by the repeal and re-enactment of the Revenue Act of 1918, instead of its amendment in specified particulars, as explained in connection with amendment No. 3, and the House recedes."

tax law.

There is nothing of the legislative history of § 226 which indicates a contrary interpretation than that which we have given it, and the conference report argues forcibly that Congress had in mind returns expressly referred to in subdivision (a) when it enacted subdivision (c) thereof. The interpretation of statutes levying taxes must not extend beyond their provi-construction of sions by implication, nor must they be interpreted beyond the clear import of the language used. In case of doubt, they are interpreted are interpreted strongly against the government and in favor of the taxpayer. United States v. Wigglesworth, 2 Story, 369, Fed. Cas. No. 16,690; American Net & Twine Co. v. Worthington, 141 U. S. 468, 35 L. ed. 821, 12 Sup. Ct. Rep. 55; Benziger v. United States, 192 U. S. 38, 48 L. ed. 331, 24 Sup. Ct. Rep. 189; Gould v.

Gould, 245 U. S. 151, 62 L. ed. 211, 38 Sup. Ct. Rep. 53; Smietanka v. First Trust & Sav. Bank, 257 U. S. 602, 66 L. ed. 391, 42 Sup. Ct. Rep. 223. The taxpayer may change his accounting period under § 226 as he will, and may stand the disadvantage of the tax. Inequity would flow in following the formula proposed for taxation under § 226 (a), if applied to a decedent and his estate, particularly if the practice was indulged in of using the month and a fraction of a month in calculating the income. Where a construction of a statute will occasion great inconvenience, or produce inequality or injustice, that view is to be vetoed if another and more reasonable interpretation is present in the statute. Knowlton v. Moore, 178 U. S. 41, 44 L. ed. 969, 20 Sup. Ct. Rep. 747; Bate Refrigerating Co. v. Sulzberger, 157 U. S. 37, 39 L. ed. 611, 15 Sup. Ct. Rep. 508.

We think the complaint sufficiently alleges a cause of action for the recovery of the tax in question, and that it was error to grant the motion for judgment.

Judgment reversed.

As is stated in the reported case (BANKERS' TRUST Co. v. BOWERS, ante, 922), the Federal Income Tax Act of 1921 makes a decedent and his estate separate taxable entities, so that a separate return must be made by each. This arises from the fact that § 225 requires fiduciaries to make a return not only for "every individual" having an income reaching certain specified amounts, but also for "every estate" the net income of which for the taxable year is $1,000 or over." The question then arises whether the respective returns should be made as for the full year, with the taxes computed as such, or whether the return for the individual should be made for the portion of the taxable year lived by him, and the estate return

for the balance of the year computed on that basis.

Examining this question it is found that § 226 is the only one possibly pertinent which deals with returns the tax in which is to be computed on the basis of a period less than a year. This section, however, deals generally with returns in instances where the taxpayer has changed his accounting period, merely specifying in subdivision (c) that, in the case of a return for a period of less than one year, a specified method of accounting shall be employed. On the other hand, other parts of the act contain a complete scheme for the filing of income-tax returns for decedents and their estates. For instance, § 219, entitled "Estates and

Trusts," provides in subdivision (a) that § 210, which specifies the normal tax rates for individuals, and § 211, which specifies the surtax rates for individuals, shall apply to income of estates and trusts, and subdivision (b) expressly provides that the net income of an estate shall be computed in the same manner and on the same basis as provided in § 212, which requires the returns for individuals, except where there is a change in the accounting period, to be computed on the basis of a full year.

From this it seems logically to follow that the returns both for the deceased person as an individual and for the estate should be computed on the basis of a full year, and not upon portions of the year under § 226c. And this was the view taken in the reported case (BANKERS' TRUST Co. v. BOWERS), which apparently is the only one to have passed upon the question as controlled by the provisions of the Revenue Act of 1921.

However, the Federal Income Tax Acts of 1916, 1917, and 1918,-but, as subsequently shown, not the Act of 1913,-made provision for separate returns, and, construing the provisions of the Act of 1918, it was held in Catherwood v. United States (1922) 291 Fed. 560, affirming (1922) 280 Fed. 241, that, where a taxpayer dies during the year, the act creates two taxpayers, the decedent who pays on his income to the time of his death, and his estate which pays on the income of the estate,—and that the period for which such tax is paid is a "taxable year" within the meaning of § 210 of the act, which term is defined in § 200 to mean in this instance the calendar year. In this case the question arose over the contention of the executor that certain deductions which accrued after the taxpayer's death were deductible from the income reported in the individual return, but the court held otherwise notwithstanding its conclusion as to the periods for which the respective taxes were to be computed.

To the effect that the Act of 1913 did not require a return for the estate

of one dying during a tax year, but that this was changed by the subsequent Acts of 1916, etc., so as to require separate returns, see Smietanka v. First Trust & Sav. Bank (1922) 257 U. S. 602, 66 L. ed. 391, 42 Sup. Ct. Rep. 223.

In Brady v. Anderson (1917) 153 C. C. A. 463, 240 Fed. 665, certiorari denied in (1917) 244 U. S. 654, 61 L. ed. 1373, 37 Sup. Ct. Rep. 652, it was held that the executor of a person who died July 22, 1913, was bound under the Act of October 3, 1913, to make a return for the income received by him between March 1, 1913, when the act went into effect, and the date when he died. Here the executor attempted to avoid taxation on the theory that, since the deceased died before the act was passed, he was not a citizen or resident; but the court took the view that, although the tax was against citizens and residents personally, the effect of making the act retroactive was to render it applicable to the deceased exactly as if it had been enacted March 1, 1913, and that since, by reason of his death, he could not make a return, his executor, into whose hands his estate had come, was bound to do so. And in Re Hazard (1920) 228 N. Y. 26, 126 N. E. 345, it was said that the income tax imposed by the Federal government is against the citizens and residents personally, that the owner is taxed with reference to the "income, and that where he, by reason of his death, cannot make a return, his executor, into whose hands his estate has come, must do so."

As bearing upon the question under annotation as affected by the earlier Bankruptcy Acts, see Reg. 45, art. 305, which related to the Act of 1918, and provided that if an individual dies during the taxable year, his executor or administrator, in making a return for him, is entitled to claim his full personal exemption according to his status at the time of his death. This ruling was the same as Reg. 33, Rev. art. 14, 152, relating to Acts of 1916 and 1917, and substantially the same as Reg. 33, art. 17, relating to the Act of 1913.

And Reg. 45, art. 421, relating to the Revenue Act of 1918, provided that if the net income of a decedent from the beginning of the taxable year to the date of his death was $1,000, if unmarried, or $2,000, if married, the executor or administrator shall make return for such decedent. This again was the same as Reg. 33, Rev. Art. 4, 23, relating to Acts of 1916 and 1917, and except as to amount of exemption substantially the same as art. 17 of Reg. 33, relating to the Act of 1913.

For a decision under the Income Tax Act of June 30, 1864, see Mandell

v. Pierce (1868) 3 Cliff. 134, Fed. Cas. No. 9,008, as set out and quoted in the reported case (BANKERS' TRUST Co. v. BOWERS, ante, 922).

That under the Massachusetts income Tax Law of 1916, as amended in 1918, which imposes a tax upon incomes received by "persons since deceased," and by "estates of deceased persons," an executor is not entitled to deductions for taxes and expenses paid, although such items may be deducted by trustees, see Wheelwright v. Tax Comr. (1920) 235 Mass. 584, 127 N. E. 523. G. J. C.

Principal and agent - right of undisclosed principal against equities of purchaser from agent.

5. After the equities between a vendor and purchaser have become fixed, an undisclosed principal of the vendor cannot assert his adverse rights.

Evidence of claims against agent.

6. One purchasing goods from an agent may show, as against an undisclosed principal, that he had an agreement with the agent with regard to the setting off, against the purchase price, of claims which he held against the agent.

Trial question of fact-sufficiency of notice.

7. The jury must determine whether or not a mere statement in a communication from a bank to one purchasing goods from an importer, on the day following the delivery of the goods, that trade acceptances are to be presented by the bank and returned to it, is sufficient notice that the bank

trust receipt whereby that company agreed to deliver the silk to the purchasers thereof for the account of plaintiff and to deliver the proceeds to plaintiff; that the trading company, "as agent and on behalf of plaintiff" under said trust receipt, sold and delivered the silk to defend ant "as the property of plaintiff;" that defendant agreed to pay therefor by cash or trade acceptances; that defendant knew when the silk was delivered that it was the property of plaintiff and delivered to defendant under the trust receipt; that it "thereafter" notified defendant that the silk was its property, delivered under the trust receipt, and demanded payment, which was refused.

Defendant alleges in substance, as its defense, that it bought the silk from the Raw Silk Trading Company as a principal without knowledge or notice that it belonged to plaintiff or that the Raw Silk Trading Company was acting as agent on behalf of plaintiff under the trust receipt, and that it is entitled to set off certain claims and demands against the Raw Silk Trading Company, although they were not due and payable at the time the silk was delivered.

For convenience the plaintiff will hereafter be referred to as the "Bank," the defendant as the "Purchaser," and the Raw Silk Trading Company as the "Importer."

The facts developed on the trial are in substance as follows: On October 21, 1919, the Purchaser entered into a contract with the Importer for the purchase of 250 bales of raw silk at $8.65 per pound, to be delivered on the arrival of the shipment from Canton during March, April, May, June, and July, 1920. To finance the importation of the silk, the Raw Silk Trading Company applied to the Bank for a letter of credit, which was in due course issued, and the raw silk was shipped from China to this country under bills of lading made out in the name of the Bank. At the time of the issuance of the letter of credit, the Im

porter signed an agreement which provided that the title to and in the silk should remain in the Bank until the amount of the letters advanced had been paid, and that the raw silk should not be released to the Importer until the advances of the Bank had been paid or a sufficient security lodged with it to secure their payment. The silk arrived consigned to the Bank. It was released to the Importer by it under so-called trust receipts, reciting that the merchandise was delivered to the Importer in trust for the Bank, to enable the Importer to deliver it to purchasers, and to collect the proceeds of the sale thereunder, and that the said proceeds of sale will be immediately delivered to the Bank upon receipt of the same from customers. The title to the property was to remain in the Bank, which should have the right at any time to cancel the trust and retake possession of the merchandise.

On July 29, 1920, the Importer delivered 20 bales of raw silk to the Purchaser, and the Purchaser receipted for the same as the property of the Importer. On the same day the Bank wrote a letter to the Purchaser inclosing trade acceptances, and with them sent invoices of the Importer. These invoices recited that the merchandise was bought from the Importer and contained the statement, "Trade acceptances to be presented by Foreign Trade Banking Corporation and returned to them." The Purchaser refused to sign these acceptances and finally returned them to the bank. Its reason was that the Importer was indebted to it on other accounts for an amount in excess of the amount due on this raw silk transaction. The Purchaser endeavored to prove an agreement between it and the Importer with regard to the acceptance of merchandise and the setting off of claims owed by it to the Purchaser, but this evidence was not received. It did show, however, indebtedness from the Importer to it in excess of the amount due on the same. It also offered evidence to the