W. E. Hall Co. v. Franchise Tax Bd.

—This action pursuant to Revenue and Taxation Code section 26102 was brought by plaintiff in the superior court for a refund of California franchise taxes allegedly overpaid for the income year of 1953. Judgment was rendered for plaintiff and defendant has appealed from that judgment.

The case was tried by the court without a jury on a written stipulation of facts and the testimony of one witness for the plaintiff. There is no conflict which can be regarded as factual. The issue is the application of the law to a transaction, the terms of which are clearly described.

In 1953 Pacific Steel Fiber Drums, a corporation (hereinafter called Pacific), was the wholly owned subsidiary of plaintiff, a California corporation (hereinafter called Hall). The two companies were managed by the same officers and the same boards of directors.

In April of 1953 Rheem Manufacturing Company (hereinafter called Rheem) expressed a desire to purchase the business of Pacific.

In the oral negotiations which followed, it was agreed that Rheem would pay $200,000 for the operating assets and the patents, and that it would pay book value for inventories on hand at the time of the transfer. Pacific would…