United States v. Vogel Fertilizer Company

PETITIONER: United States
RESPONDENT: Vogel Fertilizer Company
LOCATION: White House

DOCKET NO.: 80-1251
DECIDED BY: Burger Court (1981-1986)

CITATION: 455 US 16 (1982)
ARGUED: Nov 03, 1981
DECIDED: Jan 13, 1982

Ronald C. Jensen - on behalf of the Respondent
Stuart A. Smith - on behalf of the Petitioner

Facts of the case


Media for United States v. Vogel Fertilizer Company

Audio Transcription for Oral Argument - November 03, 1981 in United States v. Vogel Fertilizer Company

Audio Transcription for Opinion Announcement - January 13, 1982 in United States v. Vogel Fertilizer Company

Warren E. Burger:

Justice Brennan will have two opinions to announce.

William J. Brennan, Jr.:

The first is 80-1251, United States versus Vogel Fertilizer Corporation. This is a case here on certiorari from the Court of Claims.

It's a tax case.

The Internal Revenue Code of 1954 limits a controlled group of corporations to a single surtax exemption.

The group of corporations involved in this case consists of two corporations, Vogel Fertilizer Company and Vogel Popcorn Company.

There are two stockholders in the Fertilizer Company, one, Vogel, who owns 77.5% and one, Crain, who owns the remaining 22.5%.

But Crain is not a stockholder of the Popcorn Company.

Vogel owns 87.5% of that company stock and the rest is also held by him as trustee of the family trust.

Now in implementing Treasury Regulation interprets the relevant statutory term to constitute two or more corporations, a controlled group.

If the same five or fewer persons own “singly or in combination” certain prescribed percentages of voting power or total value 80-percent of the total of the one corporation and more than 50-percent of the total of the other.

Since Vogel and Crain between them own more than 80-percent of the stock of the Fertilizer Company and Vogel alone owns over 90-percent of the Popcorn Company, if the provision of the regulation singly or in combination is valid, then the two companies are a controlled group entitled only a single surtax exemption.

But we hold that the implementing Treasury Regulation is invalid as not being a reasonable interpretation of the statute it purports to implement.

We read the statute to require that precisely the same shareholders must satisfy both the 80-percent and 50-percent requirements.

And since Crain is not a stockholder of the Popcorn Company but only the Fertilizer Company, the statutory requirement is not met.

We therefore affirm the Court of Claims would reach the same conclusion.

Mr. Justice Blackmun joined by Justice White, dissents and has filed a dissenting opinion.