# Brief for the Respondent in Opposition — Fuhrman & Forster Co. v. Commissioner

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Brief for the Respondent in Opposition
- **Published:** January 1, 1941
- **Citation:** 312 U.S. 686

## Text

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Jurisdiction — — — — - 4

Question presented ; ‘ :
Statutes and regulations involved _ __
Statement __- Nhe
Argument.___-_--_- ae

Conclusion _ - , . hie ‘
Appendix - - -- -- . ; ; Sona err vere ee ee

CITATIO.,

. S
Cases:
srogenrs wa “ef = : “no Ad S. 337... --...-...--- 8
Ar » V¥. 8c F . :

rari denied, 310 U. 8. 645...._. 109 F. (2d) 278, certio-
Carbon Steel Co. v. Lewellyn, 251 U~ S. ‘i
= & ee a agrees. 104 F. (2d) 563. __.

rain Belt Supply Co. v. ~OMMI185 oner, 109 F. (2d) 490,

certiorari denied, 310 U.S.648. 5,6
Lucas v. Kentucky Distilleries & TL ehouse Co., 70 F. (2d) :

883__- , oe aleg es he insaieneg te Se ee ee 9
New Consumers Bread Co. v. Com Msioner, 115 F. (2d) 162. 5

Oswald Jaeger Baking Co. v. Commizsioner, 108 F. (2d) 375

certiorari denied, 309 U.S. 683_ TA Ces ee 5
Southwestern Serum Co. v. Commis ioner, 108 F. (2d) 843,

certiorari denied, 310 U.S. 628. tf Gets ee 5,6
Trunz Pork Stores v. Rasquin, 100. om We. ......... 2&8
Warner-Patterson Co. v. United Staes, 68 C. Cls. 237___- 9
White v. Hopkins, 51 F. (2d) 159 9

Zinsmaster Baking Co. v. Commissoner, 109 F. (2d) 738,

certiorari denied, 310 U.8.653...........sisi“‘(i(‘(swtCit*;# 5
Statutes:
Agricultural Adjustment Act, ¢. 25,48 Stat. 31:
See. 9 (U.S. C., Title 7, See. 69)______- Speett arses 11
Revenue Act of 1936, ¢. 690, 49 Stitt. 1648:
Sec. 902 (U.S. C. Supp. V, Tile 7, See. 644) ca AS
See. 905 (U.S. C. Supp. V, Tile 7, Sec. 647) hee 14
Sec. 906 (U.S. C. Supp. V, Tite 7, Sec. 648) 7,14
Sec. 907 (U. 8S. C. Supp. V, Tide 7, Sec. 649) 16
See. 910 (U. S. C. Supp. V, Tife 7, See. 652)_._.._- 8, 16
See. 913 (U.S. C. Supp. V, Tite 7, See. 655) 7, 16
See. 916 (U.S. C. Supp. V, Tide 7, See. 658) oe: 17

2S5S54—41 1 (a)

II
Miscellaneous: Page
Treasury Regulations 81, promulgated under the Agricul-
tural Adjustment Act, Art. 2------------------------ 17

Treasury Regulations 96, promulgated under the Revenue
Act of 1936:

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EE PN EOD SE, EAMONN I AE LLM, OR CREE TE

Guthe Supreme Court of the Wnited States

OctToBeR TERM, 1940

No. 650

FUHRMAN & ForsTER COMPANY, PETITIONER
Vv.

Guy T. HELVERING, COMMISSIONER OF INTERNAL
REVENUE

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED
STATES CIRCUIT COURT OF APPEALS FOR THE SEVENTH
CIRCUIT

BRIEF FOR THE RESPONDENT IN OPPOSITION

OPINIONS BELOW

The order of dismissal of the United States
Processing Tax Board of Review, together with
supporting and dissenting memoranda, is printed
in the record at pages 53 to 57, inclusive. The
opinion of the Circuit Court of Appeals for the
Seventh Circuit (R. 87-94) is reported at 114 F.
(2d) 863.

JURISDICTION

The judgment of the Circuit Court of Appeals
was entered July 22, 1940. (R. 94.) <A petition
(1)

BERTAPELLE ELIS

2

for rehearing was denied by the Cireuit Court of

Appeals on October 1, 1940. (R. 95.) The peti-

tion for a writ of certiorari was filed on Decem-

ber 26, 1940. The jurisdiction of this Court is in-

voked under Section 240 (a) of the Judicial Code,

as amended by the Act of February 12%, 1925.
QUESTION PRESENTED

Whether the United States Processing Tax
Board of Review properly dismissed the petition
for review for lack of jurisdiction.

STATUTES AND REGULATIONS INVOLVED

The pertinent provisions of the statutes and reg-
ulations involved are printed in the Appendix,
infra, pp. 11-25.

STATEMENT

This proceeding was instituted before the United
States Processing ax Board of Review by a peti-
tion filed September 1, 1938 (R. 3-8), and an
amended petition filed April 24, 1939 (R. 42-48),
to review the disallowance by the Commissioner of
Internal Revenue of petitioner’s claim for refund
of $260,675.15. This sum represents $258,086.02
paid to C. A. Burnette Company, a custom slaugh-
terer, on account of processing taxes imposed upon
the latter under the Agricultural Adjustment Act,
c. 25, 48 Stat. 31, upon the slaughtering by ©. A.
Burnette Company of hogs owned by the petitioner,
and $2,589.13 paid by petitioner directly to the Col-
lector of Internal Revenue as processing taxes due

3

upon the slaughtering by the C. A. Burnette Com-
pany of hogs owned by the petitioner. (R. 42-43.)
Upon motion by the Commissioner (R. 49-50), the
Processing Tax Board of Review dismissed the
proceeding before it for lack of jurisdiction, three
members dissenting (R. 53-57). The Circuit
Court of Appeals for the Seventh Circuit affirmed.
(R. 87-94.)

Insofar as material here, the amended petition
filed with the Processing Tax Board of Review (R.
42-48) alleges that the petitioner is an Illinois cor-
poration organized January 2, 1920, with its prin-
cipal office at Chicago; that its business is confined
to the purchase and slaughter of hogs and the gale
of the resultant pork products to wholesale and re-
tail meat dealers, jobbers, hotels, restaurants, and
others. (R. 43.)

Petitioner purchased the hogs on which the
processing tax in controversy was paid. They
were bought in the open market in the customary
manner from commission houses or direct from
the producer, or both. The petitioner’s buyer se-
lected the animals and otherwise settled the terms
of purchase, the billing for which was to C. A.
Burnette Company, a custom slaughterer. The
C. A. Burnette Company always received the cash
or charged the account of the petitioner, prior to
actual payment, for the hogs purchased, on the fol-
lowing day. The C. A. Burnette Company slaugh-
tered the hogs for a fee, usually under the super-

4

vision of the buyer employed by the petitioner.
The employee who supervised the killing process
had authority to require the work to be done by
methods that were considered to be the most
favorable to the petitioner. (R. 43.)

The tax imposed upon the slaughtering of the
hogs slaughtered for the petitioner was at first
paid by the petitioner directly to the Collector of
Internal Revenue. Payments made by the peti-
tioner later were refunded to the petitioner with
instructions to pay C. A. Burnette Company. (R.
43.) Thereafter payment of the processing tax
was made by C. A. Burnette Company on all of
the hogs slaughtered for petitioner, and the peti-
tioner was compelled to pay the amount of the tax
to C. A. Burnette Company. The money thus col-
lected from petitioner actually was used by C. A.
Burnette Company to pay the processing tax on
the hogs slaughtered for petitioner. Petitioner
always paid the killing charge and the processing
tax by separate checks and recorded the disburse-
ments on its records as processing taxes paid.
(R. 44-45.) :

The only exception to this method of payment
was the payment by petitioner of $2,589.13 di-
rectly to the Collector of Internal Revenue on July
1, 1935, on account of processing taxes due for the
month of May, 1935. (R. 43-44.)

ARGUMENT

The Cireuit Courts of Appeals have held with-
out exception that Title VII of the Revenue Act

ih” eal

0

of 1936 authorizes refunds only to persons who
actually paid to the Government amounts col-
lected as tax under the Agricultural Adjustment
Act. See F. & F. Laboratories v. Commissioner,
104 F. (2d) 563 (C, C. A. Tth); Oswald Jaeger
Baking Co. v. Commissioner, 108 F. (2d) 375 (C.
©. A. 7th), certiorari denied, 309 U. S. 683; Zins-
master Baking Co. v. Commissioner, 109 F. (2d)
738 (C. C. A. 8th), certiorari denied, 310 U. S.
653; New Consumers Bread Co. v. Commissioner,
115 F. (2d) 162 (C. C. A. 3d). The issue is sim-
ply whether, under the circumstances of this case,
the petitioner or the slaughterer was the taxpayer.

1. In its argument (Br. 19-39) petitioner at-
tempts to show, contrary to the rulings of the
Commissioner of Internal Revenue and the deci-
sion of the court below, that it, instead of ©. A.
Burnette Company, was the first domestic proc-
essor of hogs within the meaning of the Agricul-
tural Adjustment Act and as such was liable for
the tax involved—that C. A. Burnette Company
only acted as its agent in making the payments.

The court below correctly held that C. A.
Burnette Company was the first domestic proc-
essor and as such liable for the tax. This part
of the court’s decision is not in conflict with any
other decision, but appears to be supported by the
decisions in Southwestern Serum Co. v. Commis-
sioner, 108 F. (2d) 848 (C. C. A. 10th), certiorari
denied, 310 U. S. 628; Grain Belt Supply Co. v.
Commissioner, 109 F. (2d) 490 (C. C. A. 8th),

6

certiorari denied, 310 U. S. 648; and Arabi Packing
Co. v. Commissioner, 109 F. (2d) 278 (C. ©. A.
Sth), certiorari denied, 310 U. S. 645. See, also,
Article 2 of Treasury Regulations 81, infra, pro-
mulgated under authority of the Agricultural
Adjustment Act.

In the Southwestern Serum Co. case and the
Grain Belt Supply Co. case the petitioners killed
their own hogs by slitting the throat, drew off the
blood for use in manufacturing anti-cholera serum,
and sold the whole carcasses to Cudahy & Company.
The Commissioner held that the killing of the hogs
constituted the first domestic processing and col-
lected the tax from the serum companies. Their
right to sue for a refund was not questioned, but
recovery was denied because they failed to show
they bore the burden of the tax. In the Arabi
Packing Co. case the petitioner was a custom
slaughterer and its right to sue for a refund was
not questioned. Its appeal was dismissed because
the Processing Tax Board of Review was not given
jurisdiction of claims for refund of amounts paid
as processing taxes by custom processors, such
jurisdiction having been vested in the District
Courts and the Court of Claims.

Furthermore, the question whether the Commis-
sioner was right or wrong in taxing C. A. Burnette
Company as the first domestic processor is imma-
terial in this proceeding. The tax actually was
paid by that company as its own liability and it

7

is recognized as the taxpayer for the purposes of
Title VII of the 1936 Act. That Congress so in-
tended is clear from the provisions of the Act.
Section 906 of the Act, infra, gives concurrent
jurisdiction to the District Courts and the Court of
Claims of suits to recover all amounts paid as tax
under the Agricultural Adjustment Act, except
amounts paid as processing tax as defined in See-
tion 913 (b); Section 906, infra, gives the Proc-
Tax Board of Review jurisdiction of claims
for refund of amounts paid as processing tax; and
Section 913 (b), infra, defines processing tax as
used in Title VII as any exaction denominated a
processing tax under the Agricultural Adjustment
Act except any amount paid as tax with respect
to the processing of a commodity for a customer
for a charge or fee. Treasury Regulations 96,
promulgated under authority of Section 916 of the
1936 Act, infra, give full effect to the provisions of
the Act by providing for the filing of refund claims
by custom processors. See Articles 101, 201, 501-
505, of Regulations 96, infra.

2. Petitioner alleges that the decision below is
in conflict with the decision of the Cireuit Court
of Appeals for the Second Cireuit in Trunz Pork
Stores v. Rasquin, 100 F. (2d) 399 (Pet. 6-7). In
that case the Trunz Pork Stores, as did the peti-
tioner in this case, purchased live hogs and had
them slaughtered by a public abattoir for a charge
or fee. Fora time it paid the processing tax but

285854—41——-2

essing

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SIDES ORL EER CAL TE ICE TIEN SIE Dt

8

later was advised that the slaughterer was liable for
the tax, whereupon it filed a claim for refund of
the amount which it had paid. Upon the expira-
tion of six months without action having been
taken by the Commissioner upon its claim, and
without having filed a claim under the Revenue
Act of 1936, it brought suit against the Collector
of Internal Revenue in the District Court of the
United States for the Eastern District of New
York. The action was dismissed by the District
Court for lack of jurisdiction (22 F. Supp. 1020),
and its decision was affirmed by the Cireuit Court
of Appeals. The opinions of both courts indicate
that the ground for dismissal was that the claim
was for an amount paid as processing tax, over
which the Processing Tax Board of Review is
given exclusive jurisdiction.’

In the Trunz case, the Commissioner had failed
to refund the tax to the packer, who had paid it
as the taxpayer. In the circumstances of that case
it would be difficult to hold that the slaughterer,
who had in fact paid none of the tax in question
was the taxpayer, and certainly the packer there
was the actual taxpayer. Here, on the contrary,

1 There ‘were other factors which deprived those courts of
jurisdiction. For one thing, the suit was brought against the
Collector of Internal Revenue, contrary to the provisions of
Section 910 of the 1936 Act, infra. See Anniston Mfg. Co.
vy. Davis, 301 U.S. 337. Then, again, it does not appear from
either opinion that the taxpayer alleged that it had borne
all or any part of the burden of the amount sued for as re-
quired by Section 902, infra.

9

the Commissioner had refunded the taxes to peti-
tioner and had collected from the slaughterer.
Petitioner, therefore, whatever the case with the
Trunz Pork Stores, could not be viewed as the
person from whom the tax was collected.

The only possible conflict between the Trunz de-
cision and that below would be as to the $2,589.13
which petitioner paid directly to the Collector of
Internal Revenue on July 1, 1935. The record
does not explain whether this was an administra-
tive oversight or a payment made, as agent or as
volunteer, to avoid collection procedures: directed
against the slaughterer (see R. 43-44). Petition-
er, in its ‘Reasons’? makes only passing reference
to this payment, and that in a different connection
(Pet. 6-14, 13). This isolated payment, ignored
in the reasoning of the Board of Review and the
court below, does not seem to us to raise a conflict
of decisions,

There is no conflict with the other decisions cited
hy petitioner. (Pet. 7-9.) None arose under Title
VII of the Revenue Act of 1936. Carbon Steel Co.
v. Lewellyn, 251 U. S. 501, cited by petitioner
(Pet. 8), involved the question whether the Steel
Company was liable for a manufacturers excise
tax. The same is true of Warner-Patterson Co. v.
United States, 68 C. Cls. 237, cited by petitioner
(Pet.9). In White v. Hopkins, 51 F. (2d) 159 (C,
C. A. 5th), and Lucas v. Kentucky Distilleries &
Warchouse Co., 70 F. (2d) 883 (C. C. A. 6th), the

Ne ae

eS me NEE

i

a hil

10

suit was brought by the party who was charged
with, and who actually paid, the taxes involved,
The only analogy to the present case is with respect
to the $2,589.13 paid by this petitioner on July 1
1935, the circumstances of which are obscure.

’

CONCLUSION

There is no conflict of decisions. The decision
below is fully supported by the facts and the law.
The petition should be denied.

Respectfully submitted,

FraNcis BIppLe,
Solicitor General.
SAMUEL O. CLARK, Jr.,
Assistant Attorney General.
SEWALL KEY,
WARNER W. GARDNER,
F. E. YouNGMAN,
Special Assistants to the Attorney General.

JANUARY 1941.

PCIE

AEF

Re AY

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386415_0300%3A3. Public record. Not legal advice.