Weber v. Rasquin
| Citation | 101 F.2d 62 |
| Decision Date | 09 January 1939 |
| Docket Number | No. 196.,196. |
| Parties | WEBER v. RASQUIN, Collector of Internal Revenue. |
| Court | United States Courts of Appeals. United States Court of Appeals (2nd Circuit) |
Cullen & Dykman, of Brooklyn, N. Y. (Francis L. Durk, Jules Haberman, and Charles J. Dodd, all of Brooklyn, N.Y., of counsel), for plaintiff-appellant.
Michael F. Walsh, U. S. Atty., of Brooklyn, N. Y. (James W. Morris, Asst. Atty. Gen., Sewall Key and Frederic G. Rita, Sp. Assts. to Atty. Gen., and Michael F. Walsh, U. S. Atty., and Frank J. Parker, Asst. U. S. Atty., both of Brooklyn, N. Y., of counsel), for defendant-appellee.
Before L. HAND, SWAN, and AUGUSTUS N. HAND, Circuit Judges.
The executrix of the will of John W. Weber, deceased, brought action to recover $15,558.38 alleged to have been illegally exacted by the defendant Collector of Internal Revenue for estate taxes. The validity of the plaintiff's claim depends on the correctness of the valuation by the Commissioner of Internal Revenue of 1,497 shares of the capital stock of William Ulmer, Inc., at $183.17 per share which the plaintiff had returned for estate taxes at a value of only $100 per share. The amount sued for represents the estate tax on the value set forth in the return as increased by $83.17 per share.
William Ulmer, Inc., was a New York corporation with a capital of the par value of $550,000 consisting of 5,500 shares of $100 each, of which the decedent owned 1,497 shares, his widow, the plaintiff, owned 1,253 shares, and her sister, Mrs. Becker, and other members of her family owned the remainder.
The corporation had originally been engaged in the business of manufacturing and selling malt beverages but with the advent of national prohibition in 1919 it ceased manufacturing and continued in business only for the purpose of managing and liquidating its assets which consisted chiefly of real property and mortgages thereon. The decedent John W. Weber died on May 26, 1933, leaving the 1,497 shares of stock of William Ulmer, Inc., among the assets of his estate. The stockholders of that corporation had generally acted in harmony and the management of its affairs and the offices and directorships were divided between the Weber and Becker families.
The shares of stock had never been listed on any exchange or sold in the market prior to the time of the death of John W. Weber. A return was submitted by the executrix in which the assets of the corporation were valued and a statement of its net worth was given. The Commissioner appraised the stock upon the basis of the net value of the assets as submitted by the executrix. She had employed George Horton, of the real estate firm of Buckley & Horton, to appraise the real property and certain mortgages. Seven of these mortgages were in default and were valued by Horton at less than their face value; the remaining twenty-one were carried in the return at par. The face amount of all the mortgages was $610,427 and the total value reported after allowing $29,895 as discount upon the mortgages in default was $580,530. The total valuation of the assets submitted by the executrix as computed by Scovell, Wellington & Company, certified public accountants, was $1,007,470.44. In arriving at the value of the 1,497 shares of stock of William Ulmer, Inc., the Commissioner simply divided the net worth of the corporate assets amounting to $1,007,470.44 by the total shares of the stock outstanding, or 5,500 shares, and $183.17 per share was the result.
The plaintiff had called an over-the-counter broker named Doughty who testified that he had examined the report of Scovell Wellington & Company and the supporting schedules submitted by the taxpayer which included Mr. Horton's appraisal; that he considered that the appraisal reflected the true value of the mortgages and the real estate, and that he had taken it as one of the bases or as a factor in arriving at a proper value to place upon the stock. But he testified that the stock was not in his opinion worth more than $100 per share and he based his opinion on his experience as a broker, coupled with his examination of the schedules and his knowledge that a person buying the stock would have no voice in the management of a corporation that was controlled by the Weber and Becker families. At the close of the evidence each side moved for judgment, whereupon the trial court directed judgment for the collector on the ground that the plaintiff had not sustained...
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Collins v. S.E.C.
...cert. denied, 377 U.S. 993, 84 S.Ct. 1920, 12 L.Ed.2d 1046 (1964); O'Malley v. Ames, 197 F.2d 256, 258 (8th Cir. 1952); Weber v. Rasquin, 101 F.2d 62, 64 (2nd Cir. 1939). Such a price necessarily accounts for all factors relevant to value. is to be determined by its fair market value at the......
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...79, Section 19(3), as amended by T.D. 4901. And that policy applies to closed or family corporations such as the one here. Weber v. Rasquin, 2 Cir., 101 F.2d 62, Worcester County Trust Co. v. Commissioner, 1 Cir., 134 F.2d 578, Laird v. Commissioner, 3 Cir., 85 F.2d 598, Horlick v. Kuhl, D.......
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Palmer v. Comm'r of Internal Revenue
...the assets of the corporation, such evidence is ordinarily unconvincing as to the value of the stock of a corporation. Weber v. Rasquin, 101 F.2d 62, 64 (C.A. 2, 1939); Williams v. Commissioner, 44 F.2d 467, 470 (C.A. 8, 1930), affirming 15 B.T.A. 227 (1929). Furthermore, the 238 shares don......
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Palmer v. Commissioner of Internal Revenue
...the assets of the corporation, such evidence is ordinarily unconvincing as to the value of the stock of a corporation. Weber v. Rasquin, 101 F. 2d 62, 64 (C.A. 2, 1939); Williams v. Commissioner, 44 F. 2d 467, 470 (C.A. 8, 1930), affirming 15 BT.A. 227 (1929). Furthermore, the 238 shares do......