Court Opinion

ID: 8195658
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:18:56.688589+00
Date Added: 2024-06-11T16:40:45.694185
License: Public Domain

CrowNhart, J.
(dissenting). Sec. 182.06, Stats., provides :
“No ■ corporation shall issue any stock or certificate of stock except in consideration of money or of labor or property estimated at its true money value, actually received by it, equal to the par value thereof, . . . and all stocks and bonds issued contrary to the provisions of law and all fictitious increase of the capital stock of any corporation shall be void.”
Therefore, the stock received by appellant is presumed to have been worth par or $200,000. There is no dispute but that the note was worth par or $10,000; there is no dispute but that the property turned in to the corporation by appellant cost appellant only $155,000; therefore he made a profit on the deal of $55,000, subject to income tax.
In State ex rel. Van Dyke v. Cary, 181 Wis. 564, 191 N. W. 546, wfe held that a corporation is estopped to deny that stock issued by it pursuant to sec. 182.06, Stats., was worth less than par value. This court there said:
“Its stamped or mint value, so to speak, as so issued by the corporation and delivered to and received by the relators at the time of the distribution must be considered and assumed to be then of the par' value expressed and stamped on the face thereof. Otherwise it is a fictitious increase and void in whole or in part under the above quoted statute. It being properly considered as taxable income, neither the corporation that issued it nor the stockholders who received it ought to be heard to say that as so issued by the corporation and received by the relators it was of less value than that which the statute directs must be its then true money *225value — par: Its selling value thereafter is immaterial. But being assessable as income,' and of the moment of issue and distribution by the corporation and receipt by the stockholders, it should, for taxing purposes at least, be treated as of par value.”
That principle is as true here as there. The appellant here claims to have been the corporation, organizing it and becoming its sole stockholder. Thus, upon his own showing, he is estopped from denying the value of the property he turned in to the corporation as a basi.s for the stock issue was worth less than the par value of the stock issued, or that the stock was worth less than the represented value, that is, par.
The action in the circuit court was begun pursuant to sec. 71.115 of the Statutes, which has been construed by this court, in Oconto Co. v. Wis. Tax Comm. 193 Wis. 488, 214 N. W. 445, as providing an-equitable remedy for over-assessment. To avail himself of this remedy the appellant had to come into court with deán hands. His hands were unclean, — he alleged a fraud by him upon the corporation, and a violation of a public policy statute in the organization of the corporation. He should not be heard to show his fraud to defeat the tax.
The court finds assurance of the soundness of its decision from the act of the legislature of 1927 providing a similar policy for the future. I see nothing in this to warrant the court in its conclusion; on the contrary, it would appear that the legislature recognized the law as the Tax Commission had applied it, and deemed it advisable to change it.' That was a proper function of the legislature but hardly the function of this court.
I think the judgment of the circuit court should be af- . firmed.
A motion for a rehearing was denied, without costs, on March 6, 1928.