However hard this case may appear to some,' we are unable to perceive any legal merit in plaintiff’s contentions, If it had been able to take title to the Westwego, this British corporation would have been obliged pro tanto at least to submit to taxation by the United States, and non constat that its condition would have-been any better than it is now.
What was done was deliberate, including the maintenance of an American corporation to own the American ship; and it will not do to call this legal scheme a fiction. It may be called a disguise; the Westwego undoubtedly became a “whitewashed” ship, but the machinery of ownership was designed and important, and in no sense fictitious. The object was to avoid one statute, that regarding vessel transfers, and if, in such avoidance, another and quite different statutory reef is encountered, the matter is only hard in the sense that it is one of the accidents of financial navigation.
What is really the matter here is that the Westwego came under Anglo-American control in 1916, when few, if any, men foresaw the war strain of taxation that was encountered in 1917. The corporate apparatus originally created before 1916, and continued of a purpose by Anglo-American Company, is too rigid to be disregarded. The taxable entity is plaintiff, and no other; it is impossible to look beyond or behind that artificial person. What is taxable is plaintiff’s capital, not that of any other; and what plaintiff is really asking is that we regard as its invested capital, not what went into its own coffers or' property, but the money of Anglo-American Company, which went into the pockets of the original shareholders in plaintiff corporation.
Seeing, therefore, nothing in the nature of things why plaintiff should not respond to the tax according to its own corporate financial history, which contains no reference to the sale of its share-stock by its original shareholders, we turn to the statute, supra, and find it impossible to consider what the Anglo-American paid, either as “actual cash paid in,” or the “cash value of tangible property paid in,” or “earned surplus and undivided profits.” This is because Anglo-American never paid anything in to the plaintiff; it only bought from third persons an interest in the plaintiff, and certainly the enhanced value of plaintiff’s shares cannot be called “earned surplus.”
On authority, La Belle Iron Works v. United States, 256 U. S. 377, 41 S. Ct. 528, 65 L. Ed. 998, is conclusive; and see especially exposition of the above statutory definition of invested capital at page 388.
Judgment affirmed, with costs.