Court Opinion

ID: 9573773
Source: CourtListenerOpinion
Date Created: 2023-08-21 20:58:54.499078+00
Date Added: 2024-06-11T12:43:18.921278
License: Public Domain

ON REHEARING
*606Asa L. Lewelling and Boy Harland, Salem, for the petitioners.
Douglas L. Hay and John A. Heltzel, Salem, contra.
Before Warner, Presiding Justice, and Bossman, Perry, Sloan, O’Connell, Goodwin and Brand, Justices.
O’CONNELL, J.
Plaintiffs have filed a petition for rehearing alleging that our original opinion was erroneous in several particulars. All but two of the alleged errors are simply assertions that we misinterpreted the lease. However, two assertions made in plaintiffs’ petition require comment.
In the original opinion, after setting out excerpts from a contract entered into between plaintiffs and Don A. Brown, we stated that “[pjlaintiffs and the Used Merchandise Mart entered into a similar agreement about six years later.” Plaintiffs now contend that this statement is factually erroneous because, it is asserted, “[a]t no time did plaintiffs and Used Merchandise Mart enter into any such agreement, none is referred to in the Narrative Statement, nor is there any other evidence of such agreement.” We call attention to the following portion of the narrative statement prepared by plaintiffs themselves:
“* * * That said tax accountant included as gross sales all the business of Capital City Glass Company and used Merchandise Mart for the reason that under the contracts with each of these *607concerns, the accounts were purchased at 90% of their face value and the books of plaintiffs showed it as a concession account with 90% of the total sales as the cost. Therefore, the amount of profit to plaintiffs for their services performed would be 10% from which plaintiffs were required to furnish all the services such as the place to do business, lights, heat, telephone, stationery, loss on accounts receivable and other expenses of that kind and nature.” Narrative Statement, p. 16 (Emphasis added)
It will 'be observed that plaintiffs not only refer to “the contracts with each of these concerns,” but describe the essence of the contract between plaintiffs and Don A. Brown which we set out in the original opinion. We are still of the opinion that the evidence (limited as it was to narrative statements by each of the parties) amply supports our original statement.
Our attention is called to the following statement made in the original opinion: “The gross sales of the two affiliated companies were also included in plaintiffs’ partnership income tax returns, and apparently plaintiffs paid an income tax based upon the gross sales for all three companies.” In the present petition plaintiffs call our attention to that part of their narrative statement which we have set out above, explaining the accounting method involved in showing plaintiffs’ interest in the gross sales of Capital City Glass Company and the Used Merchandise Mart. It would appear from plaintiffs’ explanation that the partnership information return showed the total gross sales of all three companies with a deduction of 90% of the gross sales of the affiliated companies to arrive at the 10% profit to which plaintiffs would be entitled “under the contracts with each of these concerns.” Whether the gross sales of the three com*608panies appeared as one total or as separate totals for each, it is clear that the sales of the affiliated companies were in some sense regarded as a part of the total 'business carried on by plaintiffs. Assuming this to be so, our statement that plaintiffs’ income taxes were based upon the gross sales of the three companies would be accurate only in the sense that the partnership information return included all sales as the beginning point for the computation of the net income received by the partnership. To make our opinion consistent with plaintiffs’ contention in this respect we modify it insofar as it states that the tax was computed upon the gross sales of the affiliated companies. However, even though the tax was paid only upon the 10% profit (less expenses) we still think that the recognition by plaintiffs in their tax return of the arrangement with the affiliated companies as “concession” accounts (their own description of the transaction) brings the arrangement under the terms of the lease which requires the lessees to “include in the amount of said sales the gross business from all of the various departments, concessions, and activities of Lessee’s business.” (Emphasis added).
The petition for rehearing is denied.
McAllister, C. J., did not participate in the consideration or decision of this case.
Rossman, J. and Perry, J., dissent.