VIII. During the years in question the plaintiff made, loans to members and to nonmembers in number and amount and on security as follows:

IX. At no time during the period in question did plaintiff lend money to a nonmember in preference to a member.

X. On September 18, 1924, the Commissioner of Internal Revenue assessed against the plaintiff income and excessprofits taxes for the calendar year 1918, $1,963.33 and $265.05 interest; for the calendar year 1919, $1,552.20 and $199.55 interest; for the calendar year 1920, $1,879.75 and $253.76 interest; for the calendar year 1921, $2,294.91 and $309.81 interest; for the calendar year 1922, $3,688.18; and for the calendar year 1923, $4,377.43. The collector of internal revenue for the 11th district of Ohio made formal demand upon the plaintiff for the payment of the said taxes and interest,

Opinion of the Court

against which the plaintiff protested. In order to avoid the imposition of penalties and the seizure, distraint, and sale of its property in satisfaction of such taxes and penalties, the plaintiff, on the 18th of September, 1924, under specific protest, paid the said taxes to the said collector and they were thereafter covered into the Treasury of the United States.

XI. On September 25, 1924, the plaintiff appealed to the Commissioner of Internal Revenue and filed with him a claim for refund of the whole amount of the aforesaid taxes and interest. On November 26, 1924, the commissioner rejected the said claim except as to $922.05 of the taxes assessed and paid for the year 1922, and $1,094.36 of the taxes assessed and paid for 1923, for which he issued certificates of overassessment, leaving as the aggregate amount rejected the sum of $14,767.56, which is still retained in the Treasury of the United States.

The court decided that plaintiff was entitled to recover.

Moss, Judge, delivered the opinion of the court: This is an action by plaintiff, the Cambridge Loan and Building Company, for the recovery of the sum of $14,767.56, which it alleges was illegally collected by the Government as income tax for the years 1918 to 1923, inclusive. Said taxes were paid under protest, and a claim for refund was duly filed with the Commissioner of Internal Revenue and was rejected on the 26th day of November, 1924.

The question for determination is whether or not plaintiff is entitled to exemption from taxes under the provisions of the revenue acts of 1918 and 1921, respectively.

Under section 231 (4) of the revenue act of 1918, 40 Stat. 1057, exemption is granted to "Domestic building and loan associations and cooperative banks without capital stock organized and operated for mutual purposes and without profit."

Under section 231 (4) of the revenue act of 1921, 42 Stat. 253, exemption is granted to "Domestic building and loan associations, substantially all the business of which is confined to making loans to members."

Opinion of the Court

The act of 1918 is applicable to the years 1918, 1919, 1920, and from January 1 to November 23, 1921; and the act of 1921 is applicable to the period between November 23 and December 31, 1921, when the act was passed, and to the years 1922 and 1923.

Plaintiff company was organized and incorporated under the laws of the State of Ohio in 1885, and has continuously since that time been engaged in the business of a building and loan association. Its capital stock for the years 1918 to 1923, inclusive, was $1,500,000, of the par value of $50 a share.

Under the provisions of its constitution and by-laws plaintiff company was organized "For the purpose of raising money to be loaned to its members and others, and for such other purposes as are authorized by law."

It is contended by the Government that the method pursued by plaintiff in the transaction of its business was of such a character as to destroy the essential requirements of building and loan associations as contemplated by the taxing statutes involved herein.

In an effort to ascertain the intention of Congress in the enactment of the exemption provisions of the acts of 1918 and 1919, it is deemed important to briefly review the history of legislation on this question, as well as the current administration of the various statutes by the Internal Revenue Bureau.

The revenue act of 1909 provided that the special excise tax therein contemplated should not apply to "domestic building and loan associations organized and operated exclusively for the mutual benefit of their members." Under this act certain litigation arose, resulting in each case in decisions favorable to the taxpayer. The Internal Revenue Bureau accepted the decisions of the courts and refunded all taxes which had been collected under this act, except those taxes which had been barred by the statute of limitations. In February, 1917, Congress authorized and directed the refund of all such taxes, referring to same as taxes "illegally collected from said associations under the excise tax act of August 5, 1909."

Opinion of the Court

By the act of October 3, 1913, the restrictive term " exclusively " was omitted, the act merely providing that the tax therein imposed should not apply to "domestic building and loan associations." Under this act no building and loan association was subjected to the payment of a tax, nor were they required to file a tax return.

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By the act of September 8, 1916, Congress provided that "there shall not be taxed under this title any income received by Fourth. Domestic building and loan associations and cooperative banks without capital stock organized and operated for mutual purposes and without profit." No building and loan association was subjected to the payment of income tax under this statute, nor was any tax return required to be filed.

The 1918 act, section 231 (4), contained the same language as that employed in the 1916 act, and under this statute no income tax was assessed or collected, nor was any return required.

The act of 1921, passed November 23, of that year, modified the 1916 and 1918 acts, in so far as it relates to building and loan associations, in only one particular. It provided for the exemption of those associations "substantially all the business of which is confined to making loans to members."

It will be noted, therefore, that under none of the acts, except the act of 1909, was any income tax required to be paid by any building and loan association; and that the taxes paid under the 1909 act were refunded.

A proper consideration of this legislation, together with the interpretation given to it by the Internal Revenue Bureau, covering a period of many years, and involving five separate legislative enactments; the elimination of the harsh provisions of the earlier act of 1909; and the refund of the taxes collected under the 1909 act would seem to indicate clearly a fixed purpose and intention on the part of Congress to exempt from taxation building and loan associations conforming in essential respects to the primary business of such associations. It was not until the early part of the year 1922, after the effective date of the act of 1921, that the Commissioner of Internal Revenue undertook to subject