Legal Document

348 U.S. 426 75 Supreme Court Reporter 473 99 L.Ed. 483 COMMISSIONER OF INTERNAL REVENUE, Petitioner,v.GLENSHAW GLASS COMPANY and William Goldman Theatres, Incorporated Number 199. Argued Feb. 28, 1955. Decided March Rehearing Denied May 9, See 349 925, 657. Solicitor General, Simon E. Sobeloff, Washington, D.C., for petitioner. Mr.Max Swiren, Chicago, Ill., respondent Glenshaw Glass company Mr. Samuel or Haw. Hawai‘i Reports KFH45 A2 Levy, Philadelphia, Pa., Wm. Chief Justice WARREN delivered the opinion of Court. 1 This litigation involves two cases with independent factual backgrounds yet presenting identical issue. The were consolidated argument before Appeals Third Circuit heard en banc. common question is whether money received as exemplary damages fraud punitive two-thirds portion a treble-damage antitrust recovery must be reported by taxpayer gross income under § 22(a) Internal Revenue Code 1939.1 In single opinion, 211 Federal Reporter, 2nd Series 928, affirmed Tax Court's separate rulings in favor taxpayers. 18 United States KF6280 U55 860; 19 637. Because frequent recurrence differing interpretations lower courts this decisions bearing upon problem, we granted Commissioner Revenue's ensuing petition certiorari. 813, 50. 2 facts largely stipulated are not dispute. So far pertinent they follows: 3 versus Co.—The Company, Pennsylvania corporation, manufactures glass bottles containers. It was engaged protracted Hartford-Empire which machinery character used Glenshaw. Among claims advanced demands fraud2 treble injury to its business reason Hartford's violation federal laws.3 December, 1947, parties concluded settlement all pending litigation, Hartford paid approximately $800,000. Through method allocation approved Court, 860, 870 872, no longer issue, it ultimately determined that, total settlement, $324,529.94 represented payment violations. did report tax year involved. deficiency claiming taxable entire sum less only deductible legal fees. As previously noted, upheld taxpayer. 4 Inc.—William Inc., Delaware corporation operating motion picture houses Pennsylvania, sued Loew's, alleging laws seeking damages. After holding that had occurred, Loew's Cir., 150 738, case remanded trial court determination found suffered loss profits equal $125,000 entitled $375,000. 69 F.Supp. 103, 164 1021, certiorari denied 334 811, 68 1016, 92 1742. claimed $250,000 balance constituted such taxable. agreed, 637, Appeals, hearing case, affirmed. 928. 5 conceded respondents there constitutional barrier imposition on Our one statutory construction: these payments comprehended 22(a)? 6 sweeping scope controverted statute readily apparent: 7 's 22. Gross 8 '(a) General definition. 'Gross income' includes gains, profits, derived from salaries, wages, compensation personal service * whatever kind form paid, professions, vocations, trades, businesses, commerce, sales, dealings property, real personal, growing out ownership use interest property; also interest, rent, dividends, securities, transaction any carried gain profit, gains source whatever. *' (Emphasis added.)4 9 has frequently stated language Congress exert field 'the full measure taxing power.' Helvering Clifford, 309 331, 334, 60 554, 556, 84 788; Midland Mutual Life insurance Co., 300 216, 223, 57 423, 425, 81 612; Douglas Willcuts, 296 1, 56 59, 62, 80 3; Irwin Gavit, 268 161, 166, 45 475, 897. Respondents contend damages, characterized 'windfalls' flowing culpable conduct third parties, within section. But applied limitations receipts, nor restrictive labels their nature. And given liberal construction broad phraseology recognition intention except those specifically exempted. Jacobson, 336 49, 358, 369, 93 477; Stockholms Enskilda Bank, 293 84, 87—91, 55 50, 51—53, 79 211. Thus, fortuitous accruing lessor forfeiture lessee's improvements rented property taxed Bruun, 461, 631, 864. Cf. Robertson States, 343 711, 72 994, 96 1237; Rutkin 130, 571, 833; Kirby Lumber 284 52 4, 76 131. Such demonstrate cannot but ascribe content catchall provision 22(a), 'gains whatever.' importance phrase been recognized since first appearance Act 19135 say now adds nothing meaning 'gross income.' 10 Nor can accept respondents' contention narrower reading required characterization Eisner Macomber, 252 189, 207, 40 193, 64 521, "the capital, labor, both combined."6 endeavoring determine distribution corporate stock dividend realized shareholder, changed 'only form, essence,' his capital investment. Id., at page 210, 194. held 'received company's assets benefit.' 211, distribution, therefore, event. context distinguishing capital—the definition served useful purpose. meant provide touchstone future questions. supra, pages 468—469, 634; 3, 4. 11 Here have instances undeniable accessions wealth, clearly realized, over taxpayers complete dominion. mere fact extracted wrongdoers punishment unlawful detract recipients. concede, must, recoveries extent compensate actually incurred. would an anomaly could justified absence clear congressional intent actual additional amount same caused injury. find evidence exempt payments. 12 urged re-enactment without change Board nontaxable Highland Farms Corp., 42 B.T.A. 1314, indicates satisfaction holding. Re-enactment—particularly slightest affirmative indication ever decision it—is unreliable indicium best. Wilshire Oil 308 90, 100—101, 18, 24, 101; Koshland Helvering, 298 441, 447, 767, 770, 1268. Moreover, promptly published non-acquiescence holding7 has, since, consistently maintained position receipts taxable.8 therefore said certitude intended carve exception 22(a)'s pervasive coverage. does 1954 Code's9 legislative history, reiteration proposition 'all-inclusive,'10 give support position. simplied, effect present intended.11 Certainly reasonably classified gifts, cf. 47—52, 368 370, 477, do come other exemption Code. We violence plain restrict attempt bring power bear constitutionally here income. 612. 13 Reversed. 14 DOUGLAS dissents. 15 HARLAN took part consideration case. 53 Statutes-at-Large 574, 26 KF62 Annotated KF65 U5 22(a). For bases Glenshaw's claim fraud, see Shawkee Manufacturing 322 271, 1014, 88 1269; Hazel-Atlas 238, 997, 1250. 323 386, 65 373, 89 322; 324 570, 815, 1198. note supra. 38 114, 167. Stratton's Independence, Limited Howbert, 231 399, 415, 34 136, 140, 58 285, Doyle Mitchell Bros. 247 179, 185, 467, 469, 62 1054, construing 1909, 36 11, 112. Both 'wasting asset' corporations, being mining, lumbering operations. distinction between return 'a conversion assets.' 184, SCt. 469. raised instant distinguishable. 1941—1 Cum.Bull, 16. long history departmental theory roughly correspond following property. Cum.Bull. 71; I—1 92, 93; VII—2 123; 1954—1 180. Dumages compensatory only. Punitive hand, considered restoration taxation purposes. 68A et seq. Section 61(a) 1954, 17, U.S.C.A., successor 1939 H.R.Rep.No.1337, 83d Cong., 2d Sess. A18; S.Rep.No.1622, 168. discussing Code, House Report states: 'This section corresponds While existing simplified, all-inclusive nature affected thereby. 'Section provides 'all derived.' based 16th Amendment word 'income' sense.' 10, A18. A virtually statement appears

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