Worth Bros Co v. Lederer

• Decision Date: 01 March 1920
• Docket Number: No. 525,525
• Citation: 40 S.Ct. 282,251 U.S. 507,63 L.Ed. 377
• Parties: WORTH BROS. CO. v. LEDERER, Collector of Internal Revenue
• Court: U.S. Supreme Court

251 U.S. 507

40 S.Ct. 282

63 L.Ed. 377

WORTH BROS. CO.

v LEDERER, Collector of Internal Revenue.

No. 525.

Argued Jan. 8 and 9, 1920.

Decided March 1, 1920.

Mr. A. H. Wintersteen, of Philadelphia, Pa., for petitioner.

Mr. Assistant Attorney General Frierson, for respondent.

Mr. Justice McKENNA delivered the opinion of the Court.

This writ is directed to the judgment of the Circuit Court of Appeals affirming a judgment of the District Court for Lederer, to whom we shall refer as the collector in an action by petitioner to recover from him the sum of $74,857.07 exacted as a tax under section 301 of the Munition Manufacturer's Tax Act of September 8, 1916, 39 Stat. 756, 781, (Comp. St. § 6336 1/4 b), and paid by petitioner under protest.

A detail of the imposition of the tax and the protest of its payment are unnecessary to give. The other facts were stipulated and it appears from the stipulation that during the taxable year 1916 petitioner made the steel for and did the forging on certain shell bodies under an order from the Midvale Steel Company, to enable the latter company to carry out a contract which it had with the government of France for certain explosive shells. The steel was made and the forging done by petitioner in accordance with specifications required by the French government, which specifications were attached to the order from the Midvale Steel Company to petitioner.

Inspectors employed by the French government inspected the work done by petitioner, testing the steel and examining the forgings as they passed through petitioner's hands. 'Up to the time when the blooms of steel were sliced partly through into billets, the right of inspection was exercised by the French inspector in chief, only whenever he desired to exercise it.' Some forgings were rejected, and those that were passed were so marked by the inspector. This was done in accordance with an understanding between petitioner and the Midvale Steel Company.

The profits upon which the tax was claimed in this case was imposed were derived solely from the sale of the above-mentioned forgings.

The Munitions Tax Act provides (section 301, 39 Stat. c. 463, p. 781):

'That every person manufacturing' certain articles and 'shells' 'or any part of the articles mentioned * * * shall pay for each taxable year, in addition to the income tax imposed by title I, an excise tax of twelve and one-half per centum upon the entire net profits actually received or accrued for said year from the sale or disposition of such articles manufactured within the United States.'

The question is the simple and direct one whether a shell forging under the stipulation and evidence is 'any part of a shell' within the meaning of the law. The argument of petitioner in support of a negative answer is very diffuse, pressing considerations which we do not think are relevant.

A shell is a definite article, constituted of materials of a e rtain kind and quality, assembled and fitted and finished so as to be adequate for its destructive purposes. Is not every element (we use the word for want of a better) in the aggregation or composition or amalgamation (whichever it is) of a shell, a part of it? It not, what is it? And what is the test to distinguish a part from not a part? We use the negative, as an antithetic word does not occur to us to express that something necessary to constitute a thing is not a part of it. Petitioner surmounts the difficulty by contending that the law by its words 'any part' of any of the 'shells' implies a substantially...