
    QUINCY MINING COMPANY v. THE UNITED STATES
    [No. 467-53.
    Decided December 4, 1957]
    
      
      Mr. Montgomery B. Angelí, for the plaintiff. Messrs. 'Wallace 8. Jones, and Davis Polk Wardwell Sunderland dé Kiendl, were on the brief.
    
      Mr. John A. Bees, with whom was Mr. Assistant Attorney Generad Charles K. Bice, for the defendant. Mr. James P. Garland was on the brief.
   Madden, Judge,

delivered the opinion of the court:

The plaintiff sues to recover income taxes collected from it for the year 1947. Its liability for the taxes depends upon its right to deduct from its gross sales for that year and the year 1948 certain expenses incurred by its predecessor during the years 1919, 1920, and 1921. Those expenses bore a relation, which will appear hereinafter, to its gross sales in 1947. The year 1948 is involved only because of a claimed carry-back of losses from that year to 1947.

The plaintiff succeeded, in 1932, to another corporation of the same name. The fact that there was such a succession has no significance in this case, and both corporations will be designated herein, indiscriminately, as the plaintiff.

The plaintiff began, prior to 1900, the business of mining copper ore, stamping and grinding it, extracting copper concentrates from the ore, smelting these concentrates to produce copper, and selling the copper in the market. After the copper concentrates had been removed from the ground ore, the remaining ore was known as sands. Although the sands were known to contain a considerable amount of copper, it was not profitable, with the equipment and methods then used by the plaintiff, to extract any of the copper remaining in the sands.

The milling and extracting operations of the plaintiff were located on the shore of Torch Lake, in Michigan. The sands were deposited in piles in the lake, at points where the plaintiff owned the bed of the lake. The placing of the sands under water minimized the oxidation of the copper which was left in the sands.

As early as 1919 the plaintiff’s officers believed that a process would be developed which would make it commercially feasible to recover at least a part of the copper in these sands. Another company dealing with a somewhat different type of copper was doing so. From 1929 on the plaintiff was able, in its initial processing of ore, to recover a substantial part of the copper which it had formerly had to leave in the sands, but it had still developed no method of recovering the copper in the sands previously deposited. In 1943 the plaintiff constructed a plant which was able to recover a substantial part of the copper from sands taken from the old piles.

During the years 1920, 1921, 1923, 1926, and 1927, the plaintiff’s mining, milling, smelting, and delivery costs, including the costs of disposing of the sands described above exceeded the amounts which it received from the sales of the copper produced. In its books of account it charged all of these costs as costs of the copper then sold. The accounting thus showed an operating loss, and in the plaintiff’s tax returns for those years no profit and no taxable income was shown. The amounts by which the plaintiff’s costs in those years exceeded its receipts from the sales of copper did not reduce its income tax, since it would have had no tax to pay even if there had been no excess of costs over receipts, but an even balance between the two figures. For reasons which need not be elaborated here, the plaintiff received no tax benefit from the losses described above, by way of carry-back or carry-forward or otherwise.

As we have said, the plaintiff began in 1943 to reprocess the sands which it had deposited in the lake many years before. Copper was necessary for the war and the Government’s Metals Reserve Company loaned the plaintiff money to build a plant to process the sands, and contracted to buy the copper produced, at a price of five cents a pound above the OPA ceiling. The plaintiff was also granted the privilege of accelerated amortization of its plant, the period being set at five years. The plaintiff repaid its loan to Metals Reserve in less than four years, and continued to operate the plant.

The sands processed in the years 1947 and 1948 contained about six and one-half pounds of copper per ton of sands. An average of more than four pounds of copper per ton was recovered, a total recovery of 1,242,129 pounds in 1947 and of 2,932,251 pounds in 1948.

In its tax return for 1948, and in a claim for refund later filed and relating to its 1947 return, the plaintiff set up as costs of production of the copper sold in those years part of the original mining and milling costs incurred in the years 1919, 1920, and 1921 when the sands were deposited in the lake. The parties have stipulated that the sands reprocessed in 1947 and 1948 were deposited in the water in 1920 and 1921, which were years in which the plaintiff’s costs exceeded its receipts from copper sold. The parties have stipulated a rational apportionment of the plaintiff’s excess and unused costs in 1920 to the copper produced from the sands and sold by it in 1947. As to such an apportionment for 1948, the parties have left that for future determination.

The parties have stipulated that it has been the practice in the mining industry to charge all the costs of the original mining, milling and smelting of ore as costs of the metal produced by this first processing, and sold. This practice is advantageous to the ordinary enterprise which operates at a profit, since it holds down the taxable profit below what it would be if a part of the costs were attributed to a semi-processed product of the operation, which would result in nothing saleable until some future time. When this practice is followed, and all of the costs are used up, for tax purposes, against the selling price of the primary product, any future recovery from the residue cannot, of course, be charged with any of the costs formerly incurred.

The plaintiff, in its accounting in the years when the costs here in question were incurred, followed the usual accounting practice and, as we have said, recorded an operating loss, attributing no inventory value to the sands. Now that the sands have turned out to have an ascertainable inventory value, should the taxpayer be allowed, by a rational method of apportionment, to attribute a part of the prior-incurred costs to these sands ?

The plaintiff says that the constitutional permission to tax income does not authorize the Government to tax gross receipts in disregard of the costs of producing the goods which were sold for those receipts. It says that, since it did not, in 1920, get back or get tax credit for all of the costs of what it sold then, and in 1947, the 1947 taxes were, pro tanto, an unconstitutional tax upon gross receipts.

The Government would treat what took place in 1920 as a closed incident; would treat the sands then deposited as discards ; and would say that when they were picked up in 1947 and processed, that operation had no relation to the events of 1920. It appears from the stipulation of the parties that the sands were not regarded by the plaintiff as worthless discards when they were deposited in the lake. The plaintiff’s ideas at that time as to when and how, if ever, they might be profitably further processed were, no doubt, vague. The market price and the progress of science would resolve those questions.

We are by no means certain that the question before us is so fundamental as to involve the Constitution. But we think that the plaintiff’s earlier accounting practice does not determine its rights. The Supreme Court said in Doyle v. Mitchell Brothers Co., 247 U. S. 179, 187:

Nor is the result altered by the mere fact that the increment of value had not been entered upon plaintiff’s books of account. Such books are no more than evidential, being neither indispensable nor conclusive.

We have, then, a case where the plaintiff in 1947 gets money for selling copper recovered from sands produced by a mining, stamping, grinding and milling process in 1920. The money which it received in 1947 was, in part, attributable to the expense which had been incurred in 1920. Some of that expense had never had any tax consequences, since, even without it, there was no income to tax. We think it was, in fact, a part of the cost of the copper sold in 1947 and that the Government has presented no valid reason why it should not be so treated for income tax purposes.

The plaintiff is entitled to recover, and judgment is entered to that effect.

The case is remanded to a commissioner of this court for further proceedings pursuant to Kule 38 (c).

It is so ordered.

Littleton, Judge; and Jones, Chief Judge, concur.

Whitakee, Judge,

dissenting:

The majority opinion is in conflict with a fundamental principle of the income tax law, that of computing income on an annual basis. It would apply against the income of the taxable year costs incurred a quarter of a century earlier. '

All these costs were deducted from the income of prior years. This was in accord with standard practice and was proper. That plaintiff acquired no tax benefit therefrom is no reason for allowing it to deduct these costs in a year when it would give it a tax benefit.

If plaintiff in the years 1919,1920 and 1921 had charged a part of its costs to the cost of producing these sands, and had carried the sands in its inventory, it would have been able to deduct these costs from the sales price of the sands; but this it did not do. It thought the sands were of no value and dumped them in the water of the lake. When later it discovered that the sands had some value, it is not entitled to go back and eliminate some of the costs incurred, in 1919, from its income of that year, and bring them over into the year 1947, a year in which the costs were not actually incurred.

Plaintiff properly computed its income in 1919,1920 and 1921. All companies which realized a profit in those years likewise computed their income. The fact that plaintiff happened to sustain a loss in those years is no reason for allowing it to eliminate those costs in computing its income in 1919,1920, and 1921, and now bring them forward to the year 1947, in which it realized a profit.

Once having deducted these costs, back in 1919, 1920 and 1921, plaintiff is bound thereby and cannot now deduct them again in 1947. The fact that it realized no tax benefit in 1919,1920 and 1921 is immaterial.

Fahy, Circuit Judge, sitting by designation, joins in the foregoing dissenting opinion.

PINDINGS OP PACT

The court, having considered the evidence, the stipulation of the parties, and the briefs and arguments of counsel, makes findings of fact as follows:

1. The plaintiff, Quincy Mining Company, is a corporation incorporated on June 1, 1932, and existing under the laws of the State of Michigan, and since its incorporation has maintained its principal place of business at Hancock, Michigan.

2. The Quincy Mining Company, a predecessor of the plaintiff (hereinafter referred to as “plaintiff’s predecessor”), was incorporated in 1848 by special charter granted it by the State of Michigan on March 30,1848. The Quincy Mining Company (plaintiff’s predecessor) was reincorporated under the laws of the State of Michigan in 1878 and was again reincorporated under such laws in 1908 and continued in existence until June 1,1932.

3. On June 1, 1932, pursuant to a plan of reorganization adopted on that date, the Quincy Mining Company (plaintiff’s predecessor) transferred all of its assets to a newly incorporated Quincy Mining Company, the plaintiff herein, in exchange solely for shares of common stock of the plaintiff, and the assumption by the plaintiff of all the liabilities of plaintiff’s predecessor. The plaintiff’s common stock so received in exchange, constituted the only shares of stock then issued by plaintiff. These shares were distributed to the stockholders of the plaintiff’s predecessor, and the plaintiff’s predecessor was dissolved, all pursuant to said plan of reorganization. This was a tax-free reorganization under provisions of Section 112(b) (4) and 112 (i) of the Revenue Act of 1932.

4. During all of the years here material, the plaintiff filed its Federal corporation income tax returns on a calendar year and accrual basis.

5. During a period of more than seventy-five years plaintiff’s predecessor was engaged in mining copper ore from its mines in the vicinity of Hancock, Michigan, in milling and extracting copper concentrates from such copper ore, in smelting such copper concentrates and so' producing marketable copper, and selling such marketable copper. The mining operations of plaintiff’s predecessor were located about six or seven miles from a lake known as Torch Lake. Since prior to 1900 the milling or extracting operations of the plaintiff’s predecessor and later of the plaintiff have been conducted at two stamp mills located on the shore of Torch Lake, known as Mill No. 1 and Mill No. 2, and, later on, at a reclamation plant on the shore of Torch Lake constructed in 1943. Mill No. 1 has been closed down from time to time temporarily but it was in active operation during 1919-1928. Mill No. 2 was shut down early in 1921 and has never since resumed operations. After extracting from the copper ore the copper concentrates through the processes in use at Mill No. 1 during the period 1919-1928 and prior thereto and in use at Mill No. 2 during the period 1919-1921 and prior thereto, the residual part of the copper ore was known as stamps sands (hereinafter referred to as “sands”). These sands were deposited in two locations in Torch Lake, known as “Sand Bank No. 1” and “Sand Bank No. 2”, “Sand Bank No. 1” being created from the ore treated in Mill No. 1 and “Sand Bank No. 2” being created from the ore treated in Mill No. 2. The property owned by plaintiff was acquired by plaintiff’s predecessor prior to 1900 and since then has been owned by plaintiff’s predecessor and by plaintiff continuously. The bed of that part of Torch Lake in which said sands were deposited was acquired by plaintiff’s predecessor prior to 1900 and has since been owned continuously by plaintiff’s predecessor and by plaintiff. Title to and possession of such deposit of sands were retained in plaintiff’s predecessor and later in the plaintiff.

The marketable copper produced and sold by plaintiff’s "predecessor during the period August 1,1919, through May 31, 1928, from the ore mined by it during such period was 126,394,567 lbs. produced as follows:

August 1-December 81, 1919- 8,780, 046 lbs.
Year 1920_ 19,216, 070 lbs.
Year 1921_ 16,960,265 lbs.
Year 1922_ 15,402,726 lbs.
Year 1923- 13,000,733 lbs.
Year 1924_ 14,838, 633 lbs.
Year 1925_ 14,357, 523 lbs.
Year 1926_ 13,290, 052 lbs.
Year 1927_ 9,718,662 lbs.
January 1-May 31,1928_ 829,857 lbs.
Total_^_ 126,394, 567 lbs.

6. During, the period August 1, 1919 through May 31, 1928 and prior thereto, Quificy Mills No. 1 and No. 2 were equipped with steam operated stamps used to crush the coarse material known as amygdaloid copper ore that came to these mills from the underground workings of the Quincy mine; also equipped with jigs and screens that separated the heavier copper and larger particles of ore from the fine sands; with rolls used to pulverize these larger particles into fine sands; and with Wilfley tables that used a process of agitation and gravity to remove a large portion of the copper contained in a mixture of the fine sands suspended in water. The residue of remaining particles still contained a copper content, as stated in finding 7 below, and this residue was carried from the tables at each mill as tailings to Torch Lake where such particles were deposited as the sands which formed Sand Bank No. 1 and No. 2, as stated in finding 5 above.

Beginning in 1915 and thereafter another mining company, Calumet and Hecla Consolidated Copper Company, then engaged in milling and extracting copper principally from a different type of copper ore known as conglomerate, was using the same general milling and extraction process as that used by plaintiff’s predecessor but in addition thereto also used new and improved equipment and methods to retreat sands, involving fine grinding of the coarsest sands, leaching of the copper from the medium sizes of sands, and flotation of the very fine sands. The additional treatment was justified economically principally because of the greater copper content of the conglomerate, sands.

In the leaching process, tanks were filled with sands the grains of which included attachments of copper particles. The copper (only) was attacked by percolating solutions of cupric ammonium carbonate which took the metal into solution as cuprous ammonium- carbonate. The resultant rich solution was withdrawn and subjected to heat and oxidation which precipitated copper oxide, and also regenerated barren solvent which then was recirculated to new batches of sand in the tanks. The copper oxide precipitant was collected and sold as such or smelted. The leaching process never has been used to treat amygdaloid ores or sands. Leaching and flotation processes were patented, and required the use of patented equipment, with the payment of royalties.

In the flotation process used by Calumet and Hecla Consolidated Copper Company, as stated above, very fine sands (called “slimes”) were agitated with water and oil to produce a froth, the bubbles of which were coated with fine copper which had been selected from the sands by the oil. The froth was skimmed off, dried, and the resultant concentrate sent to the smelter. After research and development of new machines and chemical reagents which were more selective than oils, the flotation principles were adapted to recovery of copper from amygdaloid mine ores in 1928, and were used to recover copper from amygdaloid tailing piles during World War II.

7. During the period August 1,1919 through May 31,1928, when sands were deposited as described in finding 5 above, the officers of plaintiff’s predecessor knew that such sands contained an amount of copper which had not been extracted through the use of their gravity milling and separation processes. As early as 1921 they expressed their belief that “a considerable residual value * * * exists in the stamp sands * * * in Torch Lake and Portage Lake which remain on hand and are available for retreatment”. This statement appears in a statement dated June 7,1921, and filed with the Bureau of Internal Revenue on June 8,1921, entitled “Statement presented in relation to proposed additional assessment of income and excess profits taxes for the years 1916, 1917 and 1918”. Despite this knowledge and belief, at that time they knew of no process by which this mineral content could be recovered economically.

In 1926 there was developed a specific flotation process (as described in finding 9 below) by which recovery of this unrecovered mineral content appeared economically feasible. The officers of plaintiff’s predecessor did not immediately authorize the considerable capital expenditures which would have been required to make possible the retreatment of sands under this process. As set forth in finding 9 below, facilities for retreatment of sands were completed in 1943; by 1929, however, the plaintiff’s predecessor’s mill, as well as every other mill in the Lake Superior mining district, had been wholly or partially converted to utilize the flotation process for amygdaloid mine ores.

By reason of assay tests that were made currently as the tailings were carried to Torch Lake, also from other similar tests made later by experienced and reputable parties of the sands deposited in Sand Bank No. 1 and No. 2, of which the officers of plaintiff’s predecessor had personal knowledge, such officers reasonably believed that the average unrecovered copper content of the sands in. Bank No. 1 was at least six pounds of copper per ton of sand. Of this copper content the parties now agree that at least four pounds per ton of sand was recoverable by milling and extraction processes available for use in 1928 and used by plaintiff for reclamation after 1942. As stated in finding 9 below, the parties also agree that approximately four pounds of copper per ton of sand in fact has been recovered from the sands deposited in Sand Bank No. 1 during the period 1919-1928 in Torch Lake, as stated in finding 5 above, and that the following pounds of copper were subsequently recovered from sands deposited in the years or portions thereof indicated below:

Sand Bank No. 1 Sand Bank No. 2 Total
Aug. 1-Dec. 31,1919-1,021,272 lbs. 610,736 lbs. 1,632,008 lbs.
Year 1920_ 1,615,800 lbs. 1,558,396 lbs. 3,174,196 lbs.
Year 1921-3,004,272 lbs. 8,168 lbs. 3,012,440 lbs.
Year 1922_ 2,651,476 lbs. 2,651,476 lbs.
Year 1923_ 2,142,924 lbs. 2,142,924 lbs.
Year 1924_ 2,307,292 lbs. 2,307,292 lbs.
Year 1925_ 2,303,368 lbs. 2,303,368 lbs.
Year 1926_ 2,031,924 lbs. 2,031,924 lbs.
Year 1927_ 1,623,608 lbs. 1,623,608 lbs.
Jan. 1-May 31,1928_ 163,684 lbs. 163,684 lbs.

8. Neither the plaintiff’s predecessor nor the plaintiff ever made any entry upon their books or accounting records to show any part of their annual costs or expense of mining, milling and extraction of copper to be a cost of the residue of mineral content deposited in the two banks in Torch Lake. All such costs and expense were entered upon book records of Quincy currently in each year as a charge against the mineral that was extracted and sold. This was a generally accepted practice used by corporations engaged in the business of mining. During the periods here involved it was and still is accepted and recognized by the Commissioner of Internal Devenue in audits of Federal income tax returns filed by such mining corporations.

9. As a part of the war emergency, plaintiff’s officers entered into negotiations that culminated with the approval of the Metals Deserve Company in a contract with the War Production Board whereby the Calumet and Hecla Consolidated Copper Company, acting as trustee, for Metals Deserve and for the plaintiff, was empowered to design and construct a plant on the shore of Torch Lake in which plant plaintiff retreated the sands deposited in the manner stated in finding 5 above. The new plant went into commission on November 1, 1943, at a cost of approximately $1,150,000, which was furnished as a loan by the Metals Deserve Company. Metals Deserve Company also contracted to purchase the reclaimed copper at a price 5 cents above the current O. P. A. price of 12 cents per pound. Later increases were made in this price to cover increased costs. These contractual obligations were based on reclamation of richer sands, averaging about 8 pounds of copper per ton of sand, whicbi had been deposited in Sand Bank No. 1 during years prior to 1919. Three years and eight months after the plant began operations the loan was repaid in full, with interest at 4% per annum, the trusteeship was dissolved, and the plaintiff has continued the enterprise since that time as the sole owner. Under provisions in Section 124 of the Internal Bevenue Code of 1939, as amended, the plaintiff claimed and was allowed accelerated amortization of its reclamation plan over a sixty-month period beginning in 1943 and ending in 1948. The plaintiff also claimed and was allowed depletion deductions (based on cost of mining properties) of $24,188.86 in 1947 and $18,099.37 in 1948 calculated at a unit rate of .52177234 cents per pound of copper produced and sold.

The sands were recovered from Torch Lake by the use of a floating dredge with a twenty-inch pump capable of digging the sand to a depth of seventy feet and conveying it to a fixed point on shore whence it was carried into the new mill. This contained Hardinge ball mills for fine grinding, Wilfley tables, Forrester and Fahrenwald flotation machines, and auxiliary settling and filtering equipment. Unlike the flotation process described in finding 6 above, the flotation method used in the plaintiff’s reclamation plant during 1943 and later years utilized the 1926 discovery that the recovery of copper from sands was improved by the substitution of xanthate salts as collector reagents for the heavy oils which had theretofore been used for that purpose. During each of the calendar years 1944 through 1950, inclusive, the reclamation plant processed over one million tons of sands. The sands processed during 1947 and 1948 contained approximately six and one-half pounds of copper per ton of sand of which the plaintiff recovered an average of more than four pounds of copper from each ton of reprocessed sand. The residue that was returned to the lake from the reclamation plant in 1947 and 1948 still contained from one and one-half to two pounds of copper per ton and no cost of such copper ever has been entered upon plaintiff’s books. During the calendar years 1947 and 1948 the plaintiff recovered an estimated 1,242,129 pounds and 2,932,251 pounds, respectively, of copper from the sands deposited by plaintiff’s predecessor in Sand Bank No. 1 during the period August 1,1919 through May 31,1928. The estimates are based upon engineering surveys made upon Sand Banks No. 1 and No. 2, applied to reclamation of copper from that portion of the sands deposited in Sand Bank No. 1 during the 1919-1928 periods.

On a first-in-first-out basis, the pounds of copper deposited by plaintiff’s predecessor in Sand Bank No. 1 during the period August 1, 1919 through May 31, 1928, which were recovered by plaintiff during the years 1947 and 1948, were as follows:

191fl
Total marketable copper actually produced from sands deposited between August 1, 1919-May 31, 1928_ 1,242,129 lbs.
From August 1-December 31,1919 deposit (finding 7 — entire)- 1,021,272 lbs.
From 1920 deposit (finding 7 — in part)_ 220,857 lbs.
1,242,129 lbs.
1948
Total marketable copper actually produced from sands deposited between August 1, 1919-May 31,1928)_ 2,932,251 lbs.
From 1920 deposit (finding 7 — balance) 1,394, 943 lbs.
From 1921 deposit (finding 7 — in part) 1,537,308 lbs.
2, 932,251 lbs.

10. The plaintiff timely filed its Federal income tax return for the calendar year 1947 reporting a net loss of $6,906.34. Such return did not claim as a cost of goods sold any cost for the sands that were recovered from Sand Bank No. 1 and reprocessed during 1947. Plaintiff also timely filed a similar return for the calendar year 1948 and thereon claimed an amount of $101,498.04 to represent that part of the original mining and milling cost to plaintiff’s predecessor of the copper that it had recovered in 1948 from Sand Bank No. 1. The 1948 return reported a net loss of $130,246.80.

In a subsequent audit of plaintiff’s 1947 and 1948 returns revenue agent’s reports recommended a deficiency in tax of $11,262.18 for 1947 and the allowance of a net loss of $4,965.96 for 1948. No allowance was made for any cost of sand as a charge against or in reduction of the plaintiff’s gross receipts in either year.

11. A deficiency of $11,262.18, with interest thereon of $2,176.84, aggregating $13,439.02, was assessed timely for the. year 1947 and paid by the plaintiff by check dated June 15, 1951 and endorsed July 3, 1951. On October 10, 1952, the plaintiff timely filed a formal claim for refund of the sum paid for the year 1947. Plaintiff’s refund claim was disallowed in full with statutory notice on May 4, 1953. No payment has been made by the defendant to the plaintiff of any part of the tax or interest to which such refund claim relates.

12. The receipts of plaintiff’s predecessor from copper produced and sold or on hand in inventory at December 31 each year (calculated at market prices) and similar receipts from a small quantity of silver, the direct costs incurred by plaintiff’s predecessor in the smelting of concentrate and delivery of refined copper and in the original mining and milling of copper ore, and the excess, if any, of such costs over such receipts for the years 1919 through 1928 were as follows:

Year Receipts Smelting and delivery Mining and milling Excess of claimed costs
1919 $3,861,998.38 $299,850.12 $2,984,146.25
1920 3,210,112.65 383.479.92 3,002,350.70 $175,717.97
1921 2,288,738.93 265.920.92 2,114,779.79 91,961.78
1922 2,232,606.22 214,786.53 1,963,910.00
1923 1.990.817.40 175,876.72 1,958,159.78 143,219.10
1924 2,072,107.31 200,298.43 1,846,805.13
1925 2.111.289.40 178,575.26 1,879,249.11
1926 1,922,073.97 155,262.18 1,830,068.89 63,257.10
1927 1,331,397.81 118,277.20 1,520,176.44 307,055.83
1928 195,189.58 33,177.68 151,195.53

13.The plaintiff’s predecessor had no net income for any year to which the losses for the years 1920 through 1928 were or could have been carried back or carried over under any applicable statute. For each year from 1919 through 1928 the tax returns of plaintiff’s predecessor showed no net income, i. e., they showed an excess of deductions over gross income, if any.

14. W. Parsons Todd now is and since its incorporation on June 1, 1932 has been the president of the plaintiff. He also was the vice president of plaintiff’s predecessor from June 5, 1912 to June 3, 1924. Thereafter and until such corporation was dissolved he was its president. If Mr. Todd were called as a witness for the plaintiff he would testify under oath that the plaintiff is the sole owner of the claims set forth in the claim for refund that was filed on October 10, 1952, as stated in finding 11 above, and that the plaintiff has not at any time assigned or transferred such claims or any part thereof or interest therein.

CONCLUSION OP LAW

Upon the foregoing findings of fact, which are made a part of the judgment herein, the court concludes as a matter of law that plaintiff is entitled to recover, and judgment will be entered to that effect. The amount of recovery will be determined pursuant to Rule 38 (c).

In accordance with the opinion of the court and on a memorandum report of the commissioner as to the amount due thereunder, it was ordered on February 12, 1958, that judgment for the plaintiff be entered for $18,439.02, plus interest thereon from July 3,1951, as provided by law.  