly payable upon the sale or lease of an article subject to tax, or that such amount was not collected, directly or indirectly, from the purchaser or lessee, or that such amount, although collected from the purchaser or lessee was returned to him; or

"(3) The Commissioner certifies to the proper disbursing officer that such manufacturer, * * * has filed * * * a bond * * * conditioned upon the immediate repayment to the United States of such portion of the amount refunded as is not distributed by such manufacturer, * * * within six months after the date of the payment of the refund to the persons who purchased * * * the articles in respect of which the...