# Petition for Writ of Certiorari — Armour v. United States > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA0438641_1003%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1959 - **Citation:** 361 U.S. 821 ## Text aes PME UNITED STATES CP AMERICA A\PITQL PACKING COMPANY, FRYER & SFILLMAN,. FN “* .PEPPER PACKING COMPANY, 3. we _ FHE UNITED STATES OF AMERICA PETITIONS FOR WRITS OF CERTIORARI TO THE haitdion STATES COURT OF CLAIMS RNON. Tr ’ F | = 4 $ e SAME e ‘ Wa em | ' CH) L1) XC, *hRENNE by 2 \\ lieRS ? ” Ps. } f ) 195U —_ en wn: = ’ \ \- . Pic CORT - Pottice on | ie e © . Ry F ‘ ee “F : ¢ ; i os / ~ - « Pa ce . | ~ : ' 1 yh i a = * ¢ a WN HIP t if the U ited. St tr Supreme Cour uf the Unite ates October Term, 1959. ; . - “T6 3 AND COMP ( Dae { | WA Ltqi DVAHY PACKING COMPANY tit RATH PACKING “COSIPANY: ard WILS & CO, ENE | fe Mer 4 o° Hi, tNL ESTATES OF AMERICA - i] e 1Jr on Se PS tet tf i ol ee oe If Oe ae Se B \ Hii. K COMPANY, 1 LL EMAN ‘ER PHODS CLE, JOR-CATL DAR () i: ANNA TA CE CAR PACK LCARE ECL EM CEEVELANR DECERL! RY } | {(s {3 Fe os! M aN NLINA ( ’ Jor : ! TE tes “4 C) pi .\s RR Y RATAN. & (590 J ERIPDLANDER & (O.. FREIT DISTRIB OF a A $5, ae LEY-MAKON & CO. St. LAPIDUS & -SUINS BOLE S SUNS. i VRSHALE 1XC.,, JOHN MICELLE: INC, MINUTE SPAED COBRORKATION, |S. -D,- SH; NATIONAYT. PRODUCE DISTRIRE TORS Px PACT I4 GAMRLE Ga (0) L}dtos Be ae is A wee Wee aks ames | ty ees SE ee eee SAN SON z... SONS O.,, JOSEPH: S SANSONE, BEN B Si MIWARTZ & SONS, UNE at Niort Sa WEEKS, INC. and PHOMAS IM. ZINGALIE, . * \ ; Petitioners, ae 7 =) o Say . I'NDEX Qpinions Below s Set bak pes ae acc nots Jurisdiction Me pages dewaeeteuas De dnuwaawen gens Question Presented reer re Tere err ind enna Statutes and Regulations Involved ......; eet Pee Statement ...... Retenckieceued os (AS nasaeensanees Reasons for Granting the Woeit.....: : rey Tore eer Conelusion sec eeees ins 44. CheN Sina ARERR An oes kee Appe ndix | See eererr ESTEE eee Swift & Co. v: U nited States, ‘1: 36. C t. C1). 394, 144 F: » Supp. 956 Opinion and Findings of Fact and ¢ ‘onelusions of Law a + ; . 3 . Appendrs Bo OES eee SO es ea AP Races 1 59 F. ee a Opinion and Judgment +" Oe ee a Ee eS ee ee oe oe oe oe Te a Appe mdix -C.. er ee ; Armour & Co. et al, v. U nite States, N6. 544- ~ apd Anderson Food Processing Co. et.al. 4 United States, No. 376557, 169 F. Supp. 521 | ne and Judgment Ap pendix D— Armour & Co. et al. ~. United States, No. 344-57 + and Anderson Food Processing Co. et al. y. United’States, No. 376-57 ” ‘Order Denying Reheating’ Pe a . - P » g . * iil : . PAG! Appendix K=...... 5 ie aE ee gaat og sues | Perera /S 7& Capital Packing Co. et al. v.. United States, | No. 337-97 | ‘ ‘Order for Judgment 7” _ sAppendis:F peek ane Ghee ee : SANE we Leese i - Capital Packing Co. et al: v. United States, ae) . “No, 357-57. « - ine ct nt ae ee erie _ Order Denying Rehearing ll ees: a Citations me Cases: ; 2 ; aq ; pager ss : ; - \ Anderson Food Processing Pa Set al. ve United States, No. 376-57, Ct. Cl, 169 F, Supp. (1959) . .5,6. — Armour ‘& Co. et-al. v. United States; No. 85-57, Ct. CL,,£59 F. Supp. 380 (1958). 2. 0.5\.. ‘ahacs pe Armour‘& Co. et tal. v. United States, No. 300-5 “07 Ae) Ct. CL, 159 F. Su upp. ‘380 (1958) ....,0eeeeseae. ee Armour & Co. et ‘ai v. United States, No. 544-57, oe , UCt. Cl, 169:F: Sapp. 521 (1959) ....2/.007..2. 56 ~Armour & Co. et al. v. United States, Nd. 521-58, | -°.. ee | ere eer rp reer Vero. edn oe Avoset Company v. United States, Civil No. 36905, — U.S. 2. Ct. Northern Districtof California . p94 CIDGBY: skis case's Dube ctiae ye am ieceeben ees sae Beber et al v, United "States, U. 8, D. Ct 167.F. |. “ Supp. 169 (1958) Sieegeneeeee cinivana via 6 Black Canyon ‘Produte, Ine. ot al: v. _ United States, | No. 87-58, Ct. Cl (1958) Seer eer pata eee ee Capitol Packing Co. et al. vet United States, No. 307- a, a: CL (19. OEE nee atai kc aea 6 Charles Een Te aa Corned! Steamboat Co.y, Viewed were entered on. January 14, 1959 (RL 285 and 99), The petitioners filed timely? petitions for rehearings which. were denied by orders‘of the Court-of Claims enteréd on April 8,-1959 (R. 344 and 103). Jurisdiction this Court / is invoked under 28:U. S. 5/88 Section 1255(1). ae oe Sey, Question Presented — - ae ao charge for the placing of ice and’salt in the bunkers of rail refrigerator cars.’ The question presented is: / wi : ‘ - ” eh . = . : * » At Wahether the word ‘‘transportation’* in the Transporta- tion of Property Tax Law: ‘tion 3475 of the Internal Revenue Code of 1939: Section 4271[a] of the 1954 Code) ‘included the supplying of ig¢e and salt in the bunkers-of -rail ’ refrigerator cars, _ ip ab ; ' . Statutes and Regulations Involved’ a ‘Internal Revenue Code of 1939: eee o 5.3475, Transportation of property PE Se a , _. paid within or without the United States. for the transportation of property ‘by rail, motor vehicle, water, or air from one point in the United States to another, a tax equal to 3. per centum of the-amount sb paid, except that; in the case of coal, thé rate of . tax shall be 4 cents: per short ton. Such tax shall apply only to amounts paid to a person engaged in - the business of transporting property for hire, in- , cluding amounts paid to a freight: forwarder, express . company, or similar person,” but not. ‘including 4 Petitioners claim refund ofthat portion of the tax on the transpertation. of property imposed on the. carrier's (a) Tak: There shall be imposed upon theamoint - . amounts paid by a freight forwarder, express coh- % oS e .one‘point in the United States to another, a tax equal - —to3 percent of the amount so paid.” rhe | ‘ Section 4271 of the es Révenue Code of. 1954-has | heen. repealed. *Pub.. L. &5- 479 « S 4(a), ‘June . 30, 1958, “F2s Stat. 260. Effectiv e date. peru a 1958. Treasury Regulations 118 C194: 3 ed. ). 4 143, $3 ‘+ ? “(dy Transportation. ° The term ‘transporta- -.. tion’ as used. herein: means. the’ movement of prop- “y+ + erty by a person enggfged in the business of trans- caeiee porting property for hire, including interstate, intra-. - state and intra-city or other local movements, as-well ‘as towing, ferrying, switching, | ete.: In ‘general, i includes accessorial services furnished in-connection with the transportation movement, such as loading, - ‘unloading, blocking and staking, elevation, transfer .~ . in transit, ventilation, refrigeration, icing, storage, demurrage, lighterage, trimming of cafgo in vessels, : wharfage, handling, feeding and watering. Hivesjock, . > and similar serviees and facilities.’’ -. ae gee ~p od ' Statement : - * The petitioners are” dhlonere of meat, fruits Py vegé- elk | tables and other perishable progucts by rail in refrigerator cars which are cooled by icé and‘salt placed in their bunkers. They seek to recover moneys paid to the United State#as tax on the charges -by rait carriers > for sa os ebsites of property. | ices ‘ . 7 Se -@— a ~- t@ _ | Included in tke rail carriers’ charges Were charges for’ the furnishing of such ice and salty The cost of ice ‘and salt or refrigeration appeared on the freight bills as dis-. tinet items, separated trom the line haul charges, Under’ the lgbel of transportation tax, three percent of the charges for these servicesayas added to the #reight bill’ by the’cag- riers, who gilso colle ‘ted the tax on thie line haul charges from petitioners, The carriers’ paid. the tax over to the United States, rete oot. eens e Atter such payment of the tax, petitioners filed time ‘ly claims for refund on the eronnid that Section 3475/a] of the Internal Revenue Code of 1! OO (Section 4271 [aj of the 1954 Code) iImposad a tax only on tlie amount paid for the “transportation of property’? ang the it icingiand. salting or refrigeration gare not costs of the ‘transportation of property: and therefore not’subject to the tux. Swift & Company in 1953 brought a test case, claiming _ a refund of $7,246.67. By a decision rendered: on January 26, £956 the Court of Claims unanimously held+that the plaintiff Was ¢ ntitled to recover the tax paid on the amonnt paid for icing and salting. Judge Laramore wrote the. opin- gion of the court, with Chief Judge Jones and Judges Mad- deny Whitaker and Ligtleton cone urring. Sw We ompany | ve Cited Sictes, Bt. Cls. 394, 144 F.Supp. 996 ( Appen- dix A),- = , Sethe bee « The defendant. refused to abide by the decision and con- ; tinucd to collect the tax. A muffi- -party dction on behalf of els cht. meat packers was instituted on February 21, 1957 in ghe Court 6f Claims. As subsequent. claims matured, an- other multi-party action on behalf of nine packers was in- stituted on July 2, 1957. Phe plaintiffs in these two actions moved ,for sunimary Saldiatiacsst and-on March 5, 1958 the Court of Claims again unanimously directed judgments for” the plaintiffs. Armour & Company'et al. vo United States, No. 85-57 and Armour & Company et al. ¥. Umited States, a a e No. 300-57, 159 F. Supp. 880 (Appendix B). Judge Lara- amore. delivered the opinion of the court with.Chiet Judge Jones and Judges Madden and Littleton concurring. Judge ‘Whitaker took no part in the consideration and decision of the cases. . ; 7 ' . The plaintiffs in the fir§t°two Armour cases eollected judgments in-the aggregate sum of $355,765.90, plus in terest. * Re ae ’ 3 After the second unanimous holding that the tax had heen improperly levied, the government gontinued to collect the ta®and a‘thirdmulti-party ‘action Was gis stituted by five — meat packers. on November 29¢.1957 in the Court ‘of Claims, seeking to recover $98,937, 49. Ti addition, on August od, 1957 a -muilti- party netion was instituted by: twenty- eight fruit.and ex table Shippers with claims totaling $96, x8,8 34, The plaintiffs:in these two actions moyed for summary judgment and on January 14, 1959 the-Court of Claims held that its two earlier decisions were erroneous and denied | plaintiffs’ motions. - The Government's cross-motions were grante d. ‘A single opinion was written. Armour and Com- pany et at. v. United States, No, 544-57 and Auderson Food Processing Co. ef'al. «, United States, No. 376-57, 169 F. Supp. 521 (Appendix (). | It is this judgment that the peti- tioners seek to review. Judwe Madden wrote the majorit® cpinion in the. Armour and Anderson, eases, with Chief Judge Jones and Judge Whitaker coneurring. Judge Larainore dissented. (Opiition, Appendix C.) ee cee aa, ae | ak The plaintiffs in the Armeur and Anderson actions moved, in the Court of Claims for a rehearing and to ‘vacate the Judgment of dismissal. These motions were overruled by®an order dated Aprils, 1999. (Appendix iS ae In addition to the foregoing actions, there are suits pend- ing in the Court of Claims brought by a number of the peti- s e J . ° 4 g ie 6 . . e ‘ tioners in the Armour and ufaderson actions: Armour and Company et al. v. United States, No.-d21-58, in which seven meat packers seek to recover $99,889.53; Black Caunyor Produce, Ine. et al. y. ated Stats, N&R ST-d8, in whieh twenty-seven fruit and Vegetable shippers sue tor #115, O79.29, ee oe. The third group of petitioners ‘for a writ of ‘certiorari are three shippers of meat Who instituted an action in the Court of Claims on August 1, 1957 seeking to recover a total Of $27,600.87, Capitol Packing Company cet alow. United . or — o« 6 oe . . . . bead States, No. 367-57, Plaintiffs in that action moved foresum- smary judgment and ou January ‘14, 1959 the @ourt of Claims granted the,defendant ’s.Crosssmotion and dismissed the petition ““* * * on the basis of the opinion rendered this date in Armour and Company et al. v. United States, No. O44-57."") (Appendix E.) 'Fhe- plaintitfs in the Capitel Packing Compaiy action moved in the Court of Claims ‘to alter or amend the judgment. © This Was overruled by an order filed on April 8, 1909, (Appefidix F.) Petitioners are advised that there uie four District Court adjudications on the same issue, all of which found in favor of .the Governtpent. coset ‘Company vy. Cnited . States, Civil No. 36905, Northern’ Distritt of California, July 31, 1958; Beber, et al. v. United States, 167 F. Supp. “169, Northern District of California, Southern Division, October 27, 1908; The Charles Abbate.Co. y. Joh nT. Jarecki, ~et-al., No. C1717; Southern District of Illinois, Eastern Division, March 18, 1959; Litrak Meat Company v. United States, Civil No. 5777, District of Colorado, April 14, 19°9. We are advised that sinfffar actions are pending ‘in several District Courts and in the United States Court of Claims. si . ‘Reasons for Qrentinn the Writs 1. The Court of Claims has upbeétd a Treasury -regula- tion Which extended the coverages of a tax statute by adopt- mya definition enacted by Congress in another statute tor the wholly ditferent purpose of rate regulation: Involved: here is the question whether the Commissioner of Internal ’ Revenue is to be clothed with the legislative power to ex- tend the coverage oft a tax statute by such a device. The tax statute in suit simply imposed a tax on the ‘transportation of property byrail * * *."* No definition of transportation was. ever enacted thy Congress in this statute. By regulation, however, the Commissioner under- took to define ‘transportation’? in this tax scheme by de- claring it to include various accessorial services rendered Ay carriers to shippers, including i icing and refrigeration. The definition thus promulgated by regulation closely‘ fol- lows the definition of transpo-tation enacted by Congress in the Hepbarn | Act ame endment to the Interstate Commerce Act.® ‘ When ‘Congress in the Hepburn; Act defined ‘trans- ** portation ‘as ineluding ‘trefrigeration or icing”, it was ia Thesgexulation in suit “reads in part (Treasury Regulations 113 {1943-Ed.] § 143.1: . “In general, it includes accessorial services furnished in con- nection with the transportation movement, such as loading, -un- ’ loading, blocking and staking, elevation, transfer in transit, ven- tilation, refrigeration, icing, storage, demurrage, lighterage, trim- tC ming of cargo in xessels’ ?wharfage, handling, feeding and water-. ing livestock, and similar Serv ices and facilities.” (Italics: sup- plied.) : The Hepburn Act amendment to the Interstate ompmuetpe Act reads in part (49 U. S-C.’A., §1[3]: “The term ‘transportation’ as used in this chapter Shall in- clude * * * all services in connection with the receipt, delivery, elevation, and transfer in transit; ventilation, refrigeration or ‘ icing, storage, and handling of - aeediiind trameported.” (Italics supplied. ) . . : 5 “a extending the meaning of that word™to inelude certain’ services which, theretofore, had not been embraced within it** 7. Pennsylrania R. Co. vy. United States, 227 F’. 911, 919 (1916), aff’d 242 U.S. 308: This Court declared that Congress did so in order to plug loopholes in the regulatory ‘scheme. If the -supervision ly the Interstate Commerce C ormmission over rates were confined to the charges for the carrier’s service as carrier, the earrier could nevertheless discriminate by under or over-charging one shipper as against another for accessorial services rendered by the earrier. Cleveland, C.C. & St. L. R. Co. v. ee 239 U.8: 666 Stn. OS ; et - In addition to these holdings that ‘*transportation’’ does © not inelude the purchase of ice and salt. or refrigération ° service, other considerations lead to the same conclusion. . Indeed, the Court of Claims so held in the two earlier eases. involving this tax and many of these petitioners (opinions in the Swiff and Armour cases, Appendix A and.B). These —. “opinions summarize several of the criteria which establish r ‘that icing or refrigeration, are not embraced within dhe ‘meaning of transportation. es * We note briefly here that ice arene by cither the shipper. or the carrier for use in railroad car bunkers has i heen subjected to local sales tax: The Court of Claims. so found (Swifté Co., Finding of Fact 7[d], Appendix A), If- 7 the purchase of these eommodities for use in interstate car- - riage was ‘‘transportation’’, the local sales tax would have . been stricken down as’in violation of the Commerce Clause. Cf. Edelman v. Boeing Air sett ta Inc., 289 U.S. 249 (1983); ashv ille C.d St. L. Ry. Co. v. Wallace, 288 U.S. 249 (1933 ); Fastern Air Transport, Inc. vy, South Carolina / Tar ¢ Tommission, 285) U.S, 147, 15 2-3 (1932), ‘The Commissioner, in borrowing the Hepburn Act ’S eX- tended ‘definition of transportation fo include -ieing and refrigeration w as clearly tlerefore extending the coverage of the tax on ‘‘transportation’’. But the Commissioner has ’ no right or power to assume that because Congress, by special enactment, gave transportation a broadly inclusive | definition for the purpose of railroad rate regulation, it must have intended to give the same meaning té that word in a tax statute. Cf... Cornell Steamboat Co. v. United States, 53-F. Supp. 349, aff'd 321 U.S. 634 (1944). The’ Commissioner usurped the prerogative of Congress in pro- viding by regulation that the coverage.of:the tax on trans-. portation was to ‘be co-extensive With the seope of trans- - portation subject to ‘the i aaraanent powers of the Inter state Commerce Conpitsston This adininistrative ¢ nection does. not ever have the doubt- ful merit of achieving synnactry. The regulatory powers of the Interstate Commerce Commission extend only to in- .terstate ‘transportation: . Tlie. tax in issue, on the ‘other . . ° G& » lo A ppend r A The term “traiisportat lyn” as Msed in this part means the movement of property by a person engaged in the business of transporting property for hire, in-’ cluding interstate, intrastate, and intra-city or other local movements, as well as towing, fe rry ‘ing, switeh- furnished im connection with:a transportation: move- ment, such as loading, unloading, blocking and stak-’ eration, icing, storage, demurrage, -lighterage} ‘trim: *. ‘ a . e ming of cargo in vessels, wharfage, handling, feed- ing and w atering liv estock, and similar services and - facilities.’ Pie eat i The plaintiff challenges this part of the regulation as ~- being invalid because it is an attempt by theCommissioner _ of Internal Revénue to” broaden the meaning of the t term transportation as used in section 3475 by. assimilating it to the definition of transportation\as defined. by Congress in the Interstate Commerce Act, 24 Stat) 379, as amended by the Hepburn Act, 34 Stat. 584, 49 U.S.C! 4$1. The plain- tiff contends that the ordinary and seis understood . Meaning of the term ti ansporation. does not include icing or s, salting or switchin d demurrage, and that it would be necessary for Congress to qniarge the ordinary meaning in _ order to include such items. The plaintiff asserts that the ing, ete. In gen ral, it includes accessorial, Servi ices - ‘ing; elevation, transfer in transit, ventilation, refrig- 7 2 ts) ordinary’ meaning of the term transportation was enlarged | for purposes of. interstate commerce by the Hepburn Act. However,. we really do not know whether the ordinary nreaning was enlarged by: the Hepburn Act Since the term transportation. was defined before and after the amendment by rather specific language. The definition -of transporta- . tion contained in ‘the Interstate’:Commerce Act’ before amendment provided that ‘“The term ‘transportation’ shall - include all instruifentalities of shipment or carriage.’’ In 1906 it was enlarged by the ‘Hepburg Act to include, inter alia, ‘and i in addition to the original definition, “¢all’services ® pa’ the. two. PY ‘ _ . The plaintiff refers to Ede rita . Boeing Air Tran sport, Tac., 289 U.S. 249; Inde ‘pendentWarehouses, Inc. +. Scheele, 331 U.S. 60; and In re New York, Ohio & W estern Railway Co. et al v. City of New York, 161 F. 2d 518, a’s indicating that some of. these accessorial services, or products are sub- ject to a state tax, the validity of which has been sustained. as not being a burden on transportation ‘in interstate com- merce: ‘The court stated in the. In Re New York Ohio & Western Railwar ay Co. case that “The demurrage represents a service agers from transportation “a Sop lie a ae . . . , - ’ : 7 . «* “Afipendix ” RE es The plaintiff also argues that sinee some of these prod- ucts or seryices are Subjeet to local taxes, a Federal tax. on, them also Cn result in double t taxation ‘w hich should ‘be ‘evoided unless, required by express terms of the statute. It relies on United States v. Sup plee Badd le Hardware Com- pany, 269 U.S. 189. Although, that case is-dis tinguishable on. the ground that in that case ‘loth a‘ Federal. tate nnd F ‘ederal i income tax were. sought on the same seats there - is some sitmificance to the fact that many: of the states do impose a tax on-these same items. It is also Significant that section taxes the amount. paid the earrier.. Therefore, if the phip:— per or ‘any one other than the, carrier performed these services, -or furnished these prodiiets, a tax thereon sould not be impésed. We can see no logical reason why C ongress eould have intended to impose:a transportation tax) on the shipper‘when the carrier ices, loads or-wnloads, ete. the ear. and not impose a tax 6n the shipper when the shipper or someone ‘else performs: the identical services. Such a tax." 3473 by its ees ee - would be Qscriminatory y “against the carriers for no ostensi- ae ble reason. ‘ We dé not believe that. Congress’ inten led to give’ ‘the term. transportation the same scope or breadth in section 3475 as it did in the acts regulating iiterstate commerce. ,* The definition of transportation. coutained in’ the above regulation is: too broad. The contention of defendant that this regulation-should be deemed to have received legisla-- tive; appv. without merit. A treasury regulation, interpreting a transportation tax act in 1918 to 1921 w hen ‘the aét was repeated could -hardly be considered to jiave Keen, approved by* Congress in 1942 when dnother.trans- * portation tax act is passed. Thé fact that-€ ongress re- acted this\section i in the 1954 C ode ‘withont any substan-. dee change ddes not give approval,te the regulation because there is no showing that this protien was called to the ¢ ‘attention ‘of ongress. =_ . : Appendia A men we me ; ae ‘he case: Of: Proc ter & Gamble Co. v. United States, 28] Red, Wl, | relied.on bys defendant-in support of its coustruc- tion, Was dismissed on the. ground that the taxpayer paid the tax voluntarily and Ww ithout protesf.. The dictum-in the two- paragraph opinion ‘did state that the transportation tax Was payable on ‘demurrage, citing only interstate eom- -meree regulatomw Cases. We believe the dictum was w rong. We believe that Congress intended to impose a tax on “the amount paid for actual transportation and not on Bll of , the additional services that may he furnished by the. carrigy. We believe that payment for any movement of cargo from one -pointon the line to another, inéluding, but not limited to, such ihings as lighterage, switching, backhauling, are wmounts paid for tra: ‘sportation. Amouis paid for venti- lation, refrigeration, icing and. salting, are payments fer those services and not payment for transportation within | the meaning of Svetion 3475. The above-mentioned services ~« arenot ite vaded to. be’ all inclusive, but. only illustrative of the distinction between amounts paid for actual transporta- tion and amounts paid for additional services. While the ; writer of this’ opinion believes ‘the above should include de MmUrrage, the majority of -the court believes otherwise. Thus de qurrage is not, included in the services w hich are not taxable. N ‘The application of the above construction to the indtant case results 1 in @ proper tax on sw itching, but an melita! tax on ieing and salting. j “> The plaintiff tS entitled to, recdver the’ tax. paid on the amount paid for icing and salting, with interest as provided , by law, and judgment will be epitered accardingly. The ‘amount of recover y is reserved for further proceed- ings in accordance with, rule’38 (c) of this court. M ADDEN, Jud ge;- Wurraker, Judge; Litt.eTos, Judge; and Jonxts, C hief Judge, concur. é 6 | ee ite = a. ad ae Appr ndix A Finpincs or Fact The court’ having considered the evidence, the stipula- tion Of facts entered into by the parties, the report of Com- tuissioner W, Ney Evans, and the-briet's and argument of couusel, makes findings of fact as follows: 1. In this action plaintiff, ‘an Hlinois corporation, to recover $7,246.67 in taxes paid by it during the period commencing October 1, 1948, and ending December 31; 1044, - ‘in connection with the transportation Of property. oy] paid *** * * for the transportation of property by rail * *\* from one point in the United States to another,”’ and sub- section fc) of the same section requires that such tax ‘* * * rt shall be paid by the person gnaking, the, payment subject to the tax,’’ and that the ‘anrier receiving a payment for the transportation of property “ * * * shall collect the amount” of the tax impésed from the person making such payment, and shall * * * make a return, under oath “* * and pay the taxes so*eollected to the collector **.*," oD. Section 143.12(d) of Regulation 113% issued in 1943 by the Commissioner of Internal Revenue defined ‘*trans- portation’? as used in seetfon 3475 (ay of the Internal Revenne*Code of 1939 as follows: a - ‘1A stipulation of facts filed by the parttes is the basis of findings 1 through 5 herein. The remaining. findings are based upon evi- dence offered by plaintiff. In their Stipulation the partjes agreed that this action “arises under a law of Congress,” and that “jurisdiction of the subject matter is conferred upon this court by section 149] . (2) or (3) of the Judicial Code,” while “jurisdiction to hea? and determine this cause at this time is conferred upon this*¢ourt by section 3772 (a) (2) of the Internal Revenue Code of 1939 and by : » Section 6532 (a) (1) of the Internal Revenue Code of- 1954." 2 26 U. S. C., § 3475 (1946: Ed.). * $26 CFR 143.1 (d) (1949 Ed.), ° oe. seeks. 2. Seetion’ $475 (a) of the Internal “Revenue Code of. M39* imposes a tax equal to three pereent of the amount » - 20° : 5 Appendix A se 7 *-* The term “transportatl ion’? as, ‘used herein means -the movement: of property - by : a person en- eaged in the business of transporting _ for hire, ineluding interstate, intrastate, and intracity _ or other local move ements, as well as towing, ferrying, — switching, ete. In general, it includes. accessorial services: furnished in connection. with a transporta-. tion movement, such as loading, unloading, blocking” and staking, elevation, t ransfer in transit, ventila- — tion, refrigeration, icing, storage, demurrage, light- brage, trimming of cargo in vessels, wharfage, han- dling, feeding and watering of livestock, and similar. services and facilities. ~ 4. (a) During flie period in suit plaintiff shipped meat avid other of its products and property (some of which was perishable) to poiits-within the United States’ over the link of certain carriers by rail. Included in the charges +4 plaintiff by these earriers was an aggregate of $241,555.77. for refrigeration charges (eonsisting of charges for the fur- nishing of ice and salt and for switching in connection therewith) and for demutrage. On the freight. bills pre- _sented to plaintiff by the carriers, these charges (for re frigeration and for demurrage) were separated from the charges for line haul applicable to the transportation of plaintiff's property; and on each such bill each earrier added, as a separate item and under the label of transpor- tation tax, an amount equal ‘to three percent of the total charge for the line haul rate-plus the hggregate charges for blectpltoants services and demurrage. ‘Ch, 49. U. §. C.1 (3) (a). | | , » ® A.schedule attached to the parties’ stipulation. lists 12 rail car- riers, together with the tax collected by each on specific charges (also listed) during the period in suit. Since the figures are not in dis- pute, details of the schedule are omitted from these findings. me , Appendix A e | PPENAIL « 2 ~(b) Plaintiff payl the sum of $7,246.67 to the carriers as representing three, percent of the aggregate charges for re- frigeration and demurrage of $241,555.75. s (c) The carriers paid $7,246.67 to the appropriate ( ‘ol- lector of Internal Revenue in monthly payments conumenc- : ing on-or about November 30, 1948, anil e nding on or about January 31,1950. (d) No part of the $7,246.67 has-ever been returned to plaintiff, nor has plaintiff consented to the allowance of a credit or refund thereof to any carrier, ; dD. (a) Plaintiff timely filed (on November 6, 1952) with the appropriate Director of Internal evenue a claim for the refund of F202 OS," stating the following reasons for allowance ef the clk im: * Said carrjers erroneously added a tas of 3% to said charges and collected from claimant the aggre- ~ gate sum of $7,252.58 as a tax owing by claimant under Code S ction 3475 (a), and waich amomit said carriers paid to the Collector of Internal Revenue at Chicago, Hinois, during the month following the month in which the carriers collected the same trom claimant. © As Code Section 3475 (a) imposes a tax of 3% only on. the amount paid for. ‘transportation of property,’? it was erroneously imposed by the ear- ‘riers on the cost of icing service, and de amurrage, which is ot a eost ‘for the transportation of prop- “erty, and consequentiy should be refunded to .the claimant with interest. No repayment. of the taxes for which refund is claimed, or any part thereof, has been made to the * The discrepancy between $7:252.58 and $7,246.67. is not eX-— plained. Plaintiff concedes the | latter amount is correct. e mo) Appendix A ‘claimant by- the colleeting carrier and the claimant ~has not consented to the allowance -of eredit or re titud to the colecting e: ir Y ier Ss (hb) The Director of Internal Revente denied: the ¢laim ~ and duly gave to plaintiff formal notice of ‘the disallow- ance,! ‘ 6. The tax payments which plaintiff seeks by this action to recover were paid to the several carriérs as three “pe reent additions to charges for refrigeration services (in- elading the furnishing and placing of ice and salt and the - switching of cars incident thereto) and for demurrage. It. is not established by. the evidence.that any of the demurrage charges related to vctrigerated ears.* 7. (a) In the course of plaintiff’s) normal business operations refrigerator cars were (and’ are)® sometimes initially iced by it as shigper. When this oceurs, no charge -for icing is made by the carrier, and, there being no charge, no tax is colle¢ted by the carrier or paid by the shipper! When the ear is initially iced. by the carrier, how ever » the charge i is made and the tax added, 4 (b) When a Sebrigerator car is held over and becomes subject to.a charge for demurrage, any additional ice the car may need must be furnished by the shipper, in which event there is no charge for icing by-the carrier and no tax “thereon is collced or paid. ea Ma, . s 7.Other dosinnatities. established by the stipulation or- by the evi-, dence are that there has been no transfer of .this claim.by plaintiff, and no action on it, other than as stated herein, ‘by the Congress or any of the departments. *In this action’ plaintiff chaltenges the validity of the pertinent regulation (finding 3) insofar as it purports to-include in transporta- tion such accessorial services as refrigeration (including switching i in- cidental thereto ), storage, and demurrage. ® This is a test case for similar claims now pending. a . vw Appendix A (c) The carrier enters a clfarge against the shipper for ieing and Switching whenever the @arrier furnishes the service.” While this may or may not oceur when the par is initially iced and made ready ‘for shipment, the carricr ©. customarily renders such service while the shipment is en route. Whenever ‘the carrier’ performs the’ service. and makes the charge, thé tax of three pereent is added and collected by the carrier from the shipper. (d) Ice purch: ised by either the shipper or the carrier ‘for use in railroad dar bunkers has been subjected. to local sale ‘Ss taxes, + “Gann a im ConcLustoN or Law r Upon the foregoing findings of facet, which are. made a part of .the judgment herein,.the court concludes as a matter of law that the plaintiff is entitled to recover the’ tax paid om the amount paid for ‘jeing and saltitig, with interest as provided by law, and judgment will be entered -to that effeet. The amount of recovery will be determinéd pursuant to rule 38'(e) of the males of this court. 1-The switching ihn is a flat or standard. charge for each: ‘refrigerator car that is serviced at an icing station. ‘It applies whether or not any switching i is done. Stee G57 . 4 . Appendix B peneal IN THE. - UNITED STATES COURT OF CLAIMS. + "(Decided March 5, 1958) { , No. 85-57 ray vv ¢ ARMOUR AND Company et al. eo. ; iy: ae ~~ Tire Usitep States sad . ; 7 en — No. 300-57 « ArMoUR anp Company ef al. we Me Tre Unitep States On Puaintirrs’ anp Derenpant’s “Motions For SuMMary JUDGMENT -LaraMonre, Judge, delivered the opinion of the court: ‘These are actions brought by eight plaintiffs in one suit — ~ and nine plaintiffs in another for the refund of transporta- tion taxes. The cases arise on plaintiffs’ and defendant's motions for summary judgment. 7 p Two, questions are present: (1). whether the phrase ‘tthe amount paid * * * for the transportation * * * of prop- . erty’? as used in section 3475 ofthe Internal Revenue Code of 1939, as amended 26 U.S. C. 3475' (1946 Ex), includes - oo eer ots: late ; Ap) seondis BB. diarges ee the carriers for the supplying of ice and salt in the bunkers of refrige ‘ration cars, and (2) whether the period for filing claims for refund of Transportation taxes begins to ruii from the date the taxes are paid to the carrier or from the date the carrier files its return and pays the taxes to the collector of internal] revenue, The facts, which are undis spute tre these: The plain- tiffs are nine corporations which ship meat and other prop- erty owned by them to points within.the United States and pay transportation taxes to the carriers on ac ‘ount Lhereot, There was included in the trans sportation charges, ébarges for icing, salting, switching, and-de miurrage., The taxes on these items were paid during the period from October 1 throngh Deee mper 31, 1952. Plaintiffs filed. claims for refund fora part of thre trans- portation: taxes paid, contending that charges for icing, salting, and demurrage were not a’ part of the, cost. of transportation and therefore they were entitled to recover taxes paid for such services.. The clgims were rejec ted and. this suit results.) The first question presented, i.e,, w hethe ricing and salt- ing aS a part of: transportation: and subject to tax, was considered.in.the.case of Swift & C ompany Vv. United States; 156 C. Cls, 394, where this court held that the definition of ‘transportation as contained in the regulations of the Com- missioner of Internal Revenue should not have ineluded amounts paid for ventilation, refrigeration, icing, amd salt- ing. On the authority of that case, to which we adhere, . - plaintiffs’ motion ‘for summary jiilgment is granted and defendant’s:motion for summary judgment is denied, sub-: jeet to the restrictions discussed below, regarding the second question presented, i.¢., that claims for refund are to an extent barred by the statute of limitations. It i is thedéfend- ee ‘Plaintiffs in their wistitins have abandoned the tax an demurrage dis set forth in the claim for refund. ry , —— y 26 - . ; wae quite semeie- =, | . Appendix B.. eee. ; ant’s position that $14, 630. 43 of the amount Set forth in the petition is ‘barred by the statute of limitations since the claims therefor were not.filed within the 4- -year period after payment. Z - Section 3313 of the Internal Riedie Code of 1939, F supre, provides that all ¢laims tor the refunding of any tax alleged to have been erroneously or illegally assessed or collected must be presented . to the Commissioner within four years next after the. payment of: such tax, and the “amount of the refund shall not exceed the portion of the tax paid during the four years immediate ly prec eding the filing of the claim, ~ ° Section 3475 (c) of the Internal Revenue Code of 1939, “supra, provides that transportation taxes imposed shall be paid by the person making the payment subject to the tax. It further provides that the person receiving. any payment - shall collect the amount of the tax, making a return ‘on or hetore the last day of each month, and pay the taxes so collected to the proper collector of internal. revenue. Plaintiffs contend that the date payment was made by the carrier to thé collector was the date of payment of the tax and hence the statute of limitations did not begin to .run until that date. ° ‘ A consideration of the pertinent statutes leads us to this conclusion: The carriers. were under duty” imposed by section 3475 (c) to collect the tax from the shipper. Thus the earrier syas in effect the agent of the Government and : received payment as such. “Payment to’ the agent dis- ” charged the obligation of the taxpayer. as fully’as'if pay- ment were made directly to the , proper collector of internal - revenue, since receipt by an agent is regarded as receipt by | its principal. When plaintiffs paid the transportation costs, which included the tax thereon, to the carriers, it ~« effectively discharged its obligation, and the time for filing claim-for refund began on that date. See Eastern Exten- é % Sot mee Appendix B f sion, - pre & Chita Telegraph Co., Lid. y. United +. States, 251 U. S. 355. oe: It folow! s that all taxes paid by plaintiffs mote than four ; years prior to the filing of claims for refund are barred by B..- the statute of Hmitations, supra. Piaintiffs’ motion for summary judgment is granted in part and denied in ajith _ and defendant’s cross- motion for summary judgment --i ~f— grarited in part and denied in part. i hd : Judgment will be entered for plaintiffs together with | _ interest as provided by law. The amount of recov ery will | he dete ‘rmined pursuant to Rule 38 (c) of the Rules of this _ . court. " It'is so prdeved: 8 e - & a . fies MADDEN, Judge; LittLETon, Judge; and JONEs, Chief Judge; concur. : i W HITAKER, buitpe: took no part in the consideration and de ‘cision of this case (sick). > IN THE” ee NITED STATES cou RT. OF C LAIMS- (Decided January. iy 1959) ” , @ sel Oo . Vv ARMOUR AND COMPANY, ET AL., Od Ss oy -Tre Usiten States. a A No. 876-57 ia ANbERSON Foop Processtnc Co. ET AL., > ae Tue Unitep STATES. Vv a 0 ‘ : \ - On PLAINTIFFS’ Motions ror SumMARY JUDGMENT-AND JU DG-* MENT ON THE PLEADINGS AND DEFENDANT’ Ss Motions FOR _SumMMaRY eve MENT M ADDEN, Suita’