Baldy

Appellee had judgment in a suit to obtain a refund of a tax exacted under § 213 of the National Industrial Recovery Act ( 48 Stat. 206 ), and the Government appeals. 1 The statute, § 213(a), imposed an excise tax of 5% upon the receipt of corporate dividends, the tax to be withheld at the source. Dividends declared before the date of the enactment of the statute (June 16, 1933), although paid after that date, were exempted from the tax.

The findings are that on April 15, 1933 appellee’s board of directors adopted a resolution reading as follows: “Mr. Gibbs then moved and Mr. Southern seconded the motion that a July dividend be declared at the rate of 200 per share on the Preferred Stock; 150 per share on the Class ‘B’ Fully Participating Preference stock and 150 per share on the Common stock, with authority for the president to make a reduction in the rate if in his discretion it is deemed advisable.”

The full amount of the dividend was paid on July 1, 1933. At the time of the adoption of the resolution the corporation was solvent and a sufficient earned surplus existed out of which to pay the dividend. The requisite amount was then available and remained available at all times…