First Trust Co. of St. Paul v. United States

• Decision Date: 09 June 1936
• Docket Number: No. 2809.,2809.
• Citation: 15 F. Supp. 634
• Parties: FIRST TRUST CO. OF ST. PAUL v. UNITED STATES.
• Court: U.S. District Court — District of Minnesota

15 F. Supp. 634

FIRST TRUST CO. OF ST. PAUL v. UNITED STATES.

No. 2809.

District Court, D. Minnesota, Third Division.

June 9, 1936.

Kellogg, Morgan, Chase, Carter & Headley, of St. Paul, Minn., for plaintiff.

George F. Sullivan, U. S. Atty., and Linus J. Hammond, Asst. U. S. Atty., both of St. Paul, Minn.

MOLYNEAUX, District Judge.

This suit was brought to recover the sum of $500 paid by the plaintiff to the defendant as a jeopardy assessment on November 23, 1934, pursuant to "Notice and Demand for Taxes" dated November 14, 1934.

The assessment was made pursuant to Schedule A2 of title 8 of the Revenue Act of 1926 (section 800 et seq.), as amended by section 722(a) of the Revenue Act of 1932 (26 U.S.C.A. § 900 note), which provides as follows:

"2. Capital stock (and similar interests), issue: On each original issue, whether on organization or reorganization, of shares or certificates of stock, or of profits, or of interest in property or accumulations, by any corporation, or by any investment trust or similar organization (or by any person on behalf of such investment trust or similar organization) holding or dealing in any of the instruments mentioned or described in this subdivision or subdivision 1 (whether or not such investment trust or similar organization constitutes a corporation within the meaning of this Act), on each $100 of par or face value or fraction thereof of the certificates issued by such corporation or by such investment trust or similar organization (or of the shares where no certificates were issued), 10 cents: Provided, That where such shares or certificates are issued without par or face value, the tax shall be 10 cents per share (corporate share, or investment trust or other organization share, as the case may be), unless the actual value is in excess of $100 per share, in which case the tax shall be 10 cents on each $100 of actual value or fraction thereof of such certificates (or of the shares where no certificates were issued), or unless the actual value is less than $100 per share, in which case the tax shall be 2 cents on each $90 of actual value, or fraction thereof, of such certificates (or of the shares where no certificates were issued).

"The stamps representing the tax imposed by this subdivision shall be attached to the stock books or corresponding records of the organization and not to the certificates issued."

Prior to November 5, 1930, Northwestern Trust Company and Merchants Trust Company were trust companies in St. Paul, Minn., duly incorporated under the Minnesota laws: On April 8, 1925, Minnesota enacted chapter 156, Session Laws of Minnesota for 1925, which is also found as sections 7699-5 to 7699-11, Mason's Minn. St.1927. This statute authorizes (section 7699-5) any two or more trust companies operating in the same city or village to consolidate into a consolidated trust company and provides all such consolidation shall be effected in the manner provided in the statute.

Section 7699-6 authorizes the respective boards of directors of such consolidating corporations by a majority vote of all their members to agree upon such consolidation and to prescribe the terms and conditions thereof; mode of carrying it into effect; the authorized capital stock of the consolidated corporation, which shall not exceed the aggregate authorized capital stock of all the corporations that are parties thereto; and the name of the consolidated corporation.

Section 7699-7 provides that the consolidated agreement shall be submitted to the superintendent of banks for his approval and shall not be effective until so approved by him.

Section 7699-8 provides that, either before or after such consolidated agreement has been approved by the superintendent of banks, it shall be submitted to the stockholders of each of such corporations at a meeting thereof called for such purpose, and that it shall not become binding upon such corporation until it shall have been approved at each of said meetings by the vote or ballot of the stockholders holding at least a majority of the stock of the respective corporations. A provision is also made whereby any dissenting stockholder may have his stock appraised and require the new corporation to pay him such appraised value. Section 7699-11.

Section 7699-9 provides:

"Upon the consolidation of any such corporation, with any one or more corporations, into a consolidated corporation, as herein provided, the corporate existence of each former corporation shall be merged into that of the consolidated corporation, and all and singular its rights, privileges, and franchises, and its right, title and interest in and to all property of whatsoever kind, whether real, personal, or mixed, and all things in action, and every right, privilege, interest or asset of conceivable value or benefit then existing which would inure to it under an unmerged or unconsolidated existence shall be deemed fully and finally transferred to and vested in the consolidated corporation without further act or deed and such last mentioned corporation shall have and hold the same in its own right as fully as the same was possessed and held by the former corporation from which it was, by operations of this act, transferred. Its rights, obligations, and relations to any person, creditor, depositor, trustee, or beneficiary of any Trust, shall remain unimpaired and the corporation into which it shall have been consolidated shall succeed to such relations, obligations, trusts, and liabilities and shall execute and perform all such trusts in the same manner as though it had itself assumed the relation or trust, or incurred the obligation or liability; and its liabilities and obligations to creditors existing for any cause whatsoever shall not be impaired by such consolidation, nor shall any obligation or liability of any stockholder in any corporation, which is party to such consolidation, be affected by any such consolidation, but such obligations and liabilities shall continue as fully and to the same extent as existed before such consolidation. The consolidated corporation shall become, without further act or deed, the successor of the consolidating corporations in any and all fiduciary capacities, in which each such consolidated corporation may be acting at the time of such consolidation, and shall be liable to all beneficiaries as fully as if such consolidating corporations had continued its separate corporate existence. If any consolidating corporation shall be nominated and appointed or shall have been nominated or appointed as executor, guardian, administrator, agent or trustee, or in any other trust relation of fiduciary capacities in any will, trust agreement, trust conveyance, or any other conveyance, order or judgment of any Court, or any other instrument whatsoever prior to such consolidation, (even though such will or other instrument shall not become operative or effective until after such consolidation shall have become effective) every such office, trust relationship, fiduciary capacity, and all of the rights, powers, privileges, duties, discretions, and responsibilities so provided to devolve upon, vest in, or inure to the corporation so nominated or appointed, shall fully and in every respect devolve upon, vest in, and inure to, and be exercised by the consolidated corporation, whether there be one or more successive mergers or consolidations."

Pursuant to this agreement of consolidation each of the old companies conveyed all of its assets to the consolidated trust company, and the stockholders of each company surrendered their stock and received from the new corporation stock of that corporation, as stipulated in the agreement of consolidation.

The agreement provided that the name of the consolidated company should be the First Trust Company of St. Paul, that the authorized capital stock of the consolidated company should be 10,000 shares of $100 each; that of these 10,000 shares, 8,000 should be issued and distributed to the stockholders of the Merchant Trust Company, St. Paul, share for share, and that 2,000 thereof should be issued and distributed to the stockholders of the Northwestern Trust Company, at the rate of 1 share for 5; that each...