(dissenting).
I think that the Standard Oil Company was liable for the tax. The law imposes a tax on “gasoline sold by the producer.” I would find that Fleet-Wing acted merely as selling agent of the producer and not in its own independent capacity.
Some of the facts are not made clear in the findings and I think the findings should be modified so as to state them in more definite form. From the evidence and the record as a whole it is clear that Fleet-Wing was merely a controlled appendage of Standard Oil. Most of Fleet-Wing’s orders were filled by Standard products. Its pricing policies were determined by a market in which Standard Oil’s retail brands were the price leaders. Its officers and directors, with the exception of two, served in such capacities with Standard Oil. In my judgment the record does not fully sustain a finding that Fleet-Wing “determined its own business policies,” though as a practical matter it was undoubtedly permitted to determine minor details.
Fleet-Wing’s operations consisted of paper manipulations mainly. Normally its orders for gasoline were forwarded to Standard for delivery to Fleet-Wing’s customers; Standard handled the deliveries and Fleet-Wing kept no inventories. It does not appear that Fleet-Wing in any way altered the gas it bought; it simply sold gas, specially colored for it by the plaintiff.
The transaction in question was very unusual. Previously there had been very few large-quantity transactions between Fleet-Wing and Standard. The findings do not cite any other transaction where Fleet-Wing itself took delivery. Such delivery as was made in this instance was in Standard’s own tanks which were leased to Fleet-Wing for six months and delivery of Fleet-Wing’s own gasoline was then handled by Standard as usual. Standard turned out to be a very lenient landlord. As soon as a tank was emptied by Fleet-Wing, Standard cancelled the lease. Ordinarily it would be immaterial whether the parent or its wholly owned selling subsidiary paid the excise — it ultimately all shows up on Standard’s profit account. But when it became profitable to make Fleet-Wing appear independent, special legal trappings were donned for the occasion.
Had Fleet-Wing not been a wholly owned and controlled subsidiary, the transaction might well have been different. By stocking up on inventory an independent entity takes on additional risks or costs. It must temper its inventory policies accordingly. Here the subsidiary took only risks and costs that would have been incurred by the parent company in any event. Whether these costs would find their way into Standard’s income statement directly or indirectly was in itself immaterial. The parent, therefore, had no good business reason for not instructing its subsidiary to take title to the gasoline.
I fully concede the right of a taxpayer to choose the method of doing business that will make his taxes less than another method. Sometimes the line of distinction is very thin between a real and a make-believe change of policy. But to permit a temporary change of this character made for the sole purpose of avoiding a tax would encourage large concerns to maintain subsidiaries purely for such purposes.
Fleet-Wing increased its price the amount of the additional tax which became effective July 1,1940, and thus passed it on to its customers or to the ultimate purchasers. In doing so it was acting as the selling agent of Standard. Plaintiff is therefore not entitled to recover because it has not met the requirements of section 3443(d) of the Internal Revenue Code of 1939.
. I would dismiss, plaintiff’s petition.