The Pacific commercial advertiser. [volume] (Honolulu, Hawaiian Islands) 1885-1921, 1902-02-08
X X Xxx X X *&k X Xxx X X X X !
SUGAR

| In the United States Circuit Court of
Appeals for the Third Circuit.
Spreckels Sugar Refining Company.
plaintiff in error, VS.. Penrose A. Nc
CLAIM, collector of internal revenue for
the first district of Pennsylvania, defend
ant in error
!, In error to the Circuit Court of the
United States for the Eastern District OF
Pennsylvania.
Before Acheson, Dallas, and Gray, Cir
cut Judges
Dallas, J.:
The plaintiff below (and here) is a cor
poration erected under the laws of Penn
sylvanfa. for the purpose e'of refining
sugar which will involve the buying OF
the raw material therefor and selling the
manufactured products, and of doing
whatever else should be incidental to the
said business of refining" The defend
ant is the collector of internal revenue
for the first district of Pennsylvania.
The action was brought to recover GER
tain sums of money which he had exact
ed under section q of the war-revenue
act of 1898. and which the plaintiff had
paid under protest. That section is as
| follows:
THAT every person. firm. corporation,
or company carrying on or doing the
business of refining petroleum. or refin-
ing sugar. or owning controlling any
pipe lines for transporting oil or other
products, whose gross annual receipts
exceed two hundred and fifty thousand
dollars, shall be subject to pay annually
a special excise tax equivalent to one
quarter of one per centum on the gross
amount of all receipts of such persons.
firms, corporations. and companies in
their respective business in excess of said
sum of two hundred and fifty thousand
dollars. And a true and accurate return
of the amount of gross receipts as afore-
said shall be made and rendered monthly
by each of such associations, corpora
tons. companies. or persons to the col
lector of the district in which any such
association. corporation or company may
be located. in which such person has
his place of business"
The parties agreed upon a special YER
dict, the material portions Of which are
set out in the opinion of the court below
and need not here be repeated.
1. The first and most important ques-
ton raised by the assignment of errors is
whether the above section is unconstitu
tional. This question, however, the
learned judge of the circuit court declin-
ed to discuss because t'the present suit
Court of the United States; and for the
same reason we, also, refrain from dis
cussing it. and deem it eXpedient to mere |
ly state our affirmance of the constitu- |
tionality of The section, upon the ground |
that the presumption in favor of its val |
idity has not been clearly confuted.
2. The use which the plaintiff really |
made of its wharveS was III carrying on |
or doing business of refining SUI |
gar They We're part of the plant of |
that business, and as it was effectually |
conducted. they were an essential con-
dition to it. Consequently their receipts |
We're its receipts. and as such they were
properly comprised in the assessment.
adams Express Company VS.. Ohio State |
Auditor, 165 u. S., 194)
8. The interest received by the plain
tiff upon its corporate funds. either de-
posted in bank or invested in income
producing securities, was also rightly in
cluded. The special verdict states that
it was interest upon its investments of
money and property explained by the
testimony of Mr.. Ball." and it appears
from that testimony that the only busi-
ness of the plaintiff was sugar refining,
and that this interest was received by it
upon investments deposits of such
part of the capital of that business as at
the time being was not in active use
therein. MIR. Ball, 1t is true, also testi-
fed that it did not have anything to do
with sugar refining, but the question for
our decision is, not whether this interest
was derived from the refining of sugar.
which of course it was not. but whether
)r not it was received in the business of
sugar refining and upon this very differ
mt question the facts found are conclu-
;ive. The funds of the corporation, how
,yer any portion of them may have been
applied or held were all en- .
parked in the sugar refining business,
md to it. therefore, all receipts which
hose funds produced necessarily be-
onged Any diminution Off them would
have been its loss, and it seems
o be equally clear that their augmenta- {
:on, however occasioned, must have
,een its gain. Except in connection with
md as incidental to that business, the
plaintiff was neither an investor nor Il
lepositor, and therefore, by becoming I
ither one the other it did not engage
n additional and separate business
4. The learned judge, in deciding that
he collector had been justified in de-
handing monthly payments, said: ''The
ak is no doubt an annual tax in the
ense that it is paid each year and if pro- 7
ision for its assessment and collection
ad been made by the act, such provision
Tould have been obligatory, both upon I
he government and upon the refiner.'
'ut he was of opinion that the act con-
aimed no such provisions. and that there
ore the regulation of the Commissioner
Internal Revenue directing its month 7
assessment and collection was author
led by section PAT of the Revised Stat
ties. We are unable to concur in the con-
truction which was thus given to section
! of the act of June IS, 1898. 1t is of
curse a possible one, but its correctness
J.; at least, so questionable as % render
inadmissibIe to impose a duty upon q :
tizen. (Hartranft VS.. Weigmah. 121 q, I
=, cog; United States VS.. Isham, 1T Wall,
81 But aside from this consideration,
he meaning attributed by the court be-
wv to the phrase shall be subject to
ay annually is not, we think, its nat
raj meaning: the requirement. as direct =
and plainly expressed, is for payment 3
nnually and upon annual receipts; and
his being SO. there is in our opinion, no
arrant for inferring from the quite dis
net privison for monthly returns that =
was intended that monthly payments ! E
light also be demanded, and upon
Ionthly receipts. The tax, however, is
My on gross annual receipts in excess :
S25O,000 and it can not be supposed to A
ave been contemplated that any person
company whose first return, as il the
resent instance, exhibited gross receipts =
inc hat