*1 Carpet & Sons 1936); Alexander Smith (C.C.A.2) 85 v. Herrick et al. Co. 16; Casting (C. Boland Precisions Co. v. 15. C.A.2) were not available These cases entry of Judges at the time of the District complained of. the orders Act, study A well as deci- sions the various circuits rеferred convinces us itself that the Act affords procedure adequate and exclusive questions in- of all the here volved, invoking equitable ju- without up- risdiction of the court. Our conclusion point unnecessary
оn this renders the con- questions. sideration of other The order in each of the cases is re-
versed, and the several causes remanded to the District directions to dis- temporary injunction solve the and to dis- MORTON, Judge, dissenting. bills for want equity. miss the
Reversed and remanded. WALKER et al. v. COMMISSIONER OF Whitney, William D. of New York INTERNAL REVENUE. City Wilmer, (Richard H. Washington, No. 3197. C., George Tyler Cravath, D. G. Gersdorff, de Swaine & all of New Appeals, Circuit Court of First Circuit. City, York brief), 1937. for review. Rehearing Denied March Asst, Remey, Sp. Atty. G. John (Robert Gen., Jackson, Atty. Gen. H. Asst. Key Pringle, Sewall Jr., John J. Sp. Atty. Gen., Assts. to the brief), for Commissioner of Internal Revenue. BINGHAM, WILSON,
BINGHAM,
This is a review of the decision of the
holding there is due
Walker,
estate of William
H.
who
resided at the time of his death
Bridg-
at
ton, Me.,
deficiency
tax of
$242.69
year 1931,
the calendar
under and
vir-
provisions
tue
of the Revenue Act
of 1928
Stat.
§
[26
note]).
raised
for consideration is whether
erred in
$10,-
that the sum of
000 received William H. Walker in 1931
gift.
*2
sidered;
and all of the
ac-
facts
that the Universal
stockholders
salient
quiesced
it;
in
glad
and
organized
was
to do
and the
Oil Products
1914,
its
was
having as
result
it was
we
that
understood that
Dakota
South
proc-
рatent
pres-
on a
come forward
a
and
these
application for
asset an
gifts
manufac-
ents or
to
petroleum and
these
that were
refining
ess
be
to
slated for
dis-
since that
it.”
checks were
turing
and
gasoline,
instance,
developing
of
tributed Mr. Halle and
each
the business
engaged
recipients personally,
ac-
subsequently
given
where
patents
other
that and
pro-
moneys
represented
various
he stated that
the
licensing them to
quired and
basis;
so
given
that it was
said checks were
them and each
royalty
to
a
ducers on
them, by
Unopco
of
Corporation,
that
the stockhold-
said
a
remarkably prosрerous
liquid gift
gratuity,
$4,100,000 from the
and
and were
ers,
taking
after
therefore
subject
company,
to sell
to
part
were able
income tax on the
of the
the
assets of
recipients;
corporation
accompany-
known as Unit-
and
the letters
to a
their stock
$25,000,000;
same
Corporation for
checks sent mail the
state-
ed Gasoline
stockholders
ment in
substance was made.
prior to this sale
that
another
organizеd
The records of the Universal show that
Corporation,
to
known as
paid
employees every
had been
bonuses
its
$4,100,00 above
transferred
which was
1930,
year from
to
inclusive.
the stockholders
Uni-
all
referred
given
“Whеther a
in a
becoming stockholders
versal
case shall be deemed taxable
holdings, and
proportionate
exempt
depends upon
or a gift
from tax
agreement of
in the sale
provided
it was
parties,
particular
intention
and
pro-
a
that
ly
employer,
that of the
to be determined
a
amount
and
certain
ceeds of
from the facts and circumstances surround
to
should
transferred
assets
ing the transаction.”
Fisher v. Commis
fund”
“guarantee
be held as
192,
sioner
It
liabilities;
on
that
unsettled
of Universal’s
employee,
to us that
seems
where
al
sale,
1931,
9,
the board
January
after the
paid
agreed salary,
he has been
his
its
Unoрco recommended to
of directors
given
an additional sum or sums
appropriat-
“be
that
stockholders
strong presumption
raises a
sixty-
as bonus to
ed,
and distributed
payments
compensations
such
presеnt employees,
former and
(64)
four
rendered,
given
and
should
its
attorneys
experts of Universal Oil
and
imposed
due consideration
a tribunal
* *
*
recogni-
Company,
Products
duty
with the
valuable
tion of
for services was contem
attorneys
experts
to
employees,
said
plated.
Company” Ihe
Products
Universal Oil
presumption
board of di-
In addition to that
we
to be distributed
determine;
here,
side,
next
that on the
have
bn the
the votes of
shall
rectors
1931,
10,
grant
the stockholders
the directors and
to
day, January
and,
bonus,
imports compensation,
met,
following the above
in rec
recommendation,
authorizing
given,
passed
ognition
a vote
of thе services
to
using
practice
give
therein the same
bonuses
and,
employees;
hand,
quoted; and
virtue
to its
on the other
above
terms as
president
authority
directors distributed
the statements
to the stock
attоrneys,
and holders that it should
form of a
money
Walker,.who
recipients
to
gift or honorarium and
paying, to Mr.
experts,
presenting
from time to time in con-
it was
a clear
case
been called
such —
testimony
given
еvidence.
and who
sultation
infringements,
patent
relative to
cases
In
Old
v. Com-
$10,000.
sum
missioner,
730,
279 U.S.
49 S.Ct.
that, prior
L.Ed.
is a
dictum to the
to
vote,
Halle, presi-
services,
Mr. H.
effect that “the
passage of the
even
J.
Unopco,
suggеsted
though entirely voluntary
stock-
neverthe-
dent of
[is]
gener-
be a nice and
less
within the
it “would
holders that
statute.”
Here,
appreciation
supplied.)
(Italics
according
for us to show our
thing
ous
resolution,
money “paid
of em-
them
number
and to remember
distributed
[a
sixty-four
(64)
form of a
or honorari-
ployees] in the
bonus
former and
um;
present employees,
suggested
experts
be con-
recognition
Unopco,
“in
apprеciating
of Universal” was
stockholders of
em-
loyal services of said
value of those services
valuable
them
experts
Uni-
ployees, attorneys and
to said
Unopco might
without such services
assets,
compensa
in the Old had
grant
versal.” And if
dictum
no
could not
*3
law
Hawley
Case states the
tion
(C.C.A.)
therefor. Bass v.
matter,
payment and
governing
(2d)
62 F.
voluntary,
entirely
be-
The
Appeals
order
Tax
was,
ing for
services”
“valuable
is affirmed.
nevertheless,
stat-
compensation within the
ute, and,
recipients.
so,
if
taxable to
Judge (dissenting).
phrase
voluntary”
“entirely
payment
The
any
I do not think there was
evidence
opinion
means
services used in that
thq
before
warrant-
substantially
stipulation
as
finding
payment
question
that the
Unop-
parties
this case that “neither
compensation.
If the
had
situation
stockholders,
any
co nor
of its
nor
reversed,
been
would
Commissioner
any were at
Universal
any
payment
have scouted
claim
this
pay
any
obligation ‘to
legal
or other
was deductible
expense
business
any
or ex-
of said
Unopco Corporation,
counsel conceded
salary,
perts,
any
including petitioners,
—his
argument
at the
probably
would
any
or consideration
”
not
point-
have allowed it. He
kind.’
ed out that
there is nothing whatever on
If, however,
the dictum
above-
which to' found such a
The deceas-
claim.
entirely
cited case
too
and an
vol-
broad
taxpayer
ed
employed by
never been
untary payment
may
for services
not be
any capacity.
He had nеver
compensation within the statute and tax-
regularly employed by
been
recipient,
able to the
we are nevertheless
Company.
professional
He was a
man in
opinion
payment
independent practice who
been
con-
attending
may properly
circumstances
it
sulted
Universal
on mat-
be considered in
whether the
ters
within
field and had
testified
gift
was a
or
patent suits,
and had
been
so do-
And
all the
serviсes.
case,
as
evidence in this
ing.
any
had never had
relations
mentioned,
just
therein that
at all
him. The
distribution was not
bearing
pay-
whether the
by Unopco Company
compensa-
treated
as
gift
ment was a
or
for serv-
tion.
was treated
as a
was so
ices was
the conflict
approved
stockholders,
well
Ap-
been determined
the Board of Tax
directors.
peals,
Lougee
its determination was final.
generosity
Whаt an
out of
v.
Commissioner
DENMAN, dissenting. Judge, *4 & ISLAND SAND ROSS HORN v. CO. GRAVEL
No. Appeals, Ninth Circuit. 16, 1937. Portland, Or., Rosenberg, Coan &
appellant. and Ar- Matthiessen & Rankin Or., Ireland, Portland, thur P. appеllee. all of WILBUR, DENMAN, MATHEWS, WILBUR, Company Ross & Island Sand Gravel petition reorganization filed a Bankruptcy Act 77B of 207), amounting it claimed assets wherein $2,880,022.17, and liabilities for the to amount, $2,031,671.46 of liabilities preferred and stockholders. The common liabilities, capital other than the principal indebtedness, liabilities, of current consisted $262,260.28, amounting to bonded $488,100 by a trust deed. debt of For secured convenience, properties covered parcels. divided into five the trust deed are 1, 2, and consist four hundred Parcels city land in and near of Port- acres of Or., land, gravel for its sand -valuable buildings, consists content. Parcel tools, etc., upon in and land in used рetition- of the business the conduct selling sand and producing er in Parcel 5 consists of certain shares gravel. the Beaver Portland Cement operated .and which owned Hill, Or., plant near Gold cement capital Oregon entire stock of Gravel owns and conducts a sand Salem, business near gravel Or. and stock of the Beaver Portland Cement Com- sold, during mentioned was pany above proceeding, progress of the cash, agreement unmortgaged estate debtor to from its