The following opinion was filed December 8, 1925:
Eschweiler, J.Plaintiff’s main contention here, as in the proceedings before the taxing officers, is that the proceedings by the stockholders and directors of the Kalt-Zimmers Manufacturing Company in October, 1920, recited in the statement of facts, should be considered in legal *274effect as being a distribution of the surplus and property of the corporation as though a dividend or distribution of surplus assets among its stockholders, and therefore, the company having in prior years accounted for and paid an income tax upon its receipts and revenue going to make up such surplus, that such-being now paid as dividends would not be properly subjected to an income tax assessment against the plaintiff.
In support of this contention it is vigorously urged that it is proper to go behind the mere face of the proceedings, and that the court is required to look into and determine what was the real substance of the transaction rather than be confined to the mere form or language in which it was clothed. That there being no express statutory form and the authorities being uniform in holding that no precise formalities are required for such corporate action, the mere form in which this purported to be done is not controlling. However correct such contention may be, yet, giving the plaintiff the benefit of the most liberal construction possible to the contract between the parties and the proceedings of the corporation in October, 1920, we nevertheless are satisfied that the transaction falls far short of being that for which plaintiff contends, and for the following among other reasons:
The language used in the recitals of the minutes of the proceedings and of the resolution adopted by the stockholders and by the board of directors makes no statement to the effect that it was thereby and then intended to distribute, as a dividend, the corporate assets to the respective stockholders as such and in proportion to their holdings.
All the writings, including the declaration by plaintiff of October 28th in the adjustment of interest recited above, speak of the transaction as a purchase by the Kalt-Casper party of the shares of stock held by the Zimmers family and of the entire amount to be paid as the purchase price.
*275There is no showing made of entries on the books of the corporation, at or after the time of the transaction, tending to indicate that, by appropriate entries, it was treated by the company at that time as a dividend as distinguished from an advance out of the property of the company for the furtherance of a purchase by one set of stockholders of the stock held by the other set in order that the internal dissensions that had so long troubled the company might be ended, — a consummation which the corporation might well and devoutly wish.
The oral testimony, if such could properly be considered in determining the real effect of the transaction, was on both sides of the question, the plaintiff testifying that it was the purpose at that time to distribute the surplus of the-company as a dividend. Mr. Casper and his counsel, who-took part in the transaction, testified to the contrary. On that feature of it, therefore, it presented a question of fact, and the findings of the taxing officers with reference to such manifestly could not be disturbed.
Further, it is hard to see how the assuming of an obligation of $75,000 to be secured by a mortgage on the property of the corporation and which was a part of the consideration paid for this stock should be considered as a distribution of assets or as part of a dividend. It was manifestly assuming a new obligation by the corporation, and pledging not only its surplus but its entire property for the meeting of such obligation. Manifestly, then, so much of the transaction as involved the assuming of an obligation for the further- payment of the $75,000 could not be considered as any part of a corporate dividend, which can only be, under the statute, sec. 182.19, Stats., out of net profits, and must not in any way impair or diminish the capital.
Again, the recital in the minutes and resolution of the substantial interest the corporation itself had in having some agreement reached whereby its internal dissensions could be *276settled, clearly indicates a proper interest that the corporation as such had in and to the buy-and-sell proposition that was then being considered. It- could well become a third party to such agreement. Neither of the warring factions among the stockholders could very well thereafter question, on the ground of its being possibly an ultra vires act, the assistance lent by the corporation as such to- this transaction, so plainly recited to be and which -SO' plainly was an actual benefit to the corporation itself.
Stress is laid by plaintiff upon the recital in the findings by the trial court to the effect that, upon the acceptance of the proposal by the Zimmers party, the Liberty bonds, stamps, certificates of indebtedness, note, and mortgage were delivered by said corporation pursuant to said resolution, and the title to the same absolutely and irrevocably passed to and vested in the Zimmers faction, together with the promissory note of Kalt and Casper; arguing therefrom that it is in effect such a finding of fact as must lead to the legal and logical conclusion that the title to this property passed directly, to the plaintiff from the corporation and never reached the person buying the Zimmers stock, and that this effect could only be reached by treating this as a dividend. We cannot, however, so construe this finding, nor could it control if treated as a conclusion of law, because if such it would be, as we have indicated above, incorrect.
We are therefore satisfied that no- other reasonable construction can be given to the transaction between the interested parties in October, 1920, than that it was a purchase outright, at the designated price per share, of the entire holdings of the Zimmers family by the Kalt-Casper party, in which transaction the company on its own behalf and for. its own interest assisted in advancing to the Casper-Kalt party, which happened to be the buyer under the option, thereafter exercised, some of its assets and pledged its credit.
*277Another question raised on this appeal is as to whether or not the proper findings were made as to the value of the stockholdings of Mr. Zimmers on January 1, 1911. The book value of the stock at the time showed a less amount than that determined to be the proper amount by the taxing officers. The plaintiff contends that it should be a much higher value by reason of assets not appearing on the books of the corporation. Testimony was given by him in this regard and testimony by other witnesses in opposition.
We deem it unnecessary to go into the details of this because it presented at most a question of fact for the taxing officers, and there is support in the record »for the conclusion at which they arrived, and nothing would be gained by further discussion.
By the Court. — Judgment affirmed.
A motion for a rehearing was denied, with $25 costs, on March 9, 1926.