holding that legal expenses of a corporation arising out of a divorce proceeding between the shareholder-owner and his wife were deductible, to the extent that the costs were incurred to resist actions that interfered with the business activities of the corporation
How later courts described this case
- holding that legal expenses of a corporation arising out of a divorce proceeding between the shareholder-owner and his wife were deductible, to the extent that the costs were incurred to resist actions that interfered with the business activities of the corporation
- affirming district court’s grant of summary judgment recharacterizing cash disbursements by a close corporation to a shareholder from debt to constructive dividend even where the form of the disbursements indicated they were loans, interest was paid, some principal payments were paid, and the shareholder had a bank balance strong enough to obtain a bank loan sufficient to pay off the entire loan
- "[Wjhen there is no dispute in the evidence, it is a question of law whether the facts add up to debt or dividend.”
- employing a variant: "There is a principle of too much; phrased colloquially, when a pig becomes a hog it is slaughtered”
Written by the judges who cited it.
The opinion
On Petition for Rehearing
PER CURIAM.
The petition for rehearing is denied. On the issue of loans versus dividends, intent to repay and expectation of repayment are significant factors not susceptible of proof by direct, objective evidence. We realize that “great circumspection is required where summary judgment is sought on an issue involving state of mind.” Hahn v. Sargent, 523 F.2d 461, 468 (1st Cir. 1975), cert. denied, 425 U.S. 904 , 96 S.Ct. 1495 , 47 L.Ed.2d 54 (1976).
*1155 The determination of mental state in the instant case requires that inferences be drawn from the affidavits, exhibits and other documentary material found in the record. These inferences must be viewed in the light most favorable to the party against whom summary judgment was entered. United States v. Diebold, Inc., 369 U.S. 654, 655 , 82 S.Ct. 993 , 8 L.Ed.2d 176 (1962). We recognize and apply this principle. On the record presented, we conclude that no permissible inference of either an intent to repay or an expectation of repayment can be drawn. Hence, summary judgment on the loans versus dividends issue was proper.
The petition for rehearing having been denied by the panel to whom the cases were argued and submitted, and no member of the panel nor judge in regular active service on the Court having requested that the Court be polled on rehearing en banc, Rule 35, Federal Rules of Appellate Procedure, the suggestion for rehearing en banc is denied.
HOLLOWAY, Circuit Judge, did not participate in the consideration or disposition of the suggestion for rehearing en banc.