Court Opinion

ID: 4605394
Source: CourtListenerOpinion
Date Created: 2020-11-20 19:36:14.88686+00
Date Added: 2024-06-11T07:59:28.196030
License: Public Domain

Ohmer Corporation, Petitioner, v. War Contracts Price Adjustment Board, RespondentOhmer Corp. v. War Contracts Price Adjustment BoardDocket No. 792-RUnited States Tax Court17 T.C. 544; 1951 U.S. Tax Ct. LEXIS 77; September 28, 1951, Promulgated 1951 U.S. Tax Ct. LEXIS 77">*77  1. Renegotiation -- Jurisdiction -- Principal or "Successor".  -- The Tax Court has jurisdiction to determine the amount of excessive profits, if any, of a petitioner which was assigned for renegotiation, furnished information to the renegotiators, was notified that renegotiation of its contracts had commenced, was renegotiated and received a unilateral order and notice of the War Contracts Price Adjustment Board that it, as a contractor or subcontractor, had received excessive profits. It was not referred to in the order and notice as a mere successor or transferee of another corporation.2. Renegotiation -- Jurisdiction -- Party -- Not Filing a Petition.  -- A former subsidiary of the petitioner is not a party to the proceeding where that subsidiary was a separate corporation which neither filed nor joined in the petition.3. Renegotiation -- Jurisdiction -- Procedural Omissions and Deficiencies.  -- The Tax Court acquired jurisdiction to determine the excess profits, if any, of the petitioner once an order was entered by the War Contracts Price Adjustment Board determining that the profits of the petitioner were excessive, notice given, and petition filed, although the renegotiation1951 U.S. Tax Ct. LEXIS 77">*78  was on a consolidated basis and the petitioner's subsidiary corporation, named in the unilateral order, was not assigned for renegotiation or notified that its renegotiation had commenced, the petitioner and its subsidiary did not expressly consent to being renegotiated on a consolidated basis, the excess profits of the petitioner and its subsidiary were not separately determined, and the notice was unsigned and not in the usual form. John Enrietto, Esq., and Fuller Holloway, Esq., for the petitioner.James D. Lynch, Esq., and John F. Wolf, Esq., for the respondent.  Murdock, Judge.  MURDOCK 17 T.C. 544">*545  The War Contracts Price Adjustment Board determined in a unilateral order that $ 620,000 of the profits of "Ohmer Register Company -- and Ohmer Corporation, Successor" from renegotiable business for the calendar year 1945 were excessive. A copy of that order was sent by registered mail with a notice of the determination to "Ohmer Register Company -- and Ohmer Corporation, Successor." Ohmer Corporation filed a petition with the Tax Court which instituted the present proceeding.  It described the petitioner in the caption of that petition as "Ohmer Corporation, for itself1951 U.S. Tax Ct. LEXIS 77">*79  and as successor to Ohmer Fare Register Company."The Court granted the petitioner's motion for severance and separate hearing of "issues of law" or contentions made for the first time in an amended petition which may be summarized as follows:(a) The Tax Court does not have jurisdiction of the proceeding because:(1) The document mailed as a "notice" of the issuance and entry of the order determining the excessive profits was not signed on behalf of the War Contracts Price Adjustment Board and therefore was not the notice required by law;(2) The petitioner is not the contractor or subcontractor named in the order, is not the one "aggrieved" by the order, and this Court has no jurisdiction over a "successor" of the one named in the order;(3) The petitioner is not a "successor" to Ohmer Register Company since the latter, by bill of sale, transferred its assets to the petitioner in partial satisfaction of debts owed by Ohmer Register Company to the petitioner.(b) The unilateral order was null and void because:(1) It did not determine excessive profits of Ohmer Register Company, the corporation named in the order as the contractor or subcontractor, but, instead, determined1951 U.S. Tax Ct. LEXIS 77">*80  excessive profits of the petitioner, a different corporation, which was not named in the order as the contractor or subcontractor but merely as successor to Ohmer Register Company;(2) Any liability of Ohmer Register Company for excessive profits for 1945 was discharged through the failure of the renegotiators to commence renegotiation and enter an order determining excessive profits within the time prescribed by section 403 (c) (3);17 T.C. 544">*546  (3) The renegotiators did not issue an order determining the separate excessive profits of either the petitioner or of Ohmer Register Company as required by section 403 (c) (1); (4) The order was issued in violation of provisions of the Administrative Procedure Act;(5) The order was issued without due process of law.Other issues raised by the pleadings are reserved for further hearing and argument if that proves necessary.The parties were heard fully on the severed issues.The following is a summary of the only points argued by the petitioner in its briefs:(1) The notice and order relate to the petitioner only in the alleged capacity of "successor" to Ohmer Register Company for which there is no authority in the Renegotiation Act1951 U.S. Tax Ct. LEXIS 77">*81  and there is no authority in the Renegotiation Act for anyone receiving such a notice to file a petition in the Tax Court.(2) Any other interpretation of the order would make it joint or joint and several against two corporations and there is no authority for such an order in the law, regulations, or practice pertaining to renegotiation.(3) The petitioner is not liable as a "successor" to Ohmer Register Company for any excessive profits of Ohmer Register Company.(4) The "notice" was not the notice required by section 403 (c) (1) since it was not signed.The respondent claims that the order was a valid one determining the excessive profits for 1945 of two corporations, one being the petitioner, Ohmer Corporation, successor during 1945 by change of name to Ohmer Fare Register Company, and the other being Ohmer Register Company.FINDINGS OF FACT.The petitioner was incorporated in 1902 under the laws of New York.  Its regular business was the manufacture of fare registers, meters, and similar products, but during 1945 it manufactured parts for airplanes to be used in war.  Its name was changed on July 20, 1945, from Ohmer Fare Register Company to Ohmer Corporation.Ohmer Register 1951 U.S. Tax Ct. LEXIS 77">*82  Company, an Ohio corporation, was formed in 1931 to handle all of the sales of the petitioner under a written contract.  The petitioner owned all of its stock.  The management of the petitioner decided in 1945 to change its sales policies and methods of distribution of its products and caused Ohmer Register Company to be completely liquidated on December 29, 1945, and to be dissolved on December 24, 1946.  Ohmer Register Company transferred all of its assets and liabilities to the petitioner on December 29, 1945, in partial 17 T.C. 544">*547  payment of its indebtedness to the petitioner which at the end of the year charged off $ 67,689.96, the balance owed, and $ 10,000, its investment in the Ohmer Register Company stock.The petitioner made sales during 1945 only through Ohmer Register Company.A consolidated Federal income tax return, which included both the petitioner and Ohmer Register Company, was filed for 1945.A negotiator for the Army Air Force sent a letter dated March 11, 1946, to Ohmer Fare Register Company advising that the addressee had been assigned to the Detroit Regional Office for renegotiation for 1945 and requesting specified information and a date for a preliminary meeting. 1951 U.S. Tax Ct. LEXIS 77">*83  No such letter was ever received by Ohmer Register Company.  The petitioner furnished information dated May 15, 1946, including a showing of its relationship with Ohmer Register Company and the liquidation of the latter, data, some of which was given on a separate and some on a consolidated basis for the petitioner and Ohmer Register Company, and an audit for 1945 of the petitioner made by an accounting firm likewise showing some information on a separate and some on a consolidated basis.  Copies of the consolidated returns of the two corporations were furnished the renegotiators on April 9, 1946.  The representatives of the War Contracts Price Adjustment Board had ample information of the separate activities of the two corporations.A notice commencing renegotiation dated February 5, 1947, was mailed to the petitioner.  No such notice was ever sent to Ohmer Register Company.The petitioner and Ohmer Register Company never gave any formal or specific consent to being renegotiated upon a consolidated basis.A letter dated October 27, 1947, addressed to "Ohmer Register Company -- and Ohmer Corporation, Successor" gave notice of the determination by the Army Price Adjustment Board of1951 U.S. Tax Ct. LEXIS 77">*84  excessive profits for 1945 and enclosed a copy of the unilateral order which could be reviewed by the War Contracts Price Adjustment Board.  The petitioner, on December 18, 1947, wrote to the War Contracts Price Adjustment Board requesting a review of the determination of October 27, 1947, in which it gave the name of contractor as "Ohmer Register Company and Ohmer Corporation, Successor" and stated the issues involved but did not complain of the consolidation of the two corporations in the one renegotiation and determination.The War Contracts Price Adjustment Board reviewed the unilateral determination but entered an order dated May 10, 1948, that the profits of "Ohmer Register Company -- and Ohmer Corporation, Successor" for 1945 from renegotiable contracts or subcontracts were excessive in the amount of $ 620,000.  A copy of that order was sent by registered 17 T.C. 544">*548  mail to "Ohmer Register Company -- and Ohmer Corporation, Successor" on May 10, 1948, along with a notice that the War Contracts Price Adjustment Board had entered the order.  The notice had the following typed below the body of the letter:Very truly yours,WAR CONTRACTS PRICE ADJUSTMENT BOARDBy NATHAN 1951 U.S. Tax Ct. LEXIS 77">*85  BASSSecretarybut was unsigned.The petitioner had been advised on April 23, 1948, of the action of the War Contracts Price Adjustment Board in reviewing the prior determination and had been requested to agree to it but declined on April 30, 1948, and requested "a detail of your computation of the segregation of income and costs which will reflect the $ 620,000 refund." The detail was furnished on May 13, 1948.  It did not show any allocation of the $ 620,000 of excessive profits between the petitioner and Ohmer Register Company.The stipulated facts are incorporated herein by this reference.OPINION.The respondent insists that the word "successor" in the order and notice refers to Ohmer Fare Register Company and not to Ohmer Register Company and the petitioner is named therein as a contractor or subcontractor along with Ohmer Register Company.  Obviously, the renegotiation was of the petitioner.  It was the corporation "assigned" for renegotiation, it furnished information to the renegotiators, it was notified that renegotiation of its contracts and subcontracts had "commenced" and it had many communications with the renegotiators. Incidentally, none of those statements applies1951 U.S. Tax Ct. LEXIS 77">*86  to Ohmer Register Company except that its business was included in the renegotiation. The conclusion is inescapable that the order of determination and the notice referred to the petitioner as a contractor or subcontractor and not merely as a "successor" or "transferee" of Ohmer Register Company.  The order determines that profits of the petitioner for 1945 were excessive, the petitioner could be "aggrieved" by that order, and it filed the petition with this Court which thus acquired jurisdiction to determine de novo the amount, if any, of the excessive profits of the petitioner for 1945.Ohmer Register Company was a separate corporation from the petitioner and had authority under the laws of Ohio to enter into any litigation incident to the winding up of its affairs.  It filed no petition, did not join in the petition, and is not a party to this proceeding.  Questions relating to its rights and liabilities are not to be 17 T.C. 544">*549  decided in this proceeding.  Furthermore, the respondent not only has not indicated any intention of attempting to impose upon the petitioner as "transferee" or "successor" of Ohmer Register Company the liability of Ohmer Register Company to refund 1951 U.S. Tax Ct. LEXIS 77">*87  any amount as its excessive profits but has affirmatively insisted that the petitioner is named in the order only as a principal and not as successor to Ohmer Register Company.The respondent concedes that the renegotiation was upon a consolidated basis.  The regulations of the renegotiators require "assignment," consent of the contractors or subcontractors to renegotiation upon a consolidated basis, and separate determinations as to each contractor or subcontractor. The statute requires commencement within a prescribed time.  Yet Ohmer Register Company was never "assigned" for renegotiation or notified that its renegotiation had commenced.  The petitioner and Ohmer Register Company never expressly consented to being renegotiated upon a consolidated basis.  The War Contracts Price Adjustment Board has not determined separately the excessive profits of the petitioner or of Ohmer Register Company.  The "notice" is not only unsigned although containing a place for a signature but it is not in the usual form. The designation "Ohmer Register Company -- and Ohmer Corporation, Successor" is awkward.  However, none of these omissions or deficiencies prevents the Tax Court from acquiring 1951 U.S. Tax Ct. LEXIS 77">*88  jurisdiction, under the circumstances, to determine the excessive profits, if any, of the petitioner for 1945.  The petitioner has this opportunity to show the correct amount regardless of what errors were committed in the course of the renegotiation once an order has been entered determining that the profits of the petitioner were excessive and notice given.  The statute does not require that a notice be signed, cf.   , affd.   , and the regulations allow the sender some leeway as to the form of the notice. Here the notice was effective and any defect was waived by the filing of the original petition which in no way questioned the notice.The case is restored to the calendar for hearing in due course on those issues raised in the pleadings other than those severed pursuant to the motion of the petitioner.