Fairmount Tool & Forging Co. v. United States

BOOTH, Chief Justice. Section 900 of the Revenue Act of 1918, 40 Stat. 1057, 1122, provides as follows: “That there shall be levied, assessed, collected, and paid upon the following articles sold or leased by the manufacturer, producer, or importer, a tax equivalent to the following percentages of the price for which so sold or leased— “(1) Automobile trucks and automobile wagons (including tires, inner tubes, parts, and accessories therefor, sold on or in connection therewith or with the sale thereof), 3 per centum; “(2) Other automobiles and motorcycles (including tires, inner tubes, parts, and accessories therefor, sold on or in connection therewith or with the sale thereof), except tractors, 5 per centum; . “(3) Tires, inner tubes, parts, or accessories, for any of the articles enumerated in subdivision (1) or (2), sold to any person other than a manufacturer or producer of any of the articles enumerated in subdivision (1) or (2), 5 per centum.” The Revenue Acts of 1921, § 900; 42 Stat. 227, 291, and 1924, § 600, 43 Stat. 253, 322, in so far as the issue involved in this ease is concerned, in nowise change the law. The plaintiff, an Ohio corporation, manufactures and sells to jobbers and dealers a great variety of standard mechanics’ and machinists’ tools. The segregated units which occasion this litigation are accurately described in finding III. As a typical illustration “Kit 10-F” will suffice. This aggregation is set forth in plaintiff’s catalogue as “designed particularly for use on Ford and Willys Overland cars,” and is made up of ten individual tools embracing a hammer, pliers, six wrenches, and two screwdrivers, encased separately in a canvas roll designed for compactness and convenience and packed for the dealers in an individual carton, with a list price of $5 printed thereon. Kits of more extensive make-up and costing more are also advertised and commented on as possessing superior advantages. The Commissioner of Internal Revenue assessed and collected a manufacturers’ excise tax upon the foregoing “kits,” justifying the collection under the above revenue laws. The plaintiff filed a claim for refund, which. was denied, and hence this suit to recover the amount claimed. The plaintiff seeks to escape taxation, upon a contention that the regulations of the Commissioner, with respect to automobile accessories, are too comprehensive and therefore illegal in including such general purpose articles, which when sold separately are coneededly nontaxable, but become so when segregated in units and advertised for use on an automobile. The regulations challenged go much into detail and read, so fár as pertinent here, as follows: “Art. 14. * * * Any article which has reached a state of manufacture wherein it is in itself a component part or accessory, and is of such a nature that it may be used or attached by an ordinary repair man or individual user as distinguished from a manufacturer or producer, is subject to tax as a ‘part’ or ‘accessory.’ • * * “Art 15.. * * * any article designed or manufactured for the special purpose of being used as or to replace a component part of any such vehicle and which by reason of some peculiar characteristic is not such a commercial commodity as would ordinarily be sold for general use and which is primarily adapted only for use as component part of such vehicle. * * * [594] “Articles, however, which ordinarily would be classed as commercial commodities become parts when, because of their design or construction, they are primarily adapted for use as component parts of such vehicles. “Component parts of articles taxable under this definition are taxable when sold separately, if they have reached such stage of manufacture that they are primarily adapted for use as such a component part. * *. * “Art. 16. * * * any article designed to be attached to or used in connection with such vehicle to add to its utility or ornamentation and which is primarily adapted for use in connection with such vehicle, whether or not essential to its operation. * * * “Articles which have a general commercial use and which are not especially designed and peculiarly adapted for use in connection with automobile trucks, automobile wagons, other automobiles, or motor cycles are not subject to tax as 'parts’ or 'accessories.’ * ** * “Parts or accessories for automobile trucks, automobile wagons, other automobiles, or motor cycles primarily adapted for use on or in connection therewith when sold for any other purpose are not taxable, provided the purchaser files with his order a statement that such parts or accessories are to be used on or in connection with another article of commerce not enumerated or included in subdivisions (1), (2), or (3) of section 900. Por example, a self-starter primarily adapted for use on an automobile, if sold to a manufacturer of motor boats, such manufacturer stating in his order that it is to be used in the manufacture of a motor boat and not upon an automobile, is not taxable.” The machinery of an automobile necessitates the employment of a variety of accessories. Article 16, quoted above, expresses the general conception of the Commissioner in dealing with the class of articles. Tools of general utility, i. e., capable of use for a variety of purposes, may not escape classification as an automobile accessory upon this single faet. Thiá, we think, is apparent. Ordinary monkey wrenches, pliers, hammers, etc., may serve a variety of useful purposes; but when set aside and singled out for an especial purpose, the very necessity of so doing emphasizes the correctness of classifying them as accessories to the purpose. The plaintiff, in order to appeal to a special demand, an essential demand, segregates from his large stoek of merchandise the particular units which serve the customers’ especial necessities, and gives to the public the merits of his offering by assuring him in public advertisements that the “kits” meet all the especial emergencies that may be-remedied by the use of the tools purchased. It is only when this is done that the Commissioner taxes the articles. The fact that tools of this design, functioning as these tools do, were manufactured prior to the advent of the automobile, and are not now, nor never were, especially designed for use on an automobile, is not in and of itself determinative. See Cole Storage Battery Co. v. United States, 65 Ct. Cl. 164; Walker Mfg. Co. v. United States, 65 Ct. Cl. 394; Advance Automobile Accessories Corporation v. United States, 66 Ct. Cl. 304. The issue to 'be solved is dependent upon the facts of each ease, and if a manufacturer offers to the automobile trade an essential accessory, one which is universally recognized as an indispensable accompaniment to meet emergencies, or maintain the integrity and workability of the ear, he surely falls within the classifications set forth in the regulations of the Commissioner. The individual tools which compose the “kits” here involved would be instantly recognized by a car owner at all familiar with its mechanism as both essential and indispensable when needed for use. It is only when so advertised and segregated from the general lot that the taxing acts are invoked by the Commissioner. Manufacturers have a definite and express way of avoiding the tax when sold for other and different purposes. See Magone v. Wiederer, 159 U. S. 555, 16 S. Ct. 122, 40 L. Ed. 258. See, also, Universal Battery Co. v. United States, 50 S. Ct. 422, 74 L. Ed. 1051, decided by the Supreme Court May 26, 1930. The plaintiff alleges in its petition the right to recover $1,688.72, with interest. The statute of limitations precludes a recovery of any sum in excess of $964.56 with interest. The findings disclose the situation with respect to this fact, and the plaintiff has not challenged the correctness of the same. The petition will be dismissed. It is so ordered. This ease was tried before the appointment of WHALEY, Judge. He therefore took no part in its decision.