Milwaukee Land Co. v. Poe

• Decision Date: 15 June 1928
• Docket Number: No. 5836.,5836.
• Citation: 27 F.2d 625
• Parties: MILWAUKEE LAND CO. v. POE, Collector of Internal Revenue.
• Court: U.S. District Court — Western District of Washington

27 F.2d 625 (1928)

MILWAUKEE LAND CO. v. POE, Collector of Internal Revenue.

No. 5836.

District Court, W. D. Washington, S. D.

June 15, 1928.

Geo. W. Korte and F. M. Dudley, both of Seattle, Wash., and Herbert S. Griggs, of Tacoma, Wash., for plaintiff.

Thos. P. Revelle, U. S. Atty., of Seattle, Wash., and John T. McCutcheon, Asst. U. S. Atty., of Tacoma, Wash. (C. M. Charest, Gen. Counsel, Bureau of Internal Revenue, and J. D. Wilson, Sp. Atty., Bureau of Internal Revenue, both of Washington, D. C., on the brief), for defendant.

CUSHMAN, District Judge.

Plaintiff sues to recover from the collector of internal revenue a special tax assessed against plaintiff on account of certain unstamped written instruments, made in 1921, 1922, 1923, 1924, and 1925, by plaintiff, of timber in Washington and Idaho, upon lands then owned by it.

While the internal revenue laws of 1919, 1921, and 1924 are involved, there has been no change in the law to be considered herein. The sections below mentioned, describing the instruments subject to the stamp tax and fixing the amount thereof, read as follows:

"Deed, instrument, or writing, whereby any lands, tenements, or other realty sold shall be granted, assigned, transferred, or otherwise conveyed to, or vested in, the purchaser or purchasers, or any other person or persons, by his, her, or their direction, when the consideration or value of the interest or property conveyed, exclusive of the value of any lien or encumbrance remaining thereon at the time of sale, exceeds $100 and does not exceed $500, 50 cents; and for each additional $500 or fractional part thereof, 50 cents. This subdivision shall not apply to any instrument or writing given to secure a debt."

The foregoing appears as section 1107, schedule a7, Act Feb. 24, 1919, 40 Stat. at Large, 1057-1137, Comp. Stat. Supp. 1919, § 6318p, p. 1287; as section 1107, schedule a6, Act Feb. 23, 1921, 42 Stat. at Large, 227-305, Comp. Stat. Supp. 1923, § 6318p, p. 1959, and as section 807, schedule a5, Act June 2, 1924, 43 Stat. at Large 355, Comp. Stat. Supp. 1925, § 6318p, p. 484, 26 USCA § 901 (a5).

Plaintiff's contention is that the instruments executed by it were contracts for the sale of personal property, and not writings conveying lands, tenements, or other realty sold. If the contracts conveyed title to personal property, plaintiff should recover. If realty or an interest in realty was conveyed, defendant should prevail.

The parties are in agreement that that which constitutes lands, tenements, or other realty is to be determined by the law of the state in which the property is situated. There are 50 of these written instruments involved. While they are not identical in form, in so far as the question to be determined is concerned, no claim is made on account of any difference in them. In most instances the relevant language is:

"* * * And in consideration of the payments and performance of the conditions hereinafter contained by the said vendee, as hereinafter stipulated, does give, grant, bargain and sell unto the said vendee, subject to existing rights of way for public highways and railways, telegraph and telephone lines, all the merchantable timber standing, lying and now being on the following described land (but no interest in the land herein described is granted or conveyed by this instrument other than the right to cut and remove said timber within the time and upon the conditions herein prescribed), * * * to have and to hold said timber unto the said vendee, his successors and assigns forever, to wit: (1) Said vendor hereby covenants and agrees to and with the said vendee to warrant and defend the said timber unto the said vendee against the lawful claims and demands of all persons, except for public taxes hereafter payable. * * *"

No question is made but that the tax imposed was fixed with reference to the standing and growing timber only; no question is made but that the timber is by such instruments "conveyed."

Plaintiff cites: France v. Deep River Logging Co., 79 Wash. 336, 140 P. 361, Ann. Cas. 1916A, 238; Brodack v. Morsbach, 38 Wash. 72, 80 P. 275; Skamania Boom Co. v. Youmans, 64 Wash. 94, 116 P. 645; Healey v. Traction Co., 78 Wash. 628, 139 P. 609; Engleson v. Shingle Co., 74 Wash. 424, 133 P. 1030; Cushing v. Timber Co., 75 Wash. 678, 685, 135 P. 660, Ann. Cas. 1914C, 1239; Somers v. Pix, 75 Wash. 233, at page 236, 134 P. 932; Remington & Ballinger's Code, § 11101; Claflin v. Carpenter, 4 Metc. (Mass.) 580, 38 Am. Dec. 381; Sterling v. Baldwin, 42 Vt. 306; Fairbanks v. Stowe, 83 Vt. 155, 74 A. 1006, 138 Am. St. Rep. 1074; Fish v. Capwell, 18 R. I. 667, 29 A. 840, 25 L. R. A. 159, 49 Am. St. Rep. 807; Leonard v. Medford, 85 Md. 666, 37 A. 365, 37 L. R. A. 449; Petey Mfg. Co. v. Morris, 118 Md. 91, 84 A. 238; Lodwick Lbr. Co. v. Taylor, 100 Tex. 270, 98 S. W. 238; North Texas Lbr. Co. v. McWhorter (Tex. Civ. App.) 156 S. W. 1152; Davis v. Conn (Tex. Civ. App.) 161 S. W. 39; Fletcher v. Lyon, 93 Ark. 5, 123 S. W. 801; Carson v. Lbr. Co., 108 Tenn. 681, 69 S. W. 320; McNair & W. Land Co. v. Parker, 64 Fla. 371, 59 So. 959; Hirth v. Graham, 50 Ohio St. 57, 33 N. E. 90, 19 L. R. A. 721, 40 Am. St. Rep. 641; Owens v. Lewis, 46 Ind. 488, 15 Am. Rep. 295; Midyette v. Grubbs, 145 N. C. 85, 58 S. E. 795, 13 L. R. A. (N. S.) 278; Clarke Bros. v. McNatt, 132 Ga. 610, 64 S. E. 795, 26 L. R. A. (N. S.) 585; 17 R. C. L. p. 1073. See, also, 17 R. C. L. pp. 1070, 1071; Hendrickson v. Lyons, 121 Wash. 632 at 637, 638, 209 P. 1095; Myers v. Arthur, 135 Wash. 583, at 586, 238 P. 899.

In addition to the foregoing, defendant cites: Seymour v. LaFurgey, 47 Wash. 450, 92 P. 267; Thill v. Johnston, 60 Wash. 393, 111 P. 225; Emerson v. Shores, 95 Me. 237, 49 A. 1051, 85 Am. St. Rep. 404; Bolland v. O'Neal, 81 Minn. 15, 83 N. W. 471, 83 Am. St. Rep. 362; Butterfield Lbr. Co. v. Guy, 92 Miss. 361, 46 So. 78, 15 L. R. A. (N. S.) 1123, 131 Am. St. Rep. 540; Giles v. Simonds, 15 Gray (Mass.) 441, 77 Am. Dec. 373; Lee Lbr. Co. v. Hotard, 122 La. 850, 48 So. 286, 129 Am. St. Rep. 368.

Section 11101, Remington's Comp. Stat. of Wash., provides: "Standing timber owned separately from the ownership of the land upon which the same may stand or be growing, for the purposes of assessment and taxation shall be considered and is hereby declared to be personal property."

The corresponding statute of Idaho differs diametrically from the foregoing, and is as follows:

Section 3101, Comp. Statutes Idaho 1919:

"Real property for the purposes of taxation shall be construed to include land, and all standing timber thereon, including standing timber owned separately from the ownership of the land upon which the same may stand. * * *"

Both of these sections are for the guidance of state officers in the assessment and taxation of property where the land, except the timber, may be in one ownership and the timber thereon in another.

The stamp tax now being considered is one upon written conveyances of realty, and therefore whether standing timber is realty or not is to be determined, rather under those laws regulating the transfer of realty and the cases construing them, than in the light of statutes of the nature of the foregoing sections. Section 10550 of Remington's Comp. Stat. of Washington, provides: "All conveyances of real estate or of any interest therein, and all contracts creating or evidencing any incumbrance upon real estate shall be by deed."

It is stipulated that each of these conveyances makes provision for the actual severance and removal of the timber from the land within a reasonable time. It may be conceded that under the decisions of the Supreme Court of the State of Washington each conveyance effected a constructive severance of the timber, and that in each instance it thereby became personal property. The foregoing concession, however, does not control the determination of the issue. The question really is, whether until so constructively severed, the timber and land being in the same ownership, the timber is realty, to be conveyed by deed, or personalty. In so far as the timber conveyed in Washington is concerned, the decision of its courts have concluded the matter.

In France v. Deep River Logging Co., 79 Wash. 336, at page 339, 140 P. 361, 362 (Ann. Cas. 1916A, 238), the court says:

"* * * Counsel for appellant first contended that respondents' tax deed did not convey to them the title to the timber upon the land, because the timber was constructively severed from the land and became personal property by...