Pacific Fruit & Produce Co. v. United States , 61 F. Supp. 619 ( 1945 )

BLACK, District Judge.

Now we come to the matter of Pacific Fruit & Produce Company, Inc., versus United States of America. The matters in issue in this action have been very exhaustively presented by counsel. The issue is one that certainly would justify a carefully written opinion. I haven’t had time as yet to prepare a written opinion. If I do not give a decision today, I probably will have no opportunity to give a decision, written or oral, for a number of weeks by reason of other pressing matters requiring my attention and by virtue of being required to hold court for a number of weeks outside the state. I think it is far preferable that counsel should know the Trial Court’s conclusion,' regardless of whether or not counsel feel that any language has been used which should be commended. It, therefore, is my intention to make my decision brief so that the parties may be aware of the ultimate result in this Court. The decision in this case has been delayed sufficiently long already by reason of the nature of the dispute. It should not be delayed longer merely in order to afford a chance to file a memorandum opinion.

I have considered the question, the facts as agreed, the arguments of counsel and their citations as they have respectively submitted same. I am of the opinion that the plaintiff is not entitled to recover. My decision therefore will be that plaintiff’s action should he dismissed. I haven’t determined whether or not plaintiff is entitled to maintain the action. Plaintiff contends that the history of the assumption by plaintiff of an obligation of a previous corporation was such and the assumption was of sufficiently early enough date as to permit plaintiff to maintain this action. The Government contends that the decisions of the courts are to a contrary effect. I am far from convinced that the Government is right in that respect. However, I am not convinced that the plaintiff is correct. As I read the law and regulations and the decisions, it is not necessary that I decide that particular phase of this case.

As I see it, the plaintiff is not within the language of the exemption. Under the holding of Helvering v. Ohio Leather Company, 317 U.S. 102, 63 S.Ct. 103, 87 L.Ed. 113, the plaintiff has failed to show that there was a written contract executed by plaintiff prior to May 1, 1936, or by any predecessor of plaintiff prior to May 1, 1936, which contained a provision as required dealing “with the disposition of earnings and profits of the taxable year,” or providing that a portion of the earnings and profits of the taxable year or at all “be paid within the taxable year in discharge of a debt,” or “be irrevocably set aside within the taxable year for the discharge of a debt.”

The decision of Rogan v. Walter Wanger Pictures Company, 9 Cir., 143 F.2d 459, is, as I read it, opposed to the contention of plaintiff. Under the decisions it was the burden of the plaintiff to show that it was strictly within the terms of the provision before it could be entitled to recover in this action. A proceeding of this kind depends upon the language of the law involved. There is no room for consideration as to what the law should have been. To me, the conclusion is inescapable that the plaintiff has failed to sustain the burden on the merits, irrespective of the question of whether the plaintiff is or is not entitled to maintain the action at all.

The decision, therefore, is that the action shall be dismissed.