15 P.2d 771 | Cal. Ct. App. | 1932
[1] The question involved in this appeal relates to the appraisement of 938 shares of the capital stock of the Pacific Manufacturing Company of the par value of $100 per share. The state inheritance tax appraiser appraised this stock at its book value of $210 per share. Respondent Kaime, one of the heirs at law of decedent, filed her objections to said appraisement, and the matter was tried upon an agreed statement of facts, with the result that the lower court fixed the value of said shares of stock at $100 per share.
The agreed statement of facts is, in part, as follows: "The decedent above named died testate on or about December 16, 1928, a resident of Los Angeles County and left property taxable under the Inheritance Tax Laws of the State of California; that included in property left by decedent is intangible property which the Inheritance Tax Appraiser has reported to be of the fair market value of $209,230.13. That of said amount said Insurance Tax Appraiser has reported 938 shares of the capital stock of Pacific Manufacturing Company belonging to decedent at the time of her death at $196,980.00, or $210.00 per share. That the method used by said Inheritance Tax Appraiser in arriving at such valuation on said shares of stock was to take into consideration the book value only of said shares, to-wit, by appraising the value of the assets of said Pacific Manufacturing Company and by dividing the aggregate value of the entire assets, including the surplus, of said company by the number of shares of stock issued, but that in reaching such valuation the said appraiser did not take into consideration any sale of shares of stock in said corporation made before or after the death of decedent. *285
"Objector (Respondent Kaime) contends that the Inheritance Tax Appraiser did not use the correct method in arriving at the market value of the shares of said stock and contends that the market value of said stock is the value established by actual sales of shares of stock in the Pacific Manufacturing Company both before and after the date of death of decedent, and is not in excess of $100.00 per share.
"That the controversy herein shall be limited entirely to the issue as to the method of arriving at the market value of said shares of stock, and it is agreed that no other question shall be presented to the Court for decision.
"That there were other sales of said stock made during said years as a result of deaths of stockholders and disposition of estates, but sales made under said circumstances are not included in the above."
Appellant contends that isolated sales of closely held stock do not establish market value, and maintains that "the law in California upon the valuation of closely held stock is set forth in the Estate of Felton,
Surrogate Slater, who wrote the opinion in the Dupignac case, later had occasion to write the opinion in In re Kerr's Estate,
In Heiner v. Crosby, 24 Fed. (2d) 191, at 193: "The fair market price or value of stock at a particular time is a question of fact, to be determined from all the circumstances. Market price implies the existence of a market, of supply and demand, of sellers and buyers. . . . (At 195): After giving due consideration to the sale and prices bid on the Pittsburgh Stock Exchange, restricted as they were, and taking into consideration the company's property, good will, and strategic position, together with the evidence of those most familiar with the property and most competent to estimate its value, the learned District Judge found as a fact that the fair market value of the plaintiff's stock on the dates in question was $22.50 per share, making the taxable gain by reason of the sale $2 per share."
In the case of Union Trust Co. v. Heiner, 19 Fed. (2d) 362, where the commissioner of internal revenue valued certain stock owned by decedent at $140 per share, the court said (p. 364): "Next, as to the value of the Dilworth-Porter stock, there were no sales in the open market of this stock, and it is only a question of determining the intrinsic worth of the stock. Taking all factors into consideration, we consider that the government is altogether too high in placing the value of this stock at $140 per share. The company had come to the crest of its operation; it was on the decline; it was beginning to lose money at the time of the death of the decedent; and we believe that the value admitted by the plaintiff ($110) was not in excess of the value of the stock in question, and was its intrinsic worth at the time of the decedent's death."
Even in Jackson's Estate,
As authority sustaining his contention, appellant cites In reColt's Estate,
None of the cases cited by appellant are analogous to the facts of the instant case. The agreed statement of facts shows a consistent sale of shares of this stock over a period of ten years, sold privately, it is true, since it was never listed on the market, but to persons who, it may be assumed, knew its true value. The sales over this period aggregated 1657 shares out of a total issue of 10,000 shares. On December 12, 1928, four days prior to decedent's death, five shares were sold at $100 per share, and 105 shares were sold during the preceding month of October (100 at $100 and five at $115), which was less than two months prior to the said death. We are of the opinion that there was no error on the part of the trial court, when it established a market value of $100 per share, taking into consideration not only the value of the property of the corporation, but also this constant stream of sales flowing over a period of years.
The order appealed from is affirmed.
*290Conrey, P.J., and Houser, J., concurred.