text:
    Detroit Egg Biscuit & Specialty Co., Petitioner, v. Commissioner of Internal Revenue, Respondent.
    Docket No. 10563.
    Promulgated January 17, 1928.

      J. H. Amide, O. P. A., for the petitioner.

      D. D. /Shepard, Esq., for the respondent.
   OPINION.

MaRQuette :

The petitioner claims (1) that the Goodyear transaction was an exchange of property, not a sale, and that there was no taxable gain; (2) that if the transaction is held to be a sale, then the March 1, 1913, value of the property should be considered as greatly in excess of its cost, and that this increased value should be the basis of computing the taxable gain, and (3) that the annual depreciation rate on the building should be 2 per cent.

The facts do not sustain the petitioner in its contention that it exchanged property with the Goodyear Company. The latter contracted to buy the petitioner’s property and made the cash payments called for by the contract. The petitioner purchased a new factory site and erected thereon a new factory building at a total expenditure of about 61 per cent of the price paid by Goodyear to the petitioner for its property. In our opinion the transaction was a sale, not an exchange, and the respondent was right in so treating it.

We think, however, that the respondent erred in his determination of the March 1, 1913, value of the petitioner’s property. The evidence adduced shows that the property originally cost about $14,100; that it was well kept up, in good repair; that it was located on one of the principal thoroughfares of the City of Detroit; that from 1906 to 1913 the city’s population increased between 50 and 75 per cent; that during those years the streets bounding the petitioner’s property had been paved, and railroad grade crossings in the vicinity of the property had been eliminated, and that other factories had been built in that section of the city. There is evidence, also, as to the fair market value of the land as of March 1, 1913. Considering all of these elements we can not agree with the respondent that petitioner’s property did not increase in value between 1906 and March 1, 1913. We think it did so increase and that its fair market value on the latter date was $25,000.

The respondent has computed depreciation from March 1, 1913, until the property was transferred in 1920, at the rate of 3 per cent per annum. The petitioner contends that 2 per cent is the proper rate. The evidence does not sustain this contention. Petitioner claimed, and was allowed, 3 per cent annual depreciation for income-tax purposes before the property was sold, and the evidence offered to show that the depreciation was less than 3 per cent was not, in our opinion, sufficient to establish that as a fact. The rate of 3 per cent, therefore, must stand as a reasonable allowance for exhaustion, wear and tear.

Judgment will he entered on 15 days' notice, v/nder Rule 50.


source: Caselaw Access Project

author: Arundell :

license: Public Domain

text:
    L. B. Menefee Lumber Co., Petitioner, v. Commissioner of Internal Revenue, Respondent.
    Docket No. 2851.
    Promulgated January 17, 1928.

      Charles E. McCulloch, Esq., and Ivan D. Phipps, Esq., for the petitioner.

      Warren F. Wattles, Esq., for the respondent.
   OPINION.

Arundell :

The petitioner does not question the action of the Commissioner in excluding from invested capital the value of shares of stock in the Baldwin Sheep Co. and the Northwestern National Bank of Portland on the ground that they are inadmissible assets in determining invested capital under the statutes. Nor does the petitioner contend that borrowed money, as such, is an admissible asset for invested capital purposes. What is questioned is the action of the Commissioner in excluding from invested capital the item of $163,886.17 prior to June 10, 1918. As set forth in the findings of fact, petitioner was indebted to its principal stockholder, Menefee, in the sum of $163,886.17, which indebtedness was .liquidated by turning over to him shares of stock in the Baldwin Sheep Co. and the Northwestern National Bank. Inasmuch as the settlement between the parties was made effective as of January 1, 1918, although entered into on June 10, 1918, we are asked to accept the former rather than the latter date and to allow the item of $163,-886.17 in invested capital from January 1, 1918. We are of the opinion that the fact that interest was not charged after January 1, 1918, and that all dividends declared and paid on the stock of petitioner from that date shall inure to Menefee were considerations for the stock sale and did not have the effect of changing the indebtedness from an interest-bearing to a noninterest-bearing obligation, or in any way alter the fact that the fund was borrowed capital prior to June 10, 1918. The real purpose of antedating the stock sale to January 1, 1918, was to provide a date from which to determine the rights and liabilities of the parties to the sale with respect to interest on the debt and dividends on the stock. But this does not affect the fact that the indebtedness continued in existence until June 10, 1918.

Judgment will be entered for the respondent.


author: Arundelu :

text:
    E. Sohier Welch et al., Trustees under the Will of Edward I. Browne, Petitioner, v. Commissioner of Internal Revenue, Respondent.
    Docket Nos. 11134, 21634.
    Promulgated January 17, 1928.

      Burton E. Eames, Esq., for the petitioners.

      Donald D. Shepard, Esq., for the respondent.
   OPINION.

Arundelu :

The parties have stipulated, for the purpose of deciding this cause, that contributions or gifts made to the City of Boston are allowable deductions under section 214(a) (11) of the Revenue Act of 1921; that the other corporate beneficiaries under the will of the petitioners’ decedent are not subject to tax in accordance with section 231(6) of the 1921 Act and that contributions made to them are deductible under section 214(a) (11) of that Act.

Petitioners claim that the income accumulated and credited to the principal of the trust during the taxable years constitutes an allowable deduction from the income of the trust under section 219(b) of the Revenue Act of 1921 as income “permanently set aside” for the remaindermen which are municipal, charitable, or educational corporations within the scope of section 214(a) (11).

The pertinent provisions of section 219(b) are as follows:

The net income of the estate or trust shall be computed in the same manner and on the same basis as provided in section 212, except that * * * there shall also be allowed as a deduction, without limitation, any part of the gross income which, pursuant to the terms of the will or deed creating the trust, is during the taxable year paid or permanently set aside for the purposes and in the manner specified in paragraph (11) of subdivision (a) of section 214.

It is clear that the trust created by the will is not in itself exempt from tax, Williamson et al., Executors, v. Commissioner, 7 B. T. A. 1033, 1039, and no amounts were paid during the taxable years to the tax-exempt remaindermen, hence, if the trust is to escape taxation on itsjncome it can only be by reason of the income having been “ permanently set aside ” for the tax-exempt corporate remaindermen.

The courts of Massachusetts seem to have invariably followed the rule of construction obtaining in most jurisdictions that remainders are to be deemed as vesting immediately on the death of the testator unless it clearly appears that the testator’s intention was otherwise. Codman v. Brigham, 187 Mass. 309; 72 N. E. 1008; Porter v. Porter, 226 Mass. 204; 115 N. E. 407; Brigham v. Peter Bent Brigham Hospital (C. C. A.), 134 Fed. 513, 522, 523. The facts in Codman v. Brigham, supra, are strikingly similar to those in this case. There the testator left the residue of his estate to his executors to manage and invest for 25 years, directing them to pay from the income certain annuities, to add the balance of the income to principal, and at the expiration of the period of 25 years to dispose of the accumulated fund to found a hospital. The trustees brought a bill for instructions in regard to the disposition of certain income in their hands. It was held by court:

The income and accumulations of the property go with the corpus of the fund, so far as the title is concerned. Tainter v. Clark, 5 Allen 66, 69. Wharton v. Masterman, (1895) A. C. 186, 192, 198. The legal title to the property having been vested in the trustees, the title to its earnings was in them also. The right to have the earnings, when they should accrtie, vested at once in the charity on the death of the testator. Any other doctrine would render provisions for accumulation inefíectuaí. See Odell v. Odell, 10 Allen, 1, and cases there cited. The expressions in the opinions in Hale v. Hobson, 167 Mass. 397, and Cronan v. Adams, 185 Mass. 436, relied on by the heirs at law, do not mean that the owner of a principal fund, on which income subsequently accrues, has not a vested right to the income from the beginning. See also Safe Deposit and Trust Co. v. Wood, 201 Penn. St. 420, 427; Rhode Island Hospital Trust Co. v. Noyes, 26 R. I. 323. The income in this case, subject to the payments to be made from it under the seven provisions, was all the time held for charitable uses, as the principal was. (Italics supplied.)

The position of the respondent is that the trust itself is not exempt from tax and no part of the income received by the trust was permanently set aside or credited to the tax-exempt beneficiaries. We agree, as stated above, with the proposition that the trust is not in and of itself exempt. Under the statute it is not necessary that the income be credited directly to an exempt residuary legatee; it is enough if, under the will the income “ was permanently set aside.” Herbert Jermain Slocum, 6 B. T. A. 36, 39; Bowers v. Slocum, 20 Fed. (2d) 350; 6 Am. Fed. Tax Rep. 6840. In the latter case the contention that is made here was disposed of with the observation that:

This would make the imposition of the tax depend upon some act of the executors, which had no result in law upon the rights of the parties, and is not in accordance with what we have found to be the expressed intent of the Congress, which was to tax the income received by the estate which would pass to any person subject to taxation, but relieve from taxation the income set aside by the terms of the will for corporations of the character described.

The Slocum cases effectively dispose of the principle involved in the present case. The only difference is that here a testamentary trust preceded the vesting of legal title to the residue in the exempt corporations. We do not regard this as material. The exempt beneficiaries here had vested interests, not only in the corpus but also, under Brigham v. Peter Bent Brigham Hospital, supra, p. 524, in the income.

The respondent, in his brief, cites the case of Kings County Trust Co. v. Law, 194 N. Y. S. 370. The Circuit Court of Appeals in Bowers v. Slocum, supra, expressly refused to follow that case.

Judgment will he entered on 15 days’ notice, under Rule 50.


author: Trussell :

text:
    Union Trust Co., Executor, Estate of G. W. Meredith, Petitioner, v. Commissioner of Internal Revenue, Respondent.
    Docket No. 4478.
    Promulgated January 17, 1928.

      J. M. Gumming, Esq., for the petitioner.

      L. C. Mitchell, Esq., for the respondent.
   OPINION.

Trussell :

Disallowance by respondent of debts in the amount of $4,478.03 charged off in the taxable year 1918 appears to have been for the reason that the ledger sheets covering the accounts were taken out of the current ledger following the charge-off and placed in a transfer binder and that this record could not be found in 1924 when an audit was made by respondent of the petitioner’s return for 1918. The fact that the debts existed and were charged off in the year in question is admitted. The necessity thought to exist for the production of the ledger sheets appears to be on the theory that those would show the last dates of payment on each account and would accordingly show when the individual debts became 'worthless in .fact, and that this showing is necessary in view of the lack of testimony on this point.

The existence of the debts and their charge-oil having been proven and admitted, the production of the ledger sheets in question is not thought to be necessary, in view of the evidence submitted by petitioner at the hearing.

There were two witnesses for petitioner on this question, F. C. Buhen, who had been in the employ of taxpayer for 12 years, and at the time these debts were charged off, and for some years prior thereto, was in charge of the books, accounts and collections and looked after most of the credit matters of the business, testified that ho made up the list of the debts charged off and identified each one of the accounts and stated that this action was taken by him after unsuccessful efforts to collect each account through the salesmen employed, then through a collection agency, and finally through local attorneys. T. II. Meredith, a son of the taxpayer, who had been an employee of the business for years and was in general charge of matters for his father during the years 1918 and 1919, corroborated this testimony as to the custom of the business in charging off debts as uncollectible upon unsuccessful efforts to collect as described.

The evidence is sufficient to determine that the petitioner’s opinion as to the uncollectibility of these debts was justified and was arrived at in the year 1918 in which they were charged off and petitioner is accordingly entitled to deduct this amount of $4,478.03 for that year. Ed. S. Hughes Co., 6 B. T. A. 949; John E. Saddler, 2 B. T. A. 1305; Townsend Lumber Co., 1 B. T. A. 894. Petitioner is also entitled to deduct for the taxable year 1919 the sum of $800 representing a dis-allowance by respondent of that amount as part of the cost of an electric sign, which, it was stipulated at the hearing, represented an expense of that year.

The deficiency should be redetermined in accordance with the foregoing findings of fact and opinion.

Judgment will be entered upon 15 days’ notice, pursuant to Rule 50.


author: Tetjssell:

text:
    The Hooven, Owens, Rentschler Co., Petitioner, v. Commissioner of Internal Revenue, Respondent.
    Docket No. 8820.
    Promulgated January 17, 1928.

      W. W. Spalding, Esq., for the petitioner.

      John D. Foley, Esq., for the respondent.
   OPINION.

Tetjssell:

The business acquired and now owned by this petitioner was started in the year 1880. The record does not show the amount of capitalization of the original organization, but one of the witnesses, who had been with the company continuously since 1880, testified that it began with comparatively small capital and that the increase in its capital and tangible assets was due chiefly to the accumulation of earnings and profits. • It is thus seen that from small beginnings in 1880 the business grew until in April, 1901, it had tangible properties of a net value of a million and a quarter dollars, that one of its chief products sold under its trademark reached a figure of annual sales of $700,000 per year and went into every part of this country, together with many sales for export. The petitioner having taken over this business and continued it along the same lines, with other additions, apparently has had an uninterrupted period of prosperity down to and including the year here under review, at the beginning of which the Commissioner found, as shown by his deficiency letter, that the company had accumulated a surplus of $3,697,402.36. The respondent’s argument that the predecessor company did not have in 1901 a valuable good will does not make a very strong appeal. Although we do not have the book records of years prior to the reorganization, one of the stockholders of the predecessor company testified that in the year immediately preceding the reorganization the predecessor company’s profits were approximately $237,000 and that for some years prior thereto, he thought they were in the neighborhood of $200,000. The present owners took over this business in April, 1901, and continued it without much modification either as to the character of the business or its capitalization, and during the two years and nine months immediately following the reorganization, the average earnings were at the rate of $216,177, per year upon a capital investment in tangible properties averaging $1,391,022. Analyzing these figures and having given consideration to the history of this business prior to 1901 and the continued prosperity of the business since that date, we have arrived at the conclusion that the good will of the predecessor company acquired by this taxpayer for stock had on the date acquired a cash value of $328,000.

The instant case involves income and profits-tax liability for the calendar year 1920 and has been tried when the tax liability for the years 1918 and 1919 are still undetermined. Final determination of deficiency herein for the year under review will be held to be made jLn accordance with the findings of fact hereinabove set forth, after the liability for the years 1918 and 1919 has been settled, at which time the taxes for the years 1918 and 1919 will be reflected in the adjustment of invested capital in accordance with the existing regulations and section 1207 of the Revenue Act of 1926.

Judgment uñll be entered upon 15 days' notice, pursuant to Rule 50.


author: Trussell:

text:
    Bedell & Ogg Co., Petitioner, v. Commissioner of Internal Revenue, Respondent.
    Docket No. 13702.
    Promulgated January 17, 1928.

      Harry L. Ogg, for the petitioner.

      F. 0. Graves, Esq., for the respondent.
   OPINION.

Trussell:

The deficiency letter from which this appeal is taken shows an overassessment for the year 1921 and therefore the Board has no jurisdiction as to that year under the rule laid down in Park Bros. & Rogers, Inc., 6 B. T. A. 719, and Cornelius Cotton Mills, 4 B. T. A. 255.

The Commissioner, in his computation of petitioner’s invested capital, prorated its prior year’s taxes and reduced said capital thereby, apparently in accordance with regulations. Pursuant to section 1207 of the Revenue Act of 1926, the Board must consider such computation as having been correctly made.

The deficiency letter, a copy of which is attached to the petition, shows that the Commissioner found listed on petitioner’s balance sheet as an asset, stock of the Owners Oil & Supply Co., a domestic corporation; that such stock being a so-called inadmissible asset under the provisions of section 325 (a) (4) of the Revenue Act of 1918, he caused petitioner’s invested capital to be reduced by a proportion thereof as provided by section 326(c) of said Act, and his computation is apparently in accordance with the Revenue Act and article 852, Regulations 45, in respect thereto.

Judgment will be entered for the respondent.


author: Titus sell :

text:
    Samuel Zimmern, Petitioner, v. Commissioner of Internal Revenue, Respondent.
    Docket No. 9951.
    Promulgated January 17, 1928.

      George E. H. Goodner, Esq., for the petitioner.

      D. D. Shepard, Esq., for the respondent.
   OPINION.

Titus sell :

The contribution of $1,111.60 made to the Chamber of Commerce for the purchase of land to be given to the United States Government for the construction of a cold storage and coal tipple for Government and public use is not a deductible business expense. The testimony shows that man}*- business men of Mobile contributed through civic pride and because the public would benefit thereby, but there is no evidence that petitioner has ever used the coal storage or coal tipple nor that petitioner’s business has derived any benefit therefrom. Petitioner has cited Anniston City Lamd Co., 2 B. T. A. 526, as an authority for his claim, but in that case the taxpayer showed the direct benefits actually derived from the camp, the site of which he contributed toward, and that his sales increased thirty-fold. We believe this contribution falls outside of the range of a reasonable interpretation of “ordinary and necessary expenses.” See Thomas Shoe Co., 1 B. T. A. 124. '

The testimony concerning the coal barge is not as full and complete as might be desired. We know that it was an iron hull constructed in 1868 and when acquired by petitioner it was in the hands of a salvage concern and that all of its former rigging and equipment had been removed, leaving practically the bare iron hull; that in 1918 when it sank, it was approximately 50 years old and that after its sinking the petitioner allowed it to lie at the bottom of the harbor for nearly two years. -The work done in reconditioning this barge required a period of three months or more at a cost of $25,697.55. The things done are described in the record in some detail and the picture which that description convoys to our mind seems to indicate that the thing done by the contractor was much more in the nature of the building of a new barge out of second hand material than it was in the nature of repairs. And we incline to the view that the petitioner instead of having a deduction for the amount claimed in the year 1920, may more equitably be permitted to recover the amount spent in 1920 in the form of depreciation deductions during the years for which the barge may continue to have a useful life. The deduction claimed should therefore be denied.

Judgment will he entered for the respondent.


author: Murdock :

text:
    Boyer Valley Telephone Co., Petitioner, v. Commissioner of Internal Revenue, Respondent.
    Docket No. 9765.
    Promulgated January 17, 1928.

      Alfred L. Geiger, Esq., for the petitioner.

      Joseph K. Moyer, Esq., for the respondent.
   Murdock :

This is a proceeding for the redetermination of deficiencies in income and excess-profits taxes for the years 1919, 1920, and 1921, as follows:

1919_$134 82
1920 _ 782. 89
1921_ 846. 37
Total_ 1,764.08

It was alleged that the Commissioner erroneously eliminated the sum of $29,222.61 from invested capital for the years 1920 and 1921, and that he did not properly compute the deduction for depreciation for the years 1919, 1920, and 1921.

The facts were stipulated as follows:

That on October 1, 1916, the charter of the Woodbine Telephone Company, a corporation organized and existing under the laws of the State of Iowa, expired.
That at the date its charter expired the books of account of the Woodbine Telephone Company stowed a Plant & Equipment Account of $101,733.91, as of September 30, 1916.
That the Boyer Valley Telephone Company, the taxpayer in this case, was organized under the laws of the State of Iowa on August 2,1916.
An appraisal was made of the Plant and Equipment of the Woodbine Telephone Company, which showed an appraised value as of October 1, 1916, of $134,314.94.
This appraisal -was made by Charles C. Deering, of Des Moines, Iowa, Secretary-Treasurer of the Iowa Independent Telephone Association, and by Perry C. Holdoegel, Secretary and General Manager of the Central Mutual Telephone Company, of Rockwell City, Iowa.
The Boyer Valley Telephone Company on October 1, 1916, acquired all the assets of the Woodbine Telephone Company on the appraised value of $184,-314.94 for plant and equipment, and issued its total capital stock of $125,000.00 and notes payable of $9,000.00 therefor.
The difference between the book value of the plant and equipment account on the books of the Woodbine Telephone Company and the book value of these same assets set up on the books of the Boyer Valley Telephone Company, the present taxpayer, based on the appraisal, was $32,581.03. Of this amount $3,358.42 represented material and supplies; the balance, or $29,222.61, was disallowed by the Commissioner of Internal Revenue, both for invested capital and depreciation purposes, and is the issue involved in this appeal.

3STo further evidence or testimony was offered at the hearing of the case. The appraisal itself was not introduced in evidence. It is not known on what basis it was made. There was no evidence as to the date of acquisition of the assets, their cost, or the length of time they had been used. We are unable to determine that the Commissioner was in error either as to the value of the assets at the time they were acquired by the petitioner,_ or their cost to the petitioner.

Judgment will be entered for the respondent.


author: MiiRdock:

text:
    Lewis A. Coleman, Petitioner, v. Commissioner of Internal Revenue, Respondent.
    Docket No. 10830.
    Promulgated January 17, 1928.

      Lewis A. Golemcm, Esq., pro se.

      W. Frank Gibbs, Esq., for the respondent.
   OPINION.

MiiRdock:

The petitioner contends that the Commissioner erred (1) in refusing to allow a deduction of $3,145.17, being 50 per cent of the alleged loss sustained in the operation of Lacoma Farms, a partnership of which the petitioner was a partner, and (2) in allowing the petitioner a deduction of only $750 as an ordinary and necessary expense and depreciation of 15 per cent on the balance of an item of $1,950 alleged to be the amount of an expenditure for the repair of fences upon the farm of which the petitioner was one of the owners.

A statement in lieu of schedules for the taxable year 1920 is set forth in the findings of fact. The partnership return shows an excess of deductions over and above gross income in the amount of $2,124.15 and a loss on sales of capital assets in the amount of $6,830.35. From the ambiguous and imperfect nature of the return, we are unable to determine whether it was made upon an accrual or a cash receipts and disbursements basis. The statement of gross income and deductions would seem to indicate a cash basis and it was this basis that the Commissioner evidently accepted. If this method be adopted, there has been presented no evidence to indicate that the Commissioner was in error in disallowing as deductions the amounts of $1,609.39, representing machinery purchased, and $562.44 representing expenditures by the taxpayer, and we can not see that the Commissioner’s determination of a net loss to the petitioner from the farming operations in the amount of $171.87 was incorrect.

The statement of assets and liabilities as of December 30, 1920, may or may not constitute an authentic picture of the partnership business at the end of the year. But, in either event, we are unable to determine from it the amount of the partnership loss on the year’s business, since the evidence fails to show that the partnership income should be computed on any other basis than that of cash receipts and disbursements. There is no reason to allow a loss to the petitioner who did not pay the notes until a later year.

In regard to the claimed deduction for repair of fences, we can not find that the Commissioner was in error in not allowing a larger portion of the alleged total expenditure as a deduction for repairs.

**From the evidence we would not be justified in requiring the allowance of any amount as a deduction.

Judgment will he entered for the respondent.


author: Sieekin: MáRQuette, Smith, and Aeundell Mtjiídogk,

text:
    Charles P. Limbert Co., Petitioner, v. Commissioner of Internal Revenue, Respondent.
    Docket Nos. 6800, 12738.
    Promulgated January 18, 1928.

      Franje E. Seidman, O. P. A., and Jacob S. Seidmcm, Esq., for the petitioner.

      Orris Bennett, Esq., for the respondent.
   OPINION.

Sieekin:

The principal question presented is the value of the contract for the services and the use of the name of Charles P. Limbert acquired by petitioner in 1911 in return for $45,000 par value of its stock and $25,000 in cash. The petitioner contends that the value of this contract should be allowed as invested capital.

Section 301 of the Revenue Act of 1918 provides for an excess-profits tax, based upon the relation of the net income to the invested capital.

Sections 311 and 312 allow credits based upon the invested capital.

Section 326 provides:

(a) That as used in this title the term “invested capital” for any year means * * * :
(4) Intangible property bona fide paid in for stock or shares prior to March 3, 1917, in an amount not exceeding (a) the actual cash value of such property at the time paid in, (b) the par value of the stock or shares issued therefor, or (c) in the aggregate 25 per centum of the par value of the total stock or shares of the corporation outstanding on March 3, 1917, whichever is lowest.

Section 32o states:

The term “ int angible property ” means patents, copyrights, secret processes and formulae, good will, trade-marks, trade-brands, franchises, and other Ulco property;
The term “ tangible property ” means stocks, bonds, notes, and other evidences of indebtedness, bills arid accounts receivable, leaseholds, and other property other than intangible property. (Italics supplied.)

The Revenue Act of 1921 has similar provisions.

It will be noted that each of these acts includes in “invested capital ” certain specified intangible properties, such as patents, copyrights, secret processes and formulae, good will, trade-marks, trade-brands and franchises, and other like property.

The question arises then as to what property may be included as invested capital under these general terms. A perusal of the legislative history fails to disclose any amplification upon the subject, the discussion being confined more or less to the manner of determining the value of intangibles.

Contracts, generally speaking, are of an intangible nature, and are often quite valuable. It would seem that the intention of Congress was to allow as invested capital any valuable tangible or intangible property which was bona fide acquired for stock or shares, subject to certain limitations as to value allowed/

We have heretofore held that contracts may be included in invested capital.

In Appeal of Dwight & Lloyd Sintering Co., 1 B. T. A. 179, we held that license agreements authorizing the licensees to make and use certain patented machines for refining ores, acquired for stock by a corporation, are intangible property for invested capital purposes and as such are subject to the limitations on intangibles contained in the Revenue Act of 1917.

In Appeal of Tonawanda Power Co., 3 B. T. A. 1195, a contract to furnish electric energy to be produced in the future, acquired by the issue of stock, was held to be intangible property where the taxpayer had the right, but only in case of breach of contract, to the use of the tangible property — generators and other machinery. The value of the contract was allowed as invested capital subject to the statutory limitation on intangibles.

We have also held that money paid, in addition to regular salaries, to secure services, may he included in invested capital. In the Appeal of Federal Plate Glass Co., 6 B. T. A. 851, we stated:

The petitioner also contends that the amount of $100,000 which it paid to its general manager and plant superintendent in addition to stated salaries shall be included in its statutory invested capital. To sustain its contention on this point it asserts that these men performed services in the completion of its manufacturing plant analogous to the duties and functions of designing and supervising architects or engineers, and that the result of such services is reflected in its capital assets. * * * It was largely through their supervision and direction that the plant was made ready for production. To secure the services of these men for the purposes here indicated, the petitioner paid each of them the amount of $50,000, which was in addition to remuneration for services connected with the operation of the enterprise. We are of the opinion that these payments were capital expenditures and should be included in the computation of the petitioner’s invested capital for profits-tax purposes in each of the taxable years.

In the decision of the case of La Belle Iron Works v. United States, 250 U. S. 377, Mr. Justice Pitney of the Supremo Court of the United States defines the words “ to invest ” as follows:

When speaking of the capital of a business corporation or partnership, such as the act deals with, “ to invest ” imports a laying out of money, or money’s worth, either by an individual in acquiring an interest in the concern with a view to obtaining income or profit from the conduct of its business, or by the concern itself in acquiring something of permanent use in the business; in either case involving a conversion of wealth from one form into another suitable for employment in the making of the hoped-for gains.

In this proceeding we must decide whether a contract for which the petitioner paid $25,000 cash and issued $45,000 par value of stock in the year 1911 should be included as invested capital. It is shown that up to the time of the acquisition of the contract the success of the business was due to the personality, ability, and energy of Limbert, and had Limbert changed the name of the company and left the business, as he had an unquestioned right to do, petitioner would have had to begin over again. The contract in question was entered into between Limbert and petitioner, and Limbert gave the petitioner the permanent right to use his name in its corporate title and in or in connection with its trade-marks, and agreed that he would not give the right to use his name in the same manner to any other concern, nor would he give his services or any part thereof to any competing business. He further agreed to manage the business of petitioner for a period of 10 years.

A part of the consideration given by Limbert was of a permanent nature and part was for his services for a period of years.

It is not necessary to determine whether the contract was intangible or tangible property, since the amount claimed is less than the maximum for intangibles as invested capital as provided by section 326 (a) (4) of the Revenue Acts of 1918 and 1921, but we find that this contract had a value of $70,000, and since the asset is of a permanent nature and was bona fide obtained for cash and shares of stock in petitioner’s business, it should be included as invested capital for that amount for each of the years in controversy.

We are, however, unable to see that the contract value may be recovered by exhaustion deductions as claimed by petitioner. The contract granted petitioner the permanent exclusive right to use Limbert’s name. This feature of the contract was not, in any sense, an expiring asset, and therefore, in so far as the contract derived value from this provision, it is not depreciable. No attempt to allocate the total value between the two features of the contract has been made. Accordingly, the deductions claimed therefor must bo denied.

The claim for special assessment being made in the alternative need not be considered in view of our valuation of the contract.

From our findings of fact it appears that more than five years elapsed between the filing of the return for the year 1919 and the mailing of the deficiency notice and that the proposed deficiency is barred by the statute of limitations. George A. Brown, et al., 6 B. T. A. 895.

Reviewed by the Board.

Judgment will be entered on 15 days’ notice, under Rule 50.

MáRQuette, Smith, and Aeundell

dissent.

Mtjiídogk,

dissenting: I dissent from the foregoing opinion, first, for the reason that the value of the contract represented by the right to the continued use of Limbert’s name was not such an asset as could form the basis for any amount of invested capital because of earned surplus er otherwise.

Furthermore, the Board has found that the contract with Limbert had a value of $70,000, that it was an asset of a permanent nature, and that it should be included in invested capital at the amount of $70,000 for each of the years in controversy. To hold that the contract in question, was of permanent value overlooks the fact that a considerable portion of the value of the contract represented advance salary” to Limbert for 10 years and that as those 10 years passed, this value exhausted.

The opinion holds that it is unnecessary to decide whether the contract was tangible or intangible property, since the amount to be included in invested capital is less than the maximum for intangibles, as provided by section 326(a) of the Revenue Ac*ts of 1918 and 1921. Yet, it appears that the consideration paid by the petitioner for the contract in question included $25,000 in cash and in regard to that portion of the value of the contract so purchased, the above mentioned sections of the Revenue Acts would not be applicable.

Stbknhagen concurs in this dissent.


author: Lansdon :

text:
    Washington Electric Supply Co., Petitioner, v. Commissioner of Internal Revenue, Respondent.
    Docket No. 19510.
    Promulgated January 18, 1928.

      Eustace LeMasier, O. P. A., for the petitioner.

      J. E. Marshall, Esq., for the respondent.
   OPINION.

Lansdon :

The petitioner’s contention here is that at the date of its organization it acquired intangible property of great value in the form of good will and contracts in exchange for shares of its capital stock. This alleged intangible asset it entered on its books at a value of $119,800. It does not now insist on these figures, but contends that such property had a substantial value which can not be ascertained by the respondent or by itself and that it is, therefore, entitled to have its tax liability determined under the provisions of sections 327 and 328 of the Revenue Act of 1918.

ISTo elements of invested capital, other than the value of the contracts and good will acquired by the issue of stock at date of organization, are in dispute. In all other respects the petitioner accepts the determination of the respondent. To prevail here on the issues that are before us, the petitioner must first establish some actual value for the intangibles in question on the date at which they were acquired. For this purpose it argues and adduces evidence intended to prove that the contracts enumerated in our findings of fact were the very basis of its prosperous business and that in some way or other it acquired, and has ever since used in its operations, a portion of a valuable good will that prior to August 7, 1907, had been built up by the Montana Electric Co.

There may be conditions in which a part of the good will of a going business can be separated and transferred, but, even if so, we can not see how that was done by the transaction proved by this petitioner, since no stock was issued to the Montana Company in exchange for the good will alleged to have been acquired at the date of the incorporation. If, however, it should be conceded that the property in question was so acquired, the only evidence offered in support of the value of the contracts purchased with stock, and good will, claimed, are some balance sheets and other computations which show that from the date of its organization, the petitioner was quite prosperous and that the income of the Montana Company, for the same period, measurably declined. All these things may be true without in any way affecting the question we must answer. The statute is specific. A taxpayer may take into its invested capital any assets acquired for stock only at their actual cash value, and, as to intangibles, subject to the limitations prescribed by law. The petitioner has failed to prove that the contracts had any value, or that it acquired good will at any cost at the date of its organization. Inasmuch as we have decided that there is no proof that the intangibles in question had any value, we are of the opinion, no other matter being in dispute, that the invested capital of the petitioner was accurately determined by the respondent. There is, therefore, no basis upon which we can allow the petitioner’s claim that it is entitled to have its tax liability computed under the provisions of sections 327 and 328 of the Revenue Act of 1918.

Judgment will ~be entered for the respondent.


author: Mukdock :

text:
    Daniel F. Ebbert, Petitioner, v. Commissioner of Internal Revenue, Respondent.
    Docket No. 18989.
    Promulgated January 18, 1928.

      Daniel F. EFbert pro se.

      A. H. Murray, Esq., for the respondent.
   OPINION.

Mukdock :

Section 214 (a) (6) of the Revenue Act of 1924, reads as follows:

Sec. 214. (a) In computing net income there shall he allowed as deductions:
(0) Losses sustained during the taxable year of property not connected with the trade or business * * * if arising from fires, storms, shipwreck, or other casualty, or from theft, and if not compensated for by insurance or otherwise. The basis for determining the amount of the deduction under this paragraph, * * * shall be the same as is provided in section 204 for determining the gain or loss from the sale or other disposition of property.

Section 204 (b) of the Revenue Act of 1924, provides as follows:

(b) The basis for determining the gain or loss from the sale or other disposition of property acquired before March 1, 1913, shall be (A) the cost of such property * * * or (B) the fair market value of such property as of March 1, 1913, whichever is greater. * * *

The cause of the damage to the petitioner’s property in this case did not arise from an “ other casualty ” within the contemplation of that term as used in the above section of the Act. The Board has held that in construing the words “other casualty” the rule of ejusdem generis is applicable, and in order that a loss sustained by an individual, resulting from an “ other casualty ” may be deductible from gross income under this provision of the Act, it must appear that the casualty was of a similar character to a fire, storm, or shipwreck. See Appeal of Fred J. Hughes, 1 B. T. A. 944.

Further construing this section of the Act, we think the language of the Board in the case of Samuel Greenbaum v. Commissioner, 8 B. T. A. 75, is controlling herein. It was there stated as follows:

There is a clear distinction between an expense of maintenance and repair, whether arising through ordinary wear and tear or through extraordinary damage, and a loss of the property itself. * * *
It is plain from the language of section 214 (a) (6) that the losses contemplated are losses of the property itself and not the cost of repair or replacement ; for the measure of the loss is either the cost of the property or its value on March 1, 1913, if acquired prior thereto. This is inconsistent with the idea that the loss is to be either measured or characterized by the cost of repair or replacement. * * *

In the present case, even if the petitioner were correct in theory he would‘necessarily fail because, there is no evidence either of cost or of the March 1,1913, value of the property damaged.

Judgment will be entered for the respondent.


author: Siefkin:

text:
    Estate of L. Bach, Petitioner, v. Commissioner of Internal Revenue, Respondent. W. D. Millar, Petitioner, v. Commissioner of Internal Revenue, Respondent. W. H. Elliott, Petitioner, v. Commissioner of Internal Revenue, Respondent. W. F. Cummings, Petitioner, v. Commissioner of Internal Revenue, Respondent. C. Galumbeck, Petitioner, v. Commissioner of Internal Revenue, Respondent.
    Docket Nos. 10637-10641.
    Promulgated January 18, 1928.

      M. Carter Hail, Esq., and C. C. Carlin, Esq., for the petitioners.

      W. S. Heffernan, Esq., for the respondent.
   OPINION.

Siefkin:

All of the petitioners were directors and employees of the corporation, which had a fiscal year ended April 30, 1921. During that fiscal year of the corporation certain salaries were voted to the petitioners, but with the limitation that withdrawals against the salaries could be made only as the needs of the business permitted. The corporation was not prosperous and was heavily indebted to banks and to its principal stockholder and president, and withdrawals were made only for a portion of the amounts voted. Such amounts that were actually paid are not in controversy, the petitioners all being upon the basis of cash receipts and disbursements in reporting income and making their returns on a calendar year basis. The amounts which were not withdrawn are the subject of this controversy, the respondent’s contention being that the transaction with the corporation’s bank centering around June 1,1921, resulted in converting the accounts of the petitioners with the corporation into income to the petitioners even though respondent concedes that such amounts were not income up to that time. It is necessary, therefore, to examine into the nature of the transactions around June 1, 1921.

An audit of the corporation’s books by its auditors late in April, 1921, disclosed an unfavorable financial position, and this situation being made known to the bank to which the corporation was heavily indebted, it was suggested by the president of the bank that the accounts of the corporation be recast so that the amounts shown as credited to the petitioners be deferred to the right of the bank to obtain its money. To this all of the petitioners agreed. It was also suggested that the recasting of the accounts of the corporation be done in such a manner as to permit rediscount of the corporation’s paper under the Federal Reserve system. The various petitioners then, in order to carry out this suggestion of the bank, whether as individuals or as directors and officers (although they signed as directors and officers) is not conclusive, agreed by letter to the bank to consider the credits due them for unpaid salaries as loans subject to the right of prior payment by the bank. Shortly thereafter the auditors for the corporation changed the audit to conform with this agreement and changed the books of the corporation so as to carry the accrued salaries into a so-called “ loan account,” although an actual loan by Elliott, one of the petitioners who was also president of the corporation, was carried in another account known as “ deposit account.” The letter to the bank, the change in the audit of the corporation’s affairs and the change of the corporation’s books are the facts relied on by the respondent as changing the situation between the corporation and the petitioners so as to render petitioners liable to tax upon the unpaid but accrued salaries.

In determining tbe deficiency the respondent made this statement:

The amount of accrued salary undrawn on June 1, 1921 at which time you acknowledge such amount as a loan to the corporation and waived your right of preference should be included as income for 1921.

We can not agree with this contention. It seems quite clear that, although the petitioners signed a letter using the word “ loan,” and although auditors of the company treated the amounts of accrued salaries as though they were loans to the corporation, the transaction, in fact, did not constitute a loan. All of the petitioners who were still living testified as to the purpose of the letter to the bank and to complete ignorance of the change in audit and the books as the result of the letter. It is clear from their testimony and from all of the circumstances surrounding the transaction that it did not result in making available to the petitioners any additional income from that already received. On the contrary, it appears that the petitioners were in a less advantageous position than before. Before the conference with the bank and the letter to the bank they had an outstanding credit on the books subject to the needs of the business. After June 1,1921, such amounts were inferior to claims of the bank. Under similar circumstances we have held in many cases that the petitioners were not in receipt of income constructively or otherwise. See Appeal of Walter L. Hopkins, 2 B. T. A. 549; Appeal of Samuel Graydon, 2 B. T. A. 552; Appeal of A. L. Englander, 1 B. T. A. 760; Appeal of Nicholas J. Maisel, Jr., 2 B. T. A. 66; Appeal of Edward J. McDonnell, 4 B. T. A. 49.

At the hearing it was conceded by the petitioners that certain amounts actually drawn by petitioners, as set forth in our findings of fact above, were properly taxable as income.

Judgment will be entered on 15 days' notice, under Rule 50.


text:
    Frederick Ludewig, Petitioner, v. Commissioner of Internal Revenue, Respondent.
    Docket Nos. 12103, 19104.
    Promulgated January 18, 1928.

      Gerard B. Townsend, Esq., for the petitioner.

      Joseph, Harlacher, Esq., for the respondent.
   OPINION.

Siefkin:

The petitioner in these cases is a member of the same partnership considered in the Appeal of Theodore Schilling, 3 B. T. A. 936. In that case we approved the respondent’s computation of taxes and held that the method used was in accordance with section 205 (c) of the Revenue Act of 1921. Petitioner in these cases, although he points out a difference in that Theodore Schilling was a nonresident alien, whereas he is a resident citizen, and in that the rates of the year 1922 were different from those of 1921, admits that there is no difference in principle between the Schilling case and these cases and frankly asks the Board to reconsider its holding in the Schilling appeal.

All the reasons that can be urged in favor of the petitioner’s position were urged by the same able counsel in the Schilling case and were the subject of a full discussion in the dissenting opinion in that case. The argument in the second of these proceedings growing out of the difference in rates between the years 1921 and 1922, is nothing more than an emphasis of the position taken in the Schilling case by the petitioner, and which forms the basis of the dissenting opinion. We hold to our former decision and approve the determination of the respondent.

Judgment will be entered for the respondent.


author: Siefkin :

text:
    Luce Furniture Co., Petitioner, v. Commissioner of Internal Revenue, Respondent.
    Docket No. 6536.
    Promulgated January 18, 1928.

      Frank E. Seidman, G. P. A., and Jacob S. Seidman, Esq., for the petitioner.

      Orris Bennett, Esq., and Hartford Allen, Esq., for the respondent.
   OPINION.

Siefkin :

The first issue in this proceeding relates to the deduction from gross income of certain losses alleged to have been sustained during the years 1920 and 1921 on account of the sale of securities purchased by the petitioner and transferred to its officers and directors or, in one case, to an employee. The respondent contends that-the transfer of all the securities were not tona fide sales and relies upon the decision of the Board in M. I. Stewart & Co., 2 B. T. A. 737, in which we held that the transfer of securities to two stockholders who were also officers of the corporation, at a price below par and cost, was not bona fide. We believe, however, that the transactions in question here can not be so characterized. The evidence shows that investments were made by petitioner in an effort to promote civic enterprises and better business for the City of Grand Rapids, the furniture manufacturers of that city and specifically itself, and that the various sales to the officers and stockholders were at prices which at least equaled, if they did not largely exceed, the fair market value of the securities sold. Respondent’s counsel calls attention to the fact that petitioner, after having sold one lot of warehouse company stock at a loss, invested further amounts in stock at par in the next year. This is understandable, however, both from the nature of the business which the warehouse company was intended to do, and from the fact that additional capital was necessary in order to permit the warehouse company to function at all. In our opinion, the losses deducted by the petitioner, consisting of $7,500 in 1920 and $3,000 in 1921 on account of the Furniture Manufacturer’s Warehouse Co. stock, $2,040 in the year 1920 on account of the Pantlind Hotel Co. stock, $500 in 1921 on account of the Regent Theatre Co. bond, and $4,950 in 1921 on account of the Eamona Amusement Co. stock, were proper deductions from gross income for the years in question and should be allowed.

The second issue relates to certain expenditures made by the petitioner corporation during the years 1920 and 1921 aggregating $5,411.17 and $1,836.73, respectively. The respondent has confessed error with respect to the amount of $833.05 spent for painting and decorating the showroom in 1920. Respondent also concedes the expenditure of $445 in 1921 for a canvas for protecting the showroom carpet was a proper deduction from gross income. With respect to the remaining items the evidence, in our opinion, establishes the amounts were capital expenditures and should be treated as such, and that the respondent’s action in disallowing the deductions claimed was proper.

The third and fourth issues relate to proper treatment of the sum of $3,500 paid to an accounting firm in 1920 for services in auditing the books of the petitioner for the year 1919. The evidence is that arrangements for the audit were made in the year 1919, the audit was started in 1920, the bill was rendered in 1920 and that payment was made in that year. The evidence is not clear as to exactly what was done in the year 1919 with respect to employing the accountants and there is some testimony that there was no obligation on the petitioner with respect to the 1919 audit during the year 1919 and that no liability accrued to the petitioner. This testimony is uncertain and we are unable to determine whether, in fact, any liability existed prior to 1920 and on that point we must affirm the respondent’s determination. For the same reason we must also hold that his action in reducing invested capital as of the beginning of the year 1920 on account of the $3,500 fee for the 1919 audit was proper.

The fifth issue relates to the statute of limitations and must be determined adversely to the petitioner not only upon the grounds stated in Art Metal Works, 9 B. T. A. 491, but also because of the provisions of section 283 (a) and (b) of the Revenue Act of 1926 by which the running of the statute of limitations as to assessment, and necessarily collection, of the proposed deficiencies for the years 1920 and 1921 is suspended while this appeal is pending before the Board.

Judgment will he entered on 15 days’ notice, under Rule 50.


author: Chief Justice Dunn

text:
    JAMES D. DOTY, impleaded with DAVID JONES and ALEXANDER J. IRWIN, Pl'ff in Error. vs. MOSES M. STRONG, Def't in Error.

      Error to Dane County. J
    A writ of error may be quashed, when it does not agree with the record of the case.
    All the persons against whom a judgment is given, must be named as plaintiffs in a writ of ovror to reverse the judgment.
    Although the proceeding of summons and severance is not familiar in American practice, the more easy and equally legitimate course, is to enter a rule against those who arc named in the writ as plaintiffs and who have not appeared, either to appear and assign error, orsuffei to be severed.
    At the November Term, 1841, of the Dane District Court, Strong obtained judgment, in an action of assumpsit, against Doty, Jones, and Irwin. To reverse the judgment, Doty alone, prosecuted this writ of error, and entered into a bond for a super-sedeas in his own name, without joining his co-defendants in the original action.
    The defendant in error moved the court to quash the writ and dismiss the cause, because,
    “ 1st. The writ of error is prosecuted in the name of Doty alone, although the judgment which it is brought to reverse, is against the said Doty, Jones, and Irwin: and 2d. The bond for the super-sedeas is informal and insufficient.”
    In support of this motion, Btfxuxett and Dunn for the defendant in error, contended:
    That where a judgment is given against several, one only, cannot prosecute a writ of error to reverse it. If the writ is sued out, it must be in the names of all the defendants against whom the. judgment was given. If each one was allowed his separate writ, they could bring up the case successively, although the judgment should be affirmed once or more; and as a writ for one would be a supersedeas for all, tho practice would tend to vexatiors and delay. See 2 Bac. Abr. Title Errar, B. pago' 4G1, and the authorities there citod. 2 Tidd’s Prac. 1053, 1054. 3 Burr. 1789. Graham’s Practice, 770,771, 772. In such case, if the writ be brought by one or more of the defendants only, and not in the names of all, the court will quash it; 2 Tidd 1054. 2 T. R. 788. 3 Burr. 1789. 1 Wils. 88.
    The bond in this case is defective. It does not conform to the statute, nor does it conespond with the record of the cause, and a recovery could not be had upon it in case the judgment should be affirmed.
    Jackson, for plaintiff in error:
    The writ is properly brought in the name of one only of the defendants below. He is the one who complains of tho error, and for aught that appears, the others may be satisfied to let the judgment rest. He has no power to compel thqm to join in the writ or to sign the bond, and if they neglect or refuse to do so, the defendant, Doty, cannot be deprived of his remedy. He is entitled to the writ in his own name as a matter of right.
    Chief Justice Dunn delivered the following opinion of the Court upon the motion.
    The defendant in error moved the court to dismiss the writ of error herein for two reasons: “1st. The writ of error is prosecuted in the name of Doty alone, although the judgment which it is brought to reverse was against the said Doty, Jones, and Irwin. 2d. The bond for supersedeas is informal and insufficient.”
    The record in this case from the District Court of Dane county, shows, that at the November term of 1841 of said court, a judgment was rendered in favor of the said defendant, Strong, against the said plaintiff, James D. Doty, Alexander J. Irwin, and David Jones. To reverse this judgment, Dotjq plaintiff in error, and one the defendants against whom the said judgment was rendered, has prosecuted this writ of error separately from the other defendants in the judgment. The case, as it is now presented on the motion submitted, being thus correctly stated, the court will proceed to examine the merits of the motion to dismiss upon the grounds set forth.
    It is not only a rule that no person, not a party, can sue out a writ of error, but it is also a settled rule that it must be brought in the names of all the parties against whom the judgment is given: And notwithstanding the death of any of the parties, though the survivors must bring the writ, he must still be named and his death must bo alledgod. And this is the rule, both that the writ of error may agree with the record, and to prevent vexation; for if each party may bring a writ, they might do it successively, to the great prejudice and delay of the plaintiff, who, in the opinion of the ablest jurists, cannot sue out execution against anyone where a writ of error is awarded, even on the application of the others. A writ of error which in this respect is erroneous, may be quashed. Garth. S. Ld. Ray. 71. Saun. 101. f.
    When one of several defendants brings a writ of error in which the others are unwilling to join, he must do it in the name of all, and those who refuse to appear and assign errors, must be summoned and severed, and then the writ of error must be proceeded •in by the rest only; and the defendant who prosecutes the writ, will not be compelled to proceed, until they have been summoned and severed. Saund. ubi sup. Thus tho writ of error corresponds with the record; and moreover the other parties would be forever after barred of the writ; see Bac. Summons, II. So that both purposes are subserved by this course of proceeding.
    To this general rule there is this obvious exception, that if ono of the defendants in an action oí'tori is acquitted, he need not be joined, because he cannot say that tho judgment is to his damage; and moreover, for tho reason that he can never vex the plaintiff with another writ of error. The suit, however, should be described in the writ according to the record, and thus both objects of the law herein will be obtained. Saund. ubi sup.

    In 6 Serg. & Ravvle, in the case of Folterall vs. Floyd, this doctrine is fully recognized on full argument and reference to authorities. Hackct vs. Horne, Garth. 7. Walter vs. Stokoe, 1 Ld. Ray. 71. Brewer vs. Turner, 1 Str.283. Cooper vs. Ginger, reported in 1 Sir. 606, and Ld. Ray. 1403, And the principle decided in Hacket vs. Horne is mentioned and acknowledged in the case of Knox vs. Costello, 3 Burr. 1789.
    The practice of summons and severance is not familiar to the American courts of error. The more easy and equally legitimate practice, would bo to enter a rule against those persons named in the writ of error as plaintiffs and not appearing, either to appear and assign error or submit to be severed. In any practice, however, all the defendants in judgment must first join in suing out the writ of error. We are of opinion, therefore, that the writ of error in this case be quashed for the' first reason assigned in the motion of tho defendant, without considering the second reason which goes to the form and sufficiency of the bond, which it is not necessary to consider at this time.
    At a subsequent day of the term, the plaintiff moved the court for a rehearing:
    Smith for plaintiff in error:
    The praecipe for tho writ in this case, was made out and filed with the clerk in tho names of all the defendants in the court below, and if the writ was not issued according to tho praecipe, it is clear that it may be amended. But whether the writ might be amended or not, is not material. A party has a right to the writ separately. The old doctrine of summons and severance is obsolete, and has not been adopted in practice in this country. By the decision of tho Buprerno Court of the United States in the case of Cox and Dick's vs. the United States, 6 Peters 173, one defendant, may bring a writ of error alone, without joining the others; and the practice recognized in that case does not come within the reasoning of the court in the opinion already delivered in this caso. One party cannot compel tho others to join in the writ and sign tho bond. Some may be absent, or refuse, and the reason of the English doctrine docs not exist here. There the writ and bail in error, supersede the whole judgment; here it is only a supesodeas as to the party who sues out the writ and gives the bond, and the plaintiff below may pursue his judgment as against the others who do not join.
    Buhwbtt, contra.
    Tho first ground assumed in support of the motion now before the court is, that tho praecipe was made out in the names of all the defendants below, and that the writ may be amended to correspond with the praecipe. The suggestion comes too late. The court will net set aside the decision given, to afford an opportunity to amend the papers or process, when no motion to amend was ever made, Besides, it is proven to the court that the praecipe was altered by tho plaintiff in error himself, and that the writ was issued in its present form by his direction.
    The case of Cox and Dicks vs. the United States, cited from G Peters by tire plaintiff’s counsel, is not analagous to this case, nor does it support the position assumed. There the parties had separate defences in the court below, and although they prosecuted separate writs of error, they were all before the court.
    War. R. Smith and M. M. Jackson, for plaintiff in error.
    T. P. Bübnett and F. J. Dunn, for defendant in error.
   Chief Justice Dunn

delivered the opinion of the court upon the motion.

The court could not, unless for extraordinary reasons, entertain this motion. The reason for entertaining the motion urged by counsel for the plaintiff, is, “ that a decision of the Supreme Court of the United States, in Cox and Dicks vs. the United States, reverses the principles decided by this court on the motion to dismiss herein.” From a minute and careful inspection of that decision, this court is unanimously in the opinion, that it is a case by no means in point, The motion was decided on different grounds entirely; and the reasons which influenced the court in that case, as far as they can be inferred from the arguments of counsel, (for they are not assigned in the decision,) are such as conduce to satisfy this court still moro clearly, if any thing were wanting, that their opinion on the motion in the case at bar, was correct.

We understand these to have been the reasons why the motion to dismiss was overruled. All the parties were before the court. They had separate grounds of defence, and the court below allowed them to sever in their answers. Judgment was awarded against all in in sólido, and separately for the whole amount against two of the defendants. They had both sued out a writ of error, and the motion should have been to consolidate. The parties had distinct grounds of error, and claimed distinct remedies. It was insisted in argument, that the case of Williams vs. Bank, in 11 Cranch, was not applicable, because Williams alone took up the cause; but in that case the court was understood to recognize the principle in practice of summons and severance,

If the Supreme Court of the United States had decided that the practice of summons and severance was obsolete in reference to error in that court, (which, however, they did not,) still, if this court had entertained the practice, it never having been reversed by any judicial decision upon principle, it certainly would not have been treated as error by the Supreme Court.

Motion overruled.


text:
    EDMUND DAWS, pl’tff in error, vs. HORACE GLASGOW, def't in error.

    | Error to Jefferson county.

    The Supreme Court will not, under any circumstances, consider matters assigned as error, which arc dehors the record.
    Although there is an obvious impropriety in an attorney in a cause, taking, as a judicial officer, the affidavit of'his client, which is tobe the foundation of the action, yet, as there, is no provision of law or rule of court to prohibit his doing so, this court cannot say, that from the fact of his being attorney, ho is not a proper officer before whom the client may make the necessary affidavit and that the proceedings should be therefore dismissed.
    Where the writ of replevin is for the caption and unjust detention of property, the declaration should correspond and alledge the caption and detention; a different form would be required under our statute if the detention only was complained of.
    Whore a motion for a now trial is made on the ground that the verdict is contrary to the evidence and the instructions of tiio court, and overruled, and the record does not show whnt the evidence or instructions were, this court is bound to presume, that the discretion of the District Court was soundly exercised in overruling the motion.
    Glasgow brought an action of replevin against Daws in the Jefferson District Court, for the caption and detention of a horse. The writ was issued in the usual form prescribed by the statute for the caption and detention, and the declaration filed corresponded with the writ. It appeared that the affidavit upon which the writ issued, was made before the plaintiff’s attorney as a Supreme Court Commissioner. At the May term 1842 of the Jefferson District Court, Daws, the defendant below, moved to dismiss the suit for want of a sufficient affidavit and bond, which motion was overruled by the court. The defendant then filed a general demurrer to the declaration, which was also overruled; upon which he filed the plea of non detinet, or that he did not unjustly detain, &c., upon which issue was joined and a verdict rendered in favor of the plaintiff. The defendant moved for a now trial on the ground that the verdict was contrary to evidence and contrary to the instructions of court, which motion was overruled and judgment rendered upon the verdict. The defendant below has prosecuted this writ of error to reverse tho judgment, and has made the following assignment of errors in the proceedings of the court below:
    “ 1st. The court erred in overruling the motion to dismiss for want of a sufficient affidavit and bond:

      2d. In overruling the defendant’s demurrer to the plaintiff’s declaration:
    3d. In overruling the defendant’s motion for anew trial:
    4th. The court erred in ordering the issue to be made up on the unjust detention only, as the taking was complained of.”
    There was no bill of exceptions taken to spread the testimony or the instructions of the court upon the record, and the record does not show any such order as is mentioned in the fourth error assigned.
    Noggle for plaintiff in error:
    The affidavit, which is the foundation of this action, is not sufficient, and the court below ought to have dismissed the case upon motion. The affidavit was made before Markley, a Supreme Court Commissioner, who was the attorney for the. plaintiff and who brought the suit. He was not a proper officer within the meaning of the statute. See Stats. Wis. pa. 272, sec. 7.
    The demurrer to the declaration ought to have been sustained. The declaration is erroneous because it does not comply with the requisitions of the statute. See Stat. Wis, pa. 273, sec. 16; Rev. Stat. N. Y. 435; Yates Plead. 547.
    The court below erred in requiring the defendant to plead as to the unjust detention only. It is not such a plea as the statute requires to a declaration in this form. See Stats. Wis. pa. 274, sec. 19. The issue thus made up precluded the defendant below from justifying on the trial his caption of the property in dispute.
    The motion for a new trial ought to have prevailed, because the verdict was contrary to law and evidence. Admitting the whole declaration to be proven, it does not establish a case in which the plaintiff can recover. See 10 Wendell 629. Our statute in relation to the action of replevin is the same as that of New York, and the decisions under it ought to be the same as given in that state. 2 N. Y. Stat. 435, sec. 36.
    The verdict of the jury was contrary to the instructions of the court, and in such ease a new trial should have been granted. Graham on new trials, 361 to 372.
    Botkin, in reply:
    The affidavit ought not to be considered insufficient on account of the professional, relation of the officer who administered the oath. He was an officer authorized by law to administer such an oath, and there is no objection to the form of the affidavit.— There is no law prohibiting an attorney in a canse from adminis-* tering oaths if he is a qualified officer. He cannot change the effect of a written affidavit by swearing the party to its contents and signing'fhe jurat. It may be conceded, that if the attorney was to make any order or give any decision in a causo, as a civil officer, that might, even by possibility, prejudice the rights of the adverse client, he would not.in such case be a proper officer. But this is not such a case, and neither the law nor reason prohibits the act that has been done.
    The counsel for the plaintiff in error has assumed matters as error that do not appear on the record, and which of course cannot be settled here. The record does not show (hat the court below in any way controlled the plaintiff in error as to the form or substance of his plea; nor does it show any thing that will enable this court to determine that the verdict of the jury was either against evidence or the instructions of the court.
    The declaration substantially complies with the statute, and with the soundest principles of practice, in every particular; and after verdict, every thing necessary to sustain it, is to be presumed where the contrary does not appear.
    Noggle, in conclusion:
    Although the statute does not expressly prohihit an attorney from acting asa civd officer in a cause in which he is employed, still reason and sound policy require that the administration of oaths and every other official act necessary to be done in the progress of the case, should be performed by some indifferent person.
    The plea in this case only denies the unjust detention. If the plainfiffbelow accepted the plea and took issue upon it, he abandoned the caption charged in the writ and declaration, and of course the whole action, as the detention is only laid as a consequence of the caption.
   Chief Justice Dunn

delivered the opinion of the court:

This case was tried in the District Court of Jefferson county at the May term thereof, 1842; verdict and judgment thereon rendered in favor of defendant Daws as plaintiff below, to reverse which judgment, writ of error is prosecuted in this court. The errors assigned by the plaintiff are:

1st. The court erred in overruling the motion to dismiss for want of sufficient affidavit and bond:

2d. In overruling demurrer to plaintiff’s declaration:

3d. In overruling defendant’s motion for a new trial:

4th. The court erred in ordering the issue to be made upon the unjust detention only, as the taking was complained of.

Before proceeding to examine the errors which are based upon the record, the court will premise, that they cannot consent, under any circumstances, to consider or entertain matters dehors, as the fourth error assigned evidently is, from an inspection of the record.

First then; did the District Court err in overruling the motion to dismiss for want of a sufficient affidavit and bond? In discussing this error, the counsel for the plaintiff took no exception to the bond, indeed it does not appear to be obnoxious to any, but confined his objections entirely to the' affidavit; and assumed the ground, “that the attorney for the plaintiff, although a Supreme Court Commissioner of the county of Jefferson, is not a proper officer in the meaning of the law, before whom the affidavit in re-plevin may be made.” Although there is an obvious impropriety in the practice, and this courtis much disposed to discountenance it, yet there is no rule of law, or of court under authority of law, against the exercise of such a power by the attorney in the case, by virtue of his office of Supreme Court Commissioner of Jefferson county. Tho possibility of the abuse of a power delegated by law, when exercised in a particular relation, is not a sufficient argument against the exercise of the power in such relation, unless so specially provided in the law granting the general power: And we aie of opinion that the District Court decided correctly in overruling the motion to dismiss.

The decision of the District Court in overruling the demurrer to the plaintiff’s declaration, is also, in the opinion of this court, free from error. The declaration is good, according to the most approved practice, as a declaration in replevin, for taking and unjustly detaining properly. If it had been a declaration on a writ of replevin, for the unjust detention only, then, according to the provisions of the 16th section of our “act concerning replevin,” the form of declaring should have been varied to meet the requirements of that section. The authority in 10th Wendell, Lloyd Nichols vs. Charles Nichols, 629, is recognized by this court, it being a decision by the Supreme Court of New York on a statute of that state pari materia with our own “act concerning replevin.” But the principle there decided is not brought in question in this case, where the declaration contains all the material allegations to support the writ of replevin, and entitle the plaintiff to recover for the taking and unjust detention of his property, if sustained by. proof. Upon the record the decision of the District Court on the demurrer was correct.

David Noggle for plt’ff in error.

Field and Botkin for def’t in error.

It is insisted in the 3d error assigned, that the Distridt Court erred in overruling the defendant’s motion for a new trial. The motion, with the reasons upon which it is based, are matters of record. Tire reasons in the motion are — 1st. That the verdict was contrary to the evidence given in said case: 2d. That said verdict was contrary to the instructions of the court.

It no where appears in the record, what this evidence and instructions of the court were. There is nothing to inform this court whether or not the District Court exercised a sound legal discretion in overruling the motion for a new trial; but we are bound to presume that the discretion was properly and soundly exercised, in the absence of matter, apparent on the record to tho contrary.

We are therefore of opinion, that all the errors assigned are untenable, and that the judgment of the District Court of Jefferson county be affirmed with costs.


author: Judge Miller

text:
    DANIEL M. PARKISON, Pt’ff in Error, vs. CHARLES BRACKEN, Def't in Error,
    S- Error to Iowa County. )

    In an action at law, the patent of the United States is conclusive evidence that the title to the land is in tho patentee, and evidence will not be admitted to establish an adverse equitable title.
    II there should be two patents for tho same tract of land, the elder patent must prevail at law.
    If the defendant has an equitable title to tho land, superior to that of tho patentee, he must resort to a court of equity to assert it.
    The Receivers receipt for the same tract of land embraced in the patent, showing that it wo.s entered by the defendant at tho land office, anterior to the date of the patent, is not evidence tor the defendant to defeat a recovery in an action of ejectment brought by the patentee, and should not be read to the jury on the trial; and the District Court properly excluded all testimony of facts which would only go to show an equitable title in tho defendant adverse to the patent.
    A continuance, asked for by the defendant, to enable him to procure testimony which would only go to establish an equitable title in himself adverse to the patent, for the purpose of defeating a recovery at law by the patentee, ought not to be granted.
    A patent which appears on its face to have been regularly issued, will be presumed to have been signed and executed according to law, until the contrary shall be made to appear, and tho court cannot undertake to say, from the mere inspection of the hand writing, that the name of the President was not signed by the proper person.
    The law presumes that publio officers do their duty, and that in their official acts they conform to the requirements of the law, until the contrary shall be made to appear.
    The act of Congress to confirm land patents, approved March 3,1841, is valid and effectual, and cures all defects provided for in patents that had been previously issued: it relates back to the date of thepatent confirmed, and it makes no difference that a suit was ponding on the patent at the passage of the act.
    This was an auction of ejectment, brought by Bracken against Parkison, in the Iowa District Court, to recover a tract of eighty acres of land. At the September term, 1841, when the cause was called for trial, Parkison moved the court for a continuance of the cause, for the purpose of enabling him to procure testimony from the General Land Office at Washington, to prove various matters tending to show that he had a superior equitable right to enter the land in controversy; in order that by connecting such testimony with the receiver’s receipt which he held for the same tract, of anterior date, lie might defeat the patent which had been issued to Bracken. The District Court refused to grant the continuance, and decided that the facts which he expected to prove would not be competent testimony in the defence. Upon the trial, the plaintiff below offered in evidence a patent from the United States to him for the land in dispute, dated 27th April, 1840. The patent was signed “ Martin Van Burén, J>y M. Van Burén, jr. sec’y.” From the appearance alone of the writing, it would seem that both names were not written by the same hand. The defendant’s counsel objected to the reading of the patent in evidence, alledging that it was evident from its face, that the President’s name was not written by the secretary authorized to sign patents, and that no other person could lawfully sign the name of the President to a patent. There was no evidence offered to sustain the objection, which objection the court overruled, and permitted the patent to be read to the jury. Alter the plaintiff’s testimony was closed, the defendant offered to read in evidence to the jury, the receipt of the Receiver of public money at Mineral Point, dated I5th March, 1830, by which it appeared that on that day he entered, at the Land Office at Mineral Point, ttie tract of land in controversy, and to accompany it by other testimony, similar to that, to procure which he asked a continuance; to all which testimony the plaintiff’s counsel objected, which objection the court sustained, and rejected 1he testimony. Exceptions were taken to these various decisions, and a verdictand judgment were' rendered in favor of the plaintiff. To reverse this judgment, Par-kison has prosecuted this writ of error, and has assigned the following errors in the record of the proceedings in the court below:
    I. The court below erred in overruling the first motion of the defendant below for a continuance,
    II. The court below erred in overruling the second motion of the defendant below for a continuance.
    III. The court below erred in admitting in evidence the patent offered by the plaintiff below.
    IV. The court below erred in excluding the Receiver’s receipt offered by the defendant below as evidence.
    V. The court below erred in excluding the evidence offered by the defendant below.
    VI. The court below erred in refusing to instruct the jury as requested by the defendant below.
    By order of the District Court, the patent was produced for the inspection of this court, and the Receiver’s receipt was also pro'duced and examined. Upon argument, the sixth error assigned was abandoned by the plaintiff in error.
    Moses M. Stkoxg for plaintiff in error:
    The two first errors assigned are in tho decisions of the court in overruling the motions of the defendant below fora continuance. As (he evidence sought to be procured by the continuance was substantially tho same as that offered on the trial and rejected by the court, they will be considered in connection with the error in excluding the evidence offered by ihe defendant; for it will be admitted, that if the court'decided correctly in rejecting the evidence that was offered, then the motion fora continuance for the purpose of procuring other evidence of the same character, was properly overruled.
    We will first inquire whether the objection to the patent read in evidence by the defendant in error on the trial below, and which is embraced in the third assignment of error, was well taken. I will assume the position that title to land can only pass from the United States in pursuance of law, and that in all cases where the laws of Congress prescribe one mode in which the title shall be passed, no other mode can be substituted by the officers of the government. By the former laws of Congress, all patents for land had to be signed by the President himself. By the present law, which was passed prior to the date of the patent in this case, a secretary appointed for that purpose may sign for the President. See acts of Congress of March 2, 1833, and July 4, 1836. We contend that, under the present law, no person but the secretary is authorized to sign tho name of the President to the patent. The patent produced by the defendant in error as evidence of his title, shows on its face that the names of the President and secretary were not written by the same hand. No testimony could make the matter more plain. But the defendant in error insists that this defect is cured by the act of Congress to confirm land patents, approved March 3, 1841. Although it cannot be questioned that Congress may pass laws to vest the title to land in any person, in the first instance, without limitation or restriction, yet it cannot, by a general law, make a patent valid that was invalid before. The rights of other persons than the patentee, cannot be prejudiced by the retrospective character of the act. Again: the act of confirmation was passed after the commencement of this suit. When the suit was commenced, the patent was bad, and the plaintiff below could not then have recovered upon it; the act cannot relate back so as to affect or entirely change the rights of the parties in the course of litigation at the time of its passage.
    The record shows that the Receiver’s receipt to Parkison for the land in dispute bears date the 15th March, 1836, and the patent by which the defendant in error recovered below, is dated 7th April, 1840, and the question now arises: did the District Court err in rejecting it and other evidence offered on the trial?' The receipt, connected with the other evidence offered, would have shown an inchoate title in the plaintiff in error prior to the date of the patent. It was a link in his testimony, and the couit could not know but it would be followed by a patent according to-the entry. According to all authorities upon the subject, Parkison had an equitable title to the land. The testimony which-he offered, would have shown that his title was acquired before the patent issued to Bracken, and the court ought to have permitted him to establish it by proof Although, technically speaking,, his title was but an equitable one, if it was better than Bracken’s it ought to have been sufficient for his defence. Conflicting decisions are to be found upon this principle, but the weight of authority and of reason, is in favor of the position assumed, in support of which I will refer the court to the following authorities: Brush, et al. vs. Ware, et al. appellees, 15 Peter’s 93. Polk's lessee vs. Wendell, 9 Cranch, 87. S; C. 5 Wheat. 293. Reader, et al. vs. Barr, et al. 4 Ohio Rep. 446. Miller, et al. vs. Kerr, et al. 7 Wheat. 1. Hoofnagle vs. Anderson, 7 Wheat. 212. Ross vs. Doe, 1 Peters, 655. In the last case, the party was allowed to go-behind the patent in a trial at law to defeat its legal effect.
    Dunn for defendant in error:
    This case principally depends upon the correctness of the decision of the District Court, in rejecting the testimony offered by the defendant below. The plaintiff m error insists that the District Court erred in not permitting him to prove an equitable title in-himself, anterior to the date of the patent to the defendant in error. A patent from the United States is conclusive as to the title to lands, and in an action at law, a party cannot set up any adverse title to the patentee or his assigns or legal representatives. If he has an equitable title, a court of law cannot decide upon it; he must apply to chancery for relief. If there are two patents for the same tract, the rule applies in favor of the elder patent, and in such case, the junior patent, if it amounts to any thing, is only evidence of an equitable title. See Wilcox vs. Jackson, 13 Peters, 498. Ross vs. Doe, 1 Peters, G58. U. S. vs. Arredondo, ■6 Peters, 725. Bagnell et al. vs. Broderick, 13 Peters,436,450. 11 Wheat. 580. 5 Wheat, 293. '7 Wheat. 151.
    The plaintiff in error insists that the patent read in evidence by the defendant in error upon the trial was not signedas the law requires, and that it is,therefore void. There was no evidence offered to impeach the patent, and there is no principle of law that will authorize the court to say, from inspection, only, that an official paper has not been signed as it purports on its face to have been done. Admitting that the error existed in the signing of the patent, as is alledged, the United States only could take advantage of the defect, and they had full power to correct it, and the correction has been made. The act of Congress of March 3,1841, was passed to confirm titles that had been defectively granted to the purchasers of the public lands, and cures the alledged defects in this patent,1 if they existed at all.
    Burkett in continuation.
    The correctness of the decision of the District Court, in admitting the patent as evidence, it seems to me cannot be questioned. A patent is a record, and proves itself. When required as a matter of evidence, nothing further is necessary than its production, and if it is regular on its face, it must be admitted. This patent appears to be regular on its face, and although the error may exist in signing, as is contended, it was not void; at most, it was only voidable, and independently of the act of Congress passed in confirmation, the plaintiff in error could not impeach it in this suit. Where a patent, regular on its face, is voidable, it can only be avoided by a proceeding in chancery for that purpose ; Jackson vs. Lawton, 10 Johns. R'ep. 23. If a patent is issued by fraud or mistake, unless the fraud or mistake appears upon its face, it can only be avoided by a suit in chancery for that purpose; id. Jackson exdem. Houseman vs. Hart, 12 Johns. Rep. 77. Further: the court is bound to presume, until it shall be made to appear otherwise, that where the law requires public officers to perform certain acts in a particular manner, they have done their duty in the manner which the law prescribes: This is a presumption of law: See 3 East. 200. Hartwell vs. Root, 19 Johns. Rep. 347. Polk's lessee vs. Wendell, 9 Cranch, 98. S. C. 5 Wheat. 304. Patterson vs. denies, 2 Peters, 237.
    But if the patent could be impeached in this suit, (which is not admitted,) how was it to be done? Surely by him who alledged the irregularity proving that it existed. This has not been attempted, and the court is asked to decide in his favor, upon bare inspection. Tho court is required to know, judicially, the hands writing of the officers of the government, and to decide from that knowledge whether signatures be genuine or not. There can be no authority found to sustain the position, and it cannot be necessary to refer to any to refute it.
    A patent, then, being a record, and proving itself, requiring no other evidence to support its authenticity or establish its validity, and this being regular on its face, and purporting to have been issued in the manner prescribed by law, and standing unimpcach-ed by any testimony against if, the court is bound to acknowledge it for what it professes to be, and give it full weight as evidence of title in the patentee.
    This point being disposed of, as I trust satisfactorily, the fourth and fifth errors assigned may be considered together, and they will dispose of the whole case. It is not necessary again to go over the arguments,that have been offered to the court, and the authorities that have been read to show, that in an action at law, the patent is conclusive evidence of title in the patentee or those claiming under him, and that an adverse equitable title cannot he set up to defeat it; and that if there be an adverse equitable title, a court of chancery is the only tribunal that can give relief. This is the established doctrine in every state in the Union, (I believe,) where equity courts exist, and the settled rule of the Supreme Court of the United States. The authorities that have been read by the plaintiff in error for the purpose of controverting the principle laid down, do not sustain his position. The most of his cases were appeals in chancery, where bills had been filed to establish equitable titles, and whenever the inquiry has been gone into at law, it has been under some peculiar and extraordinary circumstances, not at all analagous to this case. Tho case of Ross vs. Doe, cited from 1 Peters, is relied upon as authority here. When the court examines the law under which that case was decided, it will be found to have no applicability to this. The conflict of titles in that case, arose under the act of Congress of 3d March, 1803, regulating the grants of land and providing for the disposal of the lands of the United States south of the state of Tennessee, 2 Story’s Laws U. S. 893. And the principles decided by the Supreme Court, and the reasons upon which they were based, do not / at all conflict with the general rule that the patent is conclusive in a trial at law.
    But it is said that the court ought not to have rejected the evidence that was offered, because it was a link in the chain of title, and the court could not know but it might have been followed by a patent to the plaintiff in error. This argument is more specious than forcible. If ho had a patent of elder date, the production of it would have settled every question. The superior patent is the highest evidence of title, and is not connected with equity by links or chains to make it prevail over all others in a trial at law.
   Judge Miller

delivered the opinion of the court:

This was an ejectment, brought by the defendant in error against the plaintiff in error, in tho District Court of Iowa county.

The court admitted in evidence, on the part of the plaintiff, a patent purporting to have been signed in the name of tho President of the United States by his secretary for that purpose. The patent appears on its face to have been regularly executed, sealed, and recorded, according to law; but, because the filling up of the patent, and the name of the President, appear to be in the same hand writing, and the signature of the secretary in another, it was thereby inferred that the President had not signed it, or that the secretary had not signed tho President’s name according to the requisites of the statute. The objection was merely made on the ground of this supposition, without offering to produce witnesses to prove that it was not executed according to law. The patent appearing on its face to have been legally executed, sealed, and recorded, it is presumed to have been done by the proper officers until the contrary appears; 3 Starkie’s Evidence, 1248, 1249, 1250. 10 East. 216. 8 East. 200. Hartwell vs. Root, 19 Johns. Rep. 347. Polk's lessee vs. Wendell, 9 Cranch, 98. 5 Wheat. 304. 2 Peters, 237. 15 Peters, 490.

But if this objection to this deed were sustained by legal proof, the act of Congress entitled an act to confirm land patents, approved March 3d, 1841, cured this alledged defect. It is alledged, however, that it only became a legal patent, and vested the legal title to the land in the patentee, on the date of its confirmation, and not before. Congress has the sole power to dispose of the public domain, and to declare iho dignity and effect of tides etna-natingfromthe United States, andas it is not restrained by the constitution from passing such a law, its propriety and constitutionality cannot be questioned. Even in the states where legislatures are restricted and restrained from passing laws impairing the obligation of contracts, such statutes of confirmation or correction are common. The Supreme Court of Pennsylvania, in the case of Underwood vs. Lilly, (10 Sergt. & Rawle, 97,) decided that the act of assembly of that state confirming certain judgments in York county, was not unconstitutional, although retro-active. A similar decision was made on the constitutionality of the act curing defects in previous acknowledgments of deeds by femmes covert. Barnet vs. Barnet, 15 Sergt. & Rawle, 72. Tate vs. Stooltzfoos, 15 Sergt. & Rawle, 35. Mercer vs. Watson, 1 Watts’ Rep. 356. A similar decision was made by the same court, respecting an act providing for the closing of the concerns of banking institutions, although that act operated upon suits ponding at the time of its passage, so as to render them valid: Blackney vs. The Bank of Greencastle, 17 Sergt. & Rawle, 64. Similar decisions have been made, to a very great number, on similar laws, some of which will be found in 1 Rawle, 181. 2 Watts, 433. 2 Rawle, 374. 7 Sergt, & Rawle, 280. 11 Sergt. & Rawle, 191.

The fourth and fifth errors assigned, are upon the rejection of a duplicate receipt from the Receiver of public moneys for the Mineral Point Land District, to defendant, for the land in dispute, and other evidence connected with the possession and entry of this land previous to the patent. This receipt is dated on the 15th March, 1836, and the patent of plaintiff is dated onthe'27th April, 1840, but it does not appear when the patentee paid for the land and obtained his receipt. In a court of law, the patent is conclusive. Even in the case of conflicting patents, the first patent is conclusive, and relief can only be had in a court of chancery. 10 John. Rep. 23. 12 John. Rep. 76. 9 Cranch, 98. 15 Peters, 105. 7 Wheaton, 1. 15 Peters, 490. It is true that there is no objection in going into facts behind the patent in support of the title, particularly in states where there is no court of chancery, it may be necessary; but in this Territory we have a court of chancery of sufficient power to inquire into the equitable interests of the parties. There might'have been no impropriety in receiving the evidence offered, but it could not prevail against the patent of the plaintiff, under the charge of the court; but as there was no offer to accompany the evidence offered with a patent, the court was right in rejecting it. An equitable tide cannot prevail in an ejectment against a legal tide. -In an ejectment, the parties are confined to their legal rights. If there is equity in the case, it must be disposed of in the court of chancery.

Moses M. Strong, for pl’ff in error.

T. P. Burnett and F. J. Dunn, for def !t in error.

The first and second errors assigned relate to the refusal of the court to put off the trial on affidavits filed. As these affidavits contain a statement of facts not then in the possession of the party, as the ground of the application, and as it abundantly appears that the same or similar matters were properly rejected by the court, and that these would also have been rejected if offered, the court will not reverse the judgment,

The sixth error assigned was withdrawn, in the argument.

Judgment of the District Court affirmed with costs.