Anderson v. COMMISSIONER OF INTERNAL REVENUE, 1870-1872.
| Decision Date | 01 November 1939 |
| Docket Number | No. 1870-1872.,1870-1872. |
| Citation | 107 F.2d 459,23 AFTR 898 |
| Parties | ANDERSON v. COMMISSIONER OF INTERNAL REVENUE. PRICHARD v. SAME. OLSEN v. SAME. |
| Court | U.S. Court of Appeals — Tenth Circuit |
Charles H. Garnett, of Oklahoma City, Okl., for petitioners.
Joseph M. Jones, Sp. Asst. to the Atty. Gen. (James W. Morris, Asst. Atty. Gen., and Sewall Key, Sp. Asst. to the Atty. Gen., on the brief), for respondent.
Before PHILLIPS, BRATTON, and HUXMAN, Circuit Judges.
On March 19, 1931, Oklahoma City Company,1 a corporation, entered into a written contract with L. H. Prichard. It recited that the Oklahoma Company was the owner of certain oil lands and royalties, working interests, and deferred oil payments in lands situated in Oklahoma County, Oklahoma; that the Oklahoma Company desired to sell and Prichard desired to purchase such properties. It provided that for and in consideration of the sum of ten dollars the Oklahoma Company should deliver to Prichard "good and valid instruments conveying to" Prichard the properties described in the contract, together with abstracts of title thereto certified to date, and certified copies of the contracts covering the working interests and oil payments; that on approval of such abstracts and contracts by Prichard's attorneys, Prichard should pay to the Oklahoma Company $50,000 in cash; that the Oklahoma Company should have and receive one-half the proceeds received by Prichard from the sale of oil and gas from such properties, and from the sale of any of the lands conveyed to him, until the Oklahoma Company had received $110,000 with interest at the rate of six per cent per annum from the date of the contract; that the Oklahoma Company should have a first lien against one-half of all oil and gas produced from the properties and on one-half of the lands conveyed to secure the payment of the $110,000, but that such lien should not affect the other one-half interest in the oil and gas produced and the lands conveyed; that purchasers of oil and gas, including pipe line companies, should make payments directly to Prichard; that Prichard should make payment of one-half of the revenues derived from the sale of oil, gas, and lands at the end of 90-day periods commencing May 25, 1931, by depositing same to the credit of the Oklahoma Company in the Tradesmens National Bank of Oklahoma City, Oklahoma, with full, complete, accurate, and itemized statements of such receipts; and that a release should be placed in escrow in such bank, and upon the payment of the $110,000, with interest, it should be delivered by the bank to Prichard.
Immediately upon the execution of the contract the properties and interests described therein were conveyed and transferred to Prichard.
On March 23, 1931, Prichard entered into a contract with the Oil Brokerage and Investment Company,2 a corporation, whereby, in consideration of $50,000, Prichard assigned and conveyed to the Investment Company an undivided one-half interest in the properties and interests described in the Prichard-Oklahoma Company contract. The contract with the Investment Company provided that it should receive all the revenues from such properties and interests payable to Prichard under the Prichard-Oklahoma Company contract until the Investment Company had received the sum of $50,000, and that after such sum had been paid the Investment Company and Prichard should each own an undivided one-half interest in such properties and interests, and that Prichard should execute and deliver to the Investment Company good and sufficient instruments conveying to it an undivided one-half interest in such properties and interests. It further provided that in the event the revenues from such properties were not sufficient to reimburse the Investment Company for the $50,000 advanced by it, Prichard should pay to the Investment Company one-half of the difference between the revenues produced and the sum of $50,000. Prichard used the $50,000 obtained from the Investment Company to make the cash payment to the Oklahoma Company.
In the transactions, Prichard acted for himself and for Anderson and Olsen. Their respective shares in the properties and interests were set forth in a declaration of trust dated March 23, 1931, as follows: Prichard, 45 per cent; Anderson, 45 per cent; and Olsen, 10 per cent.
During the years 1931 and 1932 Prichard received all the proceeds from sales of oil and gas produced from the properties. The gross proceeds in 1931 amounted to $55,833.70. Prichard paid one-half of that amount to the Oklahoma Company and one-half to the Investment Company. The gross proceeds in 1932 were $81,547.15. Prichard paid one-half thereof to the Oklahoma Company, $23,695.91 to the Investment Company, and distributed the remainder as follows: Investment Company, 50 per cent; Anderson, 22½ per cent; Prichard, 22½ per cent; and Olsen, 5 per cent.
Prichard reported as income from the sale of oil and gas produced from the properties acquired by him from the Oklahoma Company for the year 1932, $3,165.19. Anderson...
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