Court Opinion

ID: 4480166
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:14:06.406708+00
Date Added: 2024-06-11T15:03:36.357351
License: Public Domain

Withet, /., dissenting: I dissent from the majority opinion herein largely because of the conclusion reached. To me, the conclusion places the crucial burden of proof upon the Commissioner whereas it should, under the law, rest upon the petitioners. The majority opinion, in effect, reasons that in order for the attribution provisions of section 333 and the definition section, section 331, to apply to the facts in this case, there must have been in existence the evil sought to be obviated by Congress in enacting these sections. The majority opinion comes to the conclusion that that evil, i.e., that Cyrus Eaton actually controlled the stock held by his Canadian sisters, is not shown and therefore the conclusion is reached that the statutes do not apply, the Canadian sisters’ stock is not attributable to Cyrus Eaton, and therefore control of the Canadian corporation cannot under the statute be said to be within the “United States group.” As I read this reasoning, it establishes the proposition, which I think is true, that these sections set up a presumption to the effect that, when certain degrees of consanguinity exist between an American citizen whether or not he holds any stock in a foreign corporation and foreign stockholders of that foreign corporation, it is presumed, for the purpose of determining the number of the U.S. group of stockholders, that group under the intendment of the statute has actual control of the foreign corporation. To me, unless this presumption is a rebuttable one, it would be in some instances in violation of the due process clause of the United States Constitution. It is incumbent upon the judiciary to construe statutes as constitutional if possible. I therefore conclude, as the majority seems to do, that the question of actual control by the “United States group” is always open to proof, and it seems settled and fundamental that a taxpayer taking the position that for lack of such control these statutes do not apply in his case has the burden of showing such actual lack of control. The majority in this case has placed that burden, however, upon the Commissioner by concluding that because the record does not support a finding of lack or existence of such control, decision must be entered for the taxpayers. As I have said above, at the opening of the hearing of this case under these sections the presumption is, due to the relationship of Eaton and his two Canadian sisters, that such control did exist in the Eaton group. It must always be open to proof whether regardless of such relationship with his Canadian sisters Eaton did or did not actually control the stock held by them, and that burden is the burden of the taxpayers in this case rather than the burden of the Commissioner. Decision should be entered here for the respondent because of the failure of proof on the part of the taxpayers.