Source: https://law.justia.com/cases/federal/appellate-courts/F2/542/512/25047/
Timestamp: 2020-01-19 11:05:15
Document Index: 404131829

Matched Legal Cases: ['§ 4061', '§ 4061', '§ 48', '§ 48', '§ 4061', '§ 4061']

Frank Hrubetz & Co., Inc., Appellant, v. United States of America, Appellee, 542 F.2d 512 (9th Cir. 1976) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Ninth Circuit › 1976 › Frank Hrubetz & Co., Inc., Appellant, v. United States of America, Appellee
Frank Hrubetz & Co., Inc., Appellant, v. United States of America, Appellee, 542 F.2d 512 (9th Cir. 1976)
U.S. Court of Appeals for the Ninth Circuit - 542 F.2d 512 (9th Cir. 1976) Sept. 3, 1976. Rehearing and Rehearing En Banc Denied Oct. 28, 1976
The facts in this case are fully delineated in the opinion of the district court in Frank Hrubetz & Co., Inc. v. United States, 412 F. Supp. 1033 (D. Or. 1973). We hold that the findings of the court are not clearly erroneous and that it correctly applied the law to the facts. Accordingly, we affirm the judgment of the district court.
By no stretch of imagination can I conceive of these portable amusement carnival devices being placed in the category of "automobiles" and hence an allegedly taxable article as defined in Section 4061(a) (1) of the Internal Revenue Code of 1954, 26 U.S.C. § 4061(a) (1), as amended, 26 U.S.C. § 4061(a) (1) (Supp.1976).1 Indeed, none of the devices here involved bears the slightest resemblance to such chassis. Rather, these devices, in my opinion, fall squarely within Treasury Regulations on Manufacturers and Retailers Excise Tax, 26 C.F.R. § 48.4061(a)-1. "A chassis . . . which is not designed for highway use is not subject to the tax imposed by such section." The courts in their ivory towers are not (or at least should not be) so removed from the worldly scene as not to be aware of the itinerant amusement carnivals which appear in town after town on a vacant or, if possible, a corner lot where for a period of time they afford amusement to young and old alike and then "fold their tents, like the Arabs, and . . . silently steal away."2 They are able to do so in this case because plaintiff has been inventively resourceful enough to install wheels under the amusement devices so as to move them over the highway to the next stopping place where they are anchored down firmly and resume their appointed operations.
Even if one were to focus solely upon the frame itself, the conclusion would be the same. Clearly the frames were designed by the manufacturer long before the idea of adding wheels was conceived. Thus, the only possible use for which they were intended was as a stationary foundational support for an amusement ride. And the focus, at least in this Circuit, is on intended primary use or design, not every conceivable innovative adaptation. King Trailer Co. v. United States, 228 F. Supp. 1013 (S.D. Cal. 1964), aff'd 350 F.2d 947 (9th Cir. 1965). Judge Ely, writing for the Court (Chambers, Barnes and Ely, C. JJ.) said at 948:
"We have no doubt that the portable dwelling unit in question does not fall within the classification of 'automobile truck bodies' or of 'automobile accessories', as these statutory terms must be ordinarily and reasonably construed. Yet, even should a reasonable doubt exist, our duty is to resolve it in favor of the taxpayer. Crooks v. Harrelson, supra, 282 U.S. (55), at 61, 51 S. Ct. 49 (5 L. Ed. 156); United States v. Merriam, supra, 263 U.S. (179), at 188, 44 S. Ct. 69 (68 L. Ed. 240)."
The amusement rides also would be non-taxable under the proposed new regulations. 41 F.R. 768 (1976). These regulations mandate that in determining whether a chassis is taxable, the vehicle must be examined as a completed unit. The unit is not taxable if it carries permanently mounted machinery whose operation is unrelated to transportation,3 the chassis has been specially designed as a mount for such machinery, and by reason of the design, the chassis could not carry other loads without substantial structural modification. The instant amusement rides easily satisfy all of these prerequisites of nontaxability. See 41 F.R. 771, Proposed Regulation § 48.4061(a)-1(d) (2). Although these regulations are still being promulgated, they, nonetheless, are telling evidence that the result mandated by previous rulings will continue unchanged.
A chorus composed of this Circuit's precedent, administrative interpretation both past and future and common sense, proclaims the inescapable conclusion that the frames of these amusement rides are not taxable semi-trailer, bus or truck chassis. In Big Three Gas & Equipment Company v. United States, 329 F. Supp. 1273 (S.D. Tex. 1971), aff'd on opinion below, 459 F.2d 1042 (5th Cir. 1972), the trial court said at 1278:
26 U.S.C. § 4061(a) (1) as amended, 26 U.S.C. § 4061(a) (1) (Supp.1976) provides: