Source: http://www.chanrobles.com/usa/us_supremecourt/311/60/case.php
Timestamp: 2017-10-18 02:16:26
Document Index: 734486729

Matched Legal Cases: ['§ 22', '§ 4', '§ 22', '§ 26', '§ 26', '§ 817', '§ 26', '§ 817', '§ 26', '§ 26', '§ 26', '§ 26']

During the year 1930, respondent purchased farm loan bonds issued by joint stock land banks under the Federal Farm Loan Act of 1916, 39 Stat. 360. The purchases were made for the prospective increment to the bonds, and not for their interest. At the time the purchases were made, the banks were in receivership. The bonds were acquired at prices substantially below par. In making these purchases, respondent relied upon statements contained in circulars and bulletins issued by the Farm Loan Board, reasonably believing that he was purchasing securities the profit upon which in case of sale would be exempt income. A part of the bonds so purchased, with their appurtenant coupons, was sold in 1931, and a part was surrendered in that year to the receiver of the issuing chanroblesvirtualawlibrary
True, the Bunn cases dealt only with the alleged constitutional inhibition against taxation of capital gains on municipal bonds, and not with a specific statutory exemption. But its analysis is cognate here as indicating that, in absence of clear countervailing evidence, an exemption of "income derived" from a security does not embrace "income derived" from transactions in that security. chanroblesvirtualawlibrary
The Revenue Act of 1916, 39 Stat. 756, was enacted shortly after the Farm Loan Act by the same Congress and at the same session. [Footnote 3] Sec. 2 of that Act, like § 22(a) of the 1928 Act, included in taxable income "gains, profits, and income derived from . . . sales, or dealings in property." And § 4 of that Act, like § 22(b)(4) of the 1928 Act, exempted from taxation "interest upon . . . securities issued under the provisions of the Federal Farm Loan Act." It is clear that "all acts in pari materia are to be taken together, as if they were one law." 44 U. S. 564. That these two acts are in pari materia is plain. Both deal with precisely the same subject matter -- viz., the scope of the tax exemption afforded farm loan bonds. The later act can therefore be regarded as a legislative interpretation of the earlier act (Cope v. Cope, 137 U. S. 682, 137 U. S. 688; cf. 87 U. S. 331-332) in the sense that it aids in ascertaining the meaning of the words as used in their contemporary setting. [Footnote 4] It is therefore entitled chanroblesvirtualawlibrary
In support of the contrary view, great stress is placed on the legislative history of § 26. Extensive references are made to the hearings on this bill and to the debates in Congress. Typical are the statements or criticisms that the bill gave "these investments a distinct advantage over other investments," [Footnote 5] that the exemption provision was important, [Footnote 6] that maintenance of a market for the bonds was desirable, [Footnote 7] that the exemption was too broad. [Footnote 8] These comments, however, are inconclusive. They are not sufficiently chanroblesvirtualawlibrary
Nor is respondent materially aided by the change in § 26 made by § 817 of the Revenue Act of 1938, 52 Stat. 447, 578. That amendment provides that "all income, except interest, derived" from such bonds shall be included in gross income. [Footnote 12] It is urged that this amendment is affirmative recognition by the Congress that § 26 exempts these capital gains. But, here again, the legislative record is ambiguous, and hence inconclusive. The purpose of § 817, as originally introduced, clearly was to chanroblesvirtualawlibrary
make certain that capital gains realized by joint stock land banks on transactions in their own obligations would not be exempt. [Footnote 13] The section was amended on the floor of the Senate to its present form on the suggestion that "perhaps the language is not as broad as it should be." [Footnote 14] chanroblesvirtualawlibrary
Respondent further argues that comparison of other exemption statutes with the language of § 26 reinforces the view that these capital gains are exempt. In that connection, our attention is called to numerous statutes -- some exempting only bonds [Footnote 15] and others exempting principal and interest; [Footnote 16] some exempting a corporation, "including the capital stock and surplus therein, and the income derived therefrom," [Footnote 17] and others [Footnote 18] containing chanroblesvirtualawlibrary
Suggestive as this analysis is, it is entitled to little weight. No mere collation of other statutes can be decisive in determining what the instant statute means. The meaning of each phrase must be closely related to the time and circumstance of its use. The phrase "income derived therefrom," as used in § 26, clearly has taken on coloration from the express exemption for nearly a quarter century of only interest on these bonds. We have no occasion to intimate an opinion as to the meaning of other similar statutes. It is sufficient here to note that, in another legislative setting, "income derived" from bonds may or may not be synonymous with "interest" on bonds. That must necessarily be dependent on a host of factors which only a minute scrutiny of the particular legislative scheme would reveal. For this reason, the fact that the same Congress which in 1938 amended § 26 granted an exemption to another federal instrumentality [Footnote 20] couched in the identical language of the original § 26 is merely a straw in the wind. So far as the instant chanroblesvirtualawlibrary
We return to our conclusion that the weight of these various considerations leans to the view that only interest is exempt. The cumulative strength of the several factors urged by respondent is not such clear evidence chanroblesvirtualawlibrary