McLaughlin

This action was brought to recover the sum of $3,470.98 alleged to have been unlawfully assessed and collected from Frederick A. Robbins as additional income taxes for the year 1928. On March 12, 1932, Robbins filed with the Commissioner of Internal Revenue a claim for refund of the tax, which was disallowed on January 18, 1933. Robbins died on May 27, 1932, while the claim for refund was pending, and on July 7, 1933, Wells Fargo Bank & Union Trust Company, as executor of his last will and testament, filed this action to recover the amount of the tax from the collector of internal revenue. There was judgment for the executor in the sum of $1,089, from which both the executor and the collector have appealed. The facts are as follows:

In the year 1916, Robbins owned bonds of the Peoples Water Company, a California public utility corporation, of the par value of $45,000. On January 2, 1917, these bonds were exchanged for 270 shares of class A preferred stock and 180 shares of class B preferred stock of the East Bay Water Company, another public utility corporation of California. The exchange was in pursuance of a plan of reorganization to which both companies were parties. No money…