and Statistical Statements for use of Directors', dated May, 1956, a copy of which was attached to the agreement between Capital Transit Company and T.C.A. Investing Corporation, the gross receipts tax for the fiscal year ending June 30, 1956, is eumerated as a current liability. Page 5 of this document is a consolidated balance sheet listing assets and liabilities. Under the heading 'Current Liabilities' is an item 'Income Taxes' and another item 'Other taxes'. Turning to the next page (page 5-A) which contains an itemization of various liabilities, under the heading 'Other taxes' is an item 'Gross receipts tax -- D.C.' In two right hand columns are set forth the amounts of this tax for 1956 and for 1955. It should be emphasized that this item is not set forth as a contingent or future liability, but as a current liability. In other words, it was obviously the position of Capital Transit Company that this tax had accrued and that the liability for it had attached, and not that it was a tax that would be thereafter imposed for the following year.
This Court, therefore, concludes that the liability for the gross receipts tax attached and accrued during the fiscal year ending June 30, 1956, even though payment was not due until later. One might as well argue that a promissory note due at a future date is not a liability until the date of payment arrives.
We must next consider the effect of Section 8(a) of the Act of July 24, 1956, repealing the tax 'as of August 15, 1956'. It is a well established and well recognized principle of statutory construction that in case of any ambiguity or doubt, a statute will be given a prospective rather than a retroactive effect.
It is not necessary, however, to rely solely on this doctrine, for the matter is governed by an express statutory provision. U.S.Code, Title 1, Section 109 provides, in part, as follows:
'The repeal of any statute shall not have the effect to release or extinguish any penalty, forfeiture, or liability incurred under such statute, unless the repealing Act shall so expressly provide, and such statute shall be treated as still remaining in force for the purpose of sustaining any proper action or prosecution for the enforcement of such penalty, forfeiture, or liability.'
This provision is applicable to tax laws. Thus in Hertz v. Woodman, 218 U.S. 205, 30 S. Ct. 621, 54 L. Ed. 1001, it was held that an Act of Congress repealing an inheritance tax did not abrogate the liability for such tax in a case in which the death of the testator occurred prior to the date of repeal, but the tax was not due until a later time.
Consequently, a repeal of a tax which had accrued prior to the effective date of the repeal, but is not due and payable until later, does not affect liability for its payment.
In the light of the considerations that have been discussed, this Court reaches the conclusion that the liability of Capital Transit Company to pay the tax on gross receipts earned during the year ending June 30, 1956, has not been abrogated and still subsists.
The next and final question is whether this liability has been assumed by the plaintiff. This query is capable only of an affirmative answer. As has been stated above, by the agreement of July 7, 1956, between Capital Transit Company and T.C.A. Investing Corporation, the new company to be formed was to make certain cash payments to Capital Transit Company, and 'to assume and discharge as the same mature all the liabilities of Capital Transit Company * * * of every kind and nature whatsoever whether set forth in the attached balance sheet or not' (paragraph 4(B)(3)). As has been shown the tax item here involved was listed in the attached balance sheet.
The Act of July 24, 1956, which granted a franchise to the plaintiff provided in Section 14:
'The Corporation, at the time it acquires the assets of Capital Transit Company, shall become subject to, and responsible for, all liabilities of Capital Transit Company of whatever kind or nature known or unknown, in existence at the time of such acquisition, and shall submit to suit therefor as though it had been originally liable, and the creditors of Capital Transit Company shall have as to the Corporation all rights and remedies which they would otherwise have had as to Capital Transit Company: * * * In any and all such actions or proceedings, the Corporation shall have, and be entitled to assert, any and all defenses of every kind and nature which are or would be available to Capital Transit Company or which Capital Transit Company would be entitled to assert.'
It is hardly necessary to do more than recall the fundamental principle established in Trustees of Dartmouth College v. Woodward, 4 Wheat. 518, 4 L. Ed. 629, that a franchise is a contract between the grantor and the grantee.
It seems reasonable to think that this tax must have been considered in the negotiations between the representatives of the old and new companies, for it is the largest single item listed in the schedule of current liabilities of Capital Transit Company. It is not at all unlikely that the amount of the cash payment that the new company agreed to make to Capital Transit Company was influenced by the existence and size of this tax liability that the new company was undertaking to assume. No doubt this matter must have entered into the negotiations. Consequently, it cannot be successfully urged that to exact this payment would constitute an unexpected and unanticipated burden on the plaintiff.
It follows, hence, that the tax indebtedness discussed in this opinion still subsists and that the plaintiff is liable for it.
Motion of defendants to dismiss the complaint, treated as a motion for summary judgment, is granted.
Motions of plaintiff for summary judgment and for a preliminary injunction, are denied.