Journal Co. v. Commissioner

Disney,

dissenting: I dissent. The contract of February 26, 1936, provided in effect that the petitioner was obligated to take and pay for the corporate stock provided the vendors on their part complied with the contract. The vendee became from February 26, 1936, entitled to benefit of the dividends upon the stock, for if any were paid prior to delivery of the stock the purchase price was to be reduced, and if none were paid prior to delivery of the stock the petitioner would, of course, thereafter receive the dividends. The petitioner thus appears as the equitable owner of the stock from the date of the contract and the only condition, it seems to me, was that the vendors should comply with their agreement to deliver. The petitioner was not obligated to pay the purchase price until delivery, but was obligated to do so upon delivery of the stock. It agreed to pay interest upon the purchase price from the date of the contract and I think that payment of interest so made properly comes within section 23 (b) of the Revenue Act of 1936 as made for delay in the payment of a purchase price, the benefits of which petitioner had from the date of the contract. The condition seems to me to be essentially not different from the usual condition implied in a contract, that is, compliance with the contract by the other contracting party. I do not think this is such a contingency as to negative the existence of a debt from the date of the contract, where the petitioner was obligated from that date and had the benefits of ownership of the stock from that date, subject only to fulfillment of the contract by the vendors, who upon such compliance could have compelled performance of the contract by the petitioner.