Rough shell forgings, sold by their manufacturer to another
having a contract to deliver completed shell to the French
government, are "part" of shells within the meaning of the
Munitions Tax Act of September 8, 1916, c. 463, § 301, 39 Stat.
780, the profit from which are taxable under the act to the
manufacturer of the forging. P. 251 U. S.
258 F. 533 affirmed.
The case is stated in the opinion.
MR. JUSTICE McKENNA delivered the opinion of the Court.
This writ is directed to the judgment of the circuit court of
appeals affirming a judgment of the district court for Lederer, to
whom we shall refer as the collector,
Page 251 U. S. 508
in an action by petitioner to recover from him the sum of
$74,857.07 exacted as a tax under § 301 of the Munition
Manufacturer's Tax Act of September 8, 1916, 39 Stat. 756, 781, and
paid by petitioner under protest.
Details of the imposition of the tax and the protest of its
payment are unnecessary to give. The other facts were stipulated,
and it appears from the stipulation that, during the taxable year
1916, petitioner made the steel for and did the forging on certain
shell bodies under an order from the Midvale Steel Company, to
enable the latter company to carry out a contract which it had with
the government of France for certain explosive shells. The steel
was made and the forging done by petitioner in accordance with
specifications required by the French government, which
specifications were attached to the order from the Midvale Steel
Company to petitioner.
Inspectors employed by the French government inspected the work
done by petitioner, testing the steel and examining the forgings as
they passed through petitioner's hands.
"Up to the time when the blooms of steel were sliced partly
through into billets, the right of inspection was exercised by the
French inspector in chief only whenever he desired to exercise
Some forgings were rejected, and those that were passed were so
marked by the inspector. This was done in accordance with an
understanding between petitioner and the Midvale Steel Company.
The profits upon which the tax was claimed in this case was
imposed were derived solely from the sale of the above-mentioned
The Munitions Tax Act provides (§ 301, c. 463, 39 Stat. 781)
"that every person manufacturing" certain articles and "shells"
"or any part of the articles mentioned . . . shall pay for each
taxable year, in addition to the income tax imposed by title I, an
excise tax of twelve and one-half percentum upon the entire net
Page 251 U. S. 509
profits actually received or accrued for said year from the sale
or disposition of such articles manufactured within the United
The question is the simple and direct one whether a shell
forging under the stipulation and evidence is "any part of a shell"
within the meaning of the law. The argument of petitioner in
support of a negative answer is very diffuse, pressing
considerations which we do not think are relevant.
A shell is a definite article, constituted of materials of a
certain kind and quality, assembled and fitted and finished so as
to be adequate for its destructive purposes. Is not every element
(we use the word for want of a better) in the aggregation or
composition or amalgamation (whichever it is) of a shell a part of
it? It not, what is it? And what is the test to distinguish a part
from not a part? We use the negative, as an antithetic word does
not occur to us to express that something necessary to constitute a
thing is not a part of it. Petitioner surmounts the difficulty by
contending that the law, by its words "any part" of any of the
"shells," implies a substantially finished part, as related to the
whole structure and to the purpose it is intended to subserve.
"Otherwise," counsel say "the word [part] loses all precision and
becomes equivalent to the words ingredient' or `material
composing or making up.'" And, to sustain this view, they take us
to the dictionaries and to an enumeration of the processes to which
the material must be subjected to make a forging, and those
afterwards to prepare it for a shell. In this enumeration, letters
of the alphabet are used, of which "A, B, C, and H represent stages
of development of the material prior to delivery" to the Midvale
Company, and "D, E, F, G, H, I, and K represent stages of
development by Midvale after delivery to it." It is quite obvious,
of course, as counsel declare, that the forgings were "not
shells, since a shell is a composite structure of several
Page 251 U. S. 510
counsel go farther and say that the forgings were
"not parts of shells
in any practical and legal sense
because their development was so far short -- 80% -- of the point
where they could be related to or combined with any other component
of the shell structure that they could not satisfy any fair meaning
of the shell body unit as entering into the composite shell as a
We give counsel's words because we fear that, by paraphrasing
them, we might not correctly represent their meaning and
We reject the contention. Congress did not intend to subject its
legislation to such artificialities and make it depend upon
distinctions so refined as to make a part of a shell not the
taxable "part" of the law. Besides, petitioner understates its
work. It did not deliver raw material to the Midvale Company.
Certain processes had been performed on the material giving it a
shape adapted to its destination. It was made cylindrical, hollow,
with one end closed. It was rough, it is true, but an advance upon
the raw material.
The progressive processes need not be enumerated. The lower
courts have enumerated them, and the court of appeals, describing
them, said that the "steps," six in all,
"were progressive advances toward the chemical constituents, the
shape and dimensions required by and essential to, the manufacture
of shells in compliance with the contract."
"And the court distinguished the effect of the steps. With the
fourth, it was said, the inspection by the French government began;
the fifth took the fluid metal [the result of the second step] from
the possibility of use for general commercial purposes and, by a
forging process, restricted the steel to the field of use for
shells. By the sixth step, this forging 'was drawn to a length, and
to an inside and outside diameter which enabled the Midvale Company
to carry forward its twenty-nine progressive steps which, with the
Page 251 U. S. 511
petitioner, 'were required to complete the manufactured shell of
"Manifestly," as counsel for the collector says, "the shell body
was not completely manufactured by either of the companies which
were engaged in its production," but "by the two acting together."
And each therefore is liable for the profit it made, and judgment
MR. JUSTICE DAY and MR. JUSTICE VAN DEVANTER dissent.