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92 C. Cls. Opinion of the Court guesswork. Standard Steel Car Co. v. United States, 67 C. Cls. 445, 475; Bethlehem Steel Co. v. United States, 75 C. Cls. 845.

It is contended by the defendant that the contracting officer having passed on the facts in reference to the delays and imposed the liquidated damages, and no appeal having been taken, under the terms of the contract his decision is final and conclusive. This would have been true if the contracting officer had made a fair and impartial decision on the facts in the case. However, the contracting officer did not make an impartial decision on the facts to the plaintiff. He made a certification of his findings to the Comptroller General for the guidance of the Comptroller General, and the Comptroller General made a decision that the plaintiff was responsible for the delays and assessed and deducted the amount of liquidated damages in the final settlement of the contract.

We have repeatedly held that a decision on the facts, as provided for in the contract, must be made by the contracting officer and not by the Comptroller General, who is not a party to the contract, and to whose decision the plaintiff never agreed to submit. The certification made by the contracting officer was administrative purely and was not in compliance with the terms of the contract. Sun Shipbuilding Co. v. United States, 76 C. Cls. 154.

The contracting officer not having made his decision under the terms of the contract, no appeal could be taken. Plaintiff was not required under the terms of the contract to appeal from the decision of the Comptroller General.

The Comptroller General assessed and collected the sum of $3,363.75. Subsequently he paid plaintiff $390.03, leaving a balance of $2,973.72, which remains unpaid.

Plaintiff is entitled to recover $2,973.72. It is so ordered.

LITTLETON, Judge; and GREEN, Judge, concur.

JONES, Judge; and WHITAKER, Judge, took no part in the decision of this case.

Reporter's Statement of the Case

ESTATE OF ISAAC G. JOHNSON v. THE UNITED

STATES

[No. 44018. Decided February 3, 1941]

On the Proofs

Capital stock tax;. what constitutes "engaging in business".-Where corporation, incorporated in 1904, with broad powers, for the purpose of taking over the real property of a deceased person's estate, engaged in the management and development of said property, and exercised generally the activities permitted by its charter; and where in 1929 the corporation by resolution of its board of directors declared a purpose to liquidate its affairs and thereafter distributed among its stockholders a liquidating dividend; and where thereafter said corporation discontinued many of the activities previously engaged in and generally reduced its operation to the maintenance and management of its remainIng properties and the making of such sales as were deemed advantageous, and acquired no new properties nor engaged in any new activities; it is held that such corporation during such period in question was not "engaged in business" within the meaning of the capital stock tax act and is entitled to recover the amounts assessed as capital stock tax for the years 1934, 1935, and 1936.

Same. The capital stock tax is a tax upon the privilege of doing busi

ness in a corporate capacity but two elements must appear to make the tax applicable to a corporation: (1) Transactions in corporate form; and (2) these transactions must be of such nature as to constitute doing business.

Same. Where the operations and transactions of the corporation were carried on merely for the purpose of reducing the property of an estate to a form in which it could readily be distributed among the heirs, such activities do not constitute a business.

Same. Where corporation confined its activities to the owning, holding, and preservation of its property with intent to dispose of said property and to distribute its avails in liquidation, and did only the acts necessary to continue that status; such corporation during the period involved was not subject to the capital stock tax.

The Reporter's statement of the case:

Mr. John Jay McKelvey for the plaintiff.

Mr. Fred K. Dyar, with whom was Mr. Assistant Attorney General Samuel O. Clark, Jr., for the defendant. Mr. Robert N. Anderson was on the brief.

291825-41-CC-vol. 92—— -33

92 C. Cls. Reporter's Statement of the Case The court made special findings of fact as follows:

1. Plaintiff, the Estate of Isaac G. Johnson, is a New York corporation with its principal office at Spuyten Duyvil, New York City. It was incorporated in 1904 under cir. cumstances which will hereinafter appear.

2. Isaac G. Johnson, whose name appears in the name of plaintiff, died in 1899 at an advanced age. During his lifetime he had built up a large steel-casting foundry at Spuyten Duyvil, and at his death the foundry was being operated as a partnership in which he and his five sons were the partners.

In addition to the real estate on which the steel plant was located, Isaac G. Johnson had accumulated over a period of nearly fifty years substantial real-estate holdings, a part of which was used for the steel business and the housing of his employees and a part was acquired by him for the purpose of dealing therein at a profit. All of the real estate, including the buildings connected with the steel plant, was owned by Isaac G. Johnson in his individual capacity.

3. Isaac G. Johnson left a will under which, except for two cash bequests to a brother and sister, all of his property passed to his five children subject to a life interest of his widow, Jane E. Johnson, Jane E. Johnson and his eldest son, Elias M. Johnson, were named as executors and trustees.

Shortly after the death of Isaac G. Johnson a plan was submitted by an attorney for the estate under which the business interests of the decedent could be continued and a convenient means provided for the distribution of the estate upon its final liquidation to the various parties interested therein. Under that plan two corporations were to be organized, one to carry on the steel business and the other the real estate business.

4. December 31, 1902, the steel business was incorporated under the name of Isaac G. Johnson & Company, which was the same name under which it had been carried on as a partnership. Upon organization the corporation acquired from the partnership the personal property, equipment, and goodwill of the steel business, giving in exchange therefor its capital stock, and similarly it purchased from the executors and trustees of Isaac G. Johnson's estate the land and

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Reporter's Statement of the Case buildings which were connected with the steel business and which had been owned by Isaac G. Johnson individually, by giving in exchange therefor first mortgage bonds of the corporation.

Isaac G. Johnson & Company continued in active existence until about 1923, when condemnation proceedings were started by the State of New York for the acquisition of its properties, which finally resulted in such acquisition. In 1933 the only assets held by Isaac G. Johnson & Company were certain income-producing securities and these securities were taken over in 1933 by plaintiff for reasons of economy in handling the affairs of the two corporations.

5. In the early part of 1904 plaintiff was incorporated under the name of “Estate of Isaac G. Johnson," with an authorized capital stock of $10,000, consisting of 100 shares of the par value of $100 each, and acquired from the executors and trustees of Isaac G. Johnson's estate the real estate which had been held by him individually, except that which had been sold to the corporation Isaac G. Johnson & Company. The real estate so acquired consisted of approximately 20 acres, and as consideration for the transfer the capital stock of plaintiff was issued to the executors and trustees of Isaac G. Johnson's estate. The purposes of plaintiff were stated in the certificate of incorporation as follows:

The acquiring, buying, selling, renting, exchanging and otherwise dealing in real property, improved and unimproved; the building, construction, and alteration of houses and other structures thereon and the management and development of real property generally. The purchase and manufacture, acquiring, holding, owning, mortgaging, pledging, leasing, selling, assigning, and transferring and otherwise dealing in goods, wares, merchandise, and property of every kind and description. The acquiring, holding, owning, and dealing in stocks, bonds, debentures, notes, and other corporate and individual securities. The loaning of money secured by mortgages on real or personal property. The buying, selling, and dealing in bonds, notes, loans secured by mortgages or other liens on' personal or real estate. The supervising, managing, and protecting of real and personal property and all interests in

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92 C. Cls. Reporter's Statement of the Case and claims affecting the same and the transacting of any or all other business which may be necessary or incidental or proper to the exercise of any or all of the aforesaid purposes of the corporation, wherever the same may be permitted by law either manufacturing or otherwise, and to the same extent as the laws of this State will permit and as fully and with all the powers that the laws of this State confer upon corporations under this Act, with full power to borrow such moneys

as it may require for the purposes of its business. Upon incorporation plaintiff proceeded to engage in the business for which it was organized and, as expressed in the "purposes" clause of the certificate of incorporation, making purchases, sales, and otherwise carrying on business, as will more fully hereinafter appear.

6. Jane E. Johnson, widow of Isaac G. Johnson, died in November 1906, which terminated her life interest in Isaac G. Johnson's estate. Final accounting, settlement, and distribution of the assets of Isaac G. Johnson's estate were made by the surviving executor and trustee, and on No. vember 30, 1906, the executor and trustee was finally discharged by decree of the surrogate court, thus ending the liquidation of Isaac G. Johnson's estate. At that time the stocks and bonds which had been received by the executors and trustees in the transfer of the assets of Isaac G. Johnson's estate to plaintiff and to Isaac G. Johnson & Company were distributed to the beneficiaries of the estate.

7. As heretofore shown, plaintiff acquired from Isaac G. Johnson's estate approximately 20 acres of land at the time of its incorporation in 1904, for which it issued capital stock. Thereafter plaintiff made further acquisitions as follows:

(a) At the time of Isaac G. Johnson's death the decedent held an undivided one-third interest in 15 acres of unimproved land in which his sister and his brother had a like interest. April 2, 1906, the 15 acres were acquired by plaintiff for a cash consideration and short-term notes.

(b) On various dates between 1906 and 1908 four parcels of land of approximately eight acres were acquired by plaintiff in the neighborhood of parcels previously purchased.

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