Petition for a Writ of Certiorari — United States v. Seattle-First National Bank

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Opinions below... . ar oe

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Question presented iat " [en cemecsus is

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Statement. ia

Specification of « errors to be urged care rats yi Z

Reason for granting the writ. : re

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a - CITATIONS

Cases:

Carpenter v. White, 80 F. 2d 145, certiorari dinlili 297

U.S. 720. . Ae 7

. City Bank Parnere Trust Co., ve Hoey, 125 F. 2d 577 6

Koppers Coal & Transportation Coy. v. United States, 107

F. 2d 706_ _ - : # ; 6

Niagara Hudson Power + Corp. v. He y, WTF. 2d 44. S 6

State Street Trust Co. v. Hassett, 134 F.2d 156.” die.

United States v. Merchants Nat. Trust & — Bank, 101 F.

2d 399 - : =

Weil v. United States, 15 5 F. 2d 999, certiorari denied, 313

U.S. 574 ‘ aks 6

Statutes: . _ -s ;

National Indtstrial Recovery Act, c. 90, 48 Stat. 195, See.

; : 4

Pub. Res. No. 36, ¢. 333, 49 Stat. 431 . 9

Revenue Act of 1926, c. 27, 44°Stat. 9: .

See. 800 ~

Schedule A-3 : 8

Schedule A-8 ? ad 9

‘ Schedule A-9 a, Q

Revenue Act of 1942, ¢. 619, 56 Stat. 957, See. 506 - 7

Miscellaneous:

Treastiry Regulations 71 (1932 ed.):

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| Sie gre nr he Uaed Sates

— - OcToBER Tena, 1943

| ? | - No. —

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—Unirep Srares o OF AMERICA, PETITIONER

; ; , J

~ Searrur-First NaTIONAL Bank, A NATIONAL

BANKING ASSOCIATION

PETITION FOR A WRIT OF CERTIORARI TO THE UNITED

- STATES CIRCUIT COURT OF APPEALS FOR THE NINTH

The. Solicitor General,:on behalf of the United

States, prays that a writ of certiorari issue to re-

view the judgment of the Circuit Court of Ap-

peals for the Ninth Circuit, entered in the above

- cause, affirming the judgment of the District Court

of the United States for the Eastern District of

Washington, Northern Division. ; .

OPINIONS BELOW

The opinion of the district court (R. 55-76), and

_ the opinion of the circuit court of appeals (R.

- 93-95) are not yet reported.

(1)

SU eee I

7 JURISDICTION | ,

| The judgment of the'circuit court of appeals was

- entered on May 24, 1943 (R. 95). The jurisdic-

tion of this Court ‘is invoked under Section 240).

(a) of the Judicial Code, as amended by the Act

of ey, ms, 1925.

QUESTION PRESENTED

Sinan (a national bank) and a state bank | -

consolidated under the charter of respondent by

written agreement therefor, ratified by their re-

spective shareholders and approved by the Comp-

troller of the Currency in accordance with -the -

National. Banking Act. ‘Legal title to all corpo-

za rate securities and realty held in the state bank’s

name, in its own right and in fiduciary capac ities.

* was thereby transferred to respondent. Did the

+ transaction involve a taxable transfer of the se-

curities and realty under. the stamp-tax provisions

of the Revenue Act of 1926, as amended ¢ |

STATUTE AND REGULATIONS INVOLVED ’

These will he found in the Appendix, tufra, pp.

. 8-10.

STATEMENT

Respondent, known prior to December 28, 1935

as First National Bank of Seattle, entered into

' a written agreement on November 26, 1935, with

the Spokane: and ‘Eastern Trust Company, here-!

inafter called the state bank, signed by the di-

6

3

rectors of each, providing for the consolidation ":

of the two ‘banks under respondent’s charter and

the corporate name of Seattle-First' National

Bank. The agregment provided that (R. 49-50)-

“'This consolidation shall become.effective when it

shall have. been ratified and confirmed :by the af-

‘firmative ‘vote uf the holders. of at least two-thirds

of the shares of stock, at the time outstanding, of Pas

both Banks, ‘and the: Comptroller of the Cur-

rency) * .* * shall have issued his formal cer-

tifieate under the seal Gf his office approving. such

consolidation. ”’ a

The state bank owned real estate, including its

banking premises, as well as corporate stocks and

bonds, to all of which it held legal title as a part

of its corporate assets. It ‘also held in trust certain |

stocks and bonds, the legal title to which was vested.

in it as trustee, executor, administrator, guardian,

or in other fiduciary capacities. (R. 77.) -

Séetion 5 of the agreement provided, in part, oe ;

follows (R. 29):

All assets of each association at ee date

of consolidation shall pass to and vest ‘in the

consolidated association, and the consoli-

‘dated association shall be responsible for all

of the liabilities of every kind and descrip-

’ tion of each of the « ‘onsolidating assoc iations.

The shareholders met and ratified the agree-

. ment, and on December 28, 1935, Acting Comp- 2

troller of the Currency Awalt issued a certificate

| MS. |

_of approval, reciting that it appeared the direc-

tors and shareholders of both banks had com-

plied with the Act of Congress, approved Novem-

_ ber 7, 1918, as dmended, and therefore the banks

had been consolidated ‘under the charter of the

First National Bank of Seattle and under the ©

corporate. title uf Seattle-First. National Bank.

_ with an. authorized capital of —— (R.

' 16-18).

The findings in the pretrial order, ees ap-

proved by counsel for the respective canes state

(R. 14):

That the foregoing proceedings were au-

thorized by Section 34 (a), Titlé 12, USCA,

-and resulted in the consolidation . of the .

trust company into the plaintiff Seattle -

First National Bank pursuant to the above

statute, and accordingly there was effected

by the agreement of November 26, 1935,

ard the shareholders’ ratification thereof,

‘followed by approval of the Comptroller of — .

the Currency, a‘transfér.of-legal title to _

, all corporate securities and real estate.

_ legal title to which was formerly: held in

the name of the Spokane and Eastern Trust

Company, either in its individual ‘capacity

or-as a fiduciary in various: capacities.

No documentary stamps were purchaseil or

affixed with respect to the transfer of legal

title to such corporate securities and re-

alty. Subsequently, a deputy collector ex-

amined the records of the bank, ‘and as a

0

result, documentary stamps in the amount

of $1,631.48 were purchased and affixed to

. ‘the appropriate . records. |

This suit was brought - on October 17, 1941, to

recover the above tax, $1,631.48,' and penalty of .

$100 with interest. The United States filed an

answer admitting parts ‘of the complaint. A pre-

trial hearing resulted in the entry of an otder em- >

bodying material findings of fact (R- 12-15), and -

. the introduction of documentary’ exhibits, upon -

whied the case was tried. The district court

made further findings which are a repetition of

'. the first ten paragraphs of the complaint. It en-

tered judgment for respondent for the tax of

$1,631.48 (R. 82),° which was affirmed by the eir-

_ cuit court of appeals.

seaciroactoi OF ERRORS TO BE. URGED

“The circuit court of appealserred: °

1. In failing to hold that the transactions. in

volved deliveries or transfers by the_State Bank

to respondent of the real estate and. securities,

_ owned outright, as wel as those to which it, held

mere legal title in fiduciat ‘y capacities, within the

~ stamp tax provisions of the Revenue Act of 1926,

as amended. <

- ? The $1,631.48 tax compr ised $500 paid with respect to the

; transferred realty (R. 5, 19-20), $457.60, with respect to ©

securities formerly owned by the State Bank in its own right

(R. 5, 21-22), and M73. SS with respect to sec ‘urities held in

- trust (R. 5). |

o

2. In holding’ that the ica involved

were not-subject to the stamp-tax provisions of

the Revenue Act of 1926, as amended. Emirs

3. In affirming the judgment of the ‘district

“-_ eourt.

REASON FOR GRANTING THE WRIT re

The devision below is in conflict with City Bank

Farmers’ Trust Co. v. Hoey, 125 F. 2d 577 (¢C. C.?

A. 2), and State Street Trust Co. v. Hassett, 134

' F: 2d 156 (C. C: A. 1), in each of which it was held

that a taxable transfer occurred where a. bank

‘or trust company, which had legal title to various .

securities, combined with another bank or trust

company and the title to those securities’ passed

to the new corporation.* The court below ad- °

_ hered to its earlier decision in. United States v..

Merchants Nat. Trust & Savings Bank, 101 F. 2d

399, which the First and Second Circuits, in turn,

had’ refused to follow in the foregoing cases, and

‘the court recognized the conflict, saying (R. 94):

* * * The Court of Appeals of the

Second Circuit in City Bank Farmers ‘Trust

Co. v. Hocy, 125 F. 2d 577, has reached a

different conclusion and apparently the .

First Circuit has also, State Street Trust —

Co. W. Hassett, 134 F.-2d 156, so that if we

* Similar results hs ave been reached in W «ily. United States

- + 15 F. 2d 999 (C. C. A. 2). certiorari denied, 313 U.S. 57h:

Niagara Hudson Power Corp... Hoey, 117 F.3d 414 (CC:

A. 2); Hoppers Coal & eee arcentte C ov. United States,

107 F. 2d 706 (C. Cv &. 3).

+ ae spd

are wrong the government is in a favorable -

position to ask that we be set right. ~ .°

Although Section 506 of the Revenue Act of’

“1942, ¢. 619, 56 Stat. 957, goes’ far toward clari-

- “fying” the issue for the fufure, the question is

nevertheless one: of present importance since sub- .

stantial amounts of taxes have been collected for

1941 and prior yedrs: which probably will be the:

subject of further litigation - until the matter is.

authoritatively settled.” 7

Wherefore, it is respectfully submitted that this

petition for a writ of certiorari should be granted. .

CHARLES Fany, ~

. taid | ponieitor Generel.

Avaust 1943. af

-* Although the square conflict which exists as to the securi-_

ties probably ‘does not extend to the real estate, the questions

_ are so closely related that if certiorari is granted the writ ”

should cover the entire éase. Ag to the real estate, compare.

Carpenter V. White, 80 F. 2d 145, 146 = C. A. mM certiorari. —

denied, 297 U.S. 720.

APPENDIX

Revenue Act of 1926, ¢. 27, 44 Stat. 9:

Src. 800. On and after the expiration of.

thirty days after the enactment of this

d, for and in respect of the several

nds, debentures, or certificates ‘of stock

and of indebtedness, and other documents,

instruments, matters, and things mentioned

and.described in Schedule A of this title,

or for or in zespect of the vellum, parch-

_ ment, or paper upon which such instru-

ments, matters, or things, or any of them,

are written or printed, by any person who -

makes, signs, issues, sells, removes, con -

sizns, or ships the same, or for whose use

or benefit the same are made, signed, issued,

‘sold, removed, consigned, or shipped, the

several taxes specified in ‘such sched-

_ amare 8 A be

SCHEDULE A.—STAMP TAXES ~ .

. 3. [as amended by. Section 723 (a) of

the Revenue Act of 1932; vt. 209, 47 Stat.

169] Capital stock (and similar interest),

Act ‘there shall be levied, collected, and. -

sales or transfers: On all sales, or agree-. _

“ments to sell, or memoranda of sales or °

deliveries of, or transfers of legal title to

any of the shares or certificates mentioned

or described in: subdivision 2,or to rights

to subscribe for or to receive such shares

or certificates, whether made upon or

shown by the books of the corporation or

other organization, or by any: assignment

in blank, or by any delivery, or by any

48)

9

be 7

paper or agreement or memorandum or

other evidence of transfer or sale (whether —

' - erititling the holder in any manner to the.

benefit of. such share, certificate, interest,

or rights, or not) * *

8. [as added by Section 725 of the Rev--

enue Act of 1932] Conveyances: Deed, in-

strument, or writing, delivered on or after

the 15th day after the date of the enact-

‘ment of the Revenue Act of 1932 and before

July 1, 1934 (unless deposited in escrow

before ‘April 1, 1932), whereby any lands,

tenements, or other_realty sold shall be

granted, assigned, transferred, or otherwise

conveyed to, or vested in, the purchaser or

purchasers, or any other person or persons,

by his, her, or their direction, when the con- _

sideration or value.of the iriterest or prop-

erty conveyed, exclusive of the: value of any

‘lien or encumbrance remaining thereon at

the time of sale, exceeds $100: * * *.

9. [as added by Seetion 724 (a) of the

Revenue Act of 1932] Bonds, ete., sales or

transfers: On all sales, or agreements to

sell, or memoranda of sales or deliveries of,

or transfers of legal title to any of the: in- .

struments mentioned or described in sub-

_ division 1 and of a kind the issue of which

is taxable thereunder, whether made by any

assignment in blank or by any delivery, or

by any paper-or agreement or memor seen

or other evidence of transfer or sale

(whether entitling the holder in any man-

ner to the benefit of such instrument or

not), on each $100 of face value or fraction

thereof, 4 cents * * *.

Schedule A-9 was extended by Section 212 of

the National . Industrial Recovery Act, ¢. 90,°48 -

Stat. 195, and’ by Pub. mes. No. 36, ¢. 333, 49 Stat.

31,

°10

Treasury Regulations 71: (1932 ed.) :

Art. 34. Sales or transfers subject to

-taxr—The following are examples of trans:

actions subject to the tax:

* * * * *

(b) he ‘transfer: of stock to or by trus-

tees. |

* + * “ss *

(r) Upon a merger, the transfer of ual

owned by a corporation which is merged.

into another corporation from the name of

_the first to the name of the.second corpora-

tion, such a transfer being effected by the

act of the parties and not wholly by opera-

tion of law.

* ; ae . # *

(t) The transfer of legal: title to stock

irrespective of whether or not the trans-

feree receives any beneficial interest therein,

except as provided in article 35 (k).

(u) Transfer of stoek from -old firm to |

new firm succeeding to its business where

personnel is different. :

* + o ee .

Arr. 120: Basis of taz.—The tax acerues

at the time of making the sale or agreement

to sell or memorandum of Sale; or delivery

of, or transfer of the legal title to, the

bonds, regardless of the time or manner of

the delivery of the bonds or agreement or

memorandum of sale. The -provisions ot .

articles 34 to 39, both inclusive, of these

-regulations, relating to sales or transfers

of stock, are controlling also im respe¢t ‘of

sales or transfers of bonds, in so far-as-con-

sistent with the provisions of Schedule A-9

and in so far as not inapplicable to the mat-

ter of sales or transfers of bonds. * * *

U S GOVERNMENT PRINTING OFFICE: 1945