Kenner Oil & Gas Co. v. Commissioner

THE KEENER OIL & GAS COMPANY, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. Kenner Oil & Gas Co. v. Commissioner Docket No. 60789. United States Board of Tax Appeals 32 B.T.A. 186; 1935 BTA LEXIS 981; March 7, 1935, Promulgated *981 The Akin Oil Co. filed its income tax return for 1917 on March 29, 1918. A deficiency notice was mailed to it December 27, 1928. Waivers were filed with the Commissioner and signed by him, purporting to have been signed on behalf of the company by its officers, extending the time of assessment and collection of the tax to December 31, 1928. Attorneys for the Akin Oil Co. became attorneys for petitioner and upon their motion the Akin Oil Co. proceeding was dismissed by the Board, which entered judgment for respondent for the deficiency involved. The assets of the Akin Oil Co., which were of a value in excess of the deficiency and judgment, were taken over by the Keener Oil & Gas Co., petitioner, for certain of its stock and the assumption by petitioner of the Akin Oil Co. Liabilities. There was not sufficient evidence of the dissolution of the Akin Oil Co. or the change of its officers who signed the waivers. Held: (1) The deficiency against the Akin Oil Co. was not barred. (2) Judgment was properly entered against the Akin Oil Co. (3) Petitioner is liable as a transferee of the Akin Oil Co. Charles D. Hamel, Esq., Lee I. Park, Esq., Alan E. Gray, Esq.,*982 and W. L. Clark, C.P.A., for the petitioner. Brooks Fullerton, Esq., and J. C. Hering, C.P.A., for the respondent. SEAWELL *186 This is a transferee proceeding, the Akin Oil Co. being the alleged transferor, against which a deficiency in income tax for the year 1917 in the amount of $20,943.86 was determined and decided in Docket No. 42903. The validity of the Board's decision against the transferor, which depends principally upon the validity of certain waivers therein involved, is the principal issue here. *187 FINDINGS OF FACT. The petitioner is an Ohio corporation, with its principal place of business in Tulsa, Oklahoma. The Akin Oil Co. was incorporated January 19, 1906, under the laws then applicable to the Indian Territory, wherein its property was located. On March 29, 1918, the Akin Oil Co. filed its return for the year 1917 with the collector of internal revenue for the district of Oklahoma. A deficiency notice for the year 1917, showing a deficiency of $20,943.86, was mailed to it December 27, 1928. Its original petition was filed February 25, 1929, signed: "W. L. Clark, Agent for the petitioner" and was verified*983 by "J. H. McCoy" as its president. On November 12, 1924, William O. Ligon, Jr., C.P.A., executed a power of attorney, constituting W. L. Clark, C.P.A., a member of his staff, as his true and lawful substitute to represent persons or corporations employing his services before the United States Treasury Department, in all matters. On July 20, 1926, "The Akin Oil Co. by J. H. McCoy, Prest." and "H. R. Johnson, Asst. Sect'y" executed a power of attorney, with the seal of the company affixed, to William O. Ligon, Jr., constituting him its true and lawful attorney, for and in its name and behalf, to represent it before the Treasury Department in all tax matters and other charges for all years as fully as it could do, and extended such powers to Ligon's employees enrolled to practice before the Treasury Department and gave Ligon power to delegate such authority or substitute another agent or attorney. On November 21, 1930, Charles D. Hamel, Richard S. Doyle, and Lee I. Park, as counsel for the Akin Oil Co., Docket No. 42903, moved that the hearing set for December 4, 1930, be postponed at least 90 days, which motion was granted. At the same time they stated an amended petition might*984 be filed. On January 14, 1931, G. M. Withington and H. R. Johnson, as trustees of the Akin Oil Co., executed a power of attorney to Charles D. Hamel, Lee I. Park, W. L. Clark, and E. D. Martin and each of them to represent them as trustees before the Treasury Department, any bureau or official thereof, and the Board of Tax Appeals in all matters pertaining to the determination, assessment, collection, or payment of any Federal tax under the revenue acts, 1913 to 1928, inclusive. The power revoked all previous powers filed with the Treasury Department. The corporate seal of the Akin Oil Co. was affixed to this power of attorney. An amended petition was filed on January 31, 1931, by Charles D. Hamel, W. L. Clark, and Lee I. Park, as attorneys for the petitioner, the Akin Oil Co., notice being thereafter given to the Board on February 17, 1931, by "W. L. Clark, Agent for petitioner" that *188 Hamel and Park had been appointed and designated by him as cocounsel for the petitioner in Docket No. 42903. The assignment of errors in the amended petition, Docket No. 42903, are practically the same as in the instant proceeding (with the exception of one alleging error on account*985 of a deficiency asserted against petitioner herein as a transferee of the Akin Oil Co.) and are in substance hereinafter set out. The amended petition was verified by H. R. Johnson, who swore he was one of the surviving directors and trustees of the Akin Oil Co. and was the duly elected assistant secretary at the time of its liquidation. The amended petition recited that G. M. Withington and H. R. Johnson "are surviving directors of The Akin Oil Co., now trustees of The Akin Oil Co., a dissolved or defunct corporation." The Akin Oil Co. filed its last return, for the year 1922, in March 1923. It showed no income - practically a blank form - with the following typewritten thereon: "This is the final return of this company and request is hereby made that said company be relieved from filing Income and Capital Stock Returns after this date." The return was subscribed and sworn to by G. M. Withington and H. R. Johnson, as vice president and assistant treasurer, respectively. The respondent in answering the amended petition denied errors alleged, demanded proof that the Akin Oil Co. was dissolved or defunct, and asserted that at all times material it was a corporation duly organized*986 and authorized to do business in Oklahoma and that within the time required by law, through its officers and agents whose authority was actually or impliedly warranted by said corporation, various income and excess profits tax waivers or consents were executed, extending the period within which assessment and collection might be made of such taxes due from it for the year 1917 until December 31, 1929, that date being subsequent to the date (December 27, 1928) when the deficiency notice was mailed it. The Akin Oil Co. replied, denying the allegations of the respondent, and asserted the deficiency notice was mailed after the statute of limitations on assessment and collection of the taxes for 1917 had run. When the case of the Akin Oil Co., Docket No. 42903, came on for hearing on March 23, 1931, the following proceedings were had: Mr. HAMEL: Your Honor, in that matter we have carefully gone over the situation, and have reviewed the facts and have concluded that it is not desirable to proceed with this matter. We therefore, move that the proceeding be dismissed. The MEMBER: Is there any objection? Mr. JOHNSTON: There is no objection if it be dismissed and judgment entered*987 for the respondent in the amount of the deficiency as shown in the deficiency letter. *189 The MEMBER: I assume that follows, Mr. Johnston. Mr. JOHNSTON: Yes sir. The MEMBER: It is not dismissed for lack of jurisdiction; there is no question of jurisdiction involved, is there Mr. Hamel? Mr. HAMEL: There may be a question of jurisdiction here, but we are not raising it at this time. The MEMBER: The motion to dismiss will be granted, and the deficiency as determined by the Commissioner will be approved. Thereafter, the following order of dismissal was entered on March 30, 1931: This proceeding having been called from the Day Calendar of March 23, 1931 at Pittsburgh, Pennsylvania, on motion of counsel for the petitioner to dismiss, no objection on behalf of counsel for the respondent, it is ORDERED: That the motion be and the same is hereby granted and the proceeding dismissed, it is also ORDERED: That upon redetermination, there is a deficiency for the year 1917 in the amount of $20,943.86. The deficiency notice in the instant case was mailed the petitioner on October 14, 1931, and asserted a liability against it as a transferee of the Akin Oil Co. for*988 the year 1917, in the amount of $20,943.86, as heretofore stated. Its petition was filed December 8, 1931, and alleges that the respondent erred (1) in asserting a deficiency against it as a transferee of the assets of the Akin Oil Co.: (2) in computing the alleged tax of the Akin Oil Co. for the calendar year 1917 by reducing the consolidated invested capital of that company and the Akin Gasoline Co. (with which it was affiliated) by the proration of 1916 income tax in an amount in excess of the tax paid and due for that year; (3) in failing to find that the assessment and collection of the alleged additional taxes were barred by the statute of limitations when the deficiency notice was mailed to petitioner; and (4) in failing to find that when the deficiency notice was mailed to the Akin Oil Co., the alleged transferor, the period had expired within which both assessment and collection of income and excess profits taxes for the year 1917 could be made and within which an effective final determination of deficiency could occur. The petitioner then set forth alleged facts upon which it relied to sustain its assignment of errors. The petitioner was verified by J. H. McCoy as president*989 of the Keener Oil & Gas Co., and the same counsel that had represented the Akin Oil Co. in Docket No. 42903 represents the petitioner in the instant proceeding. The respondent, in his answer and amended answers in the instant proceeding, denied alleged errors and asserted that the time within which he might assess and collect income tax from the Akin Oil Co. "for the year 1917 was extended by waivers and by an appeal to the United States Board of Tax Appeals to a date within one year previous to the mailing of the notice of deficiency" in the instant *190 proceeding and that the tax liability of the Akin Oil Co. for the year 1917 was adjudicated by the Board of Tax Appeals in an appeal by that company in Docket No. 42903, which adjudication against it is binding upon the petitioner herein and precludes it from questioning the correctness of the tax liability of its transferor, which indebtedness for additional income tax for the year 1917 in the sum of $20,943.86, with interest as provided by law, is wholly outstanding and unpaid. Respondent further alleged that subsequent to the accrual of this tax liability the petitioner in the instant case, being sole stockholder of*990 the Akin Oil Co., caused to be transferred to itself all of the assets and property of the Akin Oil Co. in liquidation of its shares of capital stock, which assets at the date of such transfer were of a value in excess of the tax liability involved, with interest thereon, as provided by law; that the waivers aforementioned were executed and filed by the former officers of the Akin Oil Co.; that those officers were also officers of the petitioner in the instant proceeding, and in filing the waivers, in filing the petition of the Akin Oil Co. for the year 1917 with the Board of Tax Appeals in Docket No. 42903, and in prosecuting the appeal, they acted for and on behalf of the petitioner as well as of the Akin Oil Co.; that the petitioner herein was a privy to the filing of the waivers and the petition and in the prosecution of the appeal, and was the real party in interest therein; that the petitioner is now estopped to claim that the waivers are not valid and that the adjudication of the Board of Tax Appeals in Docket No. 42903 is not binding upon the petitioner herein; and that as part of the consideration for the transfer of the assets of the Akin Oil Co. to petitioner, the latter*991 agreed to assume and be bound by all the liabilities and obligations of the Akin Oil Co. as of January 1, 1922, and that petitioner did assume all of said obligations. In its reply the petitioner herein denied that the time within which the respondent might assess and collect income taxes from the Akin Oil Co. for the year 1917 was extended by valid waivers beyond April 1, 1924, and admitted that the assets and property of the Akin Oil Co. were transferred to the petitioner herein and that their value at the time of such transfer was in excess of the tax liability involved in this proceeding. Petitioner denied that the alleged waivers were executed and filed by the former officers of the Akin Oil Co. or by the officers of the petitioner herein, and also denied that the persons who purported to file the alleged waivers and the petition of the Akin Oil Co. for 1917, Docket No. 42903, were acting for and on behalf of the petitioner or the Akin Oil Co. Petitioner also denied that it was privy to the filing of the alleged waivers or the petition, or to the prosecution of the petition, and denied that anyone prosecuted *191 the appeal, which was dismissed without trial. Petitioner*992 alleged that the real parties in interest in those proceedings were the "Bartlett and Withington families", and it denied that it agreed to assume and be bound by the liabilities of the Akin Oil Co. for income tax, except such tax as might be due from that company for the calendar year 1922, and denied generally each material allegation of fact contained in respondent's answers not before admitted or specifically denied. The Akin Oil Co. paid income tax for the year 1916 during the year 1917 in the amount of $4,978.06, and its affiliated company, the Akin Gasoline Co., for the same year, paid income tax of $606.01, or a total of $5,584.07, which resulted in a deduction from consolidated invested capital for 1917 of $3,042.21. In the deficiency notice to the Akin Oil Co. and petitioner herein, respondent reduced the consolidated invested capital of these companies on account of said 1916 income taxes. On March 14, 1922, the board of directors of petitioner, the Keener Oil & Gas Co., under appropriate resolution, proposed to the directors and stockholders of the Akin Oil Co. to merge all the business and properties belonging to the Akin Oil Co. into the Keener Oil & Gas Co. upon*993 stated terms, which included: 1. All properties, wherever located, owned by The Akin Oil Co. shall be conveyed to The Keener Oil & Gas Co.; 2. The Keener Oil & Gas Co. shall assume and be bound by all the liabilities and obligations of The Akin Oil Co. including 1922 Federal Income Tax, and this agreement as to such liabilities and obligations shall be as of January 1, 1922; 3. The manner of converting the capital stock of each of The Keener Oil & Gas Co. and The Akin Oil Co., as aforesaid, parties hereto, shall be as follows: (a) For each share of the capital stock of The Akin Oil Company surrendered to the Keener Oil & Gas Company, there shall be issued to the holder thereof, Three and one half shares of the capital stock of The Keener Oil & Gas Company. (b) The Vice President and Secretary of this Company shall be, and they are, hereby authorized and directed on behalf of The Keener Oil & Gas Company upon the acceptance of this proposal by The Akin Oil Company, to accept any and all shares of stock surrendered by stockholders of The Akin Oil Company to The Keener Oil & Gas Company, and to deliver therefor shares of stock in The Keener Oil & Gas Company in proportions*994 above mentioned for such surrendered stock. The resolutions referred to and passed by the board of directors of the Keener Oil & Gas Co. were on the same day approved and adopted by its stockholders. On March 14, 1922, at a stockholders' meeting of the Akin Oil Co., Harley R. Johnson and R. M. Noll were elected directors and qualified as such. Subsequently on the same day the board of directors of the Akin Oil Co. held a meeting, at which the resolution submitted *192 by the Keener Oil & Gas Co. as a proposal to the Akin Oil Co. for a merger of the properties of the two companies was read by Harley R. Johnson, and on his motion the proposition as embodied in the resolution was accepted and the vice president and secretary were authorized and directed and fully empowered to do any and all things required to carry out and complete the proposed merger so accepted by the Akin Oil Co. The directors' minutes were signed by "G. M. Withington, Vice President. Harley R. Johnson, Secretary." Following the action of its board of directors, the stockholders of the Akin Oil Co. on the same day considered the same proposition for merger acted upon by its directors, and upon motion*995 duly seconded the action of the directors in accepting the proposition of merger and in passing the resolutions mentioned were ratified and approved. On May 24, 1922, at a special meeting of the board of directors of the Keener Oil & Gas Co., J. H. McCoy, who had been serving as secretary and treasurer, resigned and was elected president, succeeding D. A. Bartlett, former president, who died on March 28, 1922. The proposed merger between the petitioner herein and the Akin Oil Co. was carried out and became effective in 1922, the petitioner acquiring the entire assets of the Akin Oil Co. and issuing to the stockholders thereof shares of the Keener Oil & Gas Co. in the ratio and in accordance with the terms proposed by the petitioner and accepted by the Akin Oil Co. and its shareholders, the stock of the latter company being thereafter canceled. At the date of the transfer of assets of the Akin Oil Co. to petitioner they had a fair market value in excess of $100,000 and practically all of the stock of the Akin Oil Co. was owned by the "Bartlett" and "Withington" interests or families, who owned approximately only 50 percent of the stock of the petitioner. Simultaneously with*996 the acquisition of the assets of the Akin Oil Co., the petitioner also acquired the assets of the Akin Gasoline Co. and the Samallen Oil Co., the stock of all three companies being owned by the same interests. During the period from January 22, 1921, to October 21, 1927, inclusive, seven so-called waivers or consents, purporting to be for the Akin Oil Co. and, as the respondent insists, extending the period for assessment against it of the income tax for the year 1917 to December 31, 1928, were executed and filed with the Bureau of Internal Revenue. The respondent introduced the same, together with the entire file in Docket No. 42903, as evidence at the hearing in the instant proceeding. It is conceded by counsel for petitioner that the first consent operated to extend the statutory period for *193 assessment and collection of the deficiency to April 1, 1924. Said waiver or consent was dated January 22, 1921, was signed "The Akin Oil Co. by F. L. Bartlett, Secty and Treas.", with seal of the company affixed, and was attested by "H. R. Johnson, Asst. Secretary." The second so-called waiver of the Akin Oil Co. was dated November 17, 1922, and had the name of the company*997 signed by "H. R. Johnson, Asst. Secy & Treas.", without seal of the company affixed, and was unlimited. The third consent was dated January 26, 1924, with the company's name signed by "H. R. Johnson, Asst. Secy & Treas.", with seal of the company affixed, and purported to extend for one year the statutory period of limitation or such period as extended by "waivers" already on file. The fourth consent was dated January 8, 1925, and was signed "Akin Oil Company, by J. H. McCoy, President." It was attested by "H. R. Johnson, Asst. Secretary", with the corporate seal affixed, and purported to extend the period for assessment until December 31, 1925. The fifth consent was dated November 25, 1925, and was signed "The Akin Oil Co. by J. H. McCoy, Pt." It purported to extend the period for assessment to December 31, 1926. However, a letter transmitting it to the Commissioner, bearing date of December 1, 1925, and signed by "H. R. Johnson, Assistant Treasurer", stated (referring also to the Akin Gasoline Co.'s "waiver") that "these have each been signed by J. H. McCoy, who is President of each Company." These "waivers" were sent to the Commissioner in response to a letter from his office*998 inclosing forms for such purpose, to be executed by the Akin Oil Co. and the Akin Gasoline Co. The sixth consent was dated November 22, 1926, was signed "Akin Oil Co. by H. R. Johnson, Asst. Secy", with the seal of the company affixed, and purported to extend the period for assessment until December 31, 1927. The seventh consent was dated October 21, 1927, and was signed "The Akin Oil Company, by H. R. Johnson, Asst. Treas." It had the seal of the company affixed and purported to extend the period for assessment for the years 1917 to 1921, both inclusive, to December 31, 1928. The deficicney notice for the year 1917 was mailed to the Akin Oil Co. on December 27, 1928, and that company filed its petition with the Board on February 25, 1929, as stated above. Other waivers were also introduced, as follows: The eighth, dated December 19, 1928, was signed "The Akin Oil Company by H. R. Johnson, Asst. Secy" and had the seal of the company affixed, but was with reference to years subsequent to 1917; the ninth, dated January 24, 1927, was signed "The Keener Oil & Gas Co., by J. H. McCoy, Prest.; H. R. Johnson, Asst. Secy", and had reference to the last named company's tax for the year*999 1922; and the tenth, dated *194 October 21, 1927, was signed "The Keener Oil & Gas Co. By H. R. Johnson, Asst. Treas." and had reference to that company's tax for 1922. All the consents heretofore described were executed and filed with the Bureau of Internal Revenue, the Commissioner signing and accepting them. The signatures of J. H. McCoy and H. R. Johnson appearing on consents eight, nine, and ten are the signatures of the same McCoy and Johnson whose signatures appear on prior consents described. While the matter of assessment of Federal taxes against the Akin Oil Co. for 1917 and subsequent years mentioned was pending before the Commissioner, numerous protests were filed in its behalf by persons purporting to be officers thereof or employed to represent it. Under date of November 15, 1924, J. H. McCoy wrote the Commissioner upon the subject, with respect to the years 1917 to 1919, inclusive, and in so doing signed his letter "J. H. McCoy, President." Under date of February 2, 1926, he so signed a similar letter relative to the years 1919 and 1920 and in a joint and several protest in behalf of the Akin Oil Co. and the Akin Gasoline Co. against possible assessment*1000 of them, he swore he was "a general officer" of both companies. Several other similar protests were subscribed and sworn to by him and in verifying one relative to years 1917 to 1920, inclusive, he, on November 30, 1928, then swore: "* * * he is president of The Akin Oil Company and The Akin Gasoline Company." The Akin Oil Co. tax matters referred to, which were pending before the Bureau of Internal Revenue and in which numerous protests were filed during the several years heretofore mentioned, were principally handled by or through the firm of W. O. Ligon Co., of which W. L. Clark was an active member and possessed the authority and power in tax matters relative to the Akin Oil Co. heretofore indicated. H. R. Johnson, who was assistant secretary and treasurer and also a director of the Akin Oil Co., frequently signed waivers for that company at the request of W. L. Clark. G. M. Withington was a stockholder, director, and vice president of the Akin Oil Co. J. H. McCoy was president of the Keener Oil & Gas Co. OPINION. SEAWELL: In 1922 all the assets of the Akin Oil Co., which had a value greater than the tax and interest here involved, were transferred to petitioner in*1001 exchange for certain of petitioner's stock and an agreement on its part to "assume and be bound by all the liabilities and obligations of The Akin Oil Company * * *", which *195 agreement is contained in resolutions of the parties dated March 14, 1922, set out in the findings of fact. These facts would apparently render petitioner liable at law and in equity as a transferee of the Akin Oil Co. for any deficiency in its tax for the year 1917 if timely action was taken in respect thereof by respondent under section 280(a)(1) of the Revenue Act of 1926. Petitioner insists (1) that such action was not taken by respondent against the Akin Oil Co. and (2) that its agreement embraced in the resolutions mentioned was limited to the tax for the year 1922 and did not include the tax of the transferor for the year 1917, the year involved. We will examine these contentions separately. 1. In reference to the proceedings against the Akin Oil Co., Docket No. 42903, petitioner says it is not bound. It insists that at the date the order of redetermination of deficiency in the amount of $20,943.86 was entered against the Akin Oil Co., it was nonexistent and dissolved, its last return*1002 being filed for the year 1922, in which its assets were acquired by the petitioner. The charter of the Akin Oil Co. was not introduced in evidence in Docket No. 42903, supra, nor in the instant proceeding. What may have been the length of its life as expressed in its charter is not shown. If dissolved, the date of dissolution is not shown by the record. There is no evidence in the record indicating that there was ever any judgment of dissolution or any certificate of dissolution filed with the secretary of state as the Compiled Statutes (1921) of Oklahoma, sections 5352, 5353, et seq., require in the event of a judgment of either voluntary or involuntary dissolution. Section 5361 provides: "Unless other persons are appointed by the Court, the directors or managers of the affairs of such corporation at the time of its dissolution are trustees of the creditors and stockholders or members of the Corporation dissolved, and have full power to settle the affairs of the Corporation * * * and for such purposes may maintain or defend actions in their own names by the style of the trustees of such corporation dissolved, naming it; and no action whereto any such corporation is a party*1003 shall abate by reason of such dissolution." See ; ; . In behalf of the petitioner, however, it is insisted that the respondent accepted the last return (1922 return) of the Akin Oil Co. filed in March 1923 - with the notation thereon as stated in our findings of fact - and was thereby put upon notice of its dissolution, and that the petitioner corporation herein never made any representations with respect to the alleged waivers and cannot, therefore, be estopped to deny their validity. In support of such contention, , affirmed in , is relied on by *196 petitioner. The petitioner, however, can gain no support in its contention from that case, as it was reversed by the Supreme Court in . See also , and authorities therein cited. The numerous consents described in our findings of fact are shown to have been accepted by the respondent and treated*1004 by him and by H. R. Johnson as valid consents. They were likewise so treated by the firm of W. O. Ligon Co. and by W. L. Clark, who was authorized, as stated in the findings of fact, to represent the Akin Oil Co. in all tax matters pending before the Bureau of Internal Revenue. Taking all facts and circumstances attending the execution of the consents on which the respondent relied into consideration, we are of the opinion and hold that he was warranted in accepting and treating the consent dated October 21, 1927, which was signed "The Akin Oil Company, by H. R. Johnson, Asst. Treas.", with the seal of the company affixed, as a valid consent which had the effect of extending the statutory limitation for assessment and collection of tax deficiency for the year 1917 for the Akin Oil Co. to December 31, 1928, before which date a deficiency notice was mailed to that company. Bearing on the question of the validity of waivers or consents executed in the name of the Akin Oil Co. and on which we, in part, base our opinion herein as to their validity, see *1005 ; certiorari denied, ; ; ; certiorari denied, ; ; certiorari denied, ; ; certiorari denied, . Cf. ; . The deficiency notice having been duly mailed to the Akin Oil Co. and an order of redetermination of a deficiency in the amount of $20,943.86 having been entered against it on March 30, 1931, without any character of protest or objection, and following a motion by its counsel for a dismissal of the proceeding, that deficiency determination is, in our opinion and we so hold, valid and binding as to the Akin Oil Co. The record shows that the notice to the Keener Oil & Gas Co. of its liability for the payment of the aforesaid deficiency*1006 was mailed to it October 14, 1931, which was within the time required by law in order to render it liable if a transferee of the assets of the Akin Oil Co. 2. The petitioner, however, contends that the aforesaid deficiency determination, not having been made on the merits, is not binding *197 upon it, and it introduced testimony at the hearing with a view to showing that its agreement never contemplated the payment by it of any taxes due from the Akin Oil Co. other than those for the year 1922, contending that its agreement to "assume and be bound by all the liabilities and obligations of The Akin Oil Company, including 1922 Federal income tax", when properly construed, meant that all taxes of the Akin Oil Co. other than those for 1922 were excluded from, or not included in, the agreement; in short, that the inclusion of the 1922 income tax meant (notwithstanding the clearly expressed terms of the agreement) the exclusion of all other taxes. We have found the facts to be otherwise. In view of the fact that the deficiency determined against the Akin Oil Co. was not made after a hearing on the merits, it is not, therefore, res judicata as to the petitioner*1007 (see ), and we are of the opinion and hold that the respondent erred in the computation of the invested capital of the Akin Oil Co. and it will be recomputed as may be agreed, counsel for respondent having stated at the hearing that the figures would be stipulated in the event the deficiency determination was held by us not to be res judicata as to the petitioner. Upon careful consideration of the entire record we are further of the opinion and hold that the Keener Oil & Gas Co. is a transferee of the Akin Oil Co. and received from it all its assets in the manner set forth in the findings of fact; that the assets so received had a value in excess of the amount of the deficiency in tax determined against the transferor and interest upon the tax now asserted against petitioner, and that a part of the consideration for the assets received by it was the agreement to assume and be bound by all the liabilities and obligations of the Akin Oil Co., and that petitioner is, therefore, liable for the deficiency determined against the Akin Oil Co., together with legal interest as heretofore set out, subject to correction of the computation*1008 of the invested capital of the Akin Oil Co. as heretofore indicated. ; aff'd., ; ; certiorari denied, ; ; ; ; ; ; . Decision will be entered under Rule 50.