Distinguished
Distinguished by Schuerholz v. Commissioner, 35 T.C.M. 726 (1976)
Petitioner and Sullivan continued as associates in the nightclub business, and thus, cases such as Knoxville Truck Sales & Service, Inc.,10 T.C. 616 (1948), and Coast Carton Co.,10 T.C. 894 (1948), are inapposite.
The opinion
Disney, /., dissenting: I must dissent from the conclusion of the majority in this matter. I shall not dwell upon the matter of res adjudicata, since that is covered by the dissent of Judge Opper— though I think res adjudicata applies, and agree fully with that dissent.
The facts found by the majority opinion disclose that James L. Norie, as administrator, listed only 522 shares of the 543 shares of stock in the community estate of himself and his wife after her death. This shows his recognition, in accord with the transfer of 10 shares to his daughter and 11 shares to his son, that he and his wife did not own 21 shares. It is in accord too with his statement, as late as 1940, that all outstanding stock was “owned in the family,” and in accord further with his statements that he was “controlling owner.” It is likewise in accord with the fact that the probate court distributed the 11 shares of stock formerly held by Norie’s son to his widow in lieu of homestead. In short, the record is affirmative and positive, and based upon statements made by Norie at a time when he was not interested in taxes, that he did not own all the stock. He now contends, and the majority opinion upholds him in the contention, that it was all owned by him. No transfer of the stock to him is shown since the above mentioned statements by him; and I am unable to accept an interested contention instead of disinterested statements of fact. The evidence of the witness Chadwick that the daughter and the daughter-in-law stated that they had no interest does not dispose of the interests which they actually owned according to the above disinterested statements by Norie.
The judgment of the Superior Court I consider clearly collusive under the language of Freuler v. Helvering, 291 U. S. 35 , for the facts found show that the daughter and the daughter-in-law “filed answers either admitting or not controverting allegations of the complaint.” The proceeding in the state court was plainly “collusive in the sense that all the parties joined in a submission of the issues and sought a decision which would adversely affect the Government’s right to additional income tax” in the language of that case.
Believing that the facts proved are contrary to the conclusions drawn therefrom, I respectfully dissent.
TurneR, Leech, and Opper, JJ., agree with this dissent.