The Hawaiian gazette. [volume] (Honolulu [Oahu, Hawaii]) 1865-1918, 1917-06-22
Seven Members Of Maui AuricuI-
tural Company Want Excise
b Money Refunded 4,
CONTEND LARGE AMOUNTS
WERE PAID UNDER DURESS
Suit In Federal Court Involves
$40,65o Collected For Years
1913 To 1915

| test case hinging on the validity Of
the collection Of federal income taxes
by the United States from the seven
companies constituting what n een.
orally known as the Maui horticultural
Company was fled yesterday in the 10.
cal United States district court. The
suit involves income taxes paid 70 the
amount Of sac, 652.90.
The plaintiffs are the Haiku sugar
Company, Paia Plantation, Kalialinui
Plantation Company, Pulehu Plantation
Company, Kula Plantation Company,
Makawao Plantation Company and Kai.
lua Plantation Company, sicopartners
doing business under the firm name Of
Maui Agricultural Company. ., while
the defendant is John h. HALEY. coI.
lector of internal revenue of the United
States for the district of the Tertiary
of Hawaii. i@[ 10 7T''f'
Smith, Warren & whitney, and Frear.
Prosser, Anderson & Marx, Honolulu
law firms, appear as attorneys for the
plaintiffs. .- @.",.s,. \. =. =. : =
The prayer of the complainant re.
!" Wherefore the said plaintiffs pray
the judgement Of this court TINT they
recover from the said defendant the
said sums Of $2,098.S3, SIC, 500 SO and
$27, 8S4.5l, total Of $40, 652. 90. together
with interest thereon from the said
eighth day of September, 1916, and All
their proper and necessary costs and
disbursements herein, and for all other
relief to which they may be entitled:
and they further pray the process OF
this court to cite the said defendant to
appear and answer this their com.
|plaint. !" III, ..'. p.
Twenty Days To Answer s!}a
The complaint is signed by J. Water.
house for each of the seven plaintiffs.
Collector Haley has been given twenty
days in which to demur, answer or 9th.
erwise plead to the complaint. He win
be represented in court by 8. @. Huber
and Judge Banks, United States district
attorney and deputy, H.. -
The plaintiff companies claim that
they paid the three separate amounts of
income taxes under protest ON Septem.
Der 8, 1915, the taxes in the amounts
mentioned above being for the wears
1913, 1914 and 1915. On September ls,
1915, the Maui Agricultural Company
appealed from the ruling and decision
that 1t was liable 10 federal income tax.
alton to the commissioner of internal
revenue, "and submitted its said an.
peal to/said commissioner with all the
facts and papers in the matter, and at
the same time stated to the said com.
missioner as the grounds of its said ap-
peal that 1t is not a corporation, Joint
STOCK company or association, but on
the contrary is a partnership
and as such partnership Is exeepted
from the terms of said act from ali Ia
bility to taxation Hereunder ="
Refund Was Refused go
The company claims, further, that at
the same time il presented a formal
claim for the refund of the money paid
by IT under duress. On December 10,
1915, the commissioner denied the ap-
Peal and rejected the claim for the re-
funding of the taxes to the company,
the latter being notified to this effect
on January 4, 1917. ~.
The complaint says, further: 49,
THAT the said taxes and additional
taxes or penalties amounting to
$209S.s3, $l0,669.56 and $27, 884.5l, 10
spectively, a, total of $40 ,652.90, and
the assessments thereof and the exact.
ion of the payment thereof, and the dc.
maHd and requirement of returns Of the
income or profits by the said Maui Ag-
ricultural Company, as aforesaid, were
and are illegal and invalid and in VIC.
lation of the Constitution and of the
laws Of the United States, and phrticu.
larry of the provisions of the said See
ton ii of the said act of the third day
of October, 1913, and of the rights of
the said plaintiffs, and that the said
plaintiffs are entitled to recover the
said sums and each of them from the
said defendant and have observed and
performed all provisions and require
ments of the laws of the United States
and of the rules and regulations pre-.
scribed by the commissioner of internal
revenue and approved by the secretary
of the treasury and all other matters
and things necessary OF required to be
observed or performed on their part to
entitle them to recover the same"
Position Of Excise otticiais .. ..,. ..
The complaint says, further, that in
1916 the commissioner of internal rev.
enue and Collector Haley took the posi-.
tiOn that the Maui Agricultural Com,
pany was not subject to the special cor.
pOration excise tax under the act of
August 5, 1909, for the reason that the
company was not organized as cor.
poration, joint stock company, or asso.
citation, but that the company was and
is subject TO the income tax under the
act Of October 3, 1913 w. 1'.'"'..'
The commissioner and his local col,
lector, alleges the complaint, also took
the position that the plaintiffs, partners
or members of the Maui Agricultural
Company, were severally subject to the
corporation excise tax for the years
1909 to 1912, both inclusive, and to the
income tax for the years 1918 to 1915,
both inclusive, in respect to the shares
distributed to and received by these
separate companies of the net income
OF the Maui Agricultural Company In
each OF these years, as distinguished
from their respective shares in the net
income of the last named company
earned and distributable in the years
mentioned WhathaT aist rihntad ~ not