290 F. 167 | 9th Cir. | 1923
The Boss & Peake Automobile Company was organized as a corporation under the laws of Oregon on
The court below, after a painstaking review of the testimony, found that the transaction of June 1 was a transfer or sale of stock in fact as well as in name, and not a division or distribution of the property and assets of the corporation among stockholders. United States v. Boss & Peake Automobile Co. (D. C.) 285 Fed. 410.
We might content ourselves with the mere statement that this finding, based as it is on conflicting testimony taken in open court, should not be disturbed on appeal. But an independent review of the testimony leads to the same conclusion. The withdrawal of Peake from the business had been under consideration for some time before the final agreement was consummated. As early as March 26, 1917, a contract was prepared to that end. Whether this contract was suggested by Boss or by Peake is not very material, because it was entirely satisfactory to' the former. By the terms of this contract Peake agreed to sell and deliver his 150 shares of stock to Boss on July 1, 1917, and Boss agreed to pay therefor 50 per cent, of the inventory value of the goods, wares, merchandise, and open accounts of the corporation, to be taken as of the latter date, within three days after the completion of the inventory. This contract apparently failed of execution because Peake refused to consent to the inventory method of fixing the selling price of his stock. There is nothing in the record to indicate any change of plan or purpose after that date.. Probably the intention to dissolve the corporation’ was formed later. No doubt a dissolution was contemplated at' least as' early as June 1st, and probably Peake had notice of that intention.- But- why should that concern him? As soon' as' he had
The fact that the selling price of the stock was fixed at approximately half the value of the assets of the corporation-is of little significance, in view of the fact that each party owned half of the stock. Furthermore, the price fixed was not exactly half the value of the assets, for certain contingent liabilities were assumed by Boss, and he was left more than half the value of the assets for that reason. Boss admitted that he assumed all known liabilities of the corporation and that Peake assumed none. This assumption would doubtless include the tax imposed under the act of 1916, but that was only a small fraction of the whole. On the entire _ record we are satisfied that the present claim that there was a dissolution of the corporation and a division and distribution of* its assets among^ stockholders on June 1st is a mere afterthought, to escape liability for the tax. So far as the record discloses, there was then no reason why there should be a dissolution of the corporation, or a division and distribution of its assets, rather than a transfer and sale of the Peake stock, or why the transaction should assume one form rather than the other. There was a transfer of stock in form at least, and we are satisfied there was a transfer in fact and in law. It is unfortunate that the entire burden of the tax should fall upon one stockholder, but apparent injustice will often result from the imposition of a tax under a retroactive law. With such questions the courts have mo concern, where a liability is lawfully imposed under a valid law.
There is no error in the record, and the decree is therefore affirmed.