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HECHT V. MALLEY, 265 U. S. 144 (1924)

U.S. Supreme Court

Hecht v. Malley, 265 U.S. 144 (1924)

Hecht v. Malley

Nos. 99, 100, 101, 119

Argued May 3, 1923

Decided May 12, 1924

265 U.S. 144


1. The special excise tax laid by the Revenue Act of 1916 on "every corporation, joint-stock company or association, now or hereafter organized in the United States for profit and having a capital stock represented by shares, and every insurance company, now or hereafter organized under the laws of the United States, or any state or Territory," did not apply to associations, such as "Massachusetts Trusts," not organized under, or deriving any quality or benefit from, a statute. Eliot v. Freeman, 220 U. S. 178. P. 265 U. S. 151.

2. In adopting language used in an earlier act, Congress must be regarded as adopting also the construction given that language by this Court. P. 265 U. S. 153.

3. The special excise laid by § 1000(a) of the Revenue Act of 1918 (40 Stat. 1057) on every " domestic corporation," -- the act (§ 1) defining the term "corporation" as including "associations, joint-stock companies, and insurance companies," and the term "domestic," when applied to a corporation or partnership, as meaning "created or organized in the United States" -- extends to organizations exercising the privilege of doing business as associations under the common law. P. 265 U. S. 154.

4. Organizations known as "Massachusetts Trusts," created by trust agreements, whereby property was conveyed to and managed in business operations by trustees, the shares of the cestuis que trustent being represented by transferable certificates entitling holder to

Page 265 U. S. 145

share ratably in the income and, upon termination of the trust, in the proceeds of the property, held "associations" created or organized in the United States and engaged in business within the meaning of the Revenue Act of 1918, supra, loc. cit. Crocker v. Malley, 249 U. S. 223, distinguished. P. 265 U. S. 156.

5. The Revenue Act of 1918 bases the special excise tax of a domestic association upon the average value of its "capital stock," including surplus and undivided profits. Held that, in the absence of a fixed share capital, the "capital stock" is the net value of the property owned by the association and used in its business. P. 265 U. S. 162.

6. Where taxes were unlawfully assessed under the Revenue Act of 1916, and paid under protest, the government was entitled to retain the money in part satisfaction of a lawful retroactive assessment for the same period under the Revenue Act of 1918. P. 265 U. S. 163.

281 F. 363 affirmed in part and reversed in part.

Certiorari to judgments of the circuit court of appeals which reversed judgments of the district court in favor of the present petitioners, in their actions to recover moneys paid, under protest, as special excise taxes.

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