Supreme Court of the United States, 1930

Clarke v. Haberle Crystal Springs Brewing Co.

Supreme Court of the United States · Decided January 27, 1930 · Holmes, McReynolds, Stone

280 U.S. 384; 50 S. Ct. 155; 74 L. Ed. 498; 1930 U.S. LEXIS 756; 8 A.F.T.R. (P-H) 10267; 2 U.S. Tax Cas. (CCH) 466 (United States Reports)

Counsel

Assistant Attorney General Youngquist, with whom Solicitor General Hughes, Messrs. Sewall Key and Norman D. Keller, Special Assistants to the Attorney General, Clarence M. Charest, General Counsel, Bureau of Internal Revenue, and T. H. Lewis, Jr., were on the brief, for petitioner., Mr. Arthur A. Ballantine, with whom Mr. George E. Cleary was on the brief, for respondent.

Cases that cite this one

35 later published cases cite this decision. The 25 that cite it most often are listed here.

Hotel Wisconsin Realty Co. v. Commissioner (7th Cir. 1931)
V. Loewers Gambrinus Brewery Co. v. Anderson (2d Cir. 1930)
Williams v. McGowan (2d Cir. 1945)
Estate of Witlin (Cal. Ct. App. 1978)
Witlin v. Rio Hondo Associates (Cal. Ct. App. 1978)
Thrifiticheck Service Corporation v. Commissioner of Internal Revenue (2d Cir. 1961)
United States v. Algemene Kunstzijde Unie, N. v. a Corporation Organized Under the Laws of the Netherlands (4th Cir. 1955)
Algemeene Kunstzijde Unie, N. V. v. United States (District Court, W.D. North Carolina 1954)
Dodge Brothers v. United States (4th Cir. 1941)
Detroit & Windsor Ferry Co. v. Woodworth (6th Cir. 1940)
Dodge Bros. v. United States (District Court, D. Maryland 1940)
Elston Co. Ex Rel. United States Brewing Co. v. United States (Court of Claims 1938)
Herrnstein v. United States (Court of Claims 1937)
Avery v. Commissioner of Internal Revenue (7th Cir. 1936)
United States v. Hardy (4th Cir. 1935)
United States v. Hardy (District Court, S.D. West Virginia 1933)
J. CHR. G. Hupfel Co. v. Anderson (2d Cir. 1932)
Moise v. Burnet (9th Cir. 1931)
Commonwealth v. Kentucky Jockey Club (Court of Appeals of Kentucky (pre-1976) 1931)
J. Chr. G. Hupfel Co. v. Anderson (District Court, S.D. New York 1931)
Seneca Hotel Co. v. United States (Court of Claims 1930)
Newark Morning Ledger Co. v. United States (Supreme Court of the United States 1993)
Rockwood v. United States (Court of Claims 1930)
Great Northern Ry. Co. v. Commissioner of Internal Revenue (8th Cir. 1930)
San Francisco Hotel Co. v. Commissioner (United States Board of Tax Appeals 1930)

This list shows which later cases cite this one. It does not say how they treated it, and no review of that has been done. Not a substitute for Shepard’s or KeyCite — verify before relying.

Opinion

Mr. Justice Holmes

delivered the opinion of the Court.

A writ of certiorari was granted in this case on May 13, 1929, on- account of a conflict between the judgment below, 30 F. (2d) 219, (reversing 20 F. (2d) 540,) and Red Wing Malting Co. v. Willcuts, 15 F. (2d) 626, (certiorari denied, 273 U. S. 763,) the latter case having been followed by Landsberger v. McLaughlin, 26 F. (2d) 77, and Renziehausen v. Commissioner of Internal Revenue, 31 F. (2d) 675, now pending here.

*386 This is a suit brought by the respondent to recover income and profits taxes paid under protest, on the ground, as stated by its counsel, that it was not allowed to deduct from gross income “a reasonable allowance for the exhaustion, including obsolescence, of its good will ... it having become certain prior to that period that the useful life of the good will would be terminated by January 16, 1920 because of prohibition legislation.” The question turns on the Revenue Act of 1918, (Act of February 24, 1919), c. 18, § 234 (a) (7); 40 Stat. 1057, 1078, allowing as deductions, inter alia, “A reasonable allowance for the exhaustion, wear and tear of property used in the trade or business, including a reasonable allowance for obsolescence.” The good will was that of a brewery and is found to have been destroyed by prohibition legislation. The deduction claimed is for the fiscal year ending May 31, 1919, it having been apparent early in 1918 that prohibition was imminent, and the officers having taken steps to prepare for the total or partial liquidation of the Company. The amount of the deduction to be made is agreed upon if any deduction is to be allowed.

We shall not follow counsel into the succession of regulations or the variations in the law before the date of the Act that we have to construe. In our opinion the words now used cannot be extended to cover the loss in this case and it is needless to speculate as to what other cases it might include. It seems to us plain without help from Mugler v. Kansas, 123 U. S. 623, that when a business is extinguished as noxious under the Constitution the owners cannot demand compensation from the Government, or a partial compensation in the form of an abatement of taxes otherwise due. It seems to us no less plain that Congress cannot be taken to have intended such a partial compensation to be provided for by the words ‘ exhaustion ’ or ‘ obsolescence,’ Neither word is apt to describe *387 termination by law as an evil of a business otherwise flourishing, and neither becomes more applicable because the death is lingering rather than instantaneous. It is incredible that Congress by an Act approved on February 24, 1919, should have meant to enable parties to cut down their taxes on such grounds because of an amendment to the Constitution that it had submitted to the legislatures of the States in 1917 and that had been ratified by the legislatures of a sufficient number of States the month before the present Act was passed.

Judgment reversed.

Mr. Justice McReynolds and Mr. Justice Stone concur in the result.

Case-law data current through December 31, 2025. Source: CourtListener bulk data.