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SOUTHERN PAC. CO. v. UNITED STATES

March 13, 1953

SOUTHERN PACIFIC CO.
v.
UNITED STATES



The opinion of the court was delivered by: KAUFMAN

The facts, as stipulated, are as follows:

(1) Pursuant to a Plan of Reincorporation, the assets of Southern Pacific Company, a Kentucky corporation, were transferred on September 30, 1947, to Southern Pacific Company, a Delaware corporation, in consideration of the assumption by Southern Pacific Company (Delaware) of all the liabilities and obligations of Southern Pacific Company (Kentucky), and the issuance to Southern Pacific Company (Kentucky) of 3,772,763.0564 shares of the common stock of Southern Pacific Company (Delaware).

(2) That at 10:30 A.M., Eastern Standard Time, on September 30, 1947, at Wilmington, Delaware, plaintiff, Southern Pacific Company (Delaware), issued and delivered to Southern Pacific Company (Kentucky), its Certificate No. CN1 for 3,772,763.0564 shares of no par value common stock and United States documentary stamps in the amount of $ 242,634.83 were at the same time affixed to the stock transfer sheet of Southern Pacific Company (Delaware) covering the original issue of Certificate No. CN1 and cancelled.

 (3) That at 2:30 P.M., E.S.T., on September 30, 1947, Certificate No. CN1 was endorsed by Southern Pacific Company (Kentucky) in favor of its stockholders and upon surrender to and cancellation by Southern Pacific Company (Delaware) of Certificate No. CN1, Certificate No. CN2 for 3,772,763.0564 shares of no par value stock was issued and delivered at 2:35 P.M., E.S.T., on September 30, 1947, to the stockholders of Southern Pacific Company (Kentucky) by Southern Pacific Company (Delaware).

 (4) On September 29, 1947, plaintiff, Southern Pacific Company, had purchased from defendant, United States of America, in New York City, United States documentary stamps in the amount of $ 244,758.03 based upon the closing market price of $ 43.25 on September 29, 1947, of Southern Pacific Company stock on the New York Stock Exchange, and that after having affixed, on September 30, 1947, at 10:30 A.M., United States documentary stamps in the amount of $ 242,634.83 (based upon the opening market price of $ 42.875 per share at 10:20 A.M., on September 30, 1947, on said Exchange), to the stock transfer sheet of Southern Pacific Company covering issuance of Certificate No. CN1 and having cancelled the aforesaid stamps, plaintiff had in its possession unused documentary stamps in the amount of $ 2,122.20.

 (5) On October 10, 1947, plaintiff duly filed with defendant, a claim for refund of the unused documentary stamps in the amount of $ 2,122.20.

 (6) On April 28, 1948, the Commissioner of Internal Revenue rejected the aforesaid claim for refund in the amount of $ 2,122.20 and ruled that United States documentary stamps in the amount of $ 246,512.34, based upon the average selling market price of $ 43.56 per share on September 30, 1947 (average of highest and lowest selling market prices on that date), should have been affixed to the aforesaid stock transfer sheet and cancelled, and assessed a deficiency of stamp taxes in the amount of $ 3,876.51 against plaintiff.

 (7) Pursuant to the aforesaid ruling and assessment of the Commissioner of Internal Revenue, plaintiff, on September 22, 1948, affixed and cancelled, under protest, documentary stamps in the amount of $ 3,876.51 to the aforesaid stock transfer sheet of Southern Pacific Company covering the original issue of Certificate No. CN1.

 (8) On September 22, 1948, plaintiff duly filed with defendant, a supplemental claim for refund of unused stamps in the amount of $ 1,754.31 on account of the purchase of additional stamps to comply with the aforesaid ruling and assessment of defendant.

 (9) On March 18, 1949, the Commissioner of Internal Revenue rejected said supplemental claim for refund in the amount of $ 1,754.31.

 (10) On September 29, 1947, 1,100 shares of Southern Pacific Company common stock were sold on the New York Stock Exchange, the opening market price of said shares being $ 42.375 per share and the closing market price being $ 43.25 per share.

 (11) On September 30, 1947, 2,600 shares of Southern Pacific Company stock were sold on the New York Stock Exchange, the opening market price (at 10:20 A.M.) of said shares being $ 42.875 per share, the lowest market price being $ 42.875 per share, the highest market price being $ 44.25 per share, and the market price of 10:30 A.M., when Certificate No CN1 was issued, being $ 43.125.

 (12) Regulation 71 (1941), Sec. 113.23, ...


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