In re National Public Utility Investing Corporation

• Decision Date: 05 August 1935
• Docket Number: No. 384.,384.
• Citation: 79 F.2d 302
• Parties: In re NATIONAL PUBLIC UTILITY INVESTING CORPORATION. HOPSON v. UNITED STATES.
• Court: U.S. Court of Appeals — Second Circuit

79 F.2d 302 (1935)

In re NATIONAL PUBLIC UTILITY INVESTING CORPORATION HOPSON v. UNITED STATES.

No. 384.

Circuit Court of Appeals, Second Circuit.

August 5, 1935.

Travis, Brownback & Paxson, of New York City (George M. Le Pine and Edward F. Huber, both of New York City, of counsel), for appellant.

Martin Conboy, U. S. Atty., of New York City. (John F. Davidson, Asst. U. S. Atty., of New York City, of counsel), for the United States.

Before MANTON, SWAN, and CHASE, Circuit Judges.

CHASE, Circuit Judge.

During an investigation by the government of the tax liability for the years 1929 to 1933, inclusive, of National Public Utility Investing Corporation, organized under the laws of Delaware, the appellant was duly summoned on June 11, 1934, to produce, pursuant to the provisions of section 618 of the Revenue Act of 1928 (26 USCA § 1247), certain designated books, papers, and records of Utilities Investing Company, Limited, General Public Utilities Company, Limited, International Public Utility Investing Company, Limited, North American Development Company, Limited, all organized under the laws of Newfoundland, and Public Utility & Financial Securities Corporation of Delaware.

The matter was referred to a special master whose report was to the effect that the documents to be produced were in Canada but subject to the control of the appellant. Exceptions to this report were overruled, and the motion to vacate the order denied.

It is undisputed that, when the ex parte order was made on September 8, 1934, the appellant was the president of National Public Utility Investing Corporation as well as one of its directors and its largest stockholder. All of its stock was held by or for the appellant and his near relatives and by or for H. C. Hopson & Company, a partnership consisting of the appellant and members of his immediate family. Its business was conducted from the appellant's own office at No. 61 Broadway, New York City. During 1928, 1929, and 1930, the four Newfoundland companies above named were organized. International Public Utility Investing Corporation, the predecessor of National Public Utility Investing Corporation, supplied all of their capital and owned all of their stock, except three shares, outstanding from the time they were organized until December 11, 1933. Apparently they were but a part of a holding company set-up and were not actively engaged in business. Until some time in August, 1933, their books were kept at the appellant's office in New York. National Public Utility Investing Corporation was merged with International Public Utility Investing Corporation on December 27, 1933, and on January 22, 1934, the name of International Public Utility Investing Corporation was changed by charter amendment to National Public Utility Investing Corporation. Hereafter, this name will be used for convenience in referring to it and its predecessors indiscriminately.

Public Utility & Financial Securities Corporation, whose books the appellant was also ordered to produce, was organized under the laws of Delaware in December, 1928. National Public Investing Corporation owned practically all of its stock. It soon sold the stock to one of the Newfoundland companies, reacquired it in August, 1929, and in December, 1929, sold it to North American Development Company, Limited, another of the Newfoundland companies. In April, 1931, Public Utility & Financial Securities Corporation was dissolved, and all of its assets together with its books and records were transferred to North American Development Company, Limited.

Until some time in August, 1933, all the books and records of these corporations which the appellant has been ordered to produce were at his office in New York. In that month they were taken to Canada for use, so it is now claimed, in connection with the liquidation of the Newfoundland companies, and are now all in the possession of one Gordon McL. Daley, in Halifax, Nova Scotia, who is the attorney for the liquidator of the Newfoundland companies, R. E. Fradsham, of St. Stephen, New Brunswick.

The affidavit of Daley discloses that he is not and never has been the attorney for the appellant or subject to his direction or control, that he is bound to retain possession of the books and...