Ban-Mac, Inc. v. King County, BAN-MA
| Decision Date | 14 July 1966 |
| Docket Number | No. 37545,INC,BAN-MA,37545 |
| Citation | 69 Wn.2d 49,416 P.2d 694 |
| Parties | , a Washington corporation, Respondent, v. KING COUNTY, and A. A. Tremper, King County Treasurer, Appellants. . 2 |
| Court | Washington Supreme Court |
Charles O. Carroll, Pros. Atty., Seattle, James E. Kennedy, William L. Paul, Jr., Deputy Pros. Attys., for appellants.
Williams, Cole & Turner, James S. Turner, Seattle, for respondent.
This is another appeal by King County seeking to have this court construe RCW 28.45, so as to make taxable as a 'sale,' the transfer of title to real property which takes place when a corporate owner of real estate is dissolved, pursuant to the voluntary dissolution proceedings authorized by RCW 23.01.520, 23.01.530, inclusive, and the corporate real estate is distributed to the stockholders in kind, as surplus property.
Eleven years have passed since we first determined that such a transfer of ownership of real estate was not a taxable sale. Deer Park Pine Indus., Inc. v. Stevens County, 46 Wash.2d 852, 286 P.2d 98 (1955). This was because such transfer was not in consideration of anything of value, passing from the trustee to the stockholder. Instead, it was a transfer pursuant to the established principle of corporate law that ownership of corporate stock carried with it the inherent right to share in the distribution of surplus corporate assets remaining on hand after discharge of corporate liabilities and expenses of dissolution.
As stated in 19 C.J.S. Corporations § 1730, p. 1489 (1940), 'In the absence of statute, the legal title to property belonging to the corporate passes by operation of law to the stockholders, who are the beneficial owners through the corporation, and who take as tenants in common * * *.'
RCW 23.01.560 is merely a statutory enactment of that rule. It provides in part: 'Any surplus remaining after paying or adequately providing for all debts and liabilities of the corporation shall be distributed, either in cash or in kind, by the trustee or trustees to the shareholders according to their respective rights and preferences.'
We have applied this construction of the statutes subsequent to Deer Park, supra, in Doric Co. v. King County, 57 Wash.2d 640, 358 P.2d 972 (1961), and Estep v. King County, 66 Wash.Dec.2d 71, 401 P.2d 332 (1965).
In each of these cases, the factual pattern has varied to some extent. In King County's present appeal, there is a further slight variance in the fact pattern, but we feel that if several pages of this opinion were used in detailing and discussing the facts, we would still have to be faced with the application of the rule of law to which we have adhered for the past 11 years.
King County asserts that the manner in which the transaction was handled was 'purely a mechanical subterfuge;' in other words, a tax-saving device employed by corporate stockholders to avoid payment of the 1 per cent tax. If...
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