Receiverships for conservation should be watched with a jealous eye, to avoid inequitable results. P. 345. 3. United States v. Whitridge, 231 U.S. 144, distinguished. P. 346. 52 F.2d 842, reversed. District Court, affirmed.

Some years following the decision of the Supreme Court in Pollock v. Farmers' Loan Trust Co., 157 U.S. 429, 15 S.Ct. 673, 39 L.Ed. 759; Id., 158 U.S. 601, 15 S.Ct. 912, 39 L.Ed. 1108; holding the income tax provisions of the Act of 1894, 28 Stat. 509, chap. 329, unconstitutional, Congress in 1909 enacted a corporation tax law imposing an excise or privilege tax upon the doing of business, which excise tax was computed on the basis of per centum on income derived, 36 Stat. 11, 112-117, chap. 6. In United States v. Whitridge, 231 U.S. 144, 34 S.Ct. 24, 58 L.Ed. 159, it was held that receivers operating street railways were not subject to the tax as the act did not by its terms impose any duty on such receivers to pay the tax or make the return. After the adoption of the income tax amendment, Congress on October 3, 1913 enacted a corporation income tax act from which section 52 is derived, 38 Stat. 175. It contained no reference to receivers or trustees.

This contention would revive an issue, once highly controversial, laid at rest by an Act of Congress of June 18, 1934, 28 U.S.C.A. § 124a. (See United States v. Whitridge, 231 U.S. 144 [34 Sup. Ct. 24, 58 L.Ed. 159]; Michigan v. Michigan Trust Co., 286 U.S. 334 [52 Sup. Ct. 512, 76 L.Ed. 1136]; Reinecke v. Gardner, 277 U.S. 239 [48 Sup. Ct. 472, 72 L.Ed. 866]; Bright v. State of Arkansas, 249 Fed. 950, 162 C.C.A. 148; Kansas City v. Johnson, 70 F.2d 360; In re Continental Candy Co., 291 Fed. 773; In re Century SilkMills, Inc., 12 F.2d 292.) The Act of Congress provides:

" Appellees agree that 28 U.S.C.A. § 124a, supra, applies to trustees in bankruptcy, but argue that as the New Mexico statute does not specifically provide that the franchise tax shall be paid by trustees in bankruptcy, that no act of Congress can confer upon the state the right to collect it from them; and cite in support of their contention Reinecke, Collector, v. Gardner, supra; United States v. Whitridge, 231 U.S. 144, 34 S.Ct. 24, 58 L.Ed. 159; Howe v. Atlantic, etc., Oil Co., D.C., 4 F. Supp. 162, reversed in Kansas City v. Johnson, 8 Cir., 70 F.2d 360; and Scott v. Western Pac. R. Co., 9 Cir., 246 F. 545, 548. From the last-cited case appellees quote the following: "Our conclusion is that there are no clear and express words which provide for the imposition of the tax upon property held by receivers appointed by the court, and that, without certainty as to the meaning and scope of language imposing the tax, doubt must be resolved in favor of the receivers."

Statutes imposing taxes and licenses are strictly construed against the state. 25 R. C. L. 1092; 36 Cyc. 1189; 26 A. E. Encyc. (2d Ed.) 669; 88 Ohio St. 1, 102 N.E. 264; 159 Ind. 182, 64 N.E. 661, 58 L.R.A. 949, 95 Am. St. Rep. 280; 73 So. 5; 138 Ala. 108, 35 So. 38. Under the strict rule of construction the receiver is not liable for the franchise tax. 231 U.S. 144, 34 Sup. Ct. 24, 58 L.Ed. 159; 108 Me. 272, 80 A. 741, Ann. Cas. 1913A, 1303; 108 Me. 296, 80 A. 750; 71 Vt. 234, 44 A. 349; 123 Mass. 493, 229 Fed. 892, 144 C.C.A. 174; 246 Fed. 545, 158 C.C.A. 515. Even if liable for the tax, the receiver would not be subject to the penalty.

These cases are obviously not in point. Appellant also cites United States v. Whitridge, 231 U.S. 144 [ 34 Sup. Ct. 24, 58 L.Ed. 159], which held that a corporation operated by a receiver in bankruptcy was not subject to the excise or privilege tax imposed by the United States Corporation Laws of 1909 upon the carrying on or doing business by a corporation, for the reason that the receiver was acting as an officer of the court and not as an officer of the corporation, and that the appointment of the receiver constituted an ouster of corporate management. That case, decided in 1913, turned upon the language of the particular statute involved, and upon the legal situation that existed before the passage of the Sixteenth Amendment to the Federal Constitution.

The Title made no mention of executors, receivers, trustees or persons acting in a fiduciary capacity, and contained no language corresponding to the quoted provision of Title I, § 4, extending the additional income tax to "the same incomes" taxed by § 10 of the Act of 1916. A tax imposed on corporations alone does not extend to a trustee in bankruptcy of a corporation. See United States v. Whitridge, 231 U.S. 144; Scott v. Western Pacific Ry., 246 F. 545; compare Smietanka v. First Trust Savings Bank, 257 U.S. 602. In support of the assessment of an excess profits tax the collector relies on the general language of § 212 of Title II, printed in the margin, providing in substance that all the administrative provisions of the Act of 1916 not inconsistent with Title II are made applicable to it, and argues that the provisions of § 13(c) of the Act of 1916, requiring the trustee in bankruptcy of a corporation to file a return and subjecting to tax the income thus disclosed are incorporated in the Act of 1917 by reference and extended to the excess profits taxes imposed by that act.

An examination of these and other provisions of the act makes it plain that the legislative purpose was not to tax property as such, or the mere conversion of property, but to tax the conduct of the business of corporations organized for profit by a measure based upon the gainful returns from their business operations and property from the time the act took effect. As was pointed out in Flint v. Stone Tracy Co., 220 U.S. 107, 145, the tax was imposed "not upon the franchises of the corporation irrespective of their use in business, nor upon the property of the corporation, but upon the doing of corporate or insurance business and with respect to the carrying on thereof;" an exposition that has been consistently adhered to. McCoach v. Minehill Schuylkill Haven Railway Co., 228 U.S. 295, 300; United States v. Whitridge, 231 U.S. 144, 147; Anderson v. Forty-two Broadway Co., 239 U.S. 69, 72. When we come to apply the act to gains acquired through an increase in the value of capital assets acquired before and converted into money after the taking effect of the act, questions of difficulty are encountered.

er Works, 237 U.S. 413; Cooley v. Granville, 10 Cush. 53; DeBarry v. Dunne, 162 F. 961; Flint v. Stone Tracy Co., 220 U.S. 107; Georgia R.R. v. Wright, 207 U.S. 127-138; Grier v. Tucker, 150 F. 658; Howell v. Bristol, 8 Bush, 493; Hooper v. Emery, 14 Me. 375; Lexington v. McQuillan, 9 Dana (Ky.), 513; Loan Association v. Topeka, 20 Wall. 655; Louis. Nash. R.R. v. Stock Yards, 212 U.S. 132, 144; McCoach v. Minehill Co., 228 U.S. 295; Mo. Pac. Ry. v. Nebraska, 164 U.S. 403, 417; Norwood v. Baker, 172 U.S. 269; People v. Brooklyn, 4 N.Y. 420; Pollock v. Farmers' L. T. Co., 158 U.S. 601; Roller v. Holly, 176 U.S. 398, 409; Schwerzchild v. Rucker, 143 F. 656; Sears v. Cottrell, 5 Mich. 251; Security Trust Co. v. Lexington, 203 U.S. 323, 333; State v. Township, 36 N.J.L. 66; State v. Travellers' Ins. Co., 73 Conn. 255; Southern Ry. v. Greene, 216 U.S. 400, 417; Stratton's Independence v. Howbart, 231 U.S. 414; Stuart v. Palmer, 74 N.Y. 183, 188; Sutton v. Louisville, 5 Dana (Ky.), 28, 31; United States v. Whitridge, 231 U.S. 144; Weeks v. Milwaukee, 10 Wis. 242; Water Co. v. Wade, 59 N.J.L. 78. The Solicitor General and Mr. Assistant Attorney General Wallace for appellee.

There was error, as it seems to us, in seeking a theoretically accurate definition of "net income," instead of adopting the meaning which is so clearly defined in the Act itself. As has been repeatedly pointed out by this court in previous cases ( Flint v. Stone Tracy Co., 220 U.S. 107, 145, 150, 151; McCoach v. Minehill Railway, 228 U.S. 295, 306 et seq.; United States v. Whitridge, 231 U.S. 144, 147; Stratton's Independence v. Howbert, 231 U.S. 399, 414), the act of 1909 was not in any proper sense an income tax law, nor intended as such, but was an excise upon the conduct of business in a corporate capacity, the tax being measured by reference to the income in a manner prescribed by the act itself. And it is very clear, from a reading of § 38, that the phrase "entire net income," as used in its first paragraph, has no other meaning than that which is particularly set forth in the second paragraph, which declares, in terms, how "such net income shall be ascertained.