Court Opinion

ID: 6879799
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:13:02.593859+00
Date Added: 2024-06-11T16:05:32.286760
License: Public Domain

SIBLEY, Circuit Judge
(dissenting).
Both the Commissioner and the Board of Review have, I think, dealt with this case too narrowly and technically. The claim for refund and the petition for review, taken together, disclose that the hogs processed were owned by Viking Packing Company and others, who employed Arabi Packing Company to slaughter them for $1 apiece. Heavy taxes were exacted on this processing of the hogs, Arabi not adding the tax to the fee, but rendering a separate bill for the tax. One of the owners sought to pay the tax direct, but was refused. So they all paid the tax through Arabi, notifying Arabi that they regarded it as unconstitutional and would seek its recovery. After unconstitutionality was decided by the Supreme Court, Viking sought a direct refund from the Government, but the Commissioner ruled that claim could be made only by the person who made the payment to the Government. Thereafter Viking filed suit against Arabi, but without trying it, authorized and requested Arabi in writing to file claim for $13,706 paid by Viking as taxes, “on behalf of and for the use and benefit of Viking.” Other hog owners orally gave a like authority; and the present claim, presented by Arabi on next to the last day limited therefor, is expressly for the use of these hog-owners.
The Commissioner rejected the claim because it disclosed that Arabi had not borne the tax but had obtained the money from the hog-owners, refusing to consider it as a claim in their behalf. I think they could have made claim in their own names, for in objects and in machinery the Agricultural Adjustment Act parallels the Bankhead Cotton Act, 48 Stat. 598, and the ginning tax under the latter is like the processing tax here involved when the processor is not the owner of the commodity processed. In Stahlmann v. Vidal, 305 U.S. 61, 59 S.Ct. 41, 83 L.Ed. 41, it was held the cotton owner and not the ginner was in mind in placing the ginning tax, that it was required that the ginner pay it, but he was expected to collect it from the owner, and when the owner paid through the ginner the owner had a standing in court to sue for refund. Processing taxes under the Agricultural Adjustment Act may not be sued for in a court, but the owner of the commodity processed by another, if he pays and bears the burden of the tax, may for like reasons seek refund before the Commissioner and the Board of Review. The statute providing for refunds, Sects. 902, 906, 907, of the Revenue Act of 1936, 49 Stats. 1747, 7 U.S. C.A. §§ 644, 648, 649, never speaks of the payer of the tax, but only of the “claimant”, and emphasizes everywhere that the important thing is not who delivered the money to the Collector, but who has “borne the burden of the tax”, and whether it has been “passed on” or “shifted”. Section 907, dealing with proof and presumptions, relates wholly to the owner who sells, and not the processor for hire who is a mere bailee or in some cases a servant. He who has the substantial right ought to be the claimant. But when the Commissioner elects to require that the processor for hire alone be dealt with, refusing to hear the owner who bore the tax burden from the beginning, he cannot play fast and loose *281with the matter and refuse to consider the owner’s rights when presented through the processor.
The Board of Review, three members dissenting, took entirely different ground; that under Section 906 (a) they had jurisdiction only over “processing taxes” as defined in Section 913(b), 7 U.S.C.A. § 655 (b), and the definition is: “The term ‘processing tax’ means any tax or exaction denominated a ‘processing tax’ under this title [chapter], but shall not include any amount paid or collected as tax with respect to the processing of a commodity for a customer for a charge or fee.” Since the processing here was for a fee, the tax on it was not a< processing tax, say they. Put otherwise, if Viking had killed its own hogs, paying the tax, it would be refundable; but having employed Arabi at $1 per head to kill them, the same tax, paid by Viking, is to be kept by the Government. There is verbal plausibility in the position, but I cannot think it the true construction of the provision. The statute is a remedial statute and to be liberally construed in advancement of the remedy. It was upheld as the exclusive remedy for obtaining refund of the unconstitutional processing taxes only by construing it to afford a complete remedy as respects all questions. Anniston Mfg. Co. v. Davis, 301 U.S. 337, 57 S.Ct. 816, 81 L.Ed. 1143. It is not to be supposed that the Congress, recognizing that the Government had unconstitutionally taken money as processing taxes, in providing for its restoration would make a law arbitrarily unequal as respects taxpayers who had the taxed processing done for a fee by another. The words of the definition may be construed as excepting only claims by those who charged the fee, for they alone have “customers”, and they could have collected the tax from them or else have refused to do the work. This construction would make the exception from the remedy less extensive and less arbitrary. It would deny refund to Arabi, but permit it to the customers. It should be adopted. What Viking'paid because of what was done to its hogs was a processing tax when paid. There is no justice in saying it is not that on a question of refund. The Board should have given the hearing “on the merits of the claim” provided in Section 906(c), treating the usees as the substantial claimants, and applying Section 907 in ascertaining whether the burden of their tax had been shifted by them to others.