Coca-Cola Bottling Co. v. Commissioner

Black, /.,

dissenting: I am in entire agreement with the majority opinion wherein it holds that the Coca-Cola Bottling Company of Sacramento, Ltd., and a partnership organized January 1,1944, known as Coca-Cola Bottling Company of Sacramento were separate legal entities and the income of the partnership cannot be taxed to the corporation. It seems to me that the facts fully support the majority opinion in its holding, on that issue. I think its reasoning is sound and the authorities which are cited well support the conclusion which is reached.

While I find myself in entire agreement with the majority opinion on that issue, I am not in agreement with the holding of the majority that N. M. Sellers and Gladys Sellers were the only members of the partnership. It seems to me that such a holding is in conflict with the facts which are present in this proceeding. The question of whether a partnership is to be recognized for income tax purposes depends upon whether the parties, in good faith and acting with a business purpose, intended to join together as partners in the present conduct of the enterprise. Commissioner v. Culbertson, 337 U. S. 733. The Commissioner has determined that N. M. Sellers and Gladys Sellers were members of the partnership which was organized January 1, 1944, but that their two children, Jack Sellers and Virginia Sellers, who also signed and obligated themselves under the very same partnership agreement, were not members of the partnership. The majority opinion sustains the Commissioner on this point and has an ultimate finding of fact as follows:

On or about January 1, 1944, N. M. Sellers and Gladys Sellers, on tbe one band, and Jack Sellers and Virginia Sellers, on the other hand, did not in good faith and acting with a business purpose intend then to join with each other, the parents with the children or the children with the parents, in the present conduct of the business known as Coca-Cola Bottling Company of Sacramento, a partnership, and Jack and Virginia Sellers were not during 1944 and 1945 bona fide members of that partnership.

I- think the foregoing ultimate finding of fact is not justified by the record. At the time this partnership was formed Jack Sellers was 23 years old and Virginia was 19 years of age. They had grown up in the business, so to speak, and it seems only natural that the parents would want to take them into the business as partners and I think that they did so in the written partnership agreement which was executed by the respective partners. This is not a case of parents endeavoring to take young minor children into a partnership with a view of reducing their own income taxes. Jack and Virginia had grown up to the adult stage at the time the partnership was formed. It seems to me that it is safe to say that the partnership thus formed would be recognized under the laws of California for all purposes and I see no reason why it should not be recognized for Federal income tax purposes. It seems to me that to refuse to recognize it for what it really was is wholly illogical»

I shall not in this dissenting opinion undertake to review all the facts which I think sustain the validity of the partnership under the rule of the OuTbertson case, sufra. It would unnecessarily prolong this dissenting opinion to do so. I will simply say that applying the test which the Supreme Court laid down in Commissioner v. Culbertson, I think the partnership which was formed January 1, 1944, was composed of N. M. Sellers, Gladys Sellers, Jack Sellers, and Virginia Sellers and that the majority opinion errs in holding that only N; M. Sellers and Gladys Sellers were members of the partnership and that all the income of the partnership is taxable to them.

To this holding of the majority, I respectfully dissent.