Court Opinion

ID: 9455980
Source: CourtListenerOpinion
Date Created: 2023-08-04 19:39:06.690351+00
Date Added: 2024-06-11T17:34:48.752073
License: Public Domain

TUTTLE, Circuit Judge
(concurring specially).
With deference to the majority of the court, I am impelled to write this short separate concurrence. This results from the fact that were it not for the fact that the three corporations set up by the two Britt brothers were themselves actual partners in the Britt Fruit Company, I would find the activities of these corporations much too slight to meet the standards which the majority adopts as what is required for a corporate body “to be a separate jural person for purposes of taxation.” That is to say, “it must engage in some industrial, commercial, or other activity besides avoiding taxation : in other words, that the term ‘corporation’ will be interpreted to mean a corporation which does some ‘business’ in the ordinary meaning; and that escaping taxation is not ‘business’ in the ordinary meaning.” National Investors v. Hoey, 2 Cir., 1944, 144 F.2d 466, 468. (Emphasis added.)
Here all the corporations really did was those things that were necessary for anyone who stood in the shoes of the original owners of the partnership interests in the Britt Fruit Company. Of course, they did the acts that were necessary to maintain the corporate existence and their accounting, once they were set up, but this of i.tself does not amount to “business,” in the concept which any of us are here using.
The turning point with me is that partners of an active business partnership not only own the business but they engage in operating the business. This is true even though they operate it by hiring a manager, and this is true even though the manager be one of the partners who is paid additional compensation for his management services. This follows because under ordinary partnership concepts, each partner has his say in the running of the partnership business, and apparently, since there was no formal partnership agreement between any of these partners, as we are t.old by the stipulation in the case, the partnership could be dissolved at the behest of any partner. This means that any partner, including these two small corporations, each owning 14% of what formerly belonged to T. M. Britt, or 21% of what formerly belonged to Harold M. Britt, did legally, even though possibly not in fact, engage in the business of operating the partnership known as Britt Fruit Company.
I feel it necessary to point to this distinction, because it would seem to me that this case should not be a precedent for the proposition that the setting up of these corporate structures would be recognized as anything other than the alter-egos of the original owners of the interests, if the corporations were not the active partners in an operating fruit and orchard business.