S. Hirsch Distilling Co. v. COMMISSIONER OF INTERNAL REVENUE
| Decision Date | 09 January 1929 |
| Docket Number | Docket No. 15816. |
| Citation | 14 BTA 1073 |
| Parties | S. HIRSCH DISTILLING CO., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Board of Tax Appeals |
James H. Sykes, Esq., for the petitioner.
John D. Foley, Esq., for the respondent.
The respondent has determined a deficiency against the S. Hirsch Distilling Co. in the amount of $27,638.59 for the calendar year 1918. A petition was filed with this Board alleging that the respondent's determination was erroneous in that the statute of limitations had run against the proposed deficiency. The respondent filed his answer and the proceeding came on for hearing on the merits, the sole issue raised by the pleadings being that of the statute of limitations. At the close of the hearing a motion was made wherein it was moved to abate the proceeding and find that there was no deficiency, upon the ground that the S. Hirsch Distilling Co. was dissolved under the laws of the State of Missouri on June 30, 1920.
FINDINGS OF FACT.
On June 30, 1920, the Circuit Court of Jackson County, Missouri, issued the following decree, to wit:
BE IT REMEMBERED that on the 44th day of the regular May Term, 1920, of the Circuit Court of Jackson County, Missouri, at Kansas City, the same being the 30th day of June 1920, the following proceedings were had and made of record before Hon. Clarence A. Burney Presiding Judge of Assignment Division in the cause entitled:
In the matter of the Dissolution, of S. Hirsch Distilling Company, | a corporation. | 146475.
Now on this day comes S. Hirsch Distilling Company, a corporation, by its attorney and submits its cause to the Court upon the pleadings and proof adduced; and the court being fully advised doth find that a resolution was passed by all Stockholders of the S. Hirsch Distilling Company favoring a dissolution of said corporation; that there are no assets or liability; that the corporation does not own any real or personal property and that it has no creditors, judgment, mortgage, pledge, or otherwise against it.
Whereupon, it is ordered, adjudged and decreed by the court that the corporation, to wit: S. Hirsch Distilling Company be dissolved and the same is by the court hereby dissolved.
On November 20, 1924, the following instrument was executed and filed with the Bureau of Internal Revenue:
IT: E: SM JCY: A-16855 November 20, 1924. (Date)
INCOME AND PROFITS TAX WAIVER.
In pursuance of the provisions of existing Internal Revenue Laws, S. Hirsch Distilling Company, a taxpayer, of Kansas City, Missouri, and the Commissioner of Internal Revenue, hereby consent to extend the period prescribed by law, for a determination, assessment, and collection of the amount of income, excess-profits, or war-profits taxes due under any return made by or on behalf of said taxpayer for the year 1918 under the Revenue Act of 1924, or under prior income, excess-profits, or war-profits tax Acts, or under Section 38 of the Act entitled "An Act to provide revenue, equalize duties, and encourage the industries of the United States, and for other purposes," approved August 5, 1909. This waiver is in effect from the date it is signed by the taxpayer and will remain in effect for a period of one year after the expiration of the statutory period of limitation within which assessments of taxes may be made for the year or years mentioned, or the statutory period of limitation as extended by Section 277 (b) of the Revenue Act of 1924, or by any waivers already on file with the Bureau.
S. HIRSCH DISTILLING COMPANY Taxpayer. (Signed) By C. A. HIRSCH, Vice President. SEAL. (Signed) D. H. BLAIR, Commissioner. N. B.
On March 12, 1926, the respondent addressed a letter to the S. Hirsch Distilling Co. of Kansas City, Mo., proposing deficiencies and an overassessment against such addressee as follows:
-------------------------------------------------------------------------------
Year or period. | Deficiency | Overassessment
| in tax |
-------------------------------------------------|------------|----------------
Calendar year 1918 _____________________________ | $27,638.59 | _______________
Calendar year 1919 _____________________________ | __________ | $13,180.28
6-month period ended June 30, 1920 _____________ | 28.52 | _______________
| ---------- | ---------------
| 27,667.11 | 13,180.28
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On May 10, 1926, a petition captioned under the name of the dissolved corporation was filed with this Board. Clarence A. Hirsch executed the jurat of such petition, which recited, in part, that "Clarence A. Hirsch, Vice-President S Hirsch Distilling Company, hereby duly sworn, says that he is the petitioner above-named; * * *."
On October 24, 1928, counsel for the petitioner filed a motion, the concluding paragraph of which is as follows:
WHEREFORE, the S. Hirsch Distilling Company, the dissolved corporation, moves this Honorable Board to abate this proceeding and find there is no deficiency against this corporation which was dissolved under the laws of the State of Missouri on June 30, 1920 and will ever pray.
It has been brought to our attention that the S. Hirsch Distilling Co. was dissolved on June 30, 1920, and we are asked to abate this proceeding and to find that there is no deficiency because of such dissolution.
In Oklahoma Natural Gas Co. v. Oklahoma, 273 U. S. 257, decided February 21, 1927, the counsel for both parties moved the United States Supreme Court to substitute a new party appellant for the Oklahoma Gas Co., which latter company had been duly and legally dissolved as a corporation by decree of the District Court of Tulsa County, Oklahoma, after the writ of error to the Supreme Court had been allowed. In denying the motions the Supreme Court, speaking through Mr. Chief Justice Taft, said:
There is no specific provision in our rules for the substitution as a party litigant of a successor to a dissolved corporation. It is well settled that at common law and in the federal jurisdiction a corporation which has been dissolved is as if it did not exist, and the result of the dissolution can not be distinguished from the death of a natural person in its effect. Mumma v. Potomac Company, 8 Pet. 281; National Bank v. Colby, 21 Wall. 609; Pendleton v. Russell, 144 U. S. 640; Bank of United States v. McLaughlin, Fed. Case No. 928; Greeley v. Smith, Fed. Cases 5748; Walters v. Western & Atlantic Railroad Co., 69 Fed. 679; Marion Phosphate Company v. Perry, 74 Fed. 425; Board of Councilmen of the City of Frankfort v. Deposit Bank of Frankfort. 120 Fed. 165; United States v. Spokane Mill Company, 206 Fed. 999. See also Edison Co. v. Westinghouse, 34 Fed. 232 and Edison Co. v. United States Lighting Co., 52 Fed. 300. It follows therefore that, as the death of the natural person abates all pending litigation to which such a person is a party, dissolution of a corporation at common law, abates all litigation in which the corporation is appearing either as plaintiff or defendant. To allow actions to continue would be to continue the existence of the corporation pro hac vice. But corporations exist for specific purposes, and only by legislative act, so that if the life of the corporation is to continue even only for litigating purposes it is necessary that there should be some statutory authority for the prolongation. The matter is really not procedural or controlled by the rules of the court in which the litigation pends. It concerns the fundamental law of the corporation enacted by the State which brought the corporation into being.
The S. Hirsch Distilling Co. was brought into being under the laws of the State of Missouri. The 1919 Revised Statutes of that State, were in force at the date of dissolution of the corporation. Section 9755 of those statutes provides that, upon the dissolution of any corporation, —
the president and directors or managers of the affairs of said corporation at the time of its dissolution, by whatever name they may be known in law, shall be trustees of such corporation, with full powers to settle the affairs, collect the outstanding debts and divide the moneys and other property among the stockholders, after paying the debts due and owing by such corporation at the time of its dissolution, as far as such money and property will enable them; to sue for and recover such debts and property by the name of the trustees of such corporation, describing it by its corporate name, and may be sued by the same; and such trustees shall be jointly and severally responsible to the creditors and stockholders of such corporation to the extent of its property and effects that shall have come into their hands.
Section 9756 provides in substance that whenever the...
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