Pickering v. Alyea-Nichols Co.

• Decision Date: 19 October 1927
• Docket Number: No. 3820,3821.,3820
• Parties: PICKERING v. ALYEA-NICHOLS CO. UNITED STATES v. SAME.
• Court: U.S. Court of Appeals — Seventh Circuit

21 F.2d 501 (1927)

PICKERING v. ALYEA-NICHOLS CO.

UNITED STATES v. SAME.

Nos. 3820, 3821.

Circuit Court of Appeals, Seventh Circuit.

July 22, 1927.

Rehearing Denied October 19, 1927.

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E. H. Horton, of Washington, D. C., for plaintiffs in error.

C. W. Armstrong, Jos. W. Cox, and Rufus Potts, all of Chicago, Ill., for defendant in error.

Before ALSCHULER, PAGE, and ANDERSON, Circuit Judges.

ALSCHULER, Circuit Judge (after stating the facts as above).

As to the facts there is no controversy. The taxes in question were assessed by the Internal Revenue Commissioner, and on his imperative demand paid by or through defendant in error as agent, attorney in fact, or trustee, and in the same capacity it seeks refund. Under the circumstances it alone could and did produce the funds required to pay these taxes, and if they were unlawfully levied the government is in no position to narrowly question the right of defendant in error to maintain the suits for refund; and its contention that defendant in error has no right or title to maintain the suits is not sustained.

For defendant in error it is contended that even if the government was entitled to the taxes — especially the policy issuance tax — it was not entitled to them from the Belt Automobile Indemnity Association, in which name the assessment was made, and that therefore the assessment and collection were void. Passing the government's contention that no assessment was necessary, we are not impressed by the force of the suggestion that the name in which the assessment was made did not indicate who was, in fact, the taxpayer. If the taxes were payable, and were paid, it is of small concern whether the correct name or capacity was employed. Names alone cannot serve to change actual conditions or to defeat lawful rights.

Tax on issuance of insurance policies constitutes the large bulk of the demand in each case. Section 504 of the Revenue Act of 1917 provides for levy and collection of "the following taxes on the issuance of insurance policies: * * * (e) Casualty Insurance. A tax equivalent to 1 cent on each dollar or fractional part thereof of the premium charged under each policy of insurance or obligation of the nature of indemnity for loss, damage, or liability * * * issued or executed or renewed by any person, corporation, partnership, or association, transacting the business of * * * automobile, or other branch of insurance. * * *"

Section 505 (Comp. St. § 6309¼b) makes provision for "every person, corporation, partnership, or association, issuing policies of insurance upon the issuance of which a tax is imposed by section 504" to make monthly return of and pay such tax. The Revenue Act of 1918, in somewhat different arrangement and wording, is to same effect.

Apart from the exception in case of insurance by fraternal societies having lodges, and the like, the sections are all-inclusive, and the only question respecting these policy taxes is whether this concern falls within them. It is the contention of defendant in error that "Belt Automobile Indemnity Association" indicated merely a place, and that the "subscribers" constituted neither a corporation, association, nor insurance company, nor body of any kind, and much of the briefs on both sides is devoted to the proposition whether or not this is an association. The many cases cited on the subject of what does or does not constitute an association within the meaning of various statutes of different states, are not particularly helpful here. We are of opinion that the Revenue Act does not employ the term in any narrow or technical sense. It is defined in Black's Law Dictionary: "The act of a number of persons who unite or join together for some special purpose or business. The union of a company of persons for the transaction of designated affairs, or the attainment of some common object. An unincorporated society." And in 1 Bouv. Law Dict. 269: "The act of a number of persons in uniting together for some purpose. The persons so joining."

If, in the transaction of this business, the subscribers were associating, or coacting, or co-operating in any way to carry it on, they constituted an association, within the meaning of the act; and this quite regardless of what, as between themselves, or between them and their attorney in fact, the contractual or financial or bookkeeping arrangements were. Without such coaction or co-operation it is more than apparent this large business could not have been created. The statement sets out quite fully the instruments whereunder the subscribers are acting through their "attorney in fact."

Let us assume there are say 50,000 subscribers in this so-called "exchange." It would be a practical impossibility for each to act for himself. There must not only be a common plan, but a co-ordinating agency. If each of the 50,000 undertook to make with the others such indemnity contract as he saw fit, each unrelated to the other, and without preconcerted uniformity of purpose and plan, nothing could possibly have been achieved. If all should meet together and agree upon a plan and carry it out through successive meetings, there would clearly be an association of the individuals. If each one constituted a different person as his attorney in fact, to act for him in the matter of granting and receiving indemnity, and these co-operate accordingly, the various attorneys, for their principals, would be associated for such purpose and it would be an association of individuals acting through their attorneys.

Is it any the less an association if each subscriber appoints and constitutes the same person as his attorney in fact, and the business is conducted through this attorney? He is none the less the agent for each of the others, and it is they, through the attorney, who are agreeing upon the form of application and power of attorney, and of the contract of indemnity, and all of the various steps and acts necessary to build up such comprehensive and extensive business of insurance. The fact that the attorney is the same in each case makes it none the less an association of the various principals acting through the attorney. Through this attorney the principals cohere in the inauguration and continuance of the common plan, to which each of the subscribers is committed by his application, power of attorney, and contract of indemnity. New subscribers become part of the association.

To constitute an association within the meaning of the act, it is not requisite that each constituent should be coordinate or hold the same relation. A very important and indispensable element here is the so-called attorney in fact, who is not merely and simply an...