NORFOLK & W. RY. CO. v. HALL, State Tax Com'r of West Virginia.

(Circuit Court of Appeals, Fourth Circuit. December 20, 1924.)

No. 2271.

Mines and minerals 87-Privilege tax for coal mining held to apply only to mining for sale or profit.

West Virginia Gross Sales Act, levying an annual privilege tax on "every person engaging or continuing, within this state, in the business of mining and producing for sale, or for profit, any coal," etc., does not apply to those producing coal as an incident to some other legitimate business in which the coal is used,

as a railroad company producing coal from its own mines solely for use in the operation of its

road.

In Error to the District Court of the United States for the Southern District of West Virginia, at Huntington; George W. McClintic, Judge.

Action at law by the Norfolk & Western Railway Company against Grant P. Hall, State Tax Commissioner of West Virginia. Judgment for defendant, and plaintiff

brings error. Reversed.

John H. Holt, of Huntington, W. Va. (Theodore W. Reath, of Philadelphia, Pa.. and Holt, Duncan & Holt, of Huntington, W. Va., on the brief), for plaintiff in er

ror.

E. T. England, Atty. Gen. of West Virginia, Charles Ritchie, Asst. Atty. Gen. of West Virginia, and John T. Simms, of Charleston, W. Va., for defendant in error. Before WOODS, WADDILL, and ROSE, Circuit Judges.

WADDILL, Circuit Judge. This is a writ of error to the judgment of the United States District Court for the Southern District of West Virginia, at Huntington. Plaintiff in error was plaintiff and defendant in error defendant in the District Court, and will be so referred to herein.

The action is in assumpsit to recover from the defendant the sum of $3,004, being the amount of the privilege tax assessed against the plaintiff by virtue of the provisions of chapter 110 of the Acts of the General Assembly of West Virginia of 1921 (chapter 31a, Barnes' Code 1923), commonly known as the "Gross Sales Act," on 323,000 tons of coal mined by the plaintiff from its own mines in the state of West Virginia, from June 30, 1921, to December 31, 1922, and used in the operation of its engines and business without the state.

Plaintiff denied the right of the defendant to assess the tax, and paid the amount claimed under protest, and the object of the suit was to recover the amount so paid. Defendant appeared and interposed sundry defenses, issue was joined, and the case submitted to the trial court under written stipulation, without a jury. The court rendered judgment against the plaintiff, and dismissed the suit, with costs, from which action this writ of error was sued out.

The following defenses were presented on behalf of the defendant: That the declaration was insufficient in law; that the tax was not paid involuntarily, and hence the amount thereof could not be recovered back; that the suit was in effect against the state; and that the tax was lawfully authorized and assessed. Plaintiff, however, insisted upon its right of recovery because of the unlawful assessment against it, apparent on the face of the act under which the levy was made, and because the assessment was void as imposing a burden upon interstate comdefenses were waived, thus presenting soleIn this court, the three first-named defenses were waived, thus presenting solely the question on the merits of whether the tax was lawfully assessed or not. This greatly simplifies the issues, and the case turns upon the correct interpretation of the act under which the assessment was made.

merce.

The portion of the act imposing the tax is as follows section 2 [a]: "That from and after June thirtieth, A. D. nineteen hundred and twenty-one, there is hereby levied and shall be collected an annual privilege tax upon every person engaging or continuing, within this state, in the business of mining and producing for sale, or for profit, any coal, oil, natural gas, limestone, sand, or other mineral product, the amount of each tax to be determined and ascertained by the value of the articles produced as shown by the gross proceeds derived from the sale thereof by the producer (except as hereinafter provided), which tax shall be equal in amount to two-fifths of one per centum of the value of the articles as so ascertained.

"If any person liable for any tax under paragraph (a) shall ship or transport his products, or any part thereof, out of the state, and before making sale of such products, shall further manufacture, transform, or consume the same, the value of the products or articles in the condition or form in which they existed when transported out of the state, shall be the basis for the assessment of the tax imposed in said paragraph; and the tax commissioner shall prescribe

It is a concessuum in this case that the plaintiff owns large tracts of coal lands in the counties of Mingo and McDowell, W. Va., and that it maintains regularly equipped mines and produces a large annual tonnage of coal for use in the operation of its railroad within and without the state of West Virginia, and that the said railroad company did not mine or produce coal save for its own use in its railroad business. It is further conceded that the railroad company was not authorized to engage in the mining of coal for sale or for profit, nor did it do so.

Plaintiff insists that what it does in the mining of coal comes within neither the letter nor spirit of the provisions of the act in question, assessing the tax, which is that "there is hereby levied, and shall be collected an annual privilege tax upon every person engaging or continuing, within this state, in the business of mining or producing for sale, or for profit, any coal," etc. This language makes it entirely clear that the tax in question was imposed upon persons engaged in the business of producing "for sale," or "for profit," coal or other minerals, and has no application to those producing coal not "for sale" or "for profit," but as an incident to some other legitimate business in which the coal is used. The business of mining and producing coal for sale, or for profit, is a very large and important one, certainly in the state of West Virginia, and is well recognized as such, and from which large revenue is derived by the state. Had it been the intention and purpose of the Legislature to make the levy extend to persons or corporations producing coal for their own exclusive purposes, and for use in their business alone, it would doubtless have said so. Certainly it could have so stated, and did not do so; and in the absence of this action on the part of the law-making power, the construction asked to be placed upon the act by this court would be tantamount to the court's levying the same tax prescribed against those mining and manufacturing coal "for sale" or "for profit" as a business, against those who are not so engaged, but are otherwise using their private property in and about their own exclusive business.

Counsel for the defendant in error insist that this view is perhaps a narrow one to take of this statute, and of the meaning of the words "for sale" and "for profit" as used in the act, and contend that the language should have a broader and more ex

While these suggestions are interesting, they do not impress us as persuasive in determining the construction to be placed upon this act, which is within itself clear, plain, and unambiguous. The levying of the tax was upon those engaged or continuing within the state in the business of mining and producing coal "for sale" or "for profit." This clearly indicated the persons against whom the tax was to be assessed. The profit had relation to the sale, and the meaning of the word "profit," read in that light, is as shown by Webster: "The excess of the price received over the cost. of producing and handling or of producing and marketing particular goods." The following cases: Rogers-Ruger Co. v. McCord, 115 Wis. 261, 91 N. W. 685; Burdett v. Estey (C. C.) 3 F. 566, 569; and Rubber Co. v. Goodyear, 9 Wall. 788, 19 L. Ed. 566

tend to support this interpretation, and in the light of the explicit language used no doubt exists in our mind that the tax assessed has no application to coal produced as in the present case. We have, of course, not lost sight of the fact that in some circumstances the word "profit" may have a broader signification. Herbert v. Shanley Co., 242 U. S. 591, 37 S. Ct. 232, 61 L. Ed. 511.

The meaning to be placed on the latter section of the act above quoted (the second paragraph of section 2 of paragraph A), relating to products transported without the state, does not militate against the views herein expressed, or serve to sustain the defendant's contention, as that portion of the act applies only to persons who are liable to the tax assessed in the first paragraph of the act, and hence coal transported beyond the limits of the state, against which there was no tax assessed, would not be liable as claimed.

The plaintiff insists that the tax is invalid because it is in violation of the commerce clause of the Constitution as creating a burden on interstate commerce. We do not feel that this question need be passed on in this case, since in our view the act in question levies no tax against property such as is here involved.

The judgment of the District Court will be reversed, with costs.

Reversed.

powers of appointment having no relation to the property here in controversy, she devised and bequeathed all the residue of her estate, real and personal, to her nephew, David M. Shirk, plaintiff below, appellant here. The defendant and appellee is the executrix and residuary devisee and legatee of Octavius. The plaintiff by his bill asked that the defendant account for the trust reposed in Octavius, and that she be required to transfer and pay over to him the share of Septimus in the trust property. He does not claim to be an heir at law to the original testatrix, Cassandra Norris, and, because he does not, the defendant says he has no interest in her estate.

sons.

Both sides agree that, in the absence of any disposition by any one of the sons of the original testatrix of his interest as heir at law in her estate, the property would now go to those persons who at the death of Octavius were her heirs, and that no one would be entitled to claim any interest in that property as the heir of any one of her The plaintiff, however, contends that the result is different when, as here, one of the sons by will left all that he could devise to some one not an heir at law of his mother. In plaintiff's view, it has been settled for centuries that such a devise amounts to taking a constructive seizin of the devisor's share in the estate to which he is at the time an heir. Defendant replies that such is certainly not the case in Maryland, when the devise by the heir at law is made or attempted to be made at a time when the legal title to the ancestor's estate is in a trustee, as in this case she says it was. The learned judge below was of this opinion, and accordingly dismissed the plaintiff's bill.

The learned, able, and industrious counsel for the plaintiff does not deny that upon the facts his case is indistinguishable from that of Conner v. Waring, 52 Md. 732, in which the Court of Appeals spoke through the mouth of the late Judge Alvey. It was there said that the result for which the appellant in that case contended, as does the plaintiff in this, had been "altogether de

3 F. (2d)-17

feated by the interposition of trustees to take the legal estate, instead of devolving it directly upon parties to take the beneficial estates under the power," and that the estate, "becoming vested by way of reverter, can only be claimed by those who could, at the time of such reverter, show themselves to be heirs to the original donor of the power"—"the intermediate heirs of such donor not having been so seized as to render them new stocks of inheritance." The learned counsel for the plaintiff argues that the holding in that case cannot be logically reconciled with much which was said and decided by the same court in cases preceding and following it. Nevertheless, so far as we know, it has never been in terms overruled, or indeed even so much as criticized, by the court which made it.

The old common-law rule which the plaintiff invokes is a highly technical one. This, perhaps, is especially true when, as in the case before us, there is nothing to show that there was any conscious purpose on the part of Septimus to dispose of any part of his mother's estate or any interest in it. His intention to do so is deduced from his general devise of all the residue of his estate. It is not questioned that such language is as effective to dispose of whatever possibility of reverter of his mother's estate is willable by him as if he had made specific mention of it; but that it may do so, and may in consequence change the stock of descent, is an illustration of how artificial is the rule upon which the plaintiff relies, namely, that such a devise amounts to taking a constructive seizin of the estate.

Plaintiff contends that the distinction made by the Court of Appeals of Maryland rests upon a narrow basis. True enough, but the doctrine upon which he must perforce put his case is in itself purely technical. Under such circumstances, we see no occasion to differ with the highest court of the state as to a rule of law controlling the descent of real property within it, even if, for the purposes of the argument only, it be assumed that we are at liberty to do so. Affirmed.

PENIX v. SLOAN et al. (Circuit Court of Appeals, Fifth Circuit. December 4, 1924.)

No. 4278.

I. Trial 76-Responsive answer admissible where question is not objected to.

It is not error to overrule an objection to

fred McKnight, of Fort Worth, Tex., Penix, Miller & Perkins, of Mineral Wells, Tex., and Capps, Cantey, Hanger & Short, of Fort Worth, Tex., on the brief), for plaintiff in error.

R. E. Taylor and J. L. Lackey, both of Wichita Falls, Tex. (Taylor & Taylor, of Wichita Falls, Tex., H. M. Muse, of Hen

to a question not objected to.

2. Evidence 179(1), 186(6)-Parties held entitled to prove signature to deed not produced and not in their possession; tracing of signature to deed held admissible as secondary evidence.

Where the genuineness of the signature to a deed was in issue, and the deed was not produced, and it did not appear that it had ever been in the possession of plaintiffs, it was permissible for them to prove the appearance of the signature by secondary evidence, and for that purpose a duly authenticated tracing of

it was admissible.

3. Evidence 343 (3)-Certified copy of record of deed held admissible under statute.

Under Vernon's Sayles' Ann. Civ. St. Tex. 1914, art. 7749. providing that in trespass to try title "it shall not be necessary for the plaintiff to deraign title beyond a common source, and proof of a common source may be made by the plaintiff by certified copies of the deeds showing a chain of title to the defendant emanating from and under such common source," certified copies of the record of such deeds are admissible.

4. Trespass to try title 40 (4) -Burden of proof of genuineness of deed, stated.

Under the provision of Vernon's Sayles' Ann. Civ. St. Tex. 1914, art. 7749, that a certified copy of a deed in defendant's chain of title, introduced by plaintiff in trespass to try title for the purpose of showing a common source of title, shall not be evidence of title in defendant unless offered in evidence by him, and article 3700, providing that any instrument duly recorded shall be admitted in evidence without proof of its execution unless the opposite party or some one for him shall file an affidavit stating that he believes such instrument to be forged, where a plaintiff files such affidavit in relation to a deed in defendant's chain of title, the subsequent introduction of a certified copy of such deed by plaintiff for the sole purpose of showing a common source of title does not relieve defendant of the burden of proving its genuineness.

In Error to the District Court of the United States for the Northern District of Texas; James Clifton Wilson, Judge.

Action at law by Hyman J. Sloan, administrator of the estate of Isaac Sayles, deceased, and others, against W. H. Penix. Judgment for plaintiffs, and defendant brings error. Affirmed.

Alfred McKnight, of Fort Worth, Tex. (T. P. Perkins, of Mineral Wells, Tex., Al

Worth, Tex., on the brief), for defendants in error.

Before WALKER and BRYAN, Circuit Judges, and DAWKINS, District Judge.

WALKER, Circuit Judge. The defendants in error, the heirs at law of Isaac Sayles, deceased, and the administrator of his estate, recovered judgment in an action of trespass to try title to described land, such a suit being the substitute under the law of Texas for the common-law action of ejectment. The answer of the plaintiff in error to the petition showed that he claimed the land under an alleged deed of said Isaac Sayles to J. L. Hynote dated January 29, 1920, and filed for record on or about February 17, 1921, in the county in which the land sued for is located. The respective parties are herein referred to as plaintiffs and defendant.

In the trial of the case the following was disclosed: At least three days before the commencement of the trial, the defendant filed among the papers of the suit a certified copy of a recorded instrument purporting to be a deed to the land in question by Isaac Sayles to J. L. Hynote, that instrument bearing date January 29, 1920, and purporting to have been acknowledged before W. B. Hale, a notary public, and filed for record on February 17, 1921; and the plaintiffs, within three days before the trial, filed an affidavit of their counsel, stating that he believed such instrument to be a forgery. Said W. B. Hale died about February 11, 1920. Isaac Sayles died on June 7, 1920. The defendant claimed under an alleged deed to him from J. L. Hynote dated December 27, 1921. There was no evidence tending to prove that Hynote was in possession of the land at any time. The land was in possession of Isaac Sayles during his lifetime under a deed to him which purported to convey a fee-simple title. At the time of the alleged purchase of the land by the defendant from Hynote, the land was in the possession of a tenant under a rent

al contract with the administrator of the estate of Isaac Sayles. The original of the alleged deed to Hynote was not produced.