United States v. J. Leslie Morris Co.
| Decision Date | 20 January 1942 |
| Docket Number | No. 9746.,9746. |
| Parties | UNITED STATES v. J. LESLIE MORRIS CO., Inc. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Samuel O. Clark, Jr., Asst. Atty. Gen., J. Louis Monarch and George H. Zeutzius, Sp. Assts. to Atty. Gen., and Wm. Fleet Palmer, U. S. Atty., and E. H. Mitchell and Armond Monroe Jewell, Asst. U. S. Attys., all of Los Angeles, Cal., for appellant.
Darius F. Johnson and Merserve, Mumper & Hughes, all of Los Angeles, Cal., for appellee.
Before GARRECHT, HANEY, and HEALY, Circuit Judges.
This is an appeal by the government from a judgment for the refund of excise taxes. It involves the question whether sales of automobile connecting rods were taxable under § 606(c) of the Revenue Act of 1932, 26 U.S.C.A.Int.Rev.Code, § 3403 (c), imposing a tax upon automobile parts "sold by the manufacturer, producer, or importer" thereof.
The taxpayer was incorporated to "operate a business for the manufacture, sale and distribution of automotive and industrial bearing metals and products". During the taxable period it was engaged in rebabbiting and otherwise processing, and selling, used or worn out automobile connecting rods under the trade name "Moroloy". It owned plants in various cities from New York to Los Angeles and was affiliated with other plants throughout the United States and Canada. Automobile wrecking brokers and jobbers were the chief source of supply for the used rods, and the sales — made on what is described as the exchange basis — were to wholesalers or jobbers, ultimately for replacement purposes in the repair of automobiles.
A connecting rod is a forging by means of which the automobile piston is connected with the crankshaft. It has a bearing at either end, the lower or crankshaft bearing being the babbit bearing. At the upper, or wristpin, end there was in at least half the rods handled by the taxpayer a bronze bushing which serves as the bearing. The reconditioning of discarded connecting rods through replacement of the bearings has become an extensive and highly specialized industry.1 The mechanics of the process — apparently not differing greatly among the several concerns engaged in the business — is described in the opinion in Clawson & Bals v. Harrison, 7 Cir., 108 F.2d 991, 994, and need not again be stated. The process involves the use both of old and new materials, the new materials purchased and used being babbit metal, shims, bronze bushings, nuts and bolts.
Taxpayer's finished product is guaranteed against defective workmanship and material. Each rod, after the process of reconditioning is complete, is put in a cardboard carton and placed in the stock room. Each carton bears at one end a stock number and taxpayer's trade name, "Moroloy", the stock number conforming to taxpayer's printed price sheets and catalogues. The carton label includes also a picture of a connecting rod and the legends "Rebabbited Connecting Rods, Centrifugally Cast, Accurately Machined" and "Moroloy Bearing Service". The printed catalogue distributed to the trade extols the merits of the Moroloy rod and emphasizes the engineering exactness of the tools employed in the process.
The problem here is whether or not taxpayer is a manufacturer or producer of the connecting rods. Their sale is conceded. The taxpayer's position is that it produces no new article of commerce; that its process commences as well as ends with a connecting rod, and is essentially one of the repair or restoration of the rod. It argues that there is no difference between what it does and the service formerly performed by the garage mechanic to whom the car owner committed these worn parts for repair; hence taxpayer cannot be classified as a manufacturer or producer.
We doubt the question is an open one in this circuit. In Clawson & Bals v. Harrison, supra, the conclusion was reached by...
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Broad Motors Co. v. Smith, C. A. No. 7658.
...Bros. Co. v. United States, 7 Cir., 142 F.2d 139; Henricksen v. Seward, 9 Cir., 135 F.2d 986, 150 A.L.R. 1; United States v. J. Leslie Morris Co., 9 Cir., 124 F.2d 371; United States v. Moroloy Bearing Service, 9 Cir., 124 F.2d 373; United States v. Armature Rewinding Co., 8 Cir., 124 F.2d ......
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LeTourneau Sales & Service, Inc. v. Olsen
...motors, the chancellor relied on four federal cases that arose under the former federal excise tax. United States v. J. Leslie Morris Co., Inc., 124 F.2d 371 (9th Cir.1941); United States v. Armature Exchange, Inc., 116 F.2d 969 (9th Cir.), cert. denied, 313 U.S. 573, 61 S.Ct. 960, 85 L.Ed.......
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