SLAVICK JEWELRY CO. v. CARTER, Internal Revenue Collector, et al.

District Court, S. D. California, S. D. October 10, 1927.

No. 2501-J.

Internal revenue 25-Sales tax on jewelry

sold on conditional sale contracts held com

putable on so much of price as was actually received (Revenue Acts 1918, 1921, § 905 [Comp. St. § 6309f]).

Plaintiff sold jewelry on conditional sale contracts, which entitled it, at its option, on default to retake the article or recover the unpaid part of the price. After partial collections on sales, it charged off the balances due as uncollectible. Held, that such action was a confirmation of the sales, and that under

Revenue Acts 1918 and 1921, § 905 (Comp. St. 8 6309%f), sales tax was then due, but computable on the amount actually received, and not on the prices contracted for.

At Law. Action by the Slavick Jewelry Company against John P. Carter, Collector of Internal Revenue, and others. Judgment for plaintiff.

Mitchell, Silberberg & Davis, of Los Angeles, Cal., for plaintiff.

Samuel W. McNabb, U. S. Atty., of Los Angeles, Cal., Emmett E. Doherty, Asst. U. S. Atty., of San Francisco, Cal., and L. Dana Latham, Special Counsel, Bureau of Internal Revenue, of Los Angeles, Cal., for defendants.

JAMES, District Judge. Plaintiff corporation brings this suit to recover from the defendant, the district internal revenue collector, the sum of $3,637.34, which was paid upon the demand of the collector as a tax imposed upon sales made by plaintiff as a dealer in jewelry. The facts were stipulated. By this stipulation it appears that plaintiff, during the period between December, 1920, and December, 1924, inclusive, in the course of its regular business, bargained with approximately 700 persons for the separate sale of different articles of jewelry upon which it thereafter received certain payments which were credited on the purchase price, subject to further conditions which will hereinafter be referred to. The total amount of the agreed sale price on the aggregate account totaled $72,746.80. After having received payments amounting to $49,115.55, plaintiff, considering that the remainder of the agreed prices were uncollectable, charged off $23,631.25 to loss and closed the accounts.

The Revenue Department, acting under the provisions of section 905 of Revenue Acts of 1918 and 1921 (Comp. St. § 6309%), col

lected a tax of 5 per cent. on the total sales price of the jewelry. Plaintiff in due time presented its claim for refund, which was refused, and this suit was then brought.

The law, which is to be looked to as embodied in the acts cited, provides that upon all articles commercially known as jewelry a tax equivalent to 5 per centum of the price shall be paid by a dealer when such jewelry is "sold." Each of the transactions making up the list of the sales, as claimed to have been made by the plaintiff, rested upon a conditional sales contract made between the vendor and its customer. The contract, a copy of which is attached to the stipulation of the facts, shows that the agreement took the ordinary form of lease or conditional sales contract, title being reserved in the vendor until all installments of the purchase price had been paid, and entitling the vendor to retake the merchandise upon default made in any payment. The customary term was also included that the vendor might at its option sue for the entire sum due when default in the payment of any installment was made. The contract was without question a contract of sale whereby the vendor reserved title in itself as security for the payment of the whole of the purchase price. Under such a contract the vendor had the right to waive the option to retake possession of the merchandise, notwithstanding the default of the purchaser, and to confirm title in the purchaser and collect the amount due.

The contention of the plaintiff that the transactions concerned did not constitute sales, in the manner in which they were handled, cannot be given approval without misapplying the purpose and intent of the revenue law. If the contention advanced is allowed to its fullest extent, it will be possible for jewelry merchants to successfully evade the payment of the sales tax by allowing the purchaser credit for a small part of the purchase price and having the sales terms expressed in a contract similar to the form exhibited here. The law is intended to work the practical result that the government shall be paid its tax where a jeweler disposes of his merchandise in the ordinary course of trade. This is not to say that the tax is payable from an uncompleted sale; and it is my opinion that a conditional sales contract does leave the transaction as uncompleted until the purchaser satisfies the condition as to payment, or the vendor affirmatively, or by his acts impliedly, confirms the transaction as completed, and relinquishes title to the vendee. Under the facts of this case it must be concluded, I think, that the

act of the vendor in charging to loss the balance of the price against the several purchasers amounted to an election not to retake the property. It must be assumed under the stipulation that the accounts were in fact uncollectable when they were charged off as such. Under that condition, the purchase price on each sale must necessarily be the amount actually collected. Treating the transaction as defined at the time of the "charge-off," the conclusion just expressed would seem to be inescapable.

It is therefore proper that the revenue collector should receive from the plaintiff the sales tax required to be paid by law. That tax, however, should be computed on the total of $49,115.55, which was the amount paid by the purchasers of the jewelry. It appears that plaintiff actually paid on the uncollected portion of the purchase price of the jewelry a tax in the sum of $1,181.56. For this amount it is entitled to judgment.

THE OCEAN VIEW.

er Ocean View subsequent to January 27, 1925. The vessel was seized and sold under admiralty process, and the fund in the registry amounts to approximately $7,000. The lien claims total approximately $9,000. The intervening libelant, the Chamber of Commerce of Alexandria, Va., a Virginia corporation, is the holder of a mortgage of $8,000 upon the steamer, dated January 27, 1925, and priority is claimed by virtue of this mortgage. It is admitted that the mortgage does not comply with the provisions of the Ship Mortgage Act of June 5, 1920 (41 Stat. 1000 [Comp. St. §§ 81461⁄4jjj-81461⁄41⁄4rr]), and the only question presented in this proceeding is what, if any, priority this mortgage is entitled to.

[1, 2] It is well settled that a mortgage, as generally understood, has no maritime incidents, and therefore is not a matter for admiralty jurisdiction, nor is it brought within such jurisdiction by the mere fact that it happens to be placed upon a ship. Bogart v. The John Jay, 17 How. 399, 15 L. Ed. 95; Schuchardt v. Babbidge, 19 How. 239, 15 L. Ed. 625. See, also, Benedict on Admiralty

1927.

No. 1421.

1. Admiralty 15-Mortgage is not for admiralty jurisdiction, though on a ship.

A mortgage, as such, has no maritime incidents, and is not a matter for admiralty jurisdiction, though on a ship.

2. Shipping 302-Mortgage not complying with Ship Mortgage Act 1920 is not "maritime lien" (Comp. St. §§ 81461⁄4jjj-81461⁄4rr).

A mortgage on a ship, not in compliance with Ship Mortgage Act 1920 (Comp. St. §§ 8146 jjj-81461⁄4rr), confers no "maritime lien," and has the status of a common-law lien, which is subsequent to all maritime claims.

[Ed. Note. For other definitions, see Words and Phrases, First and Second Series, Maritime Lien.]

In Admiralty. Suit by Edward Hamill against the steamer Ocean View. On exceptions to intervening libel of the Chamber of Commerce of Alexandria, Va. Exceptions sustained.

Henry L. Wortche, George Forbes, Griffin & Beatty, Emory, Beeuwkes & Skeen, John Henry Skeen, and J. Marsh Matthews, all of Baltimore, Md., for lien claimants.

J. Louis Raap, of Baltimore, Md., for mortgagee.

COLEMAN, District Judge. In this case the original libel was filed, asserting a lien for repairs and supplies furnished the steam

June 5, 1920, a mortgage complying with the terms of that act is affected with maritime incidents and given priority as expressly provided therein; that is, the mortgage becomes a preferred one,. and is subject to admiralty and maritime jurisdiction, entitling it to priority over all claims except “(1) preferred maritime liens, and (2) expenses and fees allowed and costs taxed by the court." Section 30, subsec. M (46 USCA § 953 [Comp. St. § 81461⁄4nnn]). Preferred mari. time liens are further defined in the act.

Since the mortgage here under considera tion does not comply with the act, it eonfers no maritime lien at all, and must take the status assigned to common-law liens, which are subsequent to all maritime claims. See Morse Dry Dock Co. v. The Northern Star, 271 U. S. 552, 46 S. Ct. 589, 70 L. Ed. 1082. In this case the Supreme Court has set at rest any question as to whether the provisions of the Ship Mortgage Act must be strictly complied with, saying at page 556 (46 S. Ct. 590): "The words of the statute seem to us too clear to be escaped. The mortgage is made preferred only upon compliance with all the conditions specified, one of which is indorsement, and a maritime lien is preferred, if it arises before the recording and indorsement of the mortgage. We see no room for construction, and there is nothing for the courts to do but to bow their heads and obey."

No. 15312.

Aliens 62 (3)-Petitioner, working within judicial district for four years, while family resided elsewhere, held not "resident," within naturalization requirements (Naturalization Act, § 3 [8 USCA § 357]).

Where petitioner for naturalization had resided with family on farm in Pennsylvania for a number of years, and, though working within district where petition was filed for some four years, family had never resided therein, he was not a "resident," within meaning of Naturalization Act June 29, 1906, § 3 (8 USCA § 357), prescribing that naturalization shall extend only to aliens resident within judicial district.

[Ed. Note.-For other definitions, see Words and Phrases, First and Second Series, Resident.]

Naturalization Proceeding. Petition for naturalization of George Wojciech Matczak. Petition denied.

TUTTLE, District Judge. The petition for naturalization, No. 15312, of George Wojciech Matczak, filed with this court on April 16, 1926, came on regularly for hearing on September 19, 1927. The following were all of the facts presented to the court on the question of the residence of petitioner. (1) The petitioner was born in Poland in 1884 and arrived in the United States in 1906. (2) He purchased a farm and established a home in the state of Pennsylvania.

(3) His family has resided upon this farm in Pennsylvania for a number of years and is now residing there.

(4) The petitioner has worked in Detroit at intervals for upwards of four years. (5) The petitioner's family has never resided in the state of Michigan.

The court holds that the facts so presented are insufficient to satisfy the burden of proof which is upon the petitioner to show that he is a resident of this district. Therefore he cannot prosecute a petition for naturalization in this jurisdiction, since under section 3 of the Naturalization Act of June

In re DEMANIS.

District Court, E. D. Michigan. September 19, 1927.

Aliens 68(3)-Certificate filed with petition for naturalization must show legal entry of petitioner into United States (Naturalization Act [8 USCA § 380]).

Under Naturalization Act June 29, 1906, § 4 (2), being 8 USCA § 380, requiring certificate from Department of Labor to be filed with petition for naturalization, showing date, place, and manner of arrival of applicant in United States, such certificate must show legal arrival in compliance with all immigration law requirements, and certificate that record of arrival cannot be found is insufficient.

Naturalization Proceeding. Petition of Nickolaos Georgeou Demanis for naturalization. Denied.

TUTTLE, District Judge. The petition for naturalization No. 17755 of Nickolaos Georgeou Demanis, filed with this court on October 27, 1926, came on regularly for hear ing on September 19, 1927. The following facts were presented to the court:

1. Petitioner was born in Turkey September 14, 1891, and claims to have landed in the United States in March, 1912.

2. No record of his arrival in the United States could be found.

3. On October 13, 1926, he paid $4 to the United States government as a head tax and was issued a so-called nunc pro tunc certificate of arrival by the immigration authorities. This so-called certificate of arrival was a statement that a record of his arrival in the United States could not be found.

The court holds, in view of that part of subdivision 2 of section 4 of the Naturalization Act of June 29, 1906 (8 USCA § 380), which reads as follows:

"At the time of filing his petition there shall be filed with the clerk of the court a certificate from the Department of Labor, if the peti tioner arrived in the United States after" the passage of this act, "stating the date, place, and manner of his arrival in the United

States, and the declaration of intention of such petitioner, which certificate and declaration shall be attached to and made a part of such petition,"

-that the certificate of arrival called for by the law must be a certificate showing a legal arrival in the United States in full compliance with all immigration law requirements, and that the so-called nunc pro tunc certificate of arrival, which is not an actual record of arrival in the United States, but a mere statement that a record of arrival cannot be found, is in no sense such a certification of arrival as is contemplated by the above-quoted statute. United States v. Ness, 245 U. S. 319, 38 S. Ct. 118, 62 L. Ed. 321. Petition denied.

Petition of READER.

District Court, E. D. Michigan. September 19,

1927.

No. 17699.

877

CULLEN v. ESOLA, U. S. Marshal, et al. District Court, N. D. California, S. D. October 7, 1927.

No. 1954.

. Injunction 128-State or federal officers will not be enjoined from instituting crimInal proceedings, except on clear showing of right.

A court of equity will enjoin the officers of a state or the United States from instituting criminal proceedings in certain instances, but not be exercised except upon clear showing of such jurisdiction is of limited scope and will plaintiff's right.

2. Conspiracy 23-Law making conspiracy to commit offense against United States a felony held valid (Criminal Code [18 USCA § 88]).

Criminal Code, § 37 (18 USCA § 88), providing that conspiracy to commit any offense against the United States constitutes a felony, held valid.

3. Conspiracy 43 (6)-Indictment for conspiracy to violate law forbidding interstate transportation of prize fight films charged offense against United States (Criminal Code [18 USCA § 88]; 18 USCA §§ 405-407).

admitted cannot make valid declaration of Intention as basis for naturalization.

Alien, who entered United States unlawfully and was never legally admitted, cannot make valid declaration of intention as basis for naturalization.

Naturalization Proceeding. On petition of Charles Henry Reader for naturalization. Denied.

TUTTLE, District Judge. The petition for naturalization No. 17699 of Charles Henry Reader, filed with this court on October 25, 1926, came on regularly for hearing on September 19, 1927. The following facts were presented to the court:

(1) Petitioner was born in England, November 7, 1899.

(2) While serving as a seaman, on a boat calling at a United States port, the petitioner deserted the boat and entered the United States without the payment of head tax or inspection by the immigration authorities as required by the immigration law.

(3) Petitioner declared his intention to become a citizen March 3, 1920.

The court holds that the petitioner was never legally admitted into the United States, and that hence his declaration of intention is invalid and insufficient upon which to base a petition for naturalization. In re Jensen (D. C.) 11 F.(2d) 414.

Petition denied.

sentations of prize fights, held to charge an offense against the United States within meaning of Criminal Code, § 37 (18 USCA § 88).

4. Injunction 105(1)-Equity court, in proceeding to restrain arrest and seizing prize fight films, cannot determine evidentiary value of films or admissibility in criminal case (18 USCA § 405-407).

Court of equity, in a proceeding to restrain arrest and seizing certain motion picture prize fight films, has no jurisdiction to determine evidentiary value of films seized or their admissibility in evidence on trial of criminal charges under 18 USCA §§ 405-407; such matters being for a jury in a common law court 5. Injunction 105(1)—Theater operator may not restrain federal officers from making arrests and seizure of prize fight films (18 USCA § 405-407).

Theater operator held not entitled to restrain United States officials from making arrests and seizing motion pictures of prize fights under 18 USCA §§ 405 407, in so far as single arrest with accompanying seizure of

films as evidence is concerned, in that to enjoin such arrest and seizure would be to determine guilt or innocence of crime in advance of trial and admissibility of evidence therein. 6. Injunction ~105(1)—United States attorney will not be enjoined from repeatedly entering theater to seize prize fight films, copied within state after interstate transporation (18 USCA §§ 405-407).

United States attorney will not be enjoined from repeatedly entering premises of theater exhibiting prize fight films in alleged violation of 18 USCA §§ 405-407, though such films

were copied within state indirectly from that originally transported in interstate commerce. 7. Injunction 105(1)-Equity court will not determine effect of repeated seizures of evidence before criminal trial.

It is not within province of an equity court to determine the effect of repeated seizures of evidence in advance of trial of criminal cause.

In Equity. Suit by William P. Cullen against Fred Esola, United States Marshal, and others. On motion to dismiss. Motion granted.

Williams, Kelly & McDonald, Milton Schmitt, and Joseph Connolly, all of San Francisco, Cal., for plaintiff.

Eugene D. Bennett, Asst. U. S. Atty., of San Francisco, Cal., and Albert E. Sheets, Asst. U. S. Atty., of Sacramento, Cal., for defendants,

KERRIGAN, District Judge. A complaint in equity has been filed by the conductor and operator of the Capitol Theatre in San Francisco, Cal., against the acting United States attorney and others, seeking to restrain them from making arrests and seizing certain motion picture films depicting the Tunney-Dempsey prize fight which took place in Chicago, Ill., on September 22, 1927. A motion to dismiss has been interposed by defendants.

The complaint alleges that the films in question were "made in California," that plaintiff had an irrevocable option to exhibit them in San Francisco, and that defendants are threatening to arrest plaintiff and his employees and take possession of any such films should plaintiff attempt to exhibit them in his theater. There are further allegations setting forth various elements of damage to plaintiff's property rights due to loss of business and profit, the expense of recovery of seized film and of defense, etc. The asserted right to restrain the United States attorney from proceeding to make any such arrest or seizure is contained in the allegation that:

"Your complainant is advised by counsel, that the threatened seizure of this property is in violation of his constitutional rights and beyond the powers vested in Congress, in that it attempts to exercise a police power within the state of California and beyond the powers conferred upon Congress by the Constitution of the United States."

In 1912 Congress enacted a statute entitled "An act to prohibit the importation and the interstate transportation of films or other pictorial representations of prize fights" (Act of July 31, 1912, c. 263, 37 Stat. 240

[U. S. Code Ann. tit. 18, §§ 405-407]). It is conceded by plaintiff that at some time subsequent to the Tunney-Dempsey fight a positive film portraying that fight was transported in interstate commerce, contrary to the provisions of this statute, from Illinois to California. A negative film was then made from this positive in Los Angeles, Cal., and this California-made negative was in its turn multiplied via various positives and negatives made within this state; the films which plaintiff desires to exhibit being two or three removes from the original, illegally transported film.

The act of Congress does not purport to forbid the exhibition of prize fight pictures within the individual states, nor does it cover the making of such pictures within the states. It covers only the transportation of such pictures in interstate commerce for purposes of public exhibition. There is no statute of the state of California forbidding the exhibition of such pictures. Plaintiff asserts that the arrests and seizures threatened by the United States attorney constitute an attempt to ingraft upon the act of Congress a ban upon the exhibition of prize fight pictures not included therein, which would have been unconstitutional had it been included, as interfering with the police power of the states. Upon this ground plaintiff seeks to enjoin the United States attorney from instituting criminal proceedings against him, arising out of his possession of and exhibiting of pictures of the Tunney-Dempsey fight. [1] It is true that a court of equity will enjoin the officers of a state or of the United States from instituting criminal proceedings in certain instances. This jurisdiction is, however, of limited scope, and will not be exercised except upon a clear showing of plaintiff's right. The circumstances upon which such injunctions will issue are clearly set forth in Jacob Hoffman Brewing Co. v. MeElligott (C. C. A.) 259 F. 525, 527:

"It is perfectly well settled that the United States may not be sued, except upon its own consent. Such consent it has given by various statutes which do not apply to the case under consideration. There is no difference between the states and the United States in respect to this immunity from suit. It is an attribute of every sovereign, recognized by all sovereigns. A criminal suit in the federal courts must be brought in the name of the United States, and can only be brought by the United States attorney. Confiscation Cases, 7 Wall. (U. S.) 454, 457, 19 L. Ed. 196. A suit in equity to enjoin the United States attorney from instituting