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ELDORADO COAL & MINING CO v. MAGER , 255 U.S. 522 (1921)

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United States Supreme Court


No. 609

Argued: January 12, 1921Decided: January 12, 1921

March 28, 1921

Mr. Herbert Pope, of Chicago, Ill., for plaintiff in error.[ Eldorado Coal & Mining Co v. Mager 255 U.S. 522 (1921) ]

[255 U.S. 522, 525]   Mr. Solicitor General Frierson, for defendant in error.

Mr. Justice CLARKE delivered the opinion of the Court.

This case comes into this Court on a writ of error to review a judgment of the District Court of the United States for the Northern District of Illinois, sustaining a demurrer to a declaration in assumpsit to recover an assessment of income and excess profits taxes for the year 1917, under warrant of the Income Tax Act of Congress, approved September 8, 1916 (39 Stat. c. 463, p. 756) as amended by the act approved October 3, 1917 (40 Stat. c. 63, p. 300). Payment was made under protest, and the claim to recover is based upon the same contention dealt with in No. 608, Merchants' Loan & Trust Co. v. Smietanka, 255 U.S. 509 , 41 Sup. Ct. 386, 65 L. Ed. --, this day decided, that the fund taxed was not 'income' within the scope of the Sixteenth Amendment to the Constitution of the United States, and that the effect given by the lower court to the act renders it unconstitutional and void.

The Eldorado Coal & Mining Company is an In [255 U.S. 522, 526]   diana corporation, which operated a bituminous coal mine and mining plant, which it sold in May, 1917, for cash. The company retained its accounts receivable and prior to September 30, 1917, it distributed among its stockholders, proportionately to their ownership of stocks, the cash received from the sale and the accounts receivable in kind. The corporation, however, was not dissolved nor its charter surrendered, because there were unsettled liabilities against it for federal income taxes and excess profit taxes. Otherwise its affairs were wound up.

It is averred in the declaration that, taking the fair market value as of March 1, 1913, of the capital assets of the company invested and employed in its business, and adding thereto the cost of additions and betterments, and subtracting depreciation and depletion to the date of sale, it appears that there was an appreciation in value of the property after March 1, 1913, of $5,986.02, and it was on this profit realized by the sale that the assessment of $3,073.16 was made which the company paid and in this suit seeks to recover.

It is obvious from this statement of the case that it presents in so nearly the same form precisely the same questions as were considered in No. 608, Merchants' Loan & Trust Co., etc., v. Julius F. Smietanka, Collector, etc., 255 U.S. 509 , 41 Sup. Ct. 386, 65 L. Ed. --, this day decided, that further discussion of them is unnecessary, and, on the authority of that case, the judgment of the District Court is


Mr. Justice HOLMES and Mr. Justice BRANDEIS, because of prior decisions of the Court, concur only in the judgment.

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