Masao Hirasuna, Doing Business as Mike's Auto Top Shop & Upholstery Shop v. S. v. McKenney District Director of Internal Revenue

The question presented on this appeal is whether the federal manufacturers’ excise tax applies to automobile seat covers which were custom-made and installed on the order of used car dealers. The trial court held that the tax applies, and dismissed this suit for a tax refund. Plaintiff appeals.

The essential facts are not in dispute. During the years here in question, appellant taxpayer, Masao Hirasuna, operated a business under the style of “Mike’s Auto Top and Upholstery Shop,” in Honolulu. A good part of his business, and the only part with which we are here concerned, consisted of the making and installing of automobile seat covers on the order of used car dealers.

Appellant covered the seats of from two to five cars a day, his business coming from about a dozen used car dealers in the area. The procedure on each car began with the taking out and measuring of the cushions. The cloth was then cut to an approximate length and laid on top of the cushion. It was next pulled tight, pinned, and marked with chalk. The facing cloth was then pinned on and chalked. The cloth was next taken off and cut, the piping was sewed, and the cut portions were sewed together. The seats were then…

(dissenting).

The main opinion is erroneous because it apparently decides that the construction of the statute and regulations which is there adopted in 1957 would override a consistent long standing administrative interpretation by the federal agency itself.

This statute and the applicable regulations are not so plain in the commands thereof to leave nothing for construction. Indeed, these were construed contrary to our present interpretation in 1926 by the opinion in John J. Roche Co. v. Eaton, 9 Cir., 14 F.2d 857 . This theory was affirmed and adopted by a District Court in 1954 in Johnnie & Mack, Inc., v. United States, 123 F.Supp. 400 .

The main opinion here resolves the matter as if the case were of first impression. So does the decision in United States v. Keeton, 4 Cir., 238 F.2d 878 . But in the instant case the point was squarely raised that the agency had acquiesced in the construction of the statute in the Roche case for a period of over twenty-five years and, as a result, had left untaxed installers of seat covers on automobiles. It was also contended that this course of action was summarily reversed after the bulletin of August, 1952, by the identical agency. It…

245 F.2d 98 MASAO HIRASUNA, doing business as Mike's Auto Top Shop & Upholstery Shop, Appellant, v. S. V. McKENNEY, District Director of Internal Revenue, Appellee. No. 14995. United States Court of Appeals Ninth Circuit. April 12, 1957. Rehearing Denied May 17, 1957. Shiro Kashiwa and Genro Kashiwa, Honolulu, Hawaii, for appellant. Charles K. Rice, Asst. Atty. Gen., Lee A. Jackson, I. Henry Kutz, Walter R. Gelles, Washington, D. C., Louis B. Blissard, U. S. Atty., Charles B. Dwight, III, Honolulu, Hawaii, for appellee. Before ORR, FEE, and HAMLEY, Circuit Judges. HAMLEY, Circuit Judge. 1 The question presented on this appeal is whether the federal manufacturers' excise tax applies to automobile seat covers which were custom-made and installed on the order of used car dealers. The trial court held that the tax applies, and dismissed this suit for a tax refund. Plaintiff appeals. 2 The essential facts are not in dispute. During the years here in question, appellant taxpayer, Masao Hirasuna, operated a business under the style of "Mike's Auto Top and Upholstery Shop," in Honolulu. A good part of his business, and the only part with which we are here concerned, consisted of the…