Burnet v. Lexington Ice & Coal Co.

• Decision Date: 10 January 1933
• Docket Number: No. 3391.,3391.
• Parties: BURNET, Commissioner of Internal Revenue, v. LEXINGTON ICE & COAL CO.
• Court: U.S. Court of Appeals — Fourth Circuit

62 F.2d 906 (1933)

BURNET, Commissioner of Internal Revenue, v. LEXINGTON ICE & COAL CO.

No. 3391.

Circuit Court of Appeals, Fourth Circuit.

January 10, 1933.

Francis H. Horan, Sp. Asst. to Atty. Gen. (G. A. Youngquist, Asst. Atty. Gen., Sewall Key, Sp. Asst. to Atty. Gen., and C. M. Charest, Gen. Counsel, Bureau of Internal Revenue, and Byron M. Coon, Sp. Atty., Bureau of Internal Revenue, both of Washington, D. C., on the brief), for petitioner.

E. S. Parker, Jr., of Greensboro, N. C., for respondent.

Before NORTHCOTT and SOPER, Circuit Judges, and CHESNUT, District Judge.

NORTHCOTT, Circuit Judge.

This is a petition to review a decision of the United States Board of Tax Appeals, which decision is reported in 23 B. T. A. 463.

Petition for review was taken from a decision of the Board of Tax Appeals entered on May 29, 1931. A motion to vacate that decision was denied by the Board of Tax Appeals on December 1, 1931. The case is brought to this court by petition for review filed May 27, 1932, pursuant to the provisions of sections 1001-1003 of the Revenue Act of 1926, c. 27, 44 Stat. 9, 109, 110 (26 USCA §§ 1225, 1226, and § 1224 and note).

On November 6, 1926, respondent corporation had six stockholders, of whom five constituted its board of directors. T. S. Eanes was the principal stockholder, and owned 122 shares out of a total of 165 shares. Eanes was secretary and treasurer, and was in the active management and control of the corporation's property.

On November 6, 1926, all of the stockholders met and adopted the following resolution: "Resolved, that the Board of Directors be instructed to take such action as in their opinion will be to the best interests of the stockholders, looking to the liquidation of this corporation."

Thereafter, on the same day, the board of directors met and adopted a resolution in the following terms:

"Resolved, that the Lexington Ice & Coal Co. cease operations as a corporation on December 14, 1926, and that Mr. T. S. Eanes is hereby appointed as agent for the stockholders to receive all assets in kind from said corporation, and that he is hereby instructed to make such disposition of the said assets as he may see fit. That the officers of the corporation are hereby instructed to make deed to the real estate either to T. S. Eanes, Agent for the stockholders or direct to any party named by the said Mr. Eanes.

"Liquidation dividends shall be paid by Mr. Eanes, as funds become available, to the stockholders of record at date of dissolution according to their various holdings."

After the adoption of the resolutions of November 6, 1926, there was no other meeting of either the stockholders or the board of directors.

On November 16, 1926, Eanes (signing in his individual capacity) entered into a contract with Southeastern Ice Utilities Corporation (hereinafter called the Utilities Corporation) to sell to it certain property, which, with minor exceptions, embraced all of the assets of the respondent.

On December 11, 1926, Eanes, signing "T. S. Eanes, Trustee," delivered to the Utilities Corporation a bill of sale to the property described in the contract of November 16, 1926. On the same day a deed for the real estate of the taxpayer was executed by the taxpayer corporation by A. N. Neese as president, and T. S. Eanes as secretary, and a bill of sale of the property mentioned in the contract of November 16, 1926, and in the bill of sale executed by Eanes on that day, was executed in the name of the taxpayer by Neese as president, and Eanes as secretary.

Payment for the property so conveyed to the Utilities Corporation, in the amount of $38,500, was made in 1926 by check payable in the name of the taxpayer corporation and deposited in its name. Such amount was paid out by checks in the corporation's name; first to creditors, and then ratably to the stockholders.

The corporation was finally dissolved in May, 1927.

The Commissioner of Internal Revenue determined that the taxpayer had sold its property and realized a profit thereon, and assessed a deficiency in the amount of $2,796.65. The Board of Tax Appeals held that the assets of the respondent were transferred to Eanes before the sale was made to the Utilities Corporation, and entered its order of no deficiency.

Thereafter a motion to vacate that decision was made on the ground that the Board in the meanwhile had declared that it had wrongly decided this case. That motion was denied.

The first question presented is as to the jurisdiction of this court to hear the appeal; it being urged on behalf of the respondent that the petition for review was filed too late and was not filed in accordance with section 1001 (a) of the Revenue Act of 1926 (26 USCA § 1224 (a). This section reads as follows: "(a) The decision of the board rendered after February 26, 1926 the enactment of this act (except as provided in subdivision (j) of section 1064 283 and in subdivision (h) of section 1118 318 of this title), may be reviewed by a Circuit Court of Appeals, or the Court of Appeals of the District of Columbia, as hereinafter provided, if a petition for such review is filed by either the commissioner or the taxpayer within six months after the decision is rendered."

The exceptions referred to in the section above quoted have no bearing upon the questions now being discussed.

Section 601 of the Revenue Act of 1928 (26 USCA § 1217 (d) provides: "(d) A decision of the Board (except a decision dismissing a proceeding for lack of jurisdiction) shall be held to be rendered upon the date than an order specifying the amount of the deficiency is entered in the records of the Board. If the Board dismisses a proceeding for reasons other than lack of jurisdiction and is unable from the record to determine the amount of the deficiency determined by the Commissioner, or if the Board dismisses a proceeding for lack of jurisdiction, an order to that effect shall be entered in the records of the Board, and the decision of the Board shall be held to be rendered upon the date of such entry."

We are of the opinion that the petition was filed in time. A similar question was before the Circuit Court of Appeals for the Seventh Circuit, Griffiths v. Commissioner, 50 F.(2d) 782, 784, and, in considering it, the court said:

"Respondent has filed a motion to dismiss the appeal on the ground that the petition for review of the Board's order of redetermination was received and lodged with the Board on September 30, 1929, which was one day after the expiration of six months from the date of the order of redetermination, and hence was beyond the time granted by statute in which a petition for review may be filed. Sections 1001, 1005 (a), Revenue Act of 1926, c. 27, 44 Stat. 9 (26 USCA §§ 1224, 1228 (a).

"It is petitioner's contention, however, that since his petition for a rehearing filed on July 8, 1929, was not denied until September 20, 1929, his time for filing a petition for review was thereby extended for six months from the last-named date. It is conceded by respondent that in the federal courts the filing of a motion to reopen or vacate a judgment or decision stops the running of the time for appeal, and that it begins to run anew from the time the motion is disposed of. Morse v. United States, 270 U. S. 151, 46 S. Ct. 241, 70 L. Ed. 518. Respondent insists, however, that this well-established practice is not sufficient to override the plain words of the statutes, which provide that the appeal must be taken within six months after the decision is rendered, and that the decision shall become final upon the expiration of the time allowed for filing a petition for review, if no such petition has been duly filed within such time.

"With respondent's contention we are unable to agree, and we see no reason why the general and uniform rule should not be applied to these statutes in the same manner as applied to other similar statutes. In Morse v. United States, supra, the statute under discussion provides that all appeals from the Court of Claims shall be taken within ninety days after judgment is rendered; and if a motion for a new trial or a petition for a rehearing was duly and seasonably filed it suspends the running of the statute, and the time within which the proceeding must be initiated begins from the date of the denial of either the motion or petition."

And in the Morse Case, above referred to, Chief...