The opinion of the court was delivered by: LEIBELL
This is an action under section 1802(a)
of the Internal Revenue Code to collect a stamp tax on shares allegedly 'issued in a recapitalization' of the defendant on December 31, 1947. The action was commenced December 29, 1952. The facts are not in dispute. Defendant moved for a summary judgment and the plaintiff has made a cross motion for the same relief.
The secretary of the defendant, a New Jersey corporation, has made affidavit as follows:
'2. On November 20, 1947, at a special meeting of defendant's Board of Directors regularly convened and held, a quorum then being present, the following resolution was adopted:
"Resolved that, upon the liquidation of Pennsylvania Sugar Company, the amount of $ 9,000,000 of the surplus of this Company (The National Sugar Refining Company) consisting of $ 2,632,529.46 from capital surplus and $ 6,367,470.54 from earned surplus, be transferred to capital account and that the surplus so transferred, namely $ 15 for each issued share, including treasury shares, of the capital stock without par value of this Company, be treated as capital in respect of such shares of capital stock making the total amount of such capital $ 40 per share; * * *'
The above quoted resolution has been at all times since November 20, 1947, and now is, in full force and effect.
'3. On December 31, 1947, Pennsylvania was liquidation and all of its assets distributed to defendant as a creditor and its sole stockholder.
'4. During the period from 1929 to date, the issued and outstanding capital stock of defendant has consisted of 600,000 shares of no par value. On and prior to December 31, 1947, defendant's capital was $ 15,000,000, or $ 25 for each of said 600,000 shares.
'5. On December 31, 1947, defendant, pursuant to the aforesaid resolution, transferred $ 9,000,000 to its capital account from its capital surplus and earned surplus accounts, making the amount of its capital $ 24,000,000, or $ 40 for each of said 600,000 shares.
'6. Defendant has not issued any shares or certificates of stock in respect of the aforesaid transfer of $ 9,000,000 to capital account.
'7. Attached hereto and made a part hereof is the form of certificate evidencing shares of defendant's capital stock in use prior to, and at all times subsequent to, the aforesaid transfer of $ 9,000,000 to capital account. No change or modification whatsoever was made in such form of certificate as the result of such increase.'
The form of stock certificate certifies that (blank) 'is the owner of (one hundred) fully paid and nonasseable shares without nominal or par value of the Capital Stock of The National Sugar Refining Company, transferable on the books of the Corporation by the holder hereof in person or by duly authorized attorney upon surrender of this certificate properly endorsed. This certificate is not valid until countersigned by the Transfer Agent and registered by the Register'. The certificate bore a number and the signatures of its president and treasurer.
The Comptroller of The National Sugar Refining Company has made affidavit as follows:
'2. During the period from 1929 to date, the issued and outstanding capital stock of defendant has consisted of 600,000 shares of no par value. On and prior to December 31, 1947, defendant's capital was $ 15,000,000, or $ 25 for each of said 600,000 shares.
'3. On December 31, 1947, defendant increased the amount of its capital account from $ 15,000,000 to $ 24,000,000 by transferring thereto from its capital surplus and earned surplus accounts $ 9,000,000, of which $ 2,632,529.46 was transferred from its capital surplus ...