Gulf Oil Corporation v. Lewellyn
| Decision Date | 09 December 1918 |
| Docket Number | No. 310,310 |
| Citation | 39 S.Ct. 35,63 L.Ed. 133,248 U.S. 71 |
| Parties | GULF OIL CORPORATION v. LEWELLYN, Collector of Internal Revenue |
| Court | U.S. Supreme Court |
Messrs. William A. Seifert and James H. Beal, both of Pittsburgh, Pa., for plaintiff.
Mr. William C. Herron, of Washington, D. C., for respondent.
This is a suit to recover a tax levied upon certain dividends as income, under the Act of October 3, 1913, c. 16, section II, 38 Stat. 114, 166. The District Court gave judgment for the plaintiff, 242 Fed. 709, but this judgment was reversed by the Circuit Court of Appeals. 245 Fed. 1, 158 C. C. A. 1.
The facts may be abridged from the findings below as follows: The petitioner was a holding company owning all the stock in the other corporations concerned except the qualifying shares held by directors. These companies with others constituted a single enterprise, carried on by the petitioner, of producing, buying, transporting, refining and selling oil. The subsidiary companies had retained their earnings, although making some loans inter se, and all their funds were invested in properties or actually required to carry on the business, so that the debtor companies had no money available to pay their debts. In January, 1913, the petitioner decided to take over the previously accumulated earnings and surplus and did so in that year by votes of the companies that it controlled. But, disregarding the forms gone through, the result was merely that the petitioner became the holder of the debts previously due from one of its companies to another. It was no richer than before, but its property now was represented by stock in and debts due from its subsidiaries, whereas formerly it was represented by the stock alone, the change being effected by entries upon the respective companies' books. The earnings thus transferred had been accumulated and had been used as capital before the taxing year. Lynch v. Turrish, 247 U. S. 221, 228, 38 Sup. Ct. 537, 62 L. Ed. 1087.
We are of opinion that the decision of the District Court was right. It is true that the petitioner and its subsidiaries were distinct beings in contemplation of law, but the facts that they were related as parts of one enterprise, all owned by the petitioner, that the debts were all enterprise debts due to members, and that the dividends represented earnings that had been made in former years and that practically had been converted into capital,...
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