PRODUCERS'CREAMERY CO. v. United States
| Citation | 55 F.2d 104 |
| Decision Date | 21 January 1932 |
| Docket Number | No. 6210.,6210. |
| Parties | PRODUCERS' CREAMERY CO. v. UNITED STATES. |
| Court | United States Courts of Appeals. United States Court of Appeals (5th Circuit) |
Harry C. Weeks, of Wichita Falls, Tex., for appellant.
Wright Matthews, Sp. Atty., Bureau of Internal Revenue, of Washington, D. C., and Norman A. Dodge, U. S. Atty., of Fort Worth, Tex.
Before BRYAN, FOSTER, and HUTCHESON, Circuit Judges.
Appellant, a corporation organized under the general corporation laws of Texas as a dairy and creamery company, with a capital stock of $20,000 paid in, paid substantial income taxes in 1924 and 1925. Its claim for refund on the ground that it was a co-operative farmers' organization doing business in accordance with section 231 of the Revenue Acts of 1924 and 1926 (26 USCA § 982 and note), and therefore exempt from taxation, was allowed and paid on October 16, 1928. The money had no sooner been paid than the government demanded it back on the ground that it had erroneously refunded it. This suit followed appellant's refusal to comply with the demand. A jury waived, the case was submitted to the court upon substantially the same facts upon which the Bureau had first made, and then demanded back, the refund. These facts are: While all of its members were producers of milk, the company was not at any time a mere sales agent for its members. It was actively engaged in its own behalf as a dairy and creamery company, obtaining from producers, nonmembers as well as members, milk and cream, and manufacturing butter, cheese, and other dairy products, which, together with the milk and cream, it sold, and the proceeds from which it used to build up and establish its business and acquire a plant and equipment. Its established policy was not to pay dividends, at least until it had thoroughly established its plant and business. A stockholder, however, was paid a bonus over the regular market price on milk brought in by him up to ten gallons per day for each $100 of stock owned by him. It was the policy of the company to, and it did, purchase its raw milk from its stockholders, except when they were unable to supply its demands; then it purchased from nonstockholders, paying them the current market price without bonus. In 1924 and 1925 the company made large net profits of almost $15,000 a year, all of which it plowed back into buildings and equipment. During this period it purchased 70 per cent. of its supplies from members; 30 per cent. from nonmembers. At no time did the company simply deduct the cost of handling the shipments and return the proceeds to the members. It could not do so, for it was in the business of selling and distributing milk and cream, and bought milk for itself. At no time did it in any way distribute to or set apart for its nonmember customers any part of the profits arising from these purchases.
Appellant comes here complaining of the judgment for the government entered on these facts. We think the judgment was right. The most casual reading of the invoked sections of the Revenue Acts will show that appellant's operations do not bring it within their letter. The most careful reading of those acts and the regulations promulgated to enforce them will show that appellant comes within neither their letter nor their spirit. The Revenue Act of 1924, § 231 (11), 26 USCA § 982 note, extends the exemption to "farmers', fruit growers', or like associations, organized and operated as sales agents for the purpose of marketing the products of members and turning back to them the proceeds of sales, less the necessary selling expenses, on the basis of the quantity of produce furnished by them," while that of 1926, substantially enacting into law the provisions of art. 522 of the regulations promulgated for the enforcement of the act of 1924, extended the exemption of section 231 (12), 26 USCA § 982 (12) to "farmers', fruit growers', or like associations organized and operated on a cooperative basis (a) for the purpose of marketing the products of members and other producers, and turning back to them the proceeds of sales, less the necessary marketing expenses, on the basis of either the quantity or the value of the products furnished by them."
Conceding arguendo, though Riverdale Co-operative Creamery Ass'n, v....
To continue reading
Request your trial
-
Farmers Cooperative Co. v. Birmingham
...1007, affirmed 9 Cir., 1932, 62 F.2d 407, certiorari denied, 1933, 289 U.S. 730, 53 S.Ct. 527, 77 L.Ed. 1479; Producers' Creamery Co. v. United States, 5 Cir., 1932, 55 F.2d 104; Riverdale Co-operative Creamery Ass'n v. Commissioner, 9 Cir., 1931, 48 F.2d 711. However, if the cooperative is......
-
Water Quality Ass'n Employees' Ben. Corp. v. U.S.
...meet the specific statutory language, Commissioner v. Lake Forest, Inc., 305 F.2d 814, 817 (4th Cir.1962); Producers' Creamery Co. v. United States, 55 F.2d 104, 106 (5th Cir.1932), and the cases there cited, 1 and the additional "needful rules and regulations" that the Secretary of the Tre......
-
Co-Operative Grain & Supply Co. v. CIR
...Union Co-op. Co. of Guide Rock, Neb. v. Commissioner of Internal Revenue, 90 F.2d 488, 493 (8th Cir.1937); Producers' Creamery Co. v. United States, 55 F.2d 104, 106 (5th Cir.1932). See also Farmers Union Cooperative Oil Co. v. Commissioner, 38 B.T.A. 64 Application of the foregoing rules o......
-
West Cent. Co-op. v. United States
...Farmers Union Co-op Co. of Guide Rock v. Commissioner of Internal Revenue, 90 F.2d 488, 493 (8th Cir.1937); Producers' Creamery Co. v. United States, 55 F.2d 104, 106 (5th Cir.1932). 5. Plaintiff has failed to prove by a preponderance of the evidence that substantially all its voting stock ......