Philadelphia Storage Battery Co. v. Lederer

• Decision Date: 09 August 1927
• Docket Number: No. 11284,11286.,11284
• Parties: PHILADELPHIA STORAGE BATTERY CO. v. LEDERER, Collector, etc. SAME v. McCAUGHN, Collector, etc.
• Court: U.S. District Court — Western District of Pennsylvania

21 F.2d 320 (1927)

PHILADELPHIA STORAGE BATTERY CO. v. LEDERER, Collector, etc.

SAME v. McCAUGHN, Collector, etc.

Nos. 11284, 11286.

District Court, E. D. Pennsylvania.

August 9, 1927.

C. C. Norris, Jr., of Philadelphia, Pa., for plaintiff.

George W. Coles, U. S. Atty., of Philadelphia, Pa., for defendants.

DICKINSON, District Judge.

The conclusion reached in this cause is that the plaintiff should recover judgment.

Discussion.

These are two tax payment cases against succeeding collectors, a part of the total payment having been made to one and a part to the other. There is some overlapping of the respective claims in the pleadings, which counsel have agreed to correct by a stipulation and appropriate amendments, leave to make which is hereby granted. The law of one case is the law of the other and arises out of the same state of facts. They are in consequence treated as one action and discussed as one case. The action is to recover tax payments exacted without authority of law. The sole question is that of the lawfulness of the tax. Viewing the tax gatherer under the figure of a hunter sportsman, automobiles have become his favorite game. The tax demand is warranted, if at all, by two acts of Congress, one of which amends the other. They are identical in language, except by the addition in the later act of two words which allow an exemption, with which this case does not directly concern itself. We take the later act as the one to be construed. It is known as R. S. § 900, passed November 23, 1921 (Comp. St. § 6309 4/5a). No constitutional questions are raised, and counsel are agreed that the sole question is one of the proper construction of the act, and to this we are asked to restrict the discussion.

The argument for the plaintiff begins of course by invoking the doctrine that tax laws, as the expressions go, are to be construed "most strongly" against the United States and "most favorably" to the taxpayer. The true doctrine, as it has been stated to be, is that neither the executive nor the judiciary nor both combined can directly impose a tax. What cannot be done directly cannot be done by indirection under the guise of construing a tax law. Congress alone has the power to tax.

This takes us to the act itself. It is not an altogether correct view, but, for the purposes of the case, we may look upon this as a tax imposed upon things, those which are taxed being designated by the names which Congress has applied to them. We thus find what is taxed by finding the things which bear the names or labels which Congress has applied to what is taxed, and we recognize them by names or labels by which so designated. If the thing claimed to be taxed is not so known, then it is not subject to the tax. Tax laws, like all other laws, are made to be obeyed. They should therefore be intelligible to those who are expected to obey them. The command here is directed to "manufacturers, producers and importers" of the "articles" named. It is, because of this, a fair inference that Congress spoke to them in their own language. This means that the phrases of the law are to be given the meaning they have in the trades concerned. One sometime helpful attitude of mind in the interpretation of statutes is for the reader to get the viewpoint of the legislator. This legislator may be assumed to have had in mind to levy what may be termed a manufacturer's tax upon the producer's output of gas engine vehicles. Analyzing the development of the thought in his mind into its successive steps, he (1) taxed vehicles used for business purposes, which he designated as "automobile trucks" and "automobile wagons" at one rate. He then (2) taxed at a higher rate "all other automobiles and motor cycles." The thought then (3) obtruded itself that some manufacturers made completed cars while others made all the parts, which were afterwards assembled by another "producer," and a distinction grew up between those who made cars and those who made different parts, including what came to be known as "accessories." To meet this situation, the parenthetical phrase of the act was inserted. We construe this to mean that the manufacturers of cars and the manufacturers of accessories were put upon the same plane.

At this stage in the evolution of this tax a further thought was suggested. There might be a manufacturer who made these same accessories "for automobile trucks," etc., but sold them, not to dealers in automobiles, but to others. This led to the addition of class 3 to the list of taxpayers, and brings us close to the question now presented. The taxing clause must be construed with the fact in mind that the enumerated parts, including automobile "accessories," while largely used and hence made "for automobiles," were also used and again hence made "for" other uses. The exception incorporated in the act of 1921 here comes into play, for the "accessory" made might be made "for a tractor," and, if so made, is not taxable.

We are thus brought squarely to face the specific question here presented. The plaintiff made "storage batteries," and the cause concerns itself solely with them. A storage battery is now one of the "accessories" of a fully equipped automobile, and is now made "for automobiles," in the sense that the manufacturer of storage batteries caters to the automobile trade. Storage batteries are, however, made for other uses and are extensively used in other ways than as automobile "accessories." The sales here were to others "than manufacturers or producers" of gas engine vehicles. The parties expect to be able to agree upon the volume of sales to which the tax is applicable, if to any. If they do not so agree, the court will make the appropriate finding if either of the parties ask us so to do. The act of Congress enumerates two "articles" by the specific names of "tires and inner tubes," and then adds the more generic terms, "parts and accessories." It is to be noted that "storage batteries" are not listed by name among the taxed "articles." The question would then become whether they are "parts" or "accessories" of automobiles. The question is narrowed, however, by a further phrase which may be expanded into "sold for any automobile truck, automobile wagon, other automobile or motorcycle." The taxed thing, therefore, must not only be an automobile "part or accessory," but it must be "sold" "for" such, although not sold to a manufacturer or producer of automobiles. The distinction here to be made is one so fine as to be with some difficulty verbally expressed. Counsel for defendant would seem to interpret the word "for" or the words "sold for" as meaning an "article" sold for the purpose of being used as part of an automobile equipment or anything which can be and is commonly, generally, and extensively so sold and used. If this is the proper interpretation of the phrase, then judgment should be rendered for defendant, because we have already found...