235 Mass. 88 | Mass. | 1920
This is a petition under St. 1916, c. 269, § 20. It involves the validity of a tax assessed on an alleged gain in the pinchases or sales of intangible personal property under § 5 (c) of said act. The salient facts are that the petitioner on January 1, 1916, was the owner of one thousand three hundred shares of the preferred and one thousand shares of the common stock of the Draper Company, a Maine corporation conducting an extensive manufacturing business at Hopedale in this Commonwealth. That corporation had outstanding preferred stock of the par value of $2,000,000 and common stock of the par value of $6,000,000. The directors of that corporation, in June, 1916, caused a new corporation to be organized under the laws of Maine, called the Draper Corporation, which voted to issue its stock, all being common, of a par value of $17,500,000, in exchange for the stock of the Draper Company, two and one half of its shares for each one share of the common stock of the old company, and one and one quarter of its shares for each one share of the preferred stock of the old company. The petitioner accepted the offer to exchange on this basis and received for the surrender of her shares of stock in the old company four thousand one hundred twenty-five shares of stock in the Draper Corporation. The new corporation became the owner of substantially all of the stock of the old company and caused to be transferred to itself all the assets of the old company, and carried on the business of the latter through the same officers without interruption and without outward indication of change. The Tax Commissioner assessed a tax upon the gain which he ascertained by subtracting the value of the shares in the old company on January 1, 1916, (§ 7 of said act,) from the value of the shares of the new company at the time of the exchange in July of
Tax statutes must be construed strictly. The power to tax must be conferred by plain words or it does not exist. It is not to be extended by implication or by invoicing the spirit of the law. Sewall v. Jones, 9 Pick. 412. Hill v. Treasurer & Receiver General, 229 Mass. 474, 475.
The point to be decided is whether the transaction in which the petitioner engaged rightly can be said to be comprehended within the statutory words “purchases or sales.”
Various definitions of “sale” are to be found in decisions and among text book writers. Those commonly given when the attempt is made to fix with accuracy its meaning are familiar. It is said in Benjamin on Sales, § 1, to be “a transfer of the absolute or general property in a thing for a price in money.” In § 2 that author elaborates, with references to authorities, the point that the price must be in money and that any other consideration constitutes barter or contract for the transfer of property. In Five Per Cent Cases, 110 U. S. 471, 478, Mr. Justice Gray said, “A sale, in the ordinary sense of the word, is a transfer of property for a fixed price in money or its equivalent.” Gardner v. Lane, 12 Allen, 39, 43. Price in money is essential to a strict sale. The transfer of title for a consideration of a different nature is a barter or exchange. See, for other definitions, 35 Cyc. 25; 23 R. C. L. 1186. On the other hand, there are numerous cases where the word “sale” in statutes has been given a broader signification. The modern tendency is in that direction. In Gallus v. Elmer, 193 Mass. 106, at page 109, it was said by Mr. Justice Hammond, in holding a transfer of property by way of accord and satisfaction of a pre-existing debt to be a sale contrary to the sales in bulk act, “While it is true that in its strictest sense a sale is a transfer of personal property in consideration of money paid or to be paid, still in the interpretation of statutes it is often held to include barter and any transfer of
The aim of the court in every instance must be to ascertain as nearly as possible the intent and purpose of the Legislature.
On analysis, the transaction out of which this controversy arises was this: The petitioner was the owner of stocks of an ascertained value on January 1,1916. In the following July, without selling these stocks for cash, she used them as the consideration with which to subscribe for and acquire by purchase other stocks in a new and different corporation. Although the property owned by the new corporation was identical with that owned by the old corporation, it nevertheless plainly was a different legal entity. Brighton Packing Co. v. Butchers Slaughtering & Melting Association, 211 Mass. 398. Marsch v. Southern New England Railroad, 230 Mass. 483, 498. The stock obtained by the petitioner through exchange was different in kind and not merely in degree from that which she owned before. It was not the same corporation and the stock itself was different in nature. A change of investment had been made both in name and in essence. It would seem something of a wrench to say that the disposal of the stock in the old corpora
Tested by the difference in value of the stocks purchased as -compared with those exchanged for them at their appraisal at the time fixed by § 7 of the act, the petitioner had realized a gain. This is not the calculation of a mere paper profit or an unrealized increase in value, which is not taxable under the act. Tax Commissioner v. Putnam, 227 Mass. 522, 530. The gain had materialized by procuring title to a wholly different kind of stock in & new corporation, whose market value was definite and ascertained. The complainant had wholly parted with the old and become the legal owner of new property. It follows that a tax on this gain was lawful.
In accordance with the terms of the report, the entry may be, judgment for the petitioner in the sum of $1,119.03 with interest from July 7, 1919, and costs.
So ordered.