dissenting: In all three of the taxable years, 1936, 1937, and 1938, the petitioner completed certain prime contracts, that is to say contracts made by the petitioner directly with the Government of the United States which by their terms were subject to the provisions of the Vinson Act. As to these no issue is raised as to petitioner being liable for whatever excess profits tax is due. The only issue as to these is whether, in the computation of the profit made on a contract, petitioner is entitled to use “schedule cost,” as petitioner contends, or must use “original cost,” as determined by the Commissioner. The majority opinion holds that “original cost” must be used, and with this holding I agree.
In addition to these prime contracts which petitioner had with the United States Government, which petitioner concedes come under the provisions of the Vinson Act, petitioner delivered aluminum mate*557rials under certain “job contracts” to prime contractors engaged in the construction of complete naval vessels. Also in addition to these petitioner sold and delivered aluminum materials pursuant to orders received from customers who were engaged in the performance of prime contracts with the Navy. As to these sales and deliveries under job contracts and under orders received from customers not under job contracts, petitioner contends that it is not subject to the provisions of the Vinson Act. The majority opinion sustains this contention and with this holding, in so far as job contracts are concerned, I do not agree.
The kinds of transactions to which I am now referring are described in the Board’s findings of fact as follows:
During the years 1937 and 1938 the petitioner, pursuant to several job contracts, delivered aluminum materials to prime contractors engaged in the construction of complete naval vessels. Under the typical job contract the petitioner agreed to furnish; and the prime contractor (described as the “purchaser”) agreed to buy 200,000 pounds or more, not to exceed 400,000 pounds, of described aluminum material for use in the construction of a named naval vessel or vessels. Such aluminum material was to be sold at prices stated in the contract for particular classes of material, reference being made for prices to pages of the petitioner’s regular published price list incorporated in the contract, but the purchaser was not required to buy any quantity of any particular class of material.
I think the “job contracts” referred to in the foregoing paragraph are subcontracts within the meaning of section 3 of the Vinson Act, quoted in the majority opinion.
It may well be that, as to the transactions described in the Board’s findings of fact as follows:
The petitioner sold and delivered commercial aluminum and materials on orders received from customers. The petitioner received an order for listed materials, acknowledged such receipts on its printed form, and proceeded to fabricate and ship the materials so ordered.
the petitioner was not a subcontractor and was only a materialman and was not subject to the provisions of the Vinson Act. The opinion so holds, and I agree. True, under article 2 of Treasury Regulations promulgated January 6, 1937 (T. D. 4723, C. B. 1937-1, p. 519) mere materialmen are included within the provisions of the Vinson Act but I agree with the majority opinion that the regulation in that respect goes beyond the law and is to that extent invalid.
But when petitioner entered into these “job contracts” with a prime contractor as described in the Board’s findings of fact, I think it becomes more than a mere materialman and becomes a subcontractor within the meaning of the act. For example, the Board’s findings are that:
One of the said job contracts, entered into with the Bethlehem Shipbuilding Corporation, petitioner’s contract No. J-5499, called for the furnishing and *558purchase of standard aluminum products for use in the construction of eleven described naval vessels. Two of these vessels were completed by the Bethlehem Shipbuilding Corporation in 1937 and two in 1938. * * *
Of course, it goes without saying that the Bethlehem Shipbuilding Corporation, as the prime contractor, was subject to the provisions of the Vinson Act. As the job contractor obligated to furnish to Bethlehem Shipbuilding Corporation the aluminum material which was to go into the vessels, I think petitioner was a “subcontractor” as that term is used in the act, and, therefore, liable to the excess profits provision of the act.
The majority opinion holds to the contrary and to that holding I respectfully dissent.
ARNOLD agrees with this dissent.