Cross-appeals from Decisions of the Board of Tax Appeals.
Before L. HAND, CHASE, and FRANK, Circuit Judges.
These cases are companions and were argued together. The evidence in the case of H. Smith Richardson and in that of Lunsford Richardson was substantially the same. We shall, for convenience, consider them together.*fn1
Early in 1932, Lunsford Richardson and his brother, H. Smith Richardson, were the owners of many shares of Vick Financial Company, a Delaware Corporation.*fn2 They were also the owners of all the shares, and were respectively president and vice-president, of Piedmont Financial Company (a New York Corporation with its offices in New York), which handled matters for them on their instructions.
H. Smith Richardson owned 98,758 shares of Vick Financial, evidenced by certificates in his name which were unendorsed and kept in his safe deposit box in Greensboro, North Carolina. Lunsford Richardson owned 53, 599 shares of Vick Financial, evidenced by unendorsed certificates in his name and kept in his separate safe deposit box in Greensboro. The box of H. Smith was accessible only to himself or to his brother if accompanied by George Dawson (who was also secretary-treasurer of Piedmont), or by Pearle Hubbard (who was an employee of Vick Chemical Company). The box of Lunsford was accessible only to Lunsford or to H. Smith if accompanied by Dawson or Pearle Hubbard.
As to 48,780 additional shares of Vick Financial owned by H. Smith Richardson, and 2,100 additional shares of that company owned by Lunsford, the following steps had been taken in 1931: The certificates for those shares had been delivered to Bankers Trust Company of New York as "depositary." The bank had caused those certificates to be registered in the names of its nominees,*fn3 and kept the certificates in its possession, in certain so-called "accounts," one for Lunsford and one for H. Smith. The bank was directed to deliver stock out of these accounts on written instructions from Piedmont. The relation of the Richardsons and Piedmont to Bankers Trust as "depositary" appears principally in the following exhibit, a certified copy of a corporate resultion of Piedmont:
"'Whereas, this Company has designated Bankers Trust Company of No. 16 Wall Street, New York City, as depositary of this Company for the deposit of stocks, bonds or other securities held by this Company,
"'and said Bankers Trust Company has been designated by certain other corporations and persons (including J. H. S. Richardson,*fn4 Lunsford Richardson, Jr., and Mary Lynn Richardson, decased, as trustees under the last Will and Testament of Lunsford Richardson, deceased) as depositary for the deposit of stocks, bonds or other securities held by them, individually or as trustees,
"'and said corporations and persons have authorized this Company to act on their behalf in the management and administration of such investment accounts; and
"'Whereas, said accounts with Bankers Trust Company for our convenience have been briefly designated as follows: