Court Opinion

ID: 1474955
Source: CourtListenerOpinion
Date Created: 2013-10-30 06:24:30.027678+00
Date Added: 2024-06-11T18:09:48.033889
License: Public Domain

22 F.2d 497 (1927)
EATON, Collector of Internal Revenue,
v.
PHNIX SECURITIES CO.
No. 51.
Circuit Court of Appeals, Second Circuit.
November 14, 1927.
*498 John Buckley, U. S. Atty., of Hartford, Conn., and Alexander W. Gregg and L. H. Baylies, both of Washington, D. C., for plaintiff in error.
Edward M. Day and Allan K. Smith, both of Hartford, Conn., for defendant in error.
Before L. HAND, SWAN, and AUGUSTUS N. HAND, Circuit Judges.
PER CURIAM.
We do not think that anything will be gained by an extended discussion of the decisions on this tangled subject. Edwards v. Chile Copper Co., 270 U.S. 452, 46 S. Ct. 345, 70 L. Ed. 678, recognized the continued authority of McCoach v. Minehill R. R. Co., 228 U.S. 295, 33 S. Ct. 419, 57 L. Ed. 842, and U. S. v. Emery-Bird-Thayer Realty Co., 237 U.S. 28, 35 S. Ct. 499, 59 L. Ed. 825, to which we may add Zonne v. Minneapolis Syndicate, 220 U.S. 187, 31 S. Ct. 361, 55 L. Ed. 428. We cannot believe that it makes any difference whether the property held be corporate shares or realty, or whether the income be dividends or rent. Had it not been for the new accessions, the plaintiff would have been as bare a holding company as could be contrived. We do not believe that such a company is "engaged in business" during the year when it first receives its property and never thereafter. The venture is single, though at the outset it may show more activity; if there is business then, there is the same business always. Therefore we think that it made no difference that property continued to drop into the corporate lap from time to time, even though that were due to its own action. The alternatives were not business or death; a minimum of activity is necessary to the persistence of even the lowest organisms. Edwards v. Chile Copper Co., supra, is so plainly different on the facts that we may pass it. Phillips v. International Salt Co., 274 U. S. ___, 47 S. Ct. 589, 71 L. Ed. ___, is indeed closer, and may perhaps be the forerunner of a stricter rule. However, the holding company there actually aided in financing the operating company, as well as borrowed money from it. Whether these turned the scale, or the transactions in its bonds, or both together, we cannot tell. So far as we can see, it had no effect upon the cases on which we rely.
Judgment affirmed.