Eaton v. Phoenix Securities Co.

Second Circuit

Eaton v. Phoenix Securities Co.

22 F.2d 497, 6 A.F.T.R. (P-H) 7057, 1927 U.S. App. LEXIS 3357, 6 A.F.T.R. (RIA) 7057

CourtCourt of Appeals for the Second Circuit

DecidedNovember 14, 1927

Docket51

StatusPublished

Cited by18 cases

This text of 22 F.2d 497 (Eaton v. Phoenix Securities Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Eaton v. Phoenix Securities Co., 22 F.2d 497, 6 A.F.T.R. (P-H) 7057, 1927 U.S. App. LEXIS 3357, 6 A.F.T.R. (RIA) 7057 (2d Cir. 1927).

Pincite

Opinion

PER CURIAM.

We do not think that anything will be gained by an extended discussion of the decisions on this tangled subject. Edwards v. Chile Copper Co., 270 U. S. 452, 46 S. Ct. 345, 70 L. Ed. 678, recognized the continued authority of McCoach v. Minehill R. R. Co., 228 U. S. 295, 33 S. Ct. 419, 57 L. Ed. 842, and U. S. v. Emery-Bird-Thayer Realty Co., 237 U. S. 28, 35 S. Ct. 499, 59 L. Ed. 825, to which we may add Zonne v. Minneapolis Syndicate, 220 U. S. 187, 31 S. Ct. 361, 55 L. Ed. 428. We cannot believe that it makes any difference whether the property held be corporate -shares or realty, or whether the income be dividends or rent. Had it not been for the new accessions, the plaintiff would have been as bare a holding company as could be contrived. We do not believe that such a company is “engaged in business” during the year when it first receives its property and never thereafter. The venture is single, though at the outset it may show more activity ; if there is business then, there is the same business always. Therefore we think that it made no difference that property continued to drop into the corporate lap from time to time, even though that were due to its own action. The alternatives were not business or death; a minimum of activity is necessary to the persistence of even the lowest organisms. Edwards v. Chile Copper Co., supra, is so plainly different on the facts that we may pass it. Phillips v. International Salt Co., 274 U. S. -, 47 S. Ct. 589, 71 L. Ed. -, is indeed closer, and may perhaps be the forerunner of a stricter rule. However, the holding company there actually aided in financing the operating company, as well as borrowed money from it. Whether these turned the scale, or the transactions in its bonds, or both together, we cannot tell. So far as we can see, it had no effect upon the cases on which we rely.

Judgment affirmed.

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PER CURIAM.

We do not think that anything will be gained by an extended discussion of the decisions on this tangled subject. Edwards v. Chile Copper Co., 270 U. S. 452, 46 S. Ct. 345, 70 L. Ed. 678, recognized the continued authority of McCoach v. Minehill R. R. Co., 228 U. S. 295, 33 S. Ct. 419, 57 L. Ed. 842, and U. S. v. Emery-Bird-Thayer Realty Co., 237 U. S. 28, 35 S. Ct. 499, 59 L. Ed. 825, to which we may add Zonne v. Minneapolis Syndicate, 220 U. S. 187, 31 S. Ct. 361, 55 L. Ed. 428. We cannot believe that it makes any difference whether the property held be corporate -shares or realty, or whether the income be dividends or rent. Had it not been for the new accessions, the plaintiff would have been as bare a holding company as could be contrived. We do not believe that such a company is “engaged in business” during the year when it first receives its property and never thereafter. The venture is single, though at the outset it may show more activity ; if there is business then, there is the same business always. Therefore we think that it made no difference that property continued to drop into the corporate lap from time to time, even though that were due to its own action. The alternatives were not business or death; a minimum of activity is necessary to the persistence of even the lowest organisms. Edwards v. Chile Copper Co., supra, is so plainly different on the facts that we may pass it. Phillips v. International Salt Co., 274 U. S. -, 47 S. Ct. 589, 71 L. Ed. -, is indeed closer, and may perhaps be the forerunner of a stricter rule. However, the holding company there actually aided in financing the operating company, as well as borrowed money from it. Whether these turned the scale, or the transactions in its bonds, or both together, we cannot tell. So far as we can see, it had no effect upon the cases on which we rely.

Judgment affirmed.

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22 F.2d 497, 6 A.F.T.R. (P-H) 7057, 1927 U.S. App. LEXIS 3357, 6 A.F.T.R. (RIA) 7057, Counsel Stack Legal Research, https://law.counselstack.com/opinion/eaton-v-phoenix-securities-co-ca2-1927.

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