Court Opinion

ID: 9641501
Source: CourtListenerOpinion
Date Created: 2023-08-22 17:33:18.393352+00
Date Added: 2024-06-11T18:10:37.930728
License: Public Domain

WALLER, Circuit Judge
(dissenting) :
It is with regret that I cannot bring myself in line with the excellent opinion of the majority in this case. I cannot escape the force of innumerable opinions of courts throughout the country holding that interest is the premium paid for the use of money, or — as held by the Supreme Court in Deputy, Administratrix v. Dupont, 308 U.S. 488, text 497, 60 S.Ct. 363, 368, 84 L.Ed. 416, — that interest “is the amount which one has contracted to pay for the use of borrowed money.”
In 1939 the taxpayer here borrowed no money, acquired no property, used no money or property of others, and owed no debts to which interest could have been an incident. On the contrary it was not in existence until January 1, 1940, and neither made, nor could have made, any contract prior to its coming into being. It, doubtless, could have ratified, upon its organization, lawful contracts theretofore made by its promoters, but the procedure adopted was not that of ratifying a prior contract made by its promoters but of making its own contract whereby it sought to engage in the Canutian pastime of turning back the tide for one year and thus to pay interest on money which it never used nor borrowed in 1939, but with which it purchased property in 1940.
The bonds were issued for the acquisition of the assets of the sixty-five affiliated companies. The consideration for the purchase of such assets was the execution and delivery of bonds and interest coupons thus ante-dated. Before its organization no assets were delivered to it, no money advanced, no forbearance extended. In short, bonds with one year’s unearned and unaccrued interest Coupons were delivered in consideration for the sale of such assets.
It seems clear that the payment represented by the 1939 coupons was not a payment of interest” but was merely a part of the consideration for the acquisition of the assets acquired in part therewith, and as su'ch was a capital investment rather than rent for the use of money or its equivalent.