Warren Service Corp. v. Commissioner of Internal Rev., No. 204.
| Court | United States Courts of Appeals. United States Court of Appeals (2nd Circuit) |
| Writing for the Court | SWAN, AUGUSTUS N. HAND, and PATTERSON, Circuit |
| Citation | 110 F.2d 723 |
| Parties | WARREN SERVICE CORPORATION v. COMMISSIONER OF INTERNAL REVENUE. |
| Docket Number | No. 204. |
| Decision Date | 25 March 1940 |
110 F.2d 723 (1940)
WARREN SERVICE CORPORATION
v.
COMMISSIONER OF INTERNAL REVENUE.
No. 204.
Circuit Court of Appeals, Second Circuit.
March 25, 1940.
Robert E. Coulson, James K. Polk, and Talbert W. Sprague, all of New York City, for petitioner.
Samuel O. Clark, Jr., Asst. Atty. Gen., and Sewall Key and Maurice J. Mahoney, Sp. Assts. to Atty. Gen., for respondent.
Before SWAN, AUGUSTUS N. HAND, and PATTERSON, Circuit Judges.
SWAN, Circuit Judge.
In August 1926 Warren Service Corporation, as lessor, entered into an agreement
110 F.2d 724
of lease with Warren-Nash Motor Corporation, as lessee, by the terms of which the lessor was to acquire certain real estate, erect thereon a building of specialized design and lease the premises for a fifteen year term at an average annual net rental of $125,000. The land cost $300,000 and the cost of erecting the building was nearly $800,000 more. The taxpayer would not have made this investment had it not previously obtained the commitment of Warren-Nash Motor Corporation to pay a relatively high rental over a long period, as embodied in the lease. The amount of net rental that could have been obtained in 1926 from another tenant was not more than $80,000 per year. The lease provided that the lessee should pay to the lessor $125,000, as security for the lessee's performance of its obligations, and that the lessor should have unrestricted use of the said sum and should repay it when the lease expired on August 1, 1941, if the lessee had faithfully performed its obligations, or having defaulted therein had cured such default. This sum was duly paid to the lessor in 1926 and was used by it in constructing the building upon the leased premises. When the lease was made the Warren-Nash Motor Corporation was a large and successful distributor of Nash automobiles, but in 1929 it began to lose money and in 1933 it was notified by Nash Motor Company that its distributor franchise would be terminated unless its operating expenses were reduced. Thereafter, on May 1, 1933, it was agreed between the lessor and the lessee that the lease should be forthwith cancelled and the lessee's interest in the security payment of $125,000 should be released, provided the taxpayer would hold such sum for the protection of the holders of the taxpayer's 6 per cent. secured notes until they should have been paid in full. The net rentals received by the taxpayer prior to cancellation of the lease aggregated about $894,000. On the date the lease was canceled the property was relet for a gross annual rental of $30,000, which was later increased to $40,000 for a five year term ending October 1, 1942. These rentals were the highest then obtainable for the property. The land and building are still owned by the taxpayer
In its income tax return for 1933 the taxpayer included as...
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16 practice notes
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Boyce v. United States, No. 370-66.
...Realty Corp. v. Commissioner of Internal Revenue, 128 F.2d 968 (5th Cir. 1942); Warren Service Corp. v. Commissioner of Internal Revenue, 110 F.2d 723 (2d Cir. 1940). If, however, the security deposits are, in reality, prepayments of rent received at the beginning of the lease-term, they ar......
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Angelus Funeral Home v. CIR, No. 22118-A.
...374 F.2d 161; Zaconick v. McKee, 5 Cir., 1962, 310 F.2d 12 (bankruptcy proceeding); Warren Service Corp. v. Commissioner, 2 Cir., 1940, 110 F.2d 723. 5 Angelus refers to an obligation to sell a casket, but that obligation is contingent upon payment of the full cost of the "funeral services,......
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FRANKLIN PIONEER CORPORATION v. Glenn, No. 749.
...337, 73 L.Ed. 720; Miami Beach Bay Shore Co. v. Commissioner, 5 Cir., 136 F. 2d 408, 409; Warren Service Corp. v. Commissioner, 2 Cir., 110 F.2d 723, 725; Rassieur v. Commissioner, 8 Cir., 129 F.2d 820, 826; See also United States v. S. S. White Dental Mfg. Co., 274 U.S. 398, 401, 47 S.Ct. ......
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Oak Industries, Inc. v. Commissioner, Docket No. 37866-84.
...the lessee defaults. Mantell v. Commissioner Dec. 18,733, 17 T.C. 1143 (1952); Warren Service Corp. v. Commissioner 40-1 USTC ¶ 9333, 110 F.2d 723 (2d Cir. 1940), affg. on this ground Dec. 10,684 39 B.T.A. 856 The Commissioner argued that the rental cases distinguish between sums that secur......
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16 cases
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Boyce v. United States, No. 370-66.
...Realty Corp. v. Commissioner of Internal Revenue, 128 F.2d 968 (5th Cir. 1942); Warren Service Corp. v. Commissioner of Internal Revenue, 110 F.2d 723 (2d Cir. 1940). If, however, the security deposits are, in reality, prepayments of rent received at the beginning of the lease-term, they ar......
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Angelus Funeral Home v. CIR, No. 22118-A.
...374 F.2d 161; Zaconick v. McKee, 5 Cir., 1962, 310 F.2d 12 (bankruptcy proceeding); Warren Service Corp. v. Commissioner, 2 Cir., 1940, 110 F.2d 723. 5 Angelus refers to an obligation to sell a casket, but that obligation is contingent upon payment of the full cost of the "funeral services,......
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FRANKLIN PIONEER CORPORATION v. Glenn, No. 749.
...337, 73 L.Ed. 720; Miami Beach Bay Shore Co. v. Commissioner, 5 Cir., 136 F. 2d 408, 409; Warren Service Corp. v. Commissioner, 2 Cir., 110 F.2d 723, 725; Rassieur v. Commissioner, 8 Cir., 129 F.2d 820, 826; See also United States v. S. S. White Dental Mfg. Co., 274 U.S. 398, 401, 47 S.Ct. ......
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Oak Industries, Inc. v. Commissioner, Docket No. 37866-84.
...the lessee defaults. Mantell v. Commissioner Dec. 18,733, 17 T.C. 1143 (1952); Warren Service Corp. v. Commissioner 40-1 USTC ¶ 9333, 110 F.2d 723 (2d Cir. 1940), affg. on this ground Dec. 10,684 39 B.T.A. 856 The Commissioner argued that the rental cases distinguish between sums that secur......
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