Graves v. COMMISSIONER OF INTERNAL REVENUE, Docket No. 22631.
| Decision Date | 25 May 1928 |
| Docket Number | Docket No. 22631. |
| Parties | A. H. GRAVES, H. D. CAMPBELL, AND MELVILLE C. HALL, AS A COMMITTEE FOR THE BENEFIT OF CREDITORS OF WHITTAKER & BACON, PETITIONERS, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Board of Tax Appeals |
Alfred P. Lowell, Esq., for the petitioners.
L. C. Mitchell, Esq., for the respondent.
This proceeding is for the redetermination of the liability which may be assessed against the petitioners, as transferees, under the provisions of section 280 of the Revenue Act of 1926. The respondent asserts that the petitioners are liable, as transferees of the assets of the estate of Robert Whittaker, for unpaid income tax, amounting to $1,954.92 for the calendar year 1919, which was assessed against Robert Whittaker. The petitioners allege that the respondent erred in determining that they were transferees of property of a taxpayer, and that the collection of the tax assessed is barred by operation of the statute of limitations.
FINDINGS OF FACT.
The petitioners constitute a committee which was formed to protect the interests of the creditors of Whittaker & Bacon, a partnership. This partnership was composed of Robert Whittaker and William R. Bacon, copartners, doing business at Boston and Northboro, Mass., and elsewhere, under the firm name and style of Whittaker & Bacon. Both partners are now dead.
In 1921 a corporation, known as Whittaker & Bacon, Inc., was formed and on August 3, 1921, the partnership transferred to it all of the partnership assets. The agreement authorizing the transfer reads as follows:
An agreement made this third day of August, 1921, by and between Robert Whittaker and William R. Bacon, copartners carrying on business at Boston and Northborough, Massachusetts and elsewhere under the firm name and style of Whittaker & Bacon (hereinafter called the Partners) of the one part and Whittaker & Bacon Incorporated, a Massachusetts corporation, (hereinafter called the Corporation) of the other part.
The Partners have offered to sell and convey to the Corporation all the real estate and all the business and other property and assets of the said partnership of Whittaker & Bacon and to accept in full payment therefor one hundred (100) full paid and non-assessable shares without par value in the capital stock of the Corporation and the agreement of the Corporation to assume and pay all the now existing partnership debts and liabilities of the said partnership, all as more particularly specified in the said offer to which reference is hereby made. The Corporation has accepted the said offer and this agreement is made in pursuance of the offer so made and accepted.
Now, therefore, in consideration of the premises and of the mutual promises herein contained it is hereby agreed and declared as follows:
1. The Partners, in consideration of the premises and of the agreements hereinafter contained to be performed by the Corporation, do hereby sell, convey, transfer, assign and set over unto the Corporation all the real estate, business, property and assets of the said partnership, including its good will, and also, without restricting the generality of the foregoing, all its plant, machinery, merchandise, stock-in-trade, cash on hand and in bank, bills and accounts receivable, bonds, notes, claims, demands, rights, equities, contracts, choses in action, trade names, trade-marks, patents, patent rights, licenses and privileges, and all other property, tangible and intangible, of every description and wherever situated, owned by the said partnership.
TO HAVE AND TO HOLD the same, with all the privileges and appurtenances thereto belonging, to the Corporation, its successors and assigns forever.
2. The Partners hereby jointly and severally constitute and appoint the Corporation, its successors and assigns, the true and lawful attorney and attorneys irrevocable of the Partners; in their name or in the name of either of the Partners but at the expense and for the benefit of the Corporation, to demand and receive any and all the business property and assets hereby transferred and assigned, or intended so to be, and to give receipts and releases therefor or in respect of the same or any part thereof, and to institute and prosecute in the name of the Partners or of either of them but for the benefit of the Corporation any and all proceedings at law, in equity or otherwise to collect or enforce any claim, or right hereby transferred and assigned, or intended to be, and to defend and compromise any and all actions, suits or proceedings against the Partners or in respect of any of the property or assets hereby transferred and assigned, or intended so to be, and to do all acts and things in respect of said property and assets which the Corporation deems desirable, but without expense to the Partners.
3. And the Partners jointly and severally hereby covenant with the Corporation at the expense of the Corporation to do, execute, acknowledge and deliver all such acts, deeds, assignments and other instruments in writing for the better assuring, conveying and confirming unto the Corporation, its successors and assigns, all and singular the property and assets hereby transferred and assigned, or intended so to be, as the Corporation shall reasonably require.
4. In consideration of the premises the Corporation hereby assumes and agrees to pay all the now existing partnership debts and liabilities of the said partnership.
5. This agreement shall bind and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors and assigns.
IN WITNESS WHEREOF the said Robert Whittaker and William R. Bacon, co-partners as aforesaid, have hereunto set their hands and seals and the said Whittaker & Bacon Incorporated has caused its corporate seal to be hereto affixed and these presents to be executed and delivered in its name by its president and its treasurer hereunto duly authorized the day and year first above written. Executed in duplicate.
ROBERT WHITTAKER (SEAL) WM. R. BACON Co-partners doing business under the firm name and style of Whittaker & Bacon. WHITTAKER & BACON INCORPORATED By ROBERT WHITTAKER, President. WM. R. BACON, Treasurer.
The total amount of capital stock issued by the corporation was 100 shares. All of this stock was without par value and was issued to the partnership in the form of two certificates of 50 shares each. Each certificate bore on its face the following:
This certifies that Robert Whittaker and William R. Bacon, co-partners, carrying on business under the firm name and style of Whittaker & Bacon, is the owner of fifty fully paid shares, without par value, of the capital stock of Whittaker & Bacon, Incorporated.
Thereafter, on December 22, 1921, the partnership transferred the 100 shares of stock to the petitioners in accordance with the following agreement:
AN AGREEMENT, made this 22nd day of December, 1921, by and between A. Howard Graves, Henry D. Campbell and Melville C. Hall, as the Committee under a certain Creditors' Agreement dated July 22, 1921, and relating to the firm of Whittaker & Bacon, but not individually (hereinafter called the Committee), of the one part, and Robert Whittaker and William R. Bacon, co-partners doing business at Boston and Northboro, Massachusetts, and elsewhere under the firm name and style of Whittaker & Bacon (hereinafter called the Partners), of the other part.
The Partners have sold and conveyed to Whittaker & Bacon Incorporated, a Massachusetts corporation (hereinafter called the Corporation), all the business, property and assets of the partnership of Whittaker & Bacon, and have received as part of the consideration therefor one hundred (100) full paid and non-assessable shares without par value in the capital stock of the Corporation; and the Corporation has assumed and agreed to pay as of August 3, 1921, all the then existing debts and liabilities of the partnership. The Partners are about to transfer the said shares to the Committee and together therewith the management so far as the Committee may deem desirable of the business property and affairs of the Corporation.
NOW, THEREFORE, in consideration of the premises and of the mutual promises herein contained it is hereby agreed and declared as follows:—
1. The Partners hereby agree to transfer to the Committee or its nominee or nominees the said one hundred (100) full paid and non-assessable shares without par value in the capital stock of the Corporation.
2. The Committee, or their nominee or nominees, may conduct and manage the business, property and affairs of the Corporation in such manner as they may deem proper and for the best interests of the "Depositors" under the said Creditors' Agreement, and may cause or permit all or any of the members of the Committee, or their nominee or nominees, or any other person or persons to become and act as directors and/or officers of the Corporation and may generally act or cause any other persons to act with reference to the Corporation and its business, property and affairs as though the Committee were the absolute owners of the said shares; and the Committee may cause the Corporation to be liquidated if in their discretion they shall deem it for the best interests of the "Depositors" under the said Creditors' Agreement; and the Committee may in their discretion pledge, sell, or otherwise dispose of all or any of the said shares for the purpose of meeting obligations of the Committee or of the said partnership of Whittaker & Bacon or otherwise carrying out the purposes of the said Creditors' Agreement; provided, however, that in event of a proposed sale of any of the said shares of stock, the Committee shall give notice in writing to the Partners stating the price and terms on which it is proposed to sell, and the Partners shall have the right, within fifteen days of the receipt of said notice, to purchase said shares on terms and...
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