The opinion
Fay, J., dissenting: I respectfully dissent from the majority’s holding that a true corporate agency for tax purposes exists in this case.
In National Carbide Corp. v. Commissioner, 336 U.S. 422, 437 (1949), the United States Supreme Court unequivocally stated that, for a true corporate agency to exist, the corporation’s "relations with its principal must not be dependent upon the fact that it is owned by the principal.” (Emphasis supplied.) The majority opinion, supra at 286-287, finds as a fact that the relations between the corporation and the partnership involved herein were dependent on the fact that the corporation was owned and controlled by the partners. In my view, that finding alone mandates a decision for respondent in this case.
The majority opinion treats the dependency of the corporation-partnership relations on the partners’ ownership and control of the corporation as being merely one of six relevant factors. Such treatment does not comport with a fair reading of National Carbide Corp. v. Commissioner, supra. In National Carbide, the United States Supreme Court listed four considerations which are relevant in determining corporate agency. Those four considerations are designated as factors one through four in the majority opinion, supra at 284-287. After its listing of relevant considerations, the Court in National Carbide added two absolutes:
If a corporation is a true agent, its relations with its principal must not be dependent upon the fact that it is owned by the principal, if such is the case. Its business purpose must be the carrying on of the normal duties of an agent. [ 336 U.S. at 437 ; emphasis added.]
Treating those absolutes as mere "factors” simply ignores the language of National Carbide. Indeed, the Fifth Circuit Court of Appeals, to which an appeal herein would lie, has clearly distinguished between National Carbide’s "relevant considerations” and its "absolutes” by designating the latter as "crucial factors.” Jones v. Commissioner, 640 F.2d 745, 755 (5th Cir. 1981). 1
Given the rule of National Carbide and the majority opinion’s finding of fact concerning the dependent relations between the corporation and the partnership, I would hold that, for tax purposes, the corporation was not a mere agent of the partnership.
Irwin, Wilbur, and Chabot, JJ., agree with this dissenting opinion. ^ee also Harrison Property Management Co. v. United States, 201 Ct. Cl. 77 , 475 F.2d 623 (1973), cert. denied 414 U.S. 1130 (1974), wherein the Court of Claims treated the dependency of the corporate-"principal” relations on the ownership of the corporation as the deciding factor in rejecting a corporate agency argument.