Court Opinion

ID: 6864196
Source: CourtListenerOpinion
Date Created: 2022-07-23 20:52:27.99104+00
Date Added: 2024-06-11T16:05:17.645255
License: Public Domain

WILBUR, Circuit Judge
(dissenting).
I dissent from the opinion of the majority in so far as it holds that Bryson’s tax liability for the years 1917 and 1918 was barred by the statute of limitations. The decision of the Board of Tax Appeals to that effect was based upon the theory that if the tax was barred, as to the corporation a waiver of the transferee would not toll the statute as to his obligation. In so holding, the Board follows its decision in Newport Co. v. Commissioner of Internal Revenue, Helvering, 22 B. T. A. 833; that decision was affirmed by the Circuit Court of Appeals for the Seventh Circuit, 65 F.(2d) 925, but reversed by the Supreme Court, 291 U. S. 485, 54 S. Ct. 480, 78 L. Ed. 929. It was thus settled that a waiver by the transferee will toll the statute as to him. The Board of Tax Appeals held that the petitioner, Elmer D. Bryson, was the transferee of the corporation, and upon that basis held him liable as transferee of the assets of the corporation for its *404deficiency for 1919. In sustaining that decision we are following the conclusion of the Board of Tax Appeals that Bryson was the transferee of the Bryson-Robison Corporation. There are certain facts upon this question of whether or not Bryson was transferee of the corporation within the meaning of section 280 of the Revenue Act 1926 (26 USCA § 1069 and note), which are not stated in the main opinion. In his petition to the Board of Tax Appeals Bryson states: “The Commissioner erred in determining petitioner to be a transferee of one-half the assets of the corporation of Bryson-Robison Corporation on dissolution thereof as petitioner purchased of and from Lester L. Robison and said corporation certain assets, being all of the assets, of said corporation as an independent, outright purchase.” Again he states: “The petitioner purchased assets of the corporation from Lester L. Robison and the corporation, not as a stockholder, but as an independent purchaser paying his own money therefor.” The Board of Tax Appeals, in its opinion, on this subject said: “But the action of Bryson taking- over all the assets of the corporation and assuming all of its liabilities, makes him a transferee of the assets of such corporation and liable as such. J. W. Oglesby v. Commissioner of Internal Revenue, 16 B. T. A. 1191; Frank Shlaudeman v. Commissioner of Internal Revenue, 21 B. T. A. 605; John Gerosa et al. v. Commissioner of Internal Revenue, 21 B. T. A. 1234.”
It appears from the evidence that on June 4, 1919, the corporation transferred all its real property to Bryson. It appears from the testimony of the attorney who handled the transaction that Lester L. ■ Robison and wife joined in the transfer because the record title of some of this property was in Lester L. Robison, although the actual ownership was in the corporation. This attorney testified as follows: “The deed was given by the corporation and Lester L. Robison and wife to Elmer D. Bryson, conveying all of the corporate real estate, and there was the transfer of all of the personal property of the corporation to Elmer D. Bryson.” He further testified that the occasion, for transferring the corporate stock when the corporation was dissolved was so that any assets, in the corporation instead of being distributed to Mr. Robison were to be distributed to Mr. Bryson pursuant to his purchase.
The brief filed by Elmer D. Bryson and Lester L. Robison before the Board of Tax Appeals shows that the contention of Bryson before the Board was that although he was a transferee of all the assets of the corporation, he was not a transferee within the meaning of section 280 of the Revenue Act of 1926, for the reason that he had paid full value for the assets received by him from the corporation. He made the same “ contention in • his petition for cross appeal to this court, stating: “The Board erred in holding that Elmer D. Bryson, respondent, is a transferee of the assets of the Bryson-Robison- Cofporation, and that he was other than a purchaser thereof for full value from said corporation
The reason I have quoted these statements is because in the main opinion there is an inference that there was no transfer from the corporation to Bryson, but that he merely took possession of the assets of the corporation. The record discloses that this is not the case. The record discloses that the agreement between Robison and Bryson and the corporation was that Bryson should pay $70,000 for the half interest owned by Robison to be secured by a mortgage upon the real estate to be conveyed by the corporation to Bryson and that Bryson agreed to pay all the liabilities and obligations of the corporation. It is true tjhere is no direct statement that Bryson agreed to pay the liabilities of the corporation, but he testified that he did pay such liabilities. I quote his testimony in that regard as follows: “At the time I bought out the corporation from Mr. Robison there were obligations of the corporation which T later on liquidated in addition to the $70,-000. Roughly — for my memory is poor —I know there were notes at the bank and they had some store bills and we had accounts that had to be settled. I could not give them — only roughly — . I am not sure but I think I owed the hank. $17,000 or $18,000. I had a current merchandise account and some of the herders’ wages were due. * * * When the proceeds [from the sale of the wool] came Mr. Robison turned over his profits to me and this money was used to pay off the debts.” With reference to his making out income tax returns he was asked: “Wasn’t it because you felt that you were the sole person that was responsible, if anybody was responsible, for the affairs of the corporation? A. Well, I did set-*405tie all bills that were due the corporation. I took over everything and gave him $70,000 for it.” Again he testified: "After the transaction between myself and Mr. Robison in June 1919 he ceased to have anything to do with the corporation affairs.”
Mr. Robison testified:
“Sometime in June, 1919, I sold out to Mr. Bryson for the sum of $70,000.-00. Mr. Bryson took the assets of the corporation and has been holding them ever since. The corporation had no assets after that time, — the time I sold out to Mr. Bryson and the corporation has no assets now.
“By Mr. McFarland: Q. Flow about the liabilities of the corporation, were they very much at the time of the transfer of those assets? A. I do not know of any other than just Mr. Bryson gave me, to take care of the liabilities.
“Q. He gave you what? A. He gave me $70,000; he was to take care of what liabilities we had.”
The importance of this evidence lies in the fact that if Bryson assumed the obligations of the corporation he must assume the obligation to pay the tax so that his contention that he is not a transferee because he purchased the assets of the corporation for a price is not tenable. In this connection it should be stated that in his petition for cross appeal for review of the order of the Board of Tax Appeals holding him responsible as transferee for the income taxes of the corporation for the year 1919, the petitioner alleges as follows:
“On June 4, 1919 Elmer D. Bryson, respondent, purchased of and from said corporation and Lester L. Robison and wife, all of the assets, real and personal and wherever situated, of said corporation. The properties were appropriately conveyed to respondent for a consideration of $70,000.00, and the payment by respondent of certain outstanding obligations of the corporation. Respondent did not either purchase or acquire the corporate capital stock of Robison, nor did he following June 4, 1919, conduct any' business by or in the name of the corporation,' on the contrary, from that date forward operated the business as an individual, sole-owner by purchase, thereof. Hs * *
“The record before the Board is clear and undisputed as to the following facts concerning the income and profit tax liability for 1919;
“This proceeding involves alleged income and profit tax liability of the respondent solely as a transferee of Bryson-Robison Corporation, and not for any personal or other income of the respondent.
“"June 4, 1919, respondent acquired by purchase for $70,000.00 all of the assets of Bryson-Robison Corporation, thereafter conducting the business as an individual. The assets were conveyed to respondent by deed and bills of sale executed by the corporation and Lester L. Robison and wife.”
From the fact that Bryson claimed he was a transferee of all the assets of the corporation, that the Board of Tax Appeals found he was a transferee of the corporation and for that reason held him liable for taxes for the year 1919, and that we have sustained this conclusion of the Board of Tax Appeals, I assume it is settled that Bryson was the transferee of the corporation and liable as such for the tax of 1919, if there was a waiver which tolled the statute of limitations. In the main opinion the waiver is set out in full and need not be repeated here. It is there held that this is a waiver neither by the corporation nor by the transferee, and this in part because of the disclaimer of authority contained in the letter accompanying the waiver. This letter is quoted in part in the main opinion. It will be observed that in addition to disclaiming authority to act for the corporation, although the corporation was in fact still in existence, and although he was the secretary of the corporation and had previously acted for the corporation in matters of income tax, he disclaimed authority so to do and stated “the only way he could make a report would be as that of an individual who was formerly secretary of the corporation.” Of this waiver the Board of Tax Appeals said: “ * * * he was not executing it as a former officer of the corporation but merely as an individual who repudiated any claim that he had authority to act for the corporation. * * * The most that could be said for the waiver which we have set out above, is that it was executed by Bryson as a transferee of the assets of the original taxpayer and we have held that a waiver executed by a transferee purporting to *406extend the time of assessment and collection of the tax against the original taxpayer, is ineffective to extend the statute of limitations as to the original taxpayer. Carnation Milk Products Co. [v. Commissioner of Internal Revenue], 15 B. T. A. 556.”
This latter statement as to the effect of a waiver by a transferee, as we have pointed out, has been decided otherwise by the Supreme Court in Helvering v. Newport Co., 291 U. S. 485, 54 S. Ct. 480, L. Ed. 929. I think the decision of the Supreme Court in that case disposes of the question as to whether or not the waiver here is sufficient to toll the statute of limitations as to the transferee where assigned by the transferee. We have to turn to the record before the Supreme Court and the Board of Tax Appeals in that case to find the exact form of the waiver signed by the Newport Company. It was signed by the Newport Company “as successor of the Chemical Works.” The court considered that the objection to this waiver was not worthy of discussion and held the waiver sufficient although it was executed in the name of the Chemical Works and signed by the Newport Company as successor. I am unable to see that the addition of the word “transferee” to the name of the transferee, or of the word “successor” adds anything to the validity or effect of the waiver. It is in fact executed by the transferee. It is his act and no one else’s, and should be binding upon him. The decision of the majority is directly contrary to the decision of the Supreme Court in the case cited.