Old Colony Trust Co. v. Malley

• Decision Date: 15 April 1925
• Docket Number: No. 878.,878.
• Citation: 5 F.2d 504
• Parties: OLD COLONY TRUST CO. v. MALLEY.
• Court: U.S. District Court — District of Massachusetts

5 F.2d 504 (1925)

OLD COLONY TRUST CO. v. MALLEY.

No. 878.

District Court, D. Massachusetts.

April 15, 1925.

Currier, Young & Pillsbury, Pillsbury & Dana, and Samuel H. Pillsbury, all of Boston, Mass., for plaintiff.

The United States Attorney, for defendant.

BREWSTER, District Judge.

This is an action at law brought to recover a portion of the taxes assessed upon and paid by plaintiff under provisions of section 3, paragraph 1, of the War Revenue Act, approved October 22, 1914 (38 Stat. 750); the taxes in dispute covering taxable periods beginning November 1, 1914, and ending December 31, 1916. The tax assessed was a special tax on bankers of $1 on each $1,000 of capital used and employed. The government computed the tax upon the total capital of the plaintiff, including surplus and undivided profits. On March 22, 1923, I rendered an opinion (288 F. 903) in which I held that the tax was not to be measured by the entire capital, surplus, and undivided profits of the defendant, but only by the capital, surplus, and undivided profits employed by the defendant in the business of banking, and that for the purposes of the tax the words "business of banking" meant the three kinds of business set out in the act, viz.:

(a) Opening credits by deposit or collecting money to be paid or remitted by draft, check, or order;

(b) Advancing or loaning money on stocks, bonds, bills of exchange or promissory notes; and

(c) Receiving for discount or sale stocks, bonds, bills of exchange or promissory notes.

I further found that during the periods in question only a part of the capital, surplus, and undivided profits of the plaintiff was so employed. In determining the proportions employed in the banking business, I took that proportion of the capital, surplus, and undivided profits which bore the same relation to the total capital, surplus, and undivided profits as the average daily assets employed in the three kinds of businesses above referred to bore to the total average daily assets employed by the bank in both banking and nonbanking business, not including, however, the assets employed in its savings bank department. I ruled that the plaintiff was entitled to recover.

On appeal the Circuit Court of Appeals, while agreeing that only capital used or employed in banking under the definition of "banker" as defined in the act was subject to the tax, reversed the judgment and remanded the action to this court for further action not inconsistent with its opinion. 299 F. 523. I have received evidence consisting of the auditor's report, upon which my earlier findings were based, and also additional oral testimony upon matters which seem to me to be required by the opinion of the Circuit Court of Appeals. As I read the opinion, the judgment of this court was reversed, not because of error in the rule of apportionment, but rather because of error in the application of the rule.

Three objections as noted...