Court Opinion

ID: 6837720
Source: CourtListenerOpinion
Date Created: 2022-07-23 20:09:17.028775+00
Date Added: 2024-06-11T16:04:45.235922
License: Public Domain

GILBERT, Circuit Judge
(dissenting). I think that the judgment of the court below should be affirmed. Confessedly the contracts by which the plaintiff parted with the possession of its jewelry were not sales, within the accepted meaning of that term. But it seems reasonable to hold, as did the court below, that for the purpose of taxation they should be deemed to be sales from the time when the plaintiff abandoned further efforts to collect installments, as it did on December 31,1923, and wrote them off as uncollectible. The Revenue Acts applicable to the ease are those of 1918 and 1921. Under the authority of those acts the Treasury Department issued its Regulation 48, governing the enforcement of the acts as they related to the tax on the sale of jewelry. In the regulations promulgated under both acts it was provided: “The tax'attaches when the article is sold; that is to say, when the title to it passes from the vendor to the purchaser. When title passes is a question of fact, dependent upon the intention of the parties as gathered from the contract of sale and the attendant circumstances. * * * In the case of a conditional sale, where the title is reserved until payment of the purchase price in full, the tax attaches (a) upon such payment; or (b) when title passes, if before completion of the payments; or (e) when, before completion of the payments,'■ the dealer disposes of the sale by charging off, by any method of accounting he may adopt, the unpaid portion of the contract price.”
Under the regulations, therefore, title is presumed to have passed to the purchasers in, the present case at the moment when the plaintiff charged off the unpaid portions of the contract price. Erom the premise that the title passes at the timé when the unpaid portion of the price is charged off, it seems logically to follow that the price for which the goods were sold, and upon which the plaintiff should be taxed, was the price which it realized, and not the price which the purchasers promised to pay, and which the plaintiff never expected to receive. Obviously, the regulations were framed with a special view to the known nature of the business of *574selling jewelry on conditional sales. In thus carrying on that business, and retaining, until paid for, the title to the thing sold, the plaintiff was not doing business upon credit; it was not relying upon the financial standing of the purchasers, but upon the security which it had, in reserving title in the goods so contracted to be sold. I think it would be an unjust conclusion to hold that it must pay a tax upon a price which it never expected to realize, and which,, in the very nature of the business in which it was engaged, it never could realize. In Gould v. Gould, 245 U. S. 151, 153, 38 S. Ct. 53, 62 L. Ed. 211, it was held that in eases of doubt statutes referring to taxes “are construed most strongly against the government, and in favor of the citizen.”
I am unable to see that the decision in Anthony v. United States, 57 Ct. Cl. 259, adds light to the present discussion. That was a ease of taxation upon automobiles “held and intended for sale by any person.” The decision was that, after the vendor had parted with possession of automobiles under conditional sales contracts, those automobiles were no longer “ ‘held and intended for sale’ by the vendor.” Obviously, when a vendor has parted with the possession of automobiles under conditional contracts of sale, it cannot be said that he still holds and intends to sell them.