Crabb v. Commissioner

WALLER, Circuit Judge

(concurring ini part and dissenting in part).

I concur in the conclusion that the arrangement of petitioners was not a partnership, and even if the instrument denominated “agency contract and trust” had. created- a partnership, it did not create a. mercantile partnership business and the; *503 profits were not community property. However, I think the parties created a trust in the lands and mineral rights and not an agency as held by this Court in its former opinions. 119 F.2d 772 ; 121 F.2d 1015 .

The trust indenture (Sec. 14) provided:

“But it is further controllingly provided that the trustees herein named, Mrs. Kate B. Welder, and James F. Welder, Jr., or the said James F. Welder, Jr., alone and their successor trustees shall have and are hereby given and granted full power and authority from time to time, to lease, rent, and let the lands of this trust estate, or any part thereof, for oil, gas and minerals, for such prices, bonuses, rentals and royalties and on such terms, time and conditions as to them or him shall seem proper, and shall receive all such bonuses, rentals and royalties, and any such lease or leases so executed, shall not be terminated by the expiration of the ten year term of this trust, or its earlier termination, but such lease or leases shall continue in effect, notwithstanding the termination of this trust, until terminated by the particular terms of such lease. In case of such leases executed by the said Mrs. Kate B. Welder and James F. Welder, Jr. or by the said James F. Welder, Jr. alone, even if the said Mrs. Kate B. Welder be at that time a trustee hereunder or executed by the successor trustees it shall not be necessary for the beneficiaries hereunder or any party to this instrument to join in any such leases, but they or he as the case may be, are hereby appointed attorneys in fact or attorney in fact of each and every party hereto, to execute such lease or leases. This power to lease, without the joinder of the beneficiaries and parties hereto is not limited to the said Mrs. Kate B. Welder and James F. Welder, Jr. or to the said James F. Welder, Jr. alone, and is fully gwen and granted to the other successor trustees. In the event of the death or incapacity of the said Mrs. Kate B. Welder, and the said James F. Welder, Jr., has appointed another trustee, he alone shall still nevertheless have the powers to lease, as above set forth.” (Emphasis added.)

Under the foregoing paragraph the power to lease was definitely given to the trustees named and their successor trustees. It further provided that the power to lease (referring to oil and gas leases) was not limited to named trustees alone but was fully given and granted to other successor trustees. In the event of death or incapacity of the said Mrs. Kate B. Welder (a named trustee) the other named trustee alone should still have the power to lease the lands for mineral purposes. The statement that the trustees “are hereby appointed attorneys in fact or attorney in fact of each and every party hereto, to execute such lease or leases” is mere surplusage and added nothing to the power of the trustees not otherwise granted. The trust instrument had, by its terms, already made them attorneys in fact, and the authorization to the trustees to act as attorneys in fact was in amplification, or definition, of the powers of the trustees and not in limitation thereof. It is significant that all leases were executed by the trustees, as such, and not as attorneys in fact.

I conclude that the taxes applicable to a trust and its beneficiaries should have been applied here, and therefore dissent only to that part of the decision which rejects the trust theory of the case. So much of the former opinions of this Court in 119 F.2d 772 and 121 F.2d 1015 , as held to the contrary should be expressly overruled.