181 F2d 188 Seattle Hardware Company v. Squire

181 F.2d 188

50-1 USTC P 9290

Clark SQUIRE, Collector of Internal Revenue, Appellee.

No. 12259.

United States Court of Appeals Ninth Circuit.

April 24, 1950.

Appeal from the United States District Court for the Western District of Washington, Southern Division; Charles H. Leavy, Judge.

H. B. Jones, A. R. Kehoe and R. B. Hooper, Seattle, Wash., for appellant.

Theron Lamar Caudle, Asst. Atty. Gen., Ellis N. Slack, S. Dee Hanson, Sp. Assts. to Atty. Gen., J. Charles Dennis, U.S. Atty., Harry Sager, Asst. U.S. Atty., Tacoma, Wash., Thomas R. Winter, Sp. Asst. to Chief Coun., Bureau of Int. Revenue, Seattle, Wash., for appellee.

Before HEALY, BONE, and POPE, Circuit Judges.


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We think the trial court correctly disposed of this matter. Appellant argues earnestly that the decision is at variance with National Carbide Corp. v. Commissioner, 336 U.S. 422, 69 S.Ct. 726, but a study of the latter opinion persuades us that the situation it dealt with is easily distinguishable. In the National Carbide case the subsidiary corporation utilized were major operating and manufacturing companies set up on a permanent basis. The court stressed their huge individual earnings and the great numbers of their employees as evidence that they were not functioning as mere agents of the principal corporation. Obviously they had a flesh and blood existence, whereas the corporation utilized in the present instance had little if anything more than a transient paper existence during which it served as a nominal conduit for the passage of title to the property from the taxpayer's agent to the taxpayer itself. It had no stock book or other records of its own, and so haphazard were the essays looking toward its organization that even its purported organizational meeting was held some days in advance of its actual incorporation.


For the reasons given more in detail below, D.C., 83 F.Supp. 106, the judgment is affirmed.