583

Opinion of the Court.

The Commissioner contends, however, that this conclusion was foreclosed by Detroit Edison Co. v. Commissioner, 319 U. S. 98 (1943). That decision denied inclusion in the base for depreciation of electric power lines the amount of payments received by the electric company for construction of the line extensions to the premises of applicants for service. It was held that to the extent of such payments the electric lines did not have cost to the taxpayer, and that such payments were neither gifts nor contributions to the taxpayer's capital. We do not consider that case controlling on the issue whether contributions to capital are involved here. Because in the Detroit Edison case "The payments were to the customer the price of the service," the Court concluded that "it overtaxes imagination to regard the farmers and other customers who furnished these funds as makers either of donations or contributions to the Company." Since in this case there are neither customers nor payments for service, we may infer a different purpose in the transactions between petitioner and the community groups. The contributions to petitioner were provided by citizens of the respective communities who neither sought nor could have anticipated any direct service or recompense whatever, their only expectation being that such contributions might prove advantageous to the community at large. Under these circumstances the transfers manifested a definite purpose to enlarge the working capital of the company.13

13 Commissioner v. Arundel-Brooks Concrete Corp., 152 F. 2d 225 (C. A. 4th Cir. 1945), relied upon by the court below, involved only the issue whether the full cost of a concrete mixing plant, the construction of which was financed in part by payments from a nearby supplier of a raw material used in mixing concrete, was depreciable to the taxpayer; there was no "contribution to capital" issue, the only question being one of cost basis. However, the payments in that case were made in consideration of services rendered. The construction of the concrete plant directly benefited the supplier of raw materials by insuring the use of its sole product by the tax

15

Opinion of the Court.

339 U.S.

The assets transferred by the community groups are likewise contributions to petitioner's capital for the purpose of computing its invested capital credit." Cf. I. R. C. § 728. Precisely the same interpretation has been placed by the relevant Treasury Regulations upon the term "contribution to capital" appearing in § 718 (a) as upon the like expression in the income tax provisions. That the excess profits tax provision characterizes capital contributions as being "invested" and "paid in" does not indicate, as the Commissioner urges, that the concept of capital is the constricted one of legal capital or capital originating with persons having a proprietary interest in the business; we think instead that the taxpayer's investment includes certain values which are properly "treated as his investment," cf. Reisinger v. Commissioner, 144 F. 2d 475, 477-478 (C. A. 2d Cir. 1944), though not having cost to the taxpayer. Cf. I. R. C. § 723. It would have been an oddity for Congress to make the inclusion of actual capital contributions in equity invested capital turn upon whether the transferor owned or failed to own one or two shares of stock in the corporation at the time of the transfer.1

The decision of this Court in LaBelle Iron Works v. United States, 256 U. S. 377 (1921), is not to the contrary. That case was decided under the excess profits tax law of 1917 in which "invested capital" was defined

payer; the supplier was also served through a business affiliation with the parent of the wholly owned taxpayer in the form of an exclusive marketing arrangement which saved the supplier the expense of a sales organization. See Arundel-Brooks Concrete Corp. v. Commissioner, 129 F. 2d 762 (C. A. 4th Cir. 1942).

14 See Brewster, The Federal Excess Profits Tax 110-111 (1941). 15 Treas. Reg. 109, § 30.718-1; Treas. Reg. 112, § 35.718-1. The Commissioner agrees that the term "contribution to capital" is used with the same meaning in §§ 113 (a) (8) (B) and 718 (a). 16 See 2 Montgomery's Federal Taxes-Corporations and Partnerships-1946-47, p. 372.

583

Opinion of the Court.

as "(1) Actual cash paid in, (2) the actual cash value of tangible property paid in other than cash, for stock or shares . . . at the time of such payment . . . and (3) paid in or earned surplus and undivided profits used or employed in the business ... The Court held that neither unearned appreciation in value of the taxpayer's ore lands nor the surrender of old stock in exchange for new issues based upon that value, could be regarded as "the actual cash value of tangible property paid in other than cash" or as "paid in or earned surplus and undivided profits." The includability of contributions by outsiders in invested capital was not passed upon.'

17

To the extent that petitioner acquired property involved in this controversy after December 31, 1920, it is entitled to deductions on account of depreciation under § 113 (a) (8) (B). It also may include the value of the contributions from community groups in equity invested capital under § 718 (a) (1) and (2). The judgment of the Court of Appeals is reversed and the case remanded with directions to remand to the Tax Court for further proceedings in conformity with this opinion.

Reversed.

MR. JUSTICE BLACK agrees with the Court of Appeals and would affirm its judgment.

17 In Southern Pac. Co. v. Edwards, 57 F. 2d 891 (S. D. N. Y. 1932), the court held that a capital donation originating with a nonstockholder was includable in invested capital as "paid-in surplus" under the 1917 Act. However, contributions to capital account from outsiders are often thought of as contributed or donated capital surplus rather than as paid-in surplus, see e. g., Hoagland, Corporation Finance 555 (3d ed. 1947); we think that for this reason among others Congress added the term "contribution to capital" to the excess profits tax provisions of the 1940 Act, as it had to the Revenue Acts (§ 113 (a) (8)) since 1932, to indicate that contributions from outsiders intended as additions to capital should be included in the computation. See S. Rep. No. 665, 72d Cong., 1st Sess. 27-28 (1932); H. R. Rep. No. 1492, 72d Cong., 1st Sess. 13 (1932).

874433 0-5042

EWING, FEDERAL SECURITY ADMINISTRATOR. ET AL. v. MYTINGER & CASSELBERRY, INC.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA.

No. 568. Argued April 19-20, 1950-Decided May 29, 1950.

Section 304 (a) of the Federal Food, Drug, and Cosmetic Act, as amended, permits multiple seizures of misbranded articles "when the Administrator has probable cause to believe from facts found, without hearing, . . . that the misbranded article is dangerous to health, or that the labeling of the misbranded article is fraudulent, or would be in a material respect misleading to the injury or damage of the purchaser or consumer." Upon the Administrator's finding, without a hearing, of probable cause to believe that the labeling of a vitamin product distributed by the appellee in interstate commerce was "misleading to the injury or damage of the purchaser or consumer," eleven seizures of the product were made and as many libel suits instituted over a four-month period. There was no claim that the product was harmful or dangerous to health. Appellee brought suit in the Federal District Court to have the multiple seizure provision of § 304 (a) declared unconstitutional and to dismiss all except the first libel suit. Held:

1. The Due Process Clause of the Fifth Amendment does not require that there be afforded a hearing in connection with the administrative determination to make multiple seizures, but is satisfied by the opportunity which the claimant has for a full hearing before the court in the libel proceedings. Pp. 598–600.

(a) In making the finding here involved, the administrative agency was merely determining whether a judicial proceeding should be instituted, subject to final determination by the Attorney General. Pp. 598–599.

(b) Where only property rights are involved, the requirements. of due process are satisfied if there is an opportunity for a hearing and a judicial determination at some stage. Pp. 599–600.

2. The District Court had no jurisdiction to review the administrative determination of probable cause. Pp. 600-602.

3. The fact that the preparation here involved is not dangerous to health does not require a different result, since the statutory scheme treats every "misbranded article" the same in this respect— whether it is "dangerous to health," or its labeling is "fraudulent" or materially "misleading to the injury or damage of the purchaser or consumer." P. 601.

594

Opinion of the Court.

4. Consolidation of the libel suits so that one trial may be had is the relief against multiplicity of suits afforded by the statute to the claimant of the seized goods. P. 602.

87 F. Supp. 650, reversed.

In a suit brought by the appellee, the District Court enjoined the enforcement of the multiple seizure provision of § 304 (a) of the Federal Food, Drug, and Cosmetic Act, as violative of the Due Process Clause of the Fifth Amendment of the Federal Constitution. 87 F. Supp. 650. On direct appeal to this Court, reversed, p. 602.

Robert L. Stern argued the cause for appellants. With him on the brief were Solicitor General Perlman, Assistant Attorney General McInerney, Philip Elman, Vincent A. Kleinfeld and William W. Goodrich.

Charles S. Rhyne argued the cause for appellee. With him on the brief were Lester L. Lev and J. E. Simpson.

MR. JUSTICE DOUGLAS delivered the opinion of the Court.

This is an appeal' from a three-judge District Court specially constituted on appellee's application for an injunction to restrain enforcement of a portion of an Act of Congress for repugnance to the Due Process Clause of the Fifth Amendment."

Section 304 (a) of the Federal Food, Drug, and Cosmetic Act, 52 Stat. 1044, 21 U. S. C. § 334 (a), as amended, 62 Stat. 582, 21 U. S. C. (Supp. III) § 334 (a), permits multiple seizures of misbranded articles "when the Administrator has probable cause to believe from facts found, without hearing, by him or any officer or employee of the Agency that the misbranded article is dangerous to health, or that the labeling of the misbranded article is fraudulent, or would be in a material respect misleading

162 Stat. 928, 961, 28 U. S. C. §§ 1253, 2101. 2 62 Stat. 968, 28 U. S. C. §§ 2282, 2284.