RESPONDENT: Commissioner of Internal Revenue
LOCATION: Kingsley Books, Inc.
DOCKET NO.: 124
DECIDED BY: Warren Court (1956-1957)
LOWER COURT: United States Court of Appeals for the Second Circuit
CITATION: 352 US 313 (1957)
ARGUED: Dec 13, 1956
DECIDED: Jan 22, 1957
Hilbert P. Zarky - for the respondent
Facts of the case
Media for National Lead Company v. Commissioner of Internal Revenue
Audio Transcription for Oral Argument - December 13, 1956 in National Lead Company v. Commissioner of Internal Revenue
The National Lead Company versus Commissioner of Internal Revenue, Number 124.
Excuse me, Riemer.
Your Honor, there is no -- Your Honors, may it please the Court.
There is no material factual difference between the -- Allen-Bradley case on this.The only material difference between the two cases that I can see is that my Brother Peters won and I lost below.
I'd like to review this amortization program for a moment that came in, in 1940, when we were faced with an emergency and when American business and industry still had a depression psychology.
Mr. Peters said that there was much responsible opinion to the effect that our physical plant was overbuilt at that time.
American business and industries were afraid of a post-war depression.
That's why it did not want to invest its capital in new productive facilities, which it might not be able to make economic use of after the war.
In those circumstances, Congress made a compact with business and industry that if they would build these facilities, that this cost could be amortized to give such profits as could be earned during the emergency period.
Now, there had to be a cutoff date.
Congress legislated in the summer of 1940.
First, it said that no facility completed after July 10 could be treated -- could be treated as an emergency facility.
Later, it pushed the date back, but it made this provision that to the extent that a facility has been completed after the critical day, it could be certified that amortization could apply to the cost attributable to construction after the critical date.
That was one problem that the percentage certificates in the early days of the program saw.
The second problem that those percentage certificates in the early days saw was this.As Undersecretary Patterson said in the report, which is in the record.
In the early days, there was difficulty in determining especially where a facility had been begun before the Blitzkrieg broke loose, whether it was really designed for defense or for -- for facility -- for civilian purposes.
So in those early days, if the certifying agencies decided that 30% of the facility was for defense and 70% was for civilian use, they issued a certificate of 30% of cost up to 30% of cost.
Now, taxpayers who got those certificates have no complaints because limiting amortization to 30% of cost of a facility that is only 30% necessary is only a practical and convenient means of reflecting the determination of necessity made by the certifying agency.
Now, that leads me to what the certifying agencies did in these cases.
First, I think the record can leave no doubt that they found as to each of these facilities that they were necessary in the interest of national defense, period.
Those are the statutory words.
Hundred -- hundred percent?
Well, necessary in the interest of national defense, Mr. Justice Reed.
I don't think you can express that in terms of percentage.
You can say that a facility is half necessary, that is half of it is necessary, but that's something else.
They found first that these facilities were necessary in the interest of national defense and that's what Congress told them to find.