Court Opinion

ID: 4491931
Source: CourtListenerOpinion
Date Created: 2020-01-17 22:03:08.263155+00
Date Added: 2024-06-11T13:33:47.821271
License: Public Domain

Black,
dissenting: I do not agree to the conclusion reached in the majority opinion in this proceeding that the Pittsburgh Terminal Coal Corporation was not the proper party to which deficiency notice should be sent for taxes due by the Meadow Lands Coal Company for the years 1917, 1918, and 1919. It is my view that petitioner was not only a proper party to which deficiency notice should *253have been sent, but it was the only proper party. If deficiency notice for the taxes due in these years had been mailed by respondent to the Meadow Lands Coal Company, any appeal based on such deficiency notice would have been dismissed for lack of jurisdiction, because no corporation by that name was any longer in existence. It had lost its identity in the new corporation — Pittsburgh Terminal Coal Corporation. Grange National Bank, 22 B. T. A. 1209.
The majority opinion points out that the respondent should have proceeded against the petitioner corporation under section 280 of the Revenue Act of 1926. I agree that petitioner is liable as a transferee and that the Commissioner could have properly proceeded under section 280 of the Revenue Act of 1926. But petitioner is more than a transferee. Under the statutes of Pennsylvania, it is the successor corporation of the two merged corporations, Pittsburgh Terminal Coal Company and the Meadow Lands Coal Company.
Chapter 18, Title 15, section 423, Purdon’s Pennsylvania Statutes Annotated, reads:
Upon the filing of said certificates and agreement, or copy of tfie agreement, in the office of the Secretary of the Commonwealth, and upon the issuing of new letters thereon by the Governor, the said merger shall be deemed to have taken place, and the said corporations to be one corporation under the name adopted in and by said agreement possessing all the rights, privileges, and franchises theretofore vested in each of them; and all the estate and property real and personal, and rights of action, of each of said corporations, shall be deemed and taken to be transferred to and vested in the said new corporation, without any further act or deed: Provided, That all rights of creditors and all liens upon the property of each of said corporations shall continue unimpaired, limited in lien to the property affected by such liens at the time of the creation of the same, and the respective constituent corporations may be deemed to be in existence to preserve the same; and all debts not of record, duties, and liabilities of each of said constituent corporations shall thenceforth attach to the said new corporation, and may be enforced against it to the same extent and by the same process as if said debts, duties, and liabilities had been contracted by it.
In Pittsburgh Terminal Coal Corporation (the same corporation as petitioner herein) v. Robert Potts, Appellant, 92 Pa. Superior Court Reports, p. 1, in discussing the effect of the' merger of the Pittsburgh Terminal Coal Company and Meadow Lands Coal Company into the Pittsburgh Terminal Coal Corporation, the court said:
We agree with the court below that the present appellee is not in the position of an ordinary assignee of a lease as, for instance, was the plaintiff in the case of Curry v. Bacharach, Quality Shops, Inc., supra. Even if it can be said in any proper sense of the word that the rights of action and property of the constituent corporations are assigned to the consolidated company resulting from the merger, such an assignment would be by operation of law. A more accurate description of the transfer would be to say that the consolidated corporation succeeds to the rights of action and property of the constituent *254companies. The language of the act is that “ all the estate and property, real and personal, and rights of action of each of said corporations, shall he deemed and taken to be transferred to and vested in the said new corporation, without any further act or deed.” This distinction between assignment and succession was recognized in Mansfield, C. & L. M. R. R. Co. v. Drinker, 30 Mich. 124, 127. The consolidated corporation in that case was attempting to recover assessments upon subscriptions to the capital stock of one of the merged corporations. It had not complied with all the provisions of the merger act. The court held that the plaintiff must show that it had succeeded to the rights of the merged corporation by fully complying with the statute, or that it had acquired those rights by assignment. Under the circumstances of this case we think the present appellee is to be regarded as the legal successor of the original lessor and is entitled to enforce against appellant the provisions of the lease here involved. We are unanimously of opinion that the court below committed no error in discharging the rule.
So it seems to me that by operation of law under the Pennsylvania statutes, as construed by the courts of that State, the petitioner in this proceeding stepped into the shoes of the merged corporations and their tax liabilities became just as much its own liabilities as they were the liabilities of the two merged corporations. _ Therefore I think the respondent properly mailed petitioner a deficiency notice as the taxpayer under section 283 (a) Revenue Act of 1926, and that petitioner is liable for whatever taxes the Meadow Lands Coal Company owed for 1917, 1918, and 1919. The majority opinion is in my judgment wrong in holding otherwise.
Smith agrees with this dissent.