Supreme Court of the United States, 1918

Gulf Oil Corp. v. Lewellyn

Supreme Court of the United States · Decided December 9, 1918 · Holmes

248 U.S. 71; 39 S. Ct. 35; 63 L. Ed. 133; 1918 U.S. LEXIS 1691 (United States Reports)

Counsel

Mr. Wm. A. Seifert, with whom Mr. J. H: Beal was on the brief, for petitioner., Mr. William C. Herron for respondent.

Cases that cite this one

127 later published cases cite this decision. The 25 that cite it most often are listed here.

Western Maryland Ry. Co. v. Com'r of Internal Revenue (4th Cir. 1929)
Thornley v. Commissioners of Internal Revenue (3d Cir. 1945)
Continental Oil Co. v. Jones (10th Cir. 1940)
Campana Corporation v. Harrison (7th Cir. 1940)
Ford Motor Co. v. United States (Court of Claims 1935)
Edward Sec. Corp. v. Commissioner (United States Board of Tax Appeals 1934)
Hill v. Commissioner of Internal Revenue (1st Cir. 1930)
Ehrman v. Galloway (Or. 1938)
Pickwick Corp. v. Welch (United States District Court for the Southern District of California 1937)
Bennett Paper Corp. & Subsidiaries v. Commissioner (United States Tax Court 1982)
Baltimore Aircoil Company v. United States (District Court, D. Maryland 1971)
Inland Development Co. v. Commissioner of Int. Rev. (10th Cir. 1941)
Consumers Const. Co. v. Commissioner of Internal Revenue (1st Cir. 1938)
North Jersey Title Ins. Co. v. Commissioner of Int. Rev. (3d Cir. 1936)
Industrial Cotton Mills Co. v. Commissioner of Int. Rev. (4th Cir. 1932)
Commonwealth Improvement Co. v. Commissioner (3d Cir. 1932)
United States v. Mellon (3d Cir. 1922)
Huron Portland Cement Co. v. Woodworth (District Court, E.D. Michigan 1921)
Walker v. Gulf & I. Ry. Co. (5th Cir. 1921)
Seaview Demolition & Rental Co. v. Director, Division of Taxation (New Jersey Tax Court 1982)
Roorda v. VOLKSWAGENWERK, AG (District Court, D. South Carolina 1979)
Lowndes v. United States (District Court, D. Maryland 1966)
Collector of Revenue v. Maison Blanche Corp. (La. Ct. App. 1961)
Albob Holding Corp. v. Commissioner (United States Tax Court 1959)
Anderson v. British Overseas Airways Corp. (District Court, S.D. New York 1956)

This list shows which later cases cite this one. It does not say how they treated it, and no review of that has been done. Not a substitute for Shepard’s or KeyCite — verify before relying.

Opinion

Mr. Justice Holmes

delivered the opinion of the court.

This is a suit to recover a tax levied upon certain dividends as income, under the Act of October 3, 1913, c. 16, § II, 38 Stat. 114, 166. The District Court gave judgment for the plaintiff, 242 Fed. Rep. 709, but this judgment was reversed by the Circuit Court of Appeals. 245 Fed. Rep. 1. 158 C. C. A..1.

The facts may be abridged from the findings below as follows. The petitioner was a holding company owning *72 all the stock in the other corporations concerned except the qualifying shares held by directors. These companies with others constituted a single enterprise, carried on by the petitioner, of producing, buying, transporting, refining and selling oil. The subsidiary companies had retained their earnings, although making some loans inter se, and all their funds were invested in properties or actually required to carry on the business, so that the debtor companies had no money available to pay their debts. In Janúary, 1913, the petitioner decided to take over the previously accumulated earnings and surplus and did so in that year by votes of the companies that it controlled. But, disregarding the forms gone through, the result was merely that the petitioner became the holder of. the, debts previously due from one of its companies to another. It was no richer than before, but its property now was represented by stock in and debts due from its subsidiaries, whereas formerly it was represented by the stock alone, .the change being effected by entries upon the respective companies’ books. The earnings thus transferred had been accumulated and, had been used as capital before the taxing year. Lynch v. Turrish, 247 U. S. 221, 228.

We are of opinion that the decision of the District Court was right. It is true that the petitioner and its subsidiaries were distinct beings in contemplation of law, but the facts that they were relat.ed as parts of one enterprise, all owned by the petitioner, that the debts were all enterprise debts due to members, and that the dividends represented earnings that had been made in former years and that practically had been converted into capital, unite to convince us that the transaction should be regarded as bookkeeping rather than as "dividends declared and paid in the ordinary course by a corporation.” .Lynch v. Hornby, 247 U. S. 339, 346. The petitioner did not itself do the business of its subsidiaries and have *73 possession of their property as in Southern Pacific Co. v. Lowe, 247 U. S. 330, but the principle of that case must be taken to cover this. By § II, G, (c), 38 Stat. 174, and S, id. 202, the tax from January 1 to February 28, 1913, is levied as a special excise tax, but in view of our decision that the dividends here concerned were not income it is unnecessary to discuss the. further question that has been raised under the latter clause as to the effect of the fact that excise taxes upon the subsidiary corporations had been paid.

'Judgment reversed.

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