Scribd Logo
Upload

Welcome to Scribd!

  • 32 views

    Liggett & Myers Co. v. United States, 299 U.S. 383 (1937)

    Uploaded by

    Scribd Government Docs
    The Supreme Court affirmed the lower court's decision that Massachusetts was not entitled to recover the value of internal revenue stamps affixed to tobacco sold to a state-run hospital. The Court found that the tax was imposed on the manufacture of tobacco, not the subsequent sale, and thus its effect on Massachusetts was only indirect. As the tax was based on weight manufactured rather than sale price, it functioned as an excise tax on manufacturing, not a prohibited tax on the state itself. Therefore, Massachusetts was not exempt from the tax as an instrumentality of government carrying out an essential function.

    Copyright:

    Public Domain
    Download as COURT, PDF, TXT or read online from Scribd

    Liggett & Myers Co. v. United States, 299 U.S. 383 (1937)

    Uploaded by

    Scribd Government Docs
    32 views4 pages
    The Supreme Court affirmed the lower court's decision that Massachusetts was not entitled to recover the value of internal revenue stamps affixed to tobacco sold to a state-run hospital. The Court found that the tax was imposed on the manufacture of tobacco, not the subsequent sale, and thus its effect on Massachusetts was only indirect. As the tax was based on weight manufactured rather than sale price, it functioned as an excise tax on manufacturing, not a prohibited tax on the state itself. Therefore, Massachusetts was not exempt from the tax as an instrumentality of government carrying out an essential function.

    Original Description:

    Filed: 1937-01-04 Precedential Status: Precedential Citations: 299 U.S. 383 Docket: Nos. 161—163

    Copyright

    © Public Domain

    Available Formats

    COURT, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The Supreme Court affirmed the lower court's decision that Massachusetts was not entitled to recover the value of internal revenue stamps affixed to tobacco sold to a state-run hospital. The Court found that the tax was imposed on the manufacture of tobacco, not the subsequent sale, and thus its effect on Massachusetts was only indirect. As the tax was based on weight manufactured rather than sale price, it functioned as an excise tax on manufacturing, not a prohibited tax on the state itself. Therefore, Massachusetts was not exempt from the tax as an instrumentality of government carrying out an essential function.

    Copyright:

    Public Domain
    Download as COURT, PDF, TXT or read online from Scribd
    Download as court, pdf, or txt
    32 views4 pages

    Liggett & Myers Co. v. United States, 299 U.S. 383 (1937)

    Uploaded by

    Scribd Government Docs
    The Supreme Court affirmed the lower court's decision that Massachusetts was not entitled to recover the value of internal revenue stamps affixed to tobacco sold to a state-run hospital. The Court found that the tax was imposed on the manufacture of tobacco, not the subsequent sale, and thus its effect on Massachusetts was only indirect. As the tax was based on weight manufactured rather than sale price, it functioned as an excise tax on manufacturing, not a prohibited tax on the state itself. Therefore, Massachusetts was not exempt from the tax as an instrumentality of government carrying out an essential function.

    Copyright:

    Public Domain
    Download as COURT, PDF, TXT or read online from Scribd
    Download as court, pdf, or txt
    You are on page 1of 4

    299 U.S.

    383
    57 S.Ct. 239
    81 L.Ed. 294

    LIGGETT & MYERS TOBACCO CO.


    v.
    UNITED STATES. * COMMONWEALTH OF
    MASSACHUSETTS v. SAME. LIGGETT & MYERS
    TOBACCO CO., on Behalf of COMMONWEALTH OF
    MASSACHUSETTS v. SAME.
    Nos. 161163.
    Argued Dec. 1114, 1936.
    Jan. 4, 1937.

    Mr. Henry F. Long, of Boston, Mass., for petitioners.


    Mr. J. P. Jackson, of Washington, D.C., for respondent.
    Mr. Justice McREYNOLDS delivered the opinion of the Court.

    These test suits, brought in the Court of Claims and based upon the same facts,
    seek to establish the right of some petitioner to recover the value of internal
    revenue stamps$17.28 affixed by Liggett & Myers Tobacco Company to four
    boxes containing 96 pounds of tobacco, which it manufactured and sold to
    Massachusetts for free distribution to patients in Boston State Hospital, an
    institution maintained by the Commonwealth and alleged to be a government
    instrumentality immune from federal taxation.

    During January, 1932, federal statutes directed

    'Upon all tobacco and snuff manufactured in or imported into the United States,
    and hereafter sold by the manufacturer or importer, or removed for
    consumption or sale, there shall be levied, collected, and paid * * * a tax of 18
    cents per pound, to be paid by the manufacturer or importer thereof.' 'The
    Commissioner, with the approval of the Secretary, shall prescribe and publish
    all needful rules and regulations for the enforcement of this Act (chapter).'

    Revenue Act 1926, 44 Stat. 9, c. 27, 401(a), 1101, U.S.C., Tit. 26,
    700(a), 701, 1049, 1350, 1691(a), 26 U.S.C.A. 700(a), 701, 1049, 1350,
    1691(a).
    4

    Treasury Regulations No. 8 (1928 Ed.) in force at the same time provided:

    Art. 43: 'The rate of tax on tobacco and snuff now in force is 18 cents per
    pound. * * * Such tax is imposed on all chewing and smoking tobacco. * * *
    The tax accrues on such manufactures upon removal from the factory or place
    where they were made, or upon sale prior to such removal, and is to be paid by
    the manufacturer thereof by the affixing of stamps before removal. * * *' Art.
    52: 'Each package containing a statutory quantity of tobacco or snuff (see
    article 45) shall, before removal from the bonded factory premises where made,
    have affixed thereto the proper internal-revenue stamps or stamps of such
    denomination as will cover fully the tax on the net weight of the contents. * *
    *' Art. 94: 'No manufacturer of tobacco, snuff, cigars, or cigarettes will be
    permitted to close his factory with material or finished product unstamped on
    hand. * * *' Art. 152: 'Every person who removes from any manufactory, or
    from any place where tobacco or snuff is made, any manufactured tobacco or
    snuff without the same being put up in proper packages, or without the proper
    stamp for the amount of tax thereon being affixed and canceled as required by
    law; or if the same be intended for export, without the proper export stamp
    being affixed; shall for each such offense, respectively, be fined not less than
    $1,000 nor more than $5,000, and be imprisoned not less than six months nor
    more than two years.'

    The Court of Claims found

    Liggett & Myers Tobacco Company is engaged in the business of


    manufacturing and dealing in tobacco. It maintains a bonded warehouse for
    storing such products. The established internal revenue procedure was to affix
    the required stamps upon manufactured tobacco before removal from the
    factory. In January, 1932, the company received from Massachusetts an order
    to deliver 96 pounds of tobacco to the Boston State Hospital, an institution
    owned and maintained by the Commonwealth. The company complied by
    shipping from its bonded warehouse four packages to which revenue stamps
    amounting to $17.28 had theretofore been affixed. This was distributed to
    patients without charge. Hospital patients, when able, pay for treatment. The
    hospital performs useful public service. A bill for $30.62price of the tobacco
    including taxwas paid by the Commonwealth.
    And the Court held that operation of the hospital by the Commonwealth is not

    And the Court held that operation of the hospital by the Commonwealth is not
    the performance of an essential governmental function; that such operation is
    not of a strictly governmental character, since it does not 'embody some kind of
    control over persons or things which can be exercised only by a sovereign
    power.' And for that reason the conclusion was that no immunity from federal
    taxation had been shown. All of the petitions were dismissed.

    Here counsel for the Commonwealth submit that the maintenance of the
    hospital is a true governmental function entitled to immunity; also that the tax
    in question was laid upon the sale of the tobacco and amounted to an imposition
    upon the Commonwealth. They rely upon the principle approved in Panhandle
    Oil Co. v. Mississippi ex rel. Knox, 277 U.S. 218, 222, 48 S.Ct. 451, 452, 72
    L.Ed. 857, 56 A.L.R. 583, Indian Motocycle Co. v. United States, 283 U.S.
    570, 578, 51 S.Ct. 601, 604, 75 L.Ed. 1277, and Graves v. Texas Co., 298 U.S.
    393, 56 S.Ct. 818, 80 L.Ed. 1236.

    10

    For the United States, it is said the tax was upon the manufacture of the
    tobacco with duty of payment postponed until removal or sale, whichever first
    occurred; consequently, there was no direct burden imposed upon the state; the
    effect was incidental, indirect, and permissible within the doctrine approved by
    Cornell v. Coyne, 192 U.S. 418, 24 S.Ct. 383, 48 L.Ed. 504, and Wheeler
    Lumber B. & S. Co. v. United States, 281 U.S. 572, 579, 50 S.Ct. 419, 421, 74
    L.Ed. 1047.

    11

    If, in reality, the tax was upon the manufacture of tobacco, then, as adequately
    pointed out by Cornell v. Coyne, supra, the effect upon the purchaser was
    indirect and imposed no prohibited burden. See Willcuts v. Bunn, 282 U.S. 216,
    230, 234, 51 S.Ct. 125, 128, 130, 75 L.Ed. 304, 71 A.L.R. 1260. We think that
    was the true nature of the exaction, and this renders unnecessary any
    consideration of the theory accepted by the Court below.

    12

    The tax is laid upon each pound of manufactured tobacco irrespective of


    intrinsic value or price obtained upon sale. The goods may be disposed of at
    any price without affecting the amount of the tax; that does not vary. Always
    the manufacturer must pay 18 cents upon each poundno more, no less. True
    the limit of time for making payment is when the product is sold or removed,
    but this is a privilege designed to mitigate the burden; it indicates no purpose to
    impose the tax upon either sale or removal. Apparently the practice is to affix
    the required stamps without regard to sale or removal. See Cornell v. Coyne,
    supra; American Mfg. Co. v. St. Louis, 250 U.S. 459, 39 S.Ct. 522, 63 L.Ed.
    1084; Wheeler Lumber B. & S. Co. v. United States, supra.

    13

    Indian Motocycle Co. v. United States, supra, much relied upon by petitioner,
    considered a tax of 5 per centum of the price obtained upon sale of the article; it
    rose or fell according to the amount received by the seller. From the outset, the
    excise there under scrutiny had been considered by Congressional Committees
    and the administrative bureau as a sales tax. Here the administrative provisions
    of the taxing act indicate that Congress regarded it as an excise on manufacture.
    And this view is strengthened by provisions of the Treasury Regulations
    designed to carry the statute into effect.

    14

    For the reasons indicated, the judgment below must be affirmed.

    15

    Affirmed.

    16

    Mr. Justice STONE took no part in the consideration or decision of this case.

    Rehearing denied 300 U.S. 686, 57 S.Ct. 428, 429, 81 L.Ed.

    You might also like