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U.S. Supreme Court

Stratton's Independence, Ltd. v. Howbert, 231 U.S. 399 (1913)

Stratton's Independence, Ltd. v. Howbert

No. 457

Argued October 211 1913

Decided December 1, 1913

231 U.S. 399


The Corporation Tax Law of August 5, 1909, c. 6, 36 Stat. 11, 112, applies to mining corporations.

Income, within the meaning of the Corporation Tax Law of 1909, includes the proceeds of ores mined by a corporation from its own premises.

A corporation mining ores from its own premises is not entitled to deduct from the proceeds of the ores mined, by way of depreciation under the Corporation Tax Law of 1909, the difference between the gross proceeds of the sales of ores during the year and the moneys expended in extracting, mining, and marketing the ores. chanroblesvirtualawlibrary

Page 231 U. S. 400

The Corporation Tax Law of 1909, having been enacted before the ratification of the Sixteenth Amendment, was not in any proper sense an income tax law; but was an excise tax upon the conduct of business in a corporate capacity measured by the income, with certain qualifications prescribed by the act itself.

The process of mining ores is, in a sense, equivalent in its results to a manufacturing process, and is "business" within the Corporation Tax Law of 1909.

Income may be defined as the gain derived from capital, from labor, or from both combined.

In fixing the income by which the excise on conducting business should be measured, Congress has power to fix the gross income even though such income involved a wasting of the capital as in mining ores.

The Corporation Tax Law deals with corporations engaged in actual business transactions and presumably conducted according to business principles.

Whatever may be the proper method of computing depreciation under the Corporation Tax Taw by reason of taking ore from the premises of a mining corporation, the rules applicable to liability of trespassers for taking ore have only a modified application thereto.

Where the case is here under § 239, Judicial Code, and the whole record has not been sent up, this Court, under Rule 37, deals with the facts as certified, and not otherwise; under such circumstances, it answers only the questions of law certified, and does not go into questions of fact or of mixed law and fact.

The facts, which involve the construction of the Corporation Tax Act of August 5, 1909, c. 6, 36 Stat. 11, 112, and its application to mining corporations are stated in the opinion. chanroblesvirtualawlibrary

Page 231 U. S. 406

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