(283 F.)

District Court (Kissam v. McElligott, 280 Fed. 212) used the following language, part of which was quoted with approval by the Supreme Court in affirming that decision:

"It is true that section 201 provides that the tax is imposed upon the transfer of the net estate of 'every decedent dying after the passage of this act'; but the assumption must be that this relates to estates thereafter created, and not to then existing vested property. If it be argued that in taxing the succession or transfer involved in the passing of the interest of Jonas to Cornelia, the measure of the tax was the extent of the interest of both, the result is the same. At the time the statute was passed Cornelia Kissam's interest helonged to her. In other words, the time of the transfer of the interest which Cornelia Kissam got from Jonas Kissam, in his lifetime, had passed. From the structure of the act, to say that the measure of the tax is the extent of the interest of both joint tenants, is, in effect, to say that a tax will be laid on the interest of Cornelia in respect of which Jonas had in his lifetime no longer neither title nor control."

Immediately after quoting the hypothetically suggested conclusion last referred to by the District Court, the Supreme Court concluded its own opinion with the following observation:

"The court rejected that conclusion and denied to the act of Congress retroactive operation. To this the Circuit Court of Appeals was opposed, and reversed the judgment based upon it. It will be observed, therefore, that this case involves the same question as that decided in Shwab v. Doyle, and on the authority of that case the judgment of the Circuit Court of Appeals is reversed, and the cause remanded for further proceedings in accordance with this opinion."

In the case of Shwab v. Doyle, 258 U. S. 529, 42 Sup. Ct. 391, 66 L. Ed. 747, thus referred to, decided on the same day as Knox v. McElligott, the question presented was whether clause (b) of section 202, hereinbefore quoted, was retrospective or retroactive in its operation, and, after reviewing the subject at some length, the Supreme Court held adversely to the argument of the government. Its opinion concluded as follows:

"Granting the contention of the defendant has plausibility, it is to be remembered that we are dealing with a tax measure, and whatever doubts exist must be resolved against it. This we have seen is the declaration of the cases, and this the basis of our decision; that is, has determined our judgment against the retroactive operation of the statute. There are adverse considerations, and the government has urged them all. To enter into a detail of them, or of the cases cited to sustain them, and of those cited to oppose them, either directly or in tendency, and the examples of the states for and against them, would extend this opinion to repellent length. We need only say that we have given careful consideration to the opposing argument and cases. and a careful study of the text of the act of Congress, and have resolved that it should be not construed to apply to transactions completed when the act became a law. And this, we repeat, is in accord with principle and authority. It is the proclamation of both that a statute should not be given a retrospective operation, unless its words make that imperative and this cannot be said of the words of the act of September 8, 1916."

[2, 3] One other consideration deserves, if it does not require, mention. As has been seen, the tenancy involved in Knox v. McElligott, supra, was a joint tenancy, and not a tenancy by entireties. As regards the applicability of section 202 (c) to jointly owned estates created prior to the enactment of the statute, it would seem to be im

material whether any such estate be one in joint tenancy or in tenancy by the entireties. It is, however, not entirely clear that all of the reasoning by which such a result is reached with respect to joint tenancies is applicable to tenancies by entireties. In view of the ownership by each tenant, in an estate by the entireties, of an undivided interest in the whole title, with the consequent anomalous incidents connected with the legal situation thus created, the relation of this statute to, and its effect upon, such an estate would appear to be at least doubtful. If, for example, the interest in such an estate held by each of such tenants be acquired at the time of, and by, the conveyance of the property to them, prior to the death of either, may it be properly said that any "transfer," within the meaning of the statute, occurs with respect to said property at the death of either? If not, to what extent is the value of such an estate material or applicable to an inquiry into the value of the gross or net estate otherwise subject to the federal estate tax? Have these or other questions pertinent to a case involving an estate by the entireties been decided by the Supreme Court? These, however, are questions not now before this court for decision. Clearly, the personal property involved here was held by the deceased and his wife as joint tenants and not as tenants by the entireties. Lober v. Dorgan, 215 Mich. 62, 183 N. W. 942. Under the general rule that a deed to two or more grantees expressing an intention to vest title in them as joint tenants will create in them such a tenancy, it would seem that the language in the deed of the land conveyed to the deceased and his wife, reciting that said land was to be held by them "as joint tenants with the right of survivorship," indicated an intention, and therefore had the effect, to make them joint tenants and not tenants by the entireties. The rule is thus stated by Tiffany in his excellent work on Real Property (1920 Ed., vol. 1, p. 646):

* *

**

"While a conveyance or devise to a husband and wife will ordinarily create a tenancy by entireties, the authorities are generally to the effect that an intention, clearly expressed in the instrument, that they shall take as tenants in common or as joint tenants, will be effective. The result of this view is that the existence of a tenancy by entireties is a question purely of in-' tention, though an intention on the part of the grantor to create such a tenancy is presumed, in the absence of an expression of a contrary intention. In other words, there is a rule of construction that, in case of a conveyance to husband and wife, the language prima facie means that they are to hold by the entireties."

However this may be, the government is hardly in position to complain of the result reached in this case, as after repaying to plaintiff the amount successfully sought and recovered by plaintiff herein, it will still have received and retained tax, under the statute involved, as upon a "transfer" of a one-half interest in the property in question.

An order will be entered in conformity to the terms of this opinion.

FOSS-HUGHES CO. v. LEDERER, Internal Revenue Collector.

(District Court, E. D. Pennsylvania.

No. 6470.

September, 1919.)

Internal revenue-Assembler of truck parts taxable as "producer of truck." Under Act Oct. 3, 1917, § 600 (Comp. St. 1918, Comp. St. Ann. Supp. 1919, § 63094a), providing for the collection of a tax on automobile trucks sold by manufacturer, producer, or importer, a dealer, who neither imports nor manufactures, but purchases the chassis from the manufacturer, and employs a contractor to add the body, is a producer of trucks, and so liable to tax.

At Law. Action by the Foss-Hughes Company against Ephraim Lederer, Collector of Internal Revenue, First District of Pennsylvania. Judgment for defendant.

DICKINSON, District Judge. This is to all intents and purposes a case stated. The right to a jury trial was waived, and the case came on to be heard without a jury. The parties then stipulated all the facts. There remains at most only an ultimate fact finding, to be made under the evidentiary facts stipulated, or possibly only a question of law to be determined.

The general situation presented is that Act Cong. October 3, 1917, $600 (Comp. St. 1918, Comp. St. Ann. Supp. 1919, § 630934a), provides (inter alia) for the collection of a tax upon all automobile trucks sold by the manufacturer, producer, or importer thereof. There is no claim that the plaintiff imports, and none that he is a manufacturer, except in the sense in which one who has something made for him by others, to be sold by him, may be said to be a manufacturer. This is doubtless the sense in which Congress used the word "producer," and was also doubtless the occasion for its use. The whole question would seem to be compressed in this one: Was the plaintiff a producer of automobile trucks?

We are not concerned with collateral fact conditions directly, but it serves to give us a grasp of the practical situation if we have in mind these other facts. One is that the tax law relates to sales of automobiles and motorcycles, as well as automobile trucks. Another is that in the administration of the law it was found that a great many sales For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

(287 F.)

of automobiles and motorcycles were made, but that sales of automobile trucks were seldom made. This was because the usual course of business was for one man to make or import a chassis, which he sold to the purchaser, who had another man make the body which suited his purposes, or the purchaser put on the body himself. As a consequence no one ordinarily manufactured, produced, or imported an automobile truck, although there were numbers who dealt each in a part of the truck.

Congress, in a subsequent act, corrected this oversight, but with the later act we are not now concerned. The real question before us is whether the plaintiff did not do for the purchaser what he usually had done for him by two persons, and do this by producing and selling automobile trucks? What the purchaser wanted was a truck, and to be saved the several purchases of a chassis and of a body, and also of having the two made into a truck. The plaintiff supplied this need by itself purchasing the chassis from the maker, and having the body added by some one engaged in that kind of work, and then selling the product as an automobile truck. The manufacturer of the chassis was a wholly independent contractor (if the phrase be an allowable one), and so likewise was the body builder. Unquestionably an automobile truck was produced. The maker of the chassis did not produce it, nor did the manufacturer of the body. One of the three parties concerned was the producer (if there was one), and he must be the plaintiff. The only escape from this conclusion is that no one of them was the producer, but it was a joint product of all. The taxpayer is one who both produces and sells. This plaintiff admittedly sells, and it is through it that what it sells is brought into existence. The fact that personally it does not make chassis or body, and does not even assemble, is not controlling "facit per alium facit per se." The fact that the maker of the chassis and the maker of the body is each what plaintiff calls an independent contractor is also aside from the mark.

It may be stated in further explanation of the fact situation that the taxing department of the government construed the act of 1917 to authorize the levying of the tax on parts of a truck as well as on trucks. It may have been right or wrong in giving the act this meaning. It has been held that the manufacturer of a body only was not liable to pay a tax on the truck. Rech-Marbaker Co. v. Lederer (March Sessions, 1919) 263 Fed. 593. However this may be, what the department in practice did was to call the chassis an automobile truck and collect a tax on its sale; to also call the body a truck, and collect a tax on its sale, and further to call the parts, when assembled, a truck, and collect the tax on the sale of the truck. Allowance was made, however, by deduction in each instance for the tax previously paid.

The present action is to recover the tax paid by plaintiff on the basis that it was unlawfully assessed, and this question of the legal propriety of its payment is the only question raised.

Judgment may be entered for defendant, with costs.

Supplemental Opinion.

The requests for findings of fact and law, answered herewith, present the views of the parties respectively in a somewhat different way

from that in which discussed at the argument and in the foregoing opinion. It was thought to be conceded that neither a chassis nor body taken by itself was an automobile truck. This court has held that the making of a body for the owner of a chassis and attaching the body to the chassis is not the manufacturing of an automobile truck. It has not been ruled, so far as we are informed, that a chassis is not an automobile.

The departmental ruling, according to the information given us, was (if there were so many steps in producing a truck) to levy a tax upon the chassis when it was made, upon the body when it was made, and then upon the completed truck when these several parts were assembled; a deduction being made at each stage of construction for the tax previously paid. Such was the course followed in the present case. The ruling already made implies a refusal to follow this departmental construction of the act, so as to sanction piecemeal levies of the tax or the levy of several taxes. The case ruled was that of the sale of a body, and it does not imply a refusal to accept the administrative view that a chassis is an automobile. If it is, it necessarily follows that plaintiff did not produce the truck but purchased it from the PierceArrow Motor Car Company, and, in consequence, was not liable to the

tax.

There is no stipulation as to what these chasses in fact are, and if the question of whether they are trucks is in the case, it may be set down for reargument; otherwise, the ruling already made may stand.