167 Opinion of the Court capital stock regardless of the actual value of the capital stock, is as follows: Declared value (1934)- Paid-in surplus and contribution to capital during year 1934 1934 net income-. $430,000.00 28, 044. 73 123, 143. 04 581, 187, 77 48, 000. 00 Less: dividends paid in 1934_ Adjusted declared value____ 533, 187.77 Based on such value, the correct excess-profits tax for 1935 is $4,826.66. 6. The plaintiff corporation was organized in January 1929 under the laws of the State of Indiana, with authorized capital of $200,000, divided into 2,000 shares of $100 par value. The corporation is a successful manufacturer of telephone and radio parts. Its net income for the years 1933 to 1938 was as follows: 7. The actual value of the capital stock of the plaintiff at all times during the years of 1934 and 1935 was in excess of $1,310,000. The court decided that the plaintiff was not entitled to recover. GREEN, Judge, delivered the opinion of the court: This suit is to recover the amount of excess profits tax paid for the year 1935. There is no dispute as to the facts in the case, and the sole issue presented is whether when the taxpayer has declared the value of its capital stock, pursuant to section 701 of the Revenue Act of 1934, such value must be used as the basis of excess profits taxes for a subsequent year, notwithstanding it is established that the real value of the capital stock was greatly in excess of the amount Opinion of the Court 92 C. Cls. declared ; and if so construed, are the statutory provisions imposing the tax constitutional? The question involved in the instant case was fully discussed and considered in the three cases of Servel, Inc. v. United States, United Motors Service v. United States, and General Motors Corporation v. United States, wherein an opinion was this day rendered. These cases involved the validity of the capital stock tax; but as we have heretofore held, with the approval of the Supreme Court, the capital stock tax and the excess profits tax are so interrelated that they cannot be properly considered separately. They are in fact a combination, the effect of which cannot be determined by consideration of only one of them. The opinion rendered in the three cases to which reference is made above, covers fully every point now made in the case at bar. The plaintiff contends that the word "value" as used in the statute means "actual value," and that since the basis of the tax under this construction, is the declared actual value, the clause in subsection (f) of section 701, which states that a "declaration of value cannot be amended," is limited to the declaration of value for the initial year and does not preclude an amendment for a subsequent year of an initial declaration of value which is untrue and substantially incorrect for such subsequent years; and that if the clause be otherwise construed it would create a conclusive presumption in violation of the Fifth Amendment to the Constitution, or, if the phrase "declared value" be construed to mean a declaration of value irrespective of the actual value, then the basis of the tax is a fictitious value and the provisions of the Act are arbitrary and unconstitutional and delegate legislative power to private persons. It is probably unnecessary to say that this argument is based upon unsound foundation as it has been repeatedly held in the previous decisions of this court and many other courts, including the Supreme Court, that the declared value need not conform to the actual value of the capital of the corporation. Cf. Haggar Co. v. Helvering, 308 U. S. 389, as quoted in the opinion on the three cases to which reference has been made above. 167 Opinion of the Court The statute also provided (as it then stood) that the declaration of value declared in the first return could not be amended, and plaintiff insists that if the provision is followed literally the statute is arbitrary and discriminatory and for that reason must be declared unconstitutional and void. This question also was fully considered in the three cases above cited, and the objection to the statute on this ground was held not well taken. It may be well to note that in the instant case the plaintiff declared the value of its capital stock as of June 30, 1934, as $430,000, and the adjusted declared value of its capital stock as of June 30, 1935, as $509,980.79. The plaintiff now says that the value of its capital stock at all times during the years 1934 and 1935 was in excess of $1,310,000. Such a gross discrepancy shows clearly that the plaintiff was making no effort to declare the true value of its capital stock but on the contrary to avoid being taxed in the manner intended by the statute. We repeat a statement we made with reference to a similar situation in the cases above cited—that if the plaintiff in its endeavor to avoid taxation made a false valuation of its stock, and as a result has paid a somewhat higher excess profits tax than it would if it had tried to conform to the statute by stating its value according to the best of the knowledge and belief of its officers, the fault is not with the statute but in its own conduct. Nor is it any valid objection to the statute that it is so framed as to counteract in some degree efforts of this kind. We hold that the objections of the plaintiff to the statute are not well taken and this conclusion has uniformly been upheld in a number of cases. The precise question involved in the instant case was passed upon in Stromberg-Carlson Manufacturing Co. v. McGowan, 32 Fed. Supp. 101, and Hornell Ice & Cold Storage Co. v. United States, 32 Fed. Supp. 468, decided adversely to the taxpayer. In the Stromberg-Carlson Manufacturing Co. case, supra, the court said: ** the tax imposed in an adjustment year may not be said to be based on a valuation of capital stock that is arbitrary and unreasonable. Reporter's Statement of the Case 92 C. Cls. In the Hornell Ice & Cold Storage Co. case, supra, the opinion after elaborately discussing the statutes on all points holds that the Act is constitutional both as to the first year and the subsequent years. Our conclusion is that the statute is constitutional, and that the plaintiff's petition must be dismissed. It is so ordered. WHITAKER, Judge; LITTLETON, Judge; and WHALEY, Chief Justice, concur. VALLEY CONSTRUCTION COMPANY TO THE USE OF R. E. COTTON COMPANY v. THE UNITED STATES [No. 44669. Decided November 12, 1940] On the Proofs Government contract; liquidated damages for delay; question of fact; decision of contracting officer final.-Decided upon the authority of Albina Marine Iron Works, Inc. v. United States, 79 C. Cls. 714. The Reporter's statement of the case: King & King for the plaintiff. Mr. George R. Shields was on the brief. Mr. Gaines V. Palmes, with whom was Mr. Assistant Attorney General Francis M. Shea, for the defendant. The court made special findings of fact as follows, upon the stipulation by the parties: 1. The plaintiff, Valley Construction Company, is a corporation organized under the laws of the State of Florida, and the use-plaintiff, R. E. Cotton Company, is a corporation organized under the laws of the State of Tennessee, with its principal office and place of business at Memphis, in said State. 2. On September 16, 1931, Valley Construction Company entered into a contract with the United States, represented by Lieutenant Colonel J. N. Hodges, Corps of Engineers, 172 Reporter's Statement of the Case U. S. Army, as contracting officer, for the construction of what is known as the Esperance Levee, involving four items, "A," "B," "C," and "D," each requiring approximately 725,000 cubic yards of earth embankment at 15.85 cents per cubic yard, amounting to a total of approximately $459,650.00. A copy of said contract, with pertinent parts of the attendant specifications, is attached to the petition herein and is by reference made a part hereof. 3. Thereafter the Valley Construction Company sublet a large part of the contract work to the aforesaid R. E. Cotton Company, and R. E. Cotton Company in fact performed the major part of such contract work. The work was to commence within twenty (20) calendar days and be completed within five hundred (500) calendar days from date of receipt of notice to proceed. Notice to proceed was received on October 28, 1931. Work on Item "D" was begun ahead of time on October 9, 1931. Work on the other items was begun as follows: Item "A," on April 20, 1932; Item "B," on the same day; Item "C," on June 28, 1932. The contract date for completion of Items "A" and "B" was March 11, 1933, and for Items "C" and "D," as extended by change orders was May 8, 1933, and May 24, 1933, respectively. The work was actually completed: Item "A," on July 10, 1933; Item "B," on August 26, 1933; Item "C," on November 7, 1933; and Item "D," on September 10, 1933, respectively 121 days, 168 days, 183 days, and 109 days after the contract date for such completion. 4. The prime contractor and its subcontractor, the plaintiff and the use-plaintiff herein, were prepared and equipped to do the agreed work in a most efficient and time-saving manner. The construction methods and plan of operations adopted for the job and the forces and equipment used thereon were most appropriate and were such that under normal weather and river conditions the work could and would have been completed by the date fixed for its completion. During the progress of the work the contractor suffered serious delays. A large portion of these delays was unforeseeable; they were caused by unusually severe weather and abnormally high-river stages. As a result of the unforesee |