Document: 350 U.S. 383 76 S.Ct. 416 100 L.Ed. 441 UNITED STATES of America, Petitioner,v.LESLIE SALT CO. No. 74. Argued Dec. 7, 1955. Decided March 5, 1956. [Syllabus from pages 383-384 intentionally omitted] John F. Davis, Washington, D.C., for petitioner. Bruce M. Casey, Jr., San Francisco, Cal., respondent. Mr. Justice HARLAN delivered the opinion Court. 1 On February 1, 1949, Leslie Salt Company, being in need funds to meet maturing bank loans and working capital, borrowed $3,000,000 Mutual Life Insurance Company New York $1,000,000 Pacific Company. As evidence indebtedness each insurance company its '3 1/4% Sinking Fund Promissory Note Due 1964' these amounts. The question presented is whether instruments are subject documentary stamp taxes laid on 'all bonds, debentures, or certificates issued by any corporation * *.' under §§ 1800 1801 Internal Revenue Code 1939, 26 U.S.C.A. 1800, 1801.1 2 Commissioner held tax applicable, considering two be 'debentures' within meaning § 1801. However, a recovery suit instituted Salt, following payment protest Commissioner's denial refund, District Court2 Court Appeals3 not otherwise taxes. We brought case here, 349 951, 75 885, 99 1276, resolve uncertainty left lower court decisions as applies corporate notes this type.4 3 Except amounts payees, were identical terms, having principal features: (1) instrument carried promissory note description already indicated; (2) had maturity 15 years; (3) interest payable August year unpaid balance; (4) was terms an underlying agreement containing elaborate provisions protection holders. Among those one which could require convert note, typewritten ordinary white paper, into series new denominations $1,000 multiples thereof, 'either registered form without coupons coupon form, printed fully engraved form.'5 This option has been exercised either holder. 4 These transactions with companies constituted variety 'private placement,' method financing which, because economies conveniences, become popular since enactment Securities Act 1933, 77a et seq. Government claims that taxable 'certificates indebtedness.' taxpayer, other hand, contends undefined statute, do include type here issue. Taking statute light legislative administrative history, we agree taxpayer's contention. 5 'Debentures' indebtedness', along kinds securities, have 1898, except period between 1902 1914.6 'Promissory notes' also duties 1898 1901 1914 until 1924, when repealed;7 it never re-enacted. 'promissory notes,' however, always section separate 'bonds, at rate than instruments. Since notes, all serve same basic purpose—that is, debt—this former distinction assumes significance determining present taxable. For unless earlier statutes intended impose instrument, should assume, debentures broader scope effect there no indication, would seem follow now taxed if they can said fall class repealed. 6 argues repealed provision related only short-term paper customarily used day-to-day commercial transactions, did embrace like involved, large amounts, long maturity, secured agreement. See General Motors Acceptance Corp. v. Higgins, Cir. ,161 F.2d 593, 595. existence features, does render less captioned. Nor find anything legislation history satisfies us provided statute. Niles-Bement-Pond Co. Fitzpatrick, Cir., 213 305, 308 310. Moreover, interpretations Treasury, discussed below, affirmatively indicate considered section. 7 But even assuming fairly called must therefore regarded That depends upon regardless their descriptive caption, essential characteristics supra; supra. And remained substnatially unchanged first enactment, Treasury's entitled great weight. White Winchester Country Club, 315 32, 41, 62 425, 430, 86 619. 8 establishes 1947, case, supra, decided, thse 'debenture' series, trust indenture, attached. In words, apply marketable term generally understood. Conversely, lacking such respondent, thereafter Government's success 1947. 9 early 1918 distinguishing 'bond' note' rate, then still force, drew line follows: 10 '(3) Instruments features but corporations numbers attached, embodying acceleration event default obligor, optional registration bearer authentication trustee, sometimes redemption before similar provisions, bonds notes. although may every issue both (a) incapable (b) lacks so requires presentation interest.' T.D. 2713, May 14, 1918, 20 Treas.Dec.Int.Rev. 358 (1918).8 11 When Congress amended existing adding language 'and instruments, however termed, known securities *,' found 1801, Treasury recognized prior restrictive interpretation.9 regulations followed repeal 1924 purport enlarge 'bonds' 'debentures'; adhered interpretation previous statute.10 1941 specific, inconsistent, taxed.11 Finally, explicit recognition attempt departure practice ruling applied retroactively: 12 'The Bureau considerable time termed 'note,' coupons, issuance transfer. Because uniform holding consequent reliance rulings, concluded that, authority contained 3791(b) (26 3791(b)), decision Corporation will retroactively, paid transfer falling refunded.' Cum.Bull.1948—2, M.T. p. 160. 13 'certificate indebtedness' background. 1920 akin including 'only general character investment distinguished evidencing debts arising transaction individuals Sales Tax Rulings, L.O. 909, December ST. 1—20—85; Regs. 55 (Art. 14), October 26, 1920, 22 T.D.Int.Rev. 502 (1920).12 essence 'investment security' course, marketability, feature have. itself acknowledged quality 160 (76 422), none cases, Motors, indebtedness. observed sections 1954 words consistenty eliminated category employed simply art embracing taxed, 'bonds,' coupons. 1954, 4311, 4381, 68A Stat. 514, 523, U.S.C. 4381. 14 contrast position consistently taken throughout many years preceding 'that Section cover long-term debt obligations supported protective covenants details papers used, consummated nature purchaser's business.' contention seems stem belief placement' widely now, entirety, did. nevertheless Congress, courts, change deal it, neither nor based employed. ago 1873, said: liability duty, well amount determined face cannot affected proof facts outside itself.' United States Isham, 17 Wall. 496, 504, 21 728. There persuasive reasons construing accordance original statute's altogether comparable predecessors. Norwegian Nitrogen Products States, 288 294, 315, 53 350, 358, 77 796, Cardozo 16 'administrative practice, consistent unchallenged, overturned very cogent command indefinite doubtful. Moore, 95 760, 763, 24 588; Logan 233 613, 627, 34 685, 58 1121; Brewster Gage, 280 327, 336, 50 115, 74 457; Fawcus Machine 282 375, 51 144, 397; Interstate Commerce Commn. York, N.H. & H.R. Co., 287 178, 106, 248 *. peculiar weight involves contemporaneous construction men charged responsibility setting machinery motion, making parts work efficiently smoothly while yet untried new.' Against longstanding more recent ad hoc how construed stand. express implied congressional acquiescence, through amendment 421), ever continued effect, let remain undisturbed years. Corn Refining Commissioner, 46, 53, 20, 24; page 313, 357.13 Still further, accord understood 'debentures.' Cf. First Nat. Bank Cincinnati Flershem, 290 508, 54 298, 78 465.14 (a statute) sense public take effect.' 18 Construing have, conclude meaning. fact provides substitution might qualify taxable, imposed. 19 hold Affirmed. Sec. 1800. 'There shall levied, collected, paid, respect several stock indebtedness, documents, matters, things mentioned described 1807, inclusive, vellum, parchment, things, them, written printed, specified sections.' 195, 'On corporation, $100 value fraction cents: Provided, renewal foregoing 195—196, 110 F.Supp. 680. 218 91. Decisions Courts Appeals pointing toward view Curtis Publishing Smith, 220 748; 305; Ely Walker Dry Goods 201 584, 36 A.L.R.2d 969; Allen Atlanta Metallic Casket 197 460; Belden Mfg. Jarecki, 192 211, Bijou Theatrical Enterprise Menninger, D.C.E.D.Mich., 127 16; Knudsen Creamery California D.C.S.D.Cal., 121 860; Shamrock Oil Gas Campbell, D.C.N.D.Tex., 107 764; Follansbee Steel D.C.W.D.Pa., 139 419; Air Lines, Inc. D.C.N.D.Ill., 653; Motor Finance D.C.D.N.J., P H Fed.Tax Serv. 72,706. way 161 Commercial Credit Hofferbert, 188 574, S.S. Pierce D.C.D.Mass., 396; H. Kobacker Sons D.C.N.D.Ohio, 124 211; D.C.S.D.N.Y., 120 737; Shoe Corp., D.C.M.D.Tenn., 117 668; Gamble-Skogmo, Inc., Kelm, D.C.D.Minn., 112 872; Sharon 414; Stuyvesant Town 111 243, Ct.Cl. 686. Other agreements summarized agreed 'purchase' Representations financial statements lists property holdings submitted complete accurate. Various conditions precedent purchase including: counsel authorized applicable state law; balance $4,000,000 loan subscribed; documents satisfactory counsel. A representation lender acquiring purpose sale. (5) prepayment $285,000 year, premium, additional annually came earnings liquidation assets. right make further prepayments, premium 3%, after three descended year. (6) promised pay taxes, keep repair, accurate records, insure properties, regular holders (7) indebted, dividends retire stock, agreement, business capital decline beneath amount. June 13, 30 448, 451, 458; 2, 1901, 31 938, 940, 942; April 12, 1902, 32 96, 97; re-enacted 22, 1914, 38 745, 753, 759, forward subsequent Acts. 459; 760; over Acts 1917, 1921, 40 300, 319, 323, 1057, 1133, 1137, 42 227, 301, 43 253, 352. Decision defined 'An seal simple promise sum money time, common everyday use, statute.' It noted qualification italicized omitted definition Regulations promulgated later. 10, infra. Solicitor Revenue, Robert N. Miller, expressed view: securities,' clearly added varied forms issued, defeat avoid issuing different name.' December, 1—20—85. 'Art. 8. numbers, bonds.—Instruments some instances notes.' 55, September 1924. provided: 48. defined.—A unconditional writing made person another signed maker engaging demand fixed determinable future certain order bearer, free restrictions usually coupons.' 11, 1919. revision substantially identical, 1921 (Regulations Articles 35). 113.50. 'Scope tax. imposes securities. Every above issue.' 113.55. 'Issues Ordinarily, styled bond, debenture, certificate taxability name alone circumstances, name, etc. Hence, designated, such. Similarly, registration, coming called.' CFR, 1944 Cum.Supp., 113.50, Century Dictionary defines 'A acknowledging debt; specifically, seal, repayment lent; usually, exclusively, moneyed copartnerships, convenient bought sold investments.' adopted Barton Atkins, 72 Vt. 33, 47 A. 176, 180. come use Board Com'rs City County Denver Home Savings Bank, 236 101, 105, 35 265, 266, 59 485, "What true about Indeed, difficult see commonly world. contain bearer.' 'If standing susceptible given above, association excludes maxim noscitur sociis applies. consideration Title XI whole supports conclusion arrived at. Three classes individuals, partnerships, thereunder tax: Bonds (subdivision 1), 3), drafts checks 6); i.e., possessing greater extent attributes paper. premises lead inevitably intention subdivision Schedule included heads shares bills exchange, evidences vestment properly 'bonds 'primarily money, bill exchange,' too inclusive sufficiently delimit term. 'It A, XI, includes individuals; conditional sale 'T.D. 2713 modified conform holding. 'Robert 'Solicitor Revenue.' consider curcial attention cases cited 4, advert practice. 1916, finance late L. Stetson terms: 'In mentioned, mean serial specific mortgage, pledge assignment property. Of course execution indenture relating thereto. Prior 1900 few issues accompanied rights privileges bondholders set forth length obligation, thus somewhat lengthy instrument. Lake Shore R.R. Central, custom adopting general. Originally 1893 Electric refunding 1912 executed.' 'Preparation Corporate Bonds, Mortgages, Collateral Trusts Debenture Indentures,' Some Legal Phases Financing, Reorganization Regulation, 66 (Assn. Bar 1917).

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