Nibley-Mimnaugh Lumber Co. v. Commissioner , 37 B.T.A. 617 ( 1938 )

NIBLEY-MIMNAUGH LUMBER COMPANY, BY J. F. RAVENSCROFT, TRUSTEE, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Nibley-Mimnaugh Lumber Co. v. Commissioner

Docket No. 85966.

United States Board of Tax Appeals

37 B.T.A. 617; 1938 BTA LEXIS 1011;

April 5, 1938, Promulgated

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A notice of deficiency was sent to a corporation, and a petition for redetermination was filed by an individual as trustee for the corporation. The corporation was dissolved more than five years prior to the filing of the petition, and under local law its existence terminated completely five years after dissolution. Held, that the petition herein is not the petition of the taxpayer to whom the notice of deficiency was sent and must be dismissed for lack of jurisdiction.

Allan A. Smith, Esq., for the petitioner.

John H. Pigg, Esq., for the respondent.

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ARUNDELL

The basis for this proceeding is the respondent's determination of a deficiency in income tax for the year 1923. Upon the filing of a petition for redetermination the respondent moved to dismiss for lack of jurisdiction. That motion, after hearing thereon, was denied by order entered March 29, 1937. Thereupon the respondent answered the petition, denying the petitioner's jurisdictional allegations. The proceeding then came on for trial on the merits and at the hearing counsel for respondent renewed the motion to dismiss. We are now of the opinion that there is no statutory petition before us in this proceeding, and our findings of fact will be confined to the jurisdictional question.

FINDINGS OF FACT.

On May 6, 1936, the respondent mailed a notice of deficiency in income tax for the year 1923 to:

Nibley-Mimnaugh Lumber Company,

c/o Mr. J. F. Ravenscroft,

Box 198,

Baker, Oregon.

On August 1, 1936, a petition for redetermination of that deficiency was filed with the Board bearing the caption:

Nibley-Mimnaugh Lumber Company, by J. F. Ravenscroft, Trustee.

The first numbered allegation of the petition reads:

The petitioner is the Trustee appointed by the Nibley-Mimnaugh Lumber Company on the 1st day of October, 1923, for the purpose of taking charge and possession of all of its affairs, closing up its business and making distribution to the stockholders of that company, all in accord with a contract, copy of which is hereto annexed, marked as Exhibit "A" and by such reference made a part hereof; that the said Nibley-Mimnaugh Lumber Company was thereafter dissolved and the said company is no longer in existence and in its own name is to initiate or carry on an appeal to this Board; that petitioner's residence is 2517 N.E. 13th Street, Portland, Oregon.

The verification is signed by J. F. Ravenscroft, who states therein in part:

That he is a former stockholder, formerly a director and formerly secretary of the Nibley-Mimnaugh Lumber Company, and also is the trustee for said company; that as such trustee he is duly authorized to verify the foregoing Petition; * * *

The Nibley-Mimnaugh Lumber Co. was formerly a corporation incorporated under the laws of Oregon in 1907. On August 1, 1923, the stockholders of Nibley-Mimnaugh Lumber Co. designated J. F. Ravenscroft "as trustee to hold, operate or sell the assets of the Nibley-Mimnaugh Lumber Company * * *." The next day a resolution was adopted by the directors authorizing "J. F. Ravenscroft, as Liquidating Trustee" to sell and convey the company's assets. A contract to sell the assets was executed the same day and in that contract the vendor is described as "The Nibley-Mimnaugh Lumber Company, an Oregon corporation, First Party, acting herein by and through J. F. Ravenscroft as Liquidating Trustee of said Nibley-Mimnaugh Lumber Company." In September 1923 the stockholders and directors formally ratified the acts of Ravenscroft. Resolutions were adopted to dissolve the corporation and the directors appointed Ravenscroft as trustee to wind up the affairs of the corporation and carry out the terms of the contract of August 2, 1923. On October 1, 1923, a contract was entered into between the corporation and Ravenscroft wherein Ravenscroft as trustee was instructed to carry out the terms of the contract of August 2, to collect all sums of money due under that contract, and was authorized to take charge of all the property of the corporation. The contract further authorized Ravenscroft to emplop such legal and clerical assistants as might be necessary to carry out the provisions of the trust or any other matter in connection with the closing up of the affairs of the corporation. On March 7, 1924, the Corporation Commissioner of the State of Oregon issued a certificate of dissolution of the Nibley-Mimnaugh Lumber Co.

OPINION.

ARUNDELL: The question for consideration at this time is whether there is before us a proper petition to bring the proceeding within our jurisdiction. As set out in the findings of fact, the notice of deficiency was addressed to "Nibley-Mimnaugh Lumber Company, c/o J. F. Ravenscroft. " The petition was filed by Ravenscroft, purporting to be trustee for the corporation to whom the deficiency notice was sent. The corporation itself obviously could not file a petition, as it was dissolved on March 7, 1924, and under the holding in , its corporate existence completely terminated five years after that date. The Standifer case, like this, involved an Oregon corporation. More than five years after dissolution a review of the Board's decision was sought in the Circuit Court of Appeals for the Ninth Circuit. The Circuit Court dismissed the petition for review. It was there pointed out that upon dissolution of a corporation the corporate existence is continued for five years for purposes of liquidation, winding up the business and disposing of property. After the expiration of that period of time the corporation was as if it did not exist and even suits commenced within that period abate upon the expiration thereof. In the present case the corporation became completely defunct five years after March 7, 1924, that is, on March 7, 1929. Consequently it could not file the petition that was filed herein purportedly in its behalf on August 1, 1936. The petition therefore is not the petition of the taxpayer against whom the deficiency was determined, and we have no jurisdiction to hear the proceeding. ; ; affirmed March 11, 1933, by the Circuit Court of Appeals for the Fifth Circuit without opinion.

The contract of October 1, 1923, between the corporation and Ravenscroft does not give validity to the petition filed herein. It can not breathe life into the dead corporation, so as to make it the petitioner. If there are Oregon statutes that continue the existence of a corporation under such a contract, the petitioner has not brought them to out attention, and the petitioner has the burden of establishing jurisdiction. See .

The petitioner contends that section 272(k) of the Revenue Act of 1934 gives the petition validity. That section provides as follows:

(k) ADDRESS FOR NOTICE OF DEFICIENCY. - In the absence of notice to the Commissioner under section 312(a) of the existence of a fiduciary relationship, notice of a deficiency in respect of a tax imposed by this title, if mailed to the taxpayer at his last known address, shall be sufficient for the purposes of this title even if such taxpayer is deceased, or is under a legal disability, or, in the case of a corporation, has terminated its existence.

The quoted provision is designed to give validity to the notice of deficiency under certain circumstances and relates to a question not present here. Neither party questions the notice of deficiency; the question here is whether the petition is a proper one. For reasons given above, we hold that there is no proper petition before us. Accordingly, the order entered in this proceeding on March 29, 1937, will be vacated and respondent's motion to dismiss for lack of jurisdiction is granted.

Order of dismissal will be entered.