Wilson v. Bowers
Decision Date | 26 June 1931 |
Citation | 51 F.2d 261 |
Parties | WILSON et al. v. BOWERS. |
Court | U.S. District Court — Southern District of New York |
Taylor, Blanc, Capron & Marsh, of New York City (Russell L. Bradford, and Edwin E. Peterson, both of New York City, of counsel), for plaintiffs.
George Z. Medalie, U. S. Atty., of New York City (George B. Schoonmaker, of New York City, of counsel), for defendant.
There must be a judgment for the plaintiff herein for $3,039, with interest from July 14, 1922, as demanded, and an order for judgment accordingly may be entered.
The defendant's motion for judgment of dismissal is, therefore, denied.
I. The complaint in this case was filed on July 13, 1926, and alleged that on the 21st day of May, 1909, a contract was entered into between the decedent Arthur R. Wilson, Franklin H. Wilson, and Edgar H. Betts which provided, inter alia, as follows:
The answer to this complaint was filed by the government on December 7, 1926, but withdrawn, and a motion to dismiss the complaint was substituted by agreement therefor.
There was also a stipulation between the parties to the effect that, for the purpose of the determination of the tax on the estate of Arthur H. Wilson under title 4, of the Revenue Act of 1918, the value of the 3,000 shares of the capital stock of the Earl & Wilson Company owned by Arthur R. Wilson was $23.55 a share at the time of his death, unless the agreement above referred to, attached to the complaint, determined the value for the purpose of their tax at $6.66 2/3 per share, in which event the tax already paid on the basis of that valuation was the true and proper tax due and payable by the estate of Arthur R. Wilson.
II. In the year 1909, Arthur R. Wilson, deceased, Franklin H. Wilson, and Edgar H. Betts, as executors, plaintiffs herein, were partners in the firm of Earl & Wilson.
Desiring to combine the dilectus personarum of their then partnership with the advantages of a corporate organization, they formed a corporation, the Earl & Wilson Company, parceled out the stock among them, and entered into a contract among themselves with regard to the stock of the corporation. The portions of the contract relevant on these motions are given above.
The former partners operated under corporate organization without change in their organization, or their contract, until 1921, when Arthur R. Wilson died leaving a will in which he bequeathed his share of the stock of the corporation to Franklin H. Wilson.
Under the provisions of title 4, §§ 401 and 402, of the Revenue Act of 1918 (40 Stat. 1096, 1097), the United States assessed a federal estate tax against the estate of Arthur R. Wilson, claiming that the value of the stock owned by Arthur R. Wilson and left by him to Franklin H. Wilson was $23.55 a share.
At the time of his death, Arthur R. Wilson owned 3,000 shares of the common stock of the Earl & Wilson Company, and the executors claimed that the value of these shares, owing to the agreement aforesaid, was $20,000.
The Commissioner of Internal Revenue, however, fixed the value of these 3,000 shares at $70,650, and assessed an additional estate tax of $3,039 against the estate.
This is the subject-matter of the present action, and was paid under appropriate reservation in the event of its recovery if the assessment by the government was wrong.
III. In effect, what happened was that Arthur R. Wilson left to Franklin H. Wilson his share of their common business.
If he had not left the 3,000 shares of stock which he owned to Franklin H. Wilson, the latter would have had the right, within four months after the qualification of the executors of Arthur R. Wilson, to have purchased the stock from the estate for the sum of $20,000; that is, at $6.66 2/3 per share.
This right could have been enforced in equity. See Scruggs v. Cotterill, 67 App. Div. 583, 73 N. Y. S. 882; Matter of Fieux, 241 N....
To continue reading
Request your trial-
Strange v. State Tax Commission
...appellee: Ferguson, Collector, v. Dickson, 3 Cir., 300 F. 961, certiorari denied 266 U.S. 628, 45 S.Ct. 126, 69 L.Ed. 476; Wilson v. Bowers, D.C.S.D.N.Y., 51 F.2d 261; Lomb v. Sugden, 2 Cir., 82 F.2d 166; Bensel Commissioner of Internal Revenue, 36 B.T.A. 246, affirmed 3 Cir., 100 F.2d 639;......
-
Johnson v. State Tax Commission
...56 S.Ct. 375, 297 U.S. 106, 80 L.Ed. 511 (1936); Lomb v. Sugden, (2 Cir.) 82 F.2d 166, 17 AFTR 582 (1936); and Wilson v. Bowers, (D.C.), 51 F.2d 261, 10 AFTR 238 (1931). These cases recognized an option agreement as establishing the value of the property at the price provided in the 'For in......