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Payments as taxes were made by Mechanics Machine Company upon sale of all universal joints and parts therefor (except upon universal joints and universal joint parts sold to automobile manufacturers; these buyers supplied with their orders tax exemption certificates) and upon the sale of all "Jumbo" transmissions and parts therefor. There is no showing as to what portion of the $6,924.54 set out in the fourth column of the schedule was paid on complete Universal joints as distinguished from taxes paid on parts of transmissions and parts of Universal joints.
3. On April 4, 1925, Mechanics Machine Company filed with the Collector of Internal Revenue for the first Illinois District, claim for refund of $4,933.60 paid as taxes upon the sale of universal joints, universal joint parts and transmission parts sold between January 1921 and December 1924, both months inclusive. This claim was allowed by the Commissioner of Internal Revenue and paid by the
Reporter's Statement of the Case
Disbursing Clerk of the Treasury Department in the amount of $1,876.03, with interest in the amount of $819.45.
4. On April 4, 1925, Mechanics Machine Company filed with the Collector of Internal Revenue for the first Illinois District claim for refund of $25,263.18 paid as taxes upon the sale of complete "Jumbo" transmissions sold between January 1921 and December 1924, both months inclusive. This claim was rejected by the then Commissioner of Internal Revenue, on August 19, 1925.
5. On August 9, 1926, Mechanics Machine Company filed. with the Collector of Internal Revenue for the first Illinois District, claim for refund of payments made as taxes, between January 1925 and February 1926, both inclusive, in the amount of $20,984.78 upon the sale of "Jumbo" transmissions, and in the amount of $1,990.94 upon the sale of "Jumbo" transmission parts, complete universal joints and parts therefor. This claim was rejected by the then Commissioner of Internal Revenue on October 7, 1927. However, in adding the monthly tax payments, an error appears in the total of column 3, page 9, of plaintiff's Exhibit 6. The total should have been $27,197.78 instead of $20,984.78.
6. The mechanical principle of the universal joint, although not the particular type here under consideration, has been in use since the Tenth Century. A universal joint seems essential in all machinery where power is transmitted between two planes that vary in level. It operates as a flexible coupling and permits motion at various angles in more than one direction while transmitting power from a driving member to a driven member. Its utility depends on the particular size and shape of the extremities for meshing with the drive shaft on one end and the driven shaft on the other, whether they be of the flange, screw cap, keyway, or spline type. The parts of a universal joint consist of trunnion bearings, housings, yokes, nuts, lock plates, cork washers, ferrules, and spring washers. These several parts could be purchased separately for use on either automobile or non-automobile machinery.
Some universal joints were fitted with flange, some with screw cap, some with keyway, and others with spline fittings. The utility of the universal joint is determined by
Reporter's Statement of the Case
the type and shape of the connecting extremity. The spline fittings type was a type customarily used for automobiles but was also used on other machinery. Universal joints used on machine tools were similar in function but not in design. A decided majority of the universal joints disposed of by plaintiff was sold for automobile and truck use.
7. Plaintiff made universal joints in seven sizes, being numbered from 1 to 7, inclusive. The various sizes could be used in any machinery where a universal joint having their capacities was required for transmitting loads at angles from a drive shaft. Some of plaintiff's standard universal joints were manufactured with a design and type of extremity according to information furnished by some automobile manufacturer purchasing them but such joints were sold under exemption certificates and no taxes were paid thereon.
Plaintiff sold its universal joints in large commercial quantities. While the majority of the universal joints was sold for automobile and truck use, yet many of them were sold in commercial quantities to manufacturers, jobbers, dealers, and distributors to be used on a variety of machinery such as tractors, trailers, hoists, locomotives, lawn mowers, loading machinery, concrete mixers, stump pulling equipment, street cars, winches, refrigerators, power take-offs, boats, and various testing machines.
The universal joints and universal joint parts upon the sales of which the taxes were sought to be recovered were standardized universal joints and parts designed and manufactured to be used as a coupling between two shafts operating at varying angles from one another wherever such a coupling was required. They were commonly and ordinarily sold for purposes not connected with an automobile, and were as well adapted for those purposes as for automobile purposes.
8. A gear transmission is a set of gears operating between a driving shaft and a driven shaft either for increasing or decreasing speeds or for reversing the rotary movement. Prior to the appearance of the automobile, transmissions were used in machine tools. However, a pulley transmis
Reporter's Statement of the Case
sion is used for a machine tool, while a gear shift transmission is used for an automobile.
The "Jumbo" transmission was composed of a transmission case, or housing, and eight gears, four of them being mounted integral. The drive gear, two sliding gears, and the idler gear were directly above the integral gears. There was an opening in the side of the transmission case through which power could be taken by meshing with the idler gear a gear of the correct pitch, mounted on a shaft. This opening was called the "power take-off" opening, and made it possible to divert power from the Ford Model T internal combustion engine through universal joints, chains or bolts to wherever the power was required. By meshing propersized gears with the idler gear in the transmission, any amount of torque required could be delivered out of the power take-off openings.
The "Jumbo" transmission was designed as and was an auxiliary transmission to be attached to the planetary transmission of the Model T Ford motor, for the various uses to which the Ford engine was being put, and to supply the demand for a sturdy, flexible unit that would increase the number of uses and adaptability of the Model T Ford engine, especially as a stationery power plant. The "Jumbo" transmission could not be used as a transmission by itself alone, nor to replace the planetary transmission in a Ford automobile or truck, but when installed in a Ford Model T automobile it became one of the operating units of the
9. Plaintiff made the "Jumbo" transmission for the PriceHollister Company, which bought the entire output and was the exclusive owner and user of the trade-mark "Jumbo", under which mark the transmission was sold. The transmissions were designed and manufactured at the suggestion of the Price-Hollister Company, which company advertised the "Jumbo" transmission in its "Parts Price List" of models 600-333. The transmission was sold as a unit and specially designed attachments for mounting on the Model T Ford automobile or truck chassis could be ordered and purchased. The transmissions might be used
Reporter's Statement of the Case
on other equipment when there was a special adaptation of the transmission to such equipment or special design of such equipment to incorporate the "Jumbo" transmission.
10. The transmissions were sold not only to automobile manufacturers but to jobbers who in turn sold them to retail merchants, garages, and machine shops in commercial quantities for use on a variety of machinery, such as automobiles, trucks, tractors, air-brakes, air compressors, clam shovels, concrete mixers, corn huskers, donkey engines, elevators, farm machinery, firefighting apparatus, hand cars, hydraulic hoists, lawn mowers, coal mine hoists, logging outfits, merry-go-rounds, machine shop machinery, pumps, snow plows, road machines, and winches.
The "Jumbo" transmission and a Model T Ford engine could be mounted on a platform, framework, or any plane surface and connected with a non-automobile machinery assembly by any repair man or individual user without alteration of the engine, transmission, or machinery assembly. No adapting parts were required. To install the transmission in an automobile or truck chassis, however, specia! attachments had to be used, numerous changes had to be made in the automobile chassis and eighteen precision operations, accurate to 4/1000 or 5/1000 of an inch, had to be performed for which special skill was required. An ordinary repair man, unless he had had sufficient schooling, could not make the installation.
The transmission was sold with or without attachments, but unless otherwise indicated by the purchaser the whole unit including the specially designed attachments was shipped on every order. When a transmission was completely installed in a Ford passenger car or truck, the car could be used both for automobile purposes and as a portable power plant.
The "Jumbo" transmission, with attachments, complete, upon the sales of which the taxes herein sought to be recovered were paid, was primarily designed and adapted for use in connection with the Ford Model T engine, but not primarily designed or adapted for installation in a car for automotive purposes.