Court Opinion

ID: 8595358
Source: CourtListenerOpinion
Date Created: 2022-11-23 16:02:29.461576+00
Date Added: 2024-06-11T16:54:53.084874
License: Public Domain

Dureee, Senior Judge,
concurring in part and dissenting in part:
I concur with the result in the majority opinion by Judge Nichols. Judge Kashiwa, in his dissent, agrees with the majority that “the rule can be stated to be, and we believe is, that Oom Products will be applied in this court to purchase of company stock to obtain a source of supply only if there is no substantial investment intent”, infra, p. 698, (Emphasis supplied).
Apart from any distinction drawn by Judge Kashiwa from United States v. Mississipi Chemical Corp., 405 U.S. 298 (1972) and the present case, the Court there did say, “The stock has value because it is the foundation of the corporate scheme; it insures stability and continuity.” 405 U.S. at 311. Judge Kashiwa’s opinion is that “the stock involved in Agway does not provide a foundation and stability for United. On the contrary, it is intended that the patronage dividend stock be redeemed when the capital is considered adequate. This is in the by-laws.” Infra, p. 700.
When plaintiff paid for market value for the products it purchased from United Cooperative, rather than their actual cost to United, this was a capital investment by which plain*698tiff acquired its preferred stock, not merely a purchase of corn futures designed to protect itself against price increases and to insure its continued supply requirements as intended in Corn Products. In my opinion, the value of plaintiff’s preferred stock was that it did “insure stability and continuity” and “the foundation of the corporate scheme”, so considered in Mississippi Chemical Corp.
Article 7, Sec. 5 of the by-laws, also provided that all capital contributions, including plaintiff’s preferred stock before redemption are “subject to all the risks and contingencies incident to the investment of capital in a corporation.” Under the Corn Products rule that we agree is to be applied “to the purchase of company stock to obtain a source of supply”, this by-law supplies convincing evidence of “substantial investment intent.”
I do not join in Judge Nichols’ criticism of the “defendant’s relitigation policy which has recently been harshly criticized in the Preliminary Report of the Commission on Revision of the Federal Court Appellate System (April 1975) A-92 and ff.” Part VI, p. 696, supra. With all deference to this Preliminary Report and to application of the rule of stare decisis for lower courts, and since this is the very last case involving the tax status of pre-1959 cooperative paper, I believe that any extensive criticism of the Government’s defense as “an example of defendant’s relitigation policy”, may well await another day and another case more effective as future precedent.