Citations
- 90 F.2d 598
Full opinion text
AUGUSTUS N. HAND, Circuit Judge.
The question raised by this appeal is whether certain shares of stock of the Consolidated Automatic Merchandising Corporation, the debtor in the above proceeding for reorganization under section 77B of the Bankruptcy Act (11 U.S.C.A. § 207), were subject to documentary stamp taxes under section 800, Schedule A (3) of the Revenue Act of 1926, 44 Stat. 101 (see 26 U.S.C.A. § 900 and note), for the transfer thereof to voting trustees, and whether if such taxes were payable they were a liability of the debtor.
The Collector of Internal Revenue for the Third District of New York filed a claim for these taxes in the 77B proceeding, which was referred to Referee Irving Kurtz as special master. He reported that the shares were subject to documentary stamp taxes for transfer to the amount of $50,434.38 and that such sum, with statutory-interest from February 4, 1932, to date of payment, should be allowed as a valid claim against the debtor. The correctness of the amount is not questioned, if any stamp taxes were due. The District Court denied the motion of the government to confirm the master’s report and expunged the claim on the ground that, even if there were transfers of stock subject to tax, the debtor was not liable for the taxes. From the order expunging the claim the government has appealed. In our opinion the master reached a correct conclusion and the order of the District Coitrt should be reversed and the report of the master confirmed.
The Consolidated Automatic Merchandising Corporation was organized under the laws of Delaware in 1928 and at once set about raising cash for corporate purposes and acquiring the stock of five companies in exchange for cash or for its own common and preferred stock. Its common stock was to be subject to a voting trust established between it, its stockholders, and the voting trustees. A resolution was adopted by the board of directors of the corporation that “all of the shares of Common Stock which are to be issued by the Corporation, be issued to and in the name of the Voting Trustees.” The resolution further provided that the secretary and vice-president of the corporation were to give instructions to the voting trustees as to the persons t