
    ANDREW L. WEIS v. THE UNITED STATES
    [No. C-23]
    
      On the Proofs
    
    
      Tames; income; exchange of stock. — Gain realized from the exchange of stock in a Michigan corporation for that in a corporation organized under the laws of South Dakota, held to be taxable income. Marr v. United States, 268 U. S. 536. See also Noll y. United States, 61 O. Ols. 180.
    
      The Reporter's statement of the case:
    
      Mr. Thomas G. Haight for the plaintiff. Messrs. Robert H. Montgomery and J. Marvin Haynes were on the briefs.
    
      Mr. Fred K. Dyar, with whom was Mr. Assistant Attorney General Hermam, J. Galloway, for the defendant. Messrs. Nelson T. Hartson and E. O. Lake were on the brief.
    Decided March 8, 1926.
    Motion for new trial overruled June 6, 1927.
    The court made special findings of fact, as follows:
    I. Plaintiff, Andrew L. Weis, was during the taxable year 1916 a citizen of the United States, residing at Monroe, in the State of Michigan, and was president and general manager of the Weis Manufacturing Company and the Weis-Yan Wormer Company, corporations organized and existing under the laws of the State of Michigan, and also the Weis Fibre Container Corporation, a corporation organized and existing under the laws of the State of South Dakota, with an authorized capital stock of $2,000,000, and engaged in the manufacture of a patented fibre container for liquids at Monroe, in said State.
    On the 22d day of February, 1917, plaintiff and his wife, Milly A. Weis, filed with the collector of internal revenue for the first district of Michigan a joint income-tax return for the taxable year 1916, showing a net income of $40,-176.28, on which a tax of $221.76 was computed and paid.
    The return so filed showed that plaintiff and his wife, the said Milly A. Weis, had received during said taxable year dividends amounting to $34,010.86 and $1,165.42, respectively, a total of $35,176.28. Of said amount of $34,-010.86 so received by plaintiff and reported as dividends on said return $9,490 represented a dividend received by him from the Weis Manufacturing Company, and the remainder of said sum of $84,010.86, amounting to $24,520.86, represented 19,461 shares of stock of the Weis Fibre Container Corporation received by said plaintiff during the taxable year 1916 and valued by him at $1.26 per share. Of said amount of dividends of $1,165.42 reported by the said Milly A. Weis in said return, $325 was a cash dividend received by her from the Weis Manufacturing Company during said taxable year to the said Milly A. Weis. The remaining portion of the said $1,165.42, amounting to $840.42, represented the aggregate value of 667 shares of stock of the Weis Fibre Container Corporation received by her during said taxable year and valued at $1.26 per share.
    II. Some time after the 1916 return was filed, plaintiff received notice of the assessment of an additional tax for that year amounting to $16,241.40. On May 25, 1921, and within the time required by law, he duly filed a claim for abatement of the said additional tax, but it was subsequently disallowed.
    III. Thereafter, and on May 9, 1922, plaintiff paid to the collector of internal revenue for the first district of Michigan as and for the said additional tax the sum of $16,241.40, plus $920.34 interest. This payment was made under protest to avoid penalties and the attachment of plaintiff’s property.
    IY. On July 12, 1922, plaintiff filed with said collector a claim for the refund of the total amount so paid, but the same was disallowed on November 24, 1922; and the whole of the said sum of $17,161.74, together with interest thereon from May 9, 1922, is now retained and held by the United States.
    Y. On or about March 25, 1911, the Weis-Yan Wormer Company was incorporated under the laws of Michigan, the incorporators being plaintiff, certain other stockholders of the Weis Manufacturing Company, a corporation of Michigan, and one John R. Van Wormer. Its authorized capital stock was $30,000, divided into 3,000 shares of the par value of $10 each.
    VI. One-quarter of the stock of this company was issued to the said John R. Van Wormer in consideration of the transfer of the assets of a corporation of the State of Ohio known as the Van Wormer Company, and the assignment of an application for a patent covering a fibre container,, designed principally to take the place of the glass- milk bottle. This patent was issued on July 18, 1911, and is known as 998309. The remainder of the stock of the Weis-Van Wormer Company was issued to the stockholders of the Weis Manufacturing Company pro rata with their holdings in that company in consideration of their agreement to render financial assistance to develop the patent and put the product on the market. All of the stock was issued at the time of the formation of the company.
    VII. The Weis Manufacturing Company was a close corporation, the only stockholders being plaintiff and his five brothers and two sisters. Plaintiff was at all times material to this suit the president and a director thereof. The company has been very successful.
    VIII. The Weis-Van Wormer Company never did any manufacturing itself, that being done by the Weis Manufacturing Company in the plant of the latter company. The latter company also advanced the moneys necessary for the purchase of machinery, tools, etc., and the general development of the business, which on March 1, 1913, amounted to $13,117.47; subsequent to that date additional amounts aggregating $50,549.74 were advanced. The money so advanced w7as never repaid in cash but was always carried on the books of the Weis Manufacturing Company as a-, charge against the Weis-Van Wormer Company until after the formation of the Weis Fiber Container Corporation.
    IX. The Weis-Van Wormer Company never made any money and never even had a set of books.
    X. About August 30, 1913, Mr. Van Wormer withdrew from the Weis-Van Wormer Company and disposed of his interest in the company pursuant to an agreement reading as follows:
    “Monroe, Michigan, July 9, 1913.
    
    “ For the payment of five thousand dollars ($5,000.00) to me in hand paid (the receipt of which is hereby acknowledged) and other valuable considerations hereinafter named — I hereby agree to sell and transfer my entire twenty-five per cent interest (25%) in the Weis-Van Wormer Company and all its interests to Andrew L. Weis on payment to me (or my heirs or assigns) the sum of five thousand dollars ($5,000.00) in cash and the entire interest of the Weis Manufacturing Company in all patents owned and held on folding cake box, with the stock of the cake box material (excepting the last shipment, amounting to $302.34, which is to be purchased at cost by me), also the dies, the glueing, folding machines, and paper-cutting machines, the above to be delivered to me at my order.
    “ It is further understood that should any territory for milk bottle or for package purposes be sold, either foreign or in the United States, either for cash or on a royalty basis, that I am to receive twenty-five per cent (25%) of all such returns, until fifteen thousand dollars ($15,000.00) additional to above have been paid to me.
    “It is understood that this proposition is made as a guarantee as to my faith in the ultimate success of the Weis-Van Wormer paper or fibre bottle, and should it for any unforeseen reason prove not a success, then and in that event I do not expect any more payment than the five thousand dollars ($5,000.00) mentioned first and the transfer of the folding cake box business.”
    At the time this agreement was entered into the money that had been advanced by the Weis Manufacturing Company on behalf of the Weis-Van Wormer Company, as aforesaid, had not been repaid.
    
      XI. The first $5,000 provided for in the agreement was paid to Mr. Van Wormer, and in July, 1916, he was paid $10,000 additional by plaintiff (this sum being later repaid to him by the Weis Manufacturing Company) in settlement of all claims that Van Wormer had under this agreement. Van Wormer’s stock was distributed among the other stockholders proportionately to their stockholdings in the Weis Manufacturing Company.
    XII. After Mr. Van Wormer’s withdrawal from the Weis-Van Wormer Company its business was carried on as theretofore through the Weis Manufacturing Company until February, 1914, when a contract embodying the provisions of the two following resolutions was entered into between the Weis Manufacturing Company and the Weis-Van Wormer Company:
    “ 1. Stockholders’ resolution: Mr. Krantz made a motion, seconded by Mr. Rumple, that the stockholders instruct the board of directors to make a contract between the Weis Manufacturing Co. and the Weis-Van Wormer Co. in effect that, inasmuch as the Weis Manufacturing Co. did all the work and furnished the finances to develop and conduct the business of the Weis-Van Wormer Co., that the Weis Manufacturing Co. be given absolute control of all the business connected with the paper-bottle patent, etc., in the ■United States and foreign countries now controlled by Weis-Van Wormer Co., and that a very nominal sum be paid to the Weis-Van Wormer Co. by the Weis Manufacturing Co. each year.
    “ 2. Directors’ resolution: As per instructions from the stockholders at their annual meeting held February 17, a contract was to be drawn up between the Weis Manufacturing Co. and the Weis-Van Wormer Co. paying $25 per year for the same.”
    XIII. No part of the royalty called for in the contract was ever paid; and no profits were made by the Weis Manufacturing Company on the fibre container business.
    XIV. On December 29, 1914, the stockholders of the Weis-Van Wormer Company adopted by unanimous vote the following resolutions:
    
      “Resolved, That we pay the Weis Manufacturing Co. the sum of seventy-five thousand, dollars for the release of the contract between them and ourselves, dated Feb. 24th, 1914. 'This sum to be paid either in cash or in stock of a new •company to be formed to take over all assets of the Weis-Yan Wormer Co., and known as the Weis Fibre Container 'Corporation.
    “ The above resolution was voted on and unanimously •adopted. After further discussion, the following resolution was offered by Mr. Consor and seconded by Mr. Goldstein:
    “ ‘ Resolved, That we sell to a company to be organized ■and known as the Weis Fibre Container Corporation for •one million dollars, all our assets consisting of machines for •the manufacture of containers, patents granted or applied for, contracts, and any and all other assets used in connection with the manufacture of containers. The above sum .to be paid in stock of the Weis Fibre Container Corporation when the assets are turned over.’
    “ This motion was voted on and carried unanimously.”
    The new corporation provided for in the foregoing resolutions was to be formed in order to develop the before-mentioned fibre container patent, it having been determined to separate the fibre container business from the regular business of the Weis Manufacturing Company, which was the making of filing cabinets, bookcases, card cabinets, &c.
    XY. Pursuant to the resolutions, and to carry out the before-mentioned purpose, the Weis Fibre Container Corporation was incorporated under the laws of South Dakota, plaintiff being one of the incorporators. The articles of incorporation were dated March 4, 1915, and the Secretary .of State certified under date of March 8, 1915, that it had become a body corporate. The authorized capital stock was $2,000,000, divided into 80,000 shares of the par value of $25 each.
    XYI. After the contract was entered into between the Weis-Van Wormer Company and the Weis Manufacturing ■Company pursuant to the resolution adopted at a meeting .of the stockholders of the Weis-Yan Wormer Company on February 17, 1914, the said Weis-Yan Wormer Company ceased doing business, and was dissolved on or about April 11,1918.
    NYU. On September 8, 1916, after the formation of the Weis Fibre Container Corporation all of the assets of the Weis-Van Wormer Company were transferred to the former. The physical assets remained in the factory of the Weis Manufacturing Company until the completion of the buildings of the Weis Fibre Container Corporation in 1916. In these buildings the Weis Manufacturing Company continued to manufacture the fibre container for development purposes on behalf of the Weis Fibre Container Corporation.
    A formal assignment of the fibre container patent was dated September 8, 1916. The same applies to some other minor patents which had been taken out in connection with the container and machinery to manufacture it.
    XVIII. The Weis Fibre Container Corporation began business with the assets which it had acquired from the Weis-Van Wormer Company, and for these assets issued to the stockholders of the Weis-Van Wormer Company $1,000,-000 par value of its stock, and to the Weis Manufacturing Company $75,000 par value of its stock; the latter either in release of the contract which that company had with the Weis-Van Wormer Company whereby it was to pay the Weis-Van Wormer Company a royalty of $25 a year on the business connected with the fibre container, or in satisfaction of the indebtedness of the Weis-Van Wormer Company to the Weis Manufacturing Company. Of this $1,000,000 of stock, however, $500,000 par value was to be held in escrow until a 6% dividend should be paid on the balance of the stock that might be issued. This stock was actually placed in escrow, and was subsequently returned to the treasury of the Weis Fibre Container Corporation without having been used or enjoyed by the persons who were entitled to it upon the fulfillment of the escrow condition. The agreement to issue the stock for these assets is evidenced by a resolution of the Weis Fibre Container Corporation reading as follows:
    “Moved by Paul S. Bumpel and supported by Frank W. Ainslie that the Weis Fibre Container Corporation purchase from the Weis-Van Wormer Company all patents granted or applied for, all machinery, tools, dies, and jigs used in the manufacture of the fibre containers or fibre container making machinery, all equipment used in their manufacture and owned by them, also all stock, manufactured product, orders, contracts, good will, etc.; the consideration to be $1,075,000, payable as follows: $1,000,000 of stock in this corporation at par and $75,000 in cash, cash to be payable when the balance of stock is sold and paid for. The consummation of this purchase to be dependent on the Weis Manufacturing Company agreeing to place one-half of the stock received in escrow, same to be held by a trustee, to be appointed by the directors of this corporation; also agreeing that the stock to be held shall not participate in any dividends until such time as dividends at the rate of 6 per cent are being paid on balance of outstanding stock. This stock to be released and returned to owners when 6 per cent dividend is paid on balance of stock. Purchase also depended on Weis Manufacturing Company agreeing to spend not to exceed $2,500 for the printing of prospectus, stock certificates, and necessary blanks; also for the selling of stock.”
    XIX. At the time of the formation of the Weis Fibre Container Corporation and the transfer of the assets of the Weis-Van Wormer Company to it the before-mentioned indebtedness of $85,549.74 of the Weis-Van Wormer Company to the Weis Manufacturing Company was outstanding.
    During the taxable year 1916 the $1,075,000 of stock issued by the Weis Fibre Container Corporation in the manner and for the purposes aforesaid had a market value of $25 per share as evidenced by the fact that $800,000 of stock in the Weis Fibre Container Corporation of equal par value was sold by the Weis Fibre Container Corporation through brokers to the general public at par. The value of the $10 par value stock of the Weis-Van Wormer Company on March 1, 1913, was $40,000, and the value on said date of each share thereof was $13.33%.
    XX. The assets of the Weis-Van Wormer Company acquired by the Weis Fibre Container Corporation for its stock of $1,075,000 as hereinbefore stated were transferred to the Weis Fibre Container Corporation on July 20, 1918. The formal assignment of all patents held by the Weis-Van Wormer Company except the one, which was made on October 5, 1916, was made September 8, 1916. All certificates evidencing the ownership of the stock of the Weis Fibre Container Corporation were issued and delivered to plaintiff and other stockholders of the Weis-Van Wormer Company during the taxable year 1916.
    XXI. At all times, after Mr. Van Wormer sold his interest in the Weis-Van Wormer Company, the stockholders were the same as those of the Weis Manufacturing Company and their stock holdings in the former were in exact proportion to their stock holdings in the latter.
    XXII. The stockholders of the Weis Fibre Container Corporation at the time of the formation of the latter and until May 24,1915, when the first stock was sold to some one other than to stockholders of the Weis-Van Wormer Company, were the same as the stockholders of the Weis-Van Wormer Company and the Weis Manufacturing Company and their stock holdings in the Weis Fibre Container Corporation were in exact proportion to their stock holdings in the other two companies. All three corporations until the sale of the stock to the general public after May, 1915, were close corporations.
    XXIII. Plaintiff owned 1,460 shares of the capital stock of the Weis-Van Wormer Company and 19,461 shares of the Weis Fibre Container Corporation, one-half absolutely and one-half in escrow. The latter, however, were never fulfilled and the escrow stock was subsequently turned back as treasury stock.
    XXIV. Plaintiff and other stockholders of the Weis-Van Wormer Company received direct their proportionate share of the $1,000,000 stock of the Weis Fibre Container Corporation, i. e., each shareholder of the Weis-Van Wormer Company received 18y3 shares of the Weis Fibre Container Corporation stock. None of the stock was issued to the Weis-Van Wormer Company, for the shareholders in the company and in the Weis Manufacturing Co. were substantially identical. The plaintiff did at the initial meeting of the Weis Fibre Container Corporation vote as a stockholder the full number of shares owned, but not yet delivered to him. He was a director and the president of the corporation. The laws of South Dakota require that a director of a corporation must hold at least 25 shares of stock of the company.
    XXY. With the exception of the certificates for 7,400 shares issued to plaintiff on January 17, 1916, no certificates for capital stock of the Weis Fibre Container Corporation were issued to any of the stockholders of the Weis-Van Wormer Company until July, 1916. The 7,400 shares were issued to plaintiff to enable him to hypothecate the same for a loan thereon.
    XXVI. The value of all of the stock of the Weis-Van Wormer Company on March 1, 1913, was $40,000.
    XXVII. The additional tax assessed by the Commissioner of Internal Revenue was assessed on the theory that plaintiff had realized a profit of $241,927.07 on the transaction shown in the findings. This profit was arrived at by figuring the value of each of his shares of stock in the Weis-Van Wormer Company at $13.33% a share and the stock which he received in the Weis Fibre Container Corporation at $25 a share, and using the number of his shares in the Weis-Van Wormer Company and one-half of the 19,461 shares in the Weis Fibre Container Corporation.
    XXVIII. After an effort to sell the treasury stock of the Weis Fibre Container Corporation in 1915 and the early part of 1916, an arrangement was made to market it through certain brokers, who conducted a campaign during which between $750,000 and $800,000 par value of stock was sold at $25 a share, of which the corporation received, after deducting brokerage commissions, but $21.25 a share. At the time this stock was sold the company had no other assets than those which it had acquired from the Weis-Van Wormer Company.
    XXIX. This stock was sold without the permission of the Michigan Securities Commission, which the law of Michigan provides must be obtained before transactions in corporate securities are carried out in Michigan. A temporary injunction had been entered against the commission and it was while this injunction was in force that the stock was sold. After the injunction was lifted, the commission refused to approve the subsequent sale of any of the stock which had been sold upon the ground that the commission was “ of the opinion that the sale of the stock would work a fraud on the purchaser.” The declination to approve is dated May 16,1917.
    XXX. With the proceeds received from the sale of the stock, the Weis Fibre Container Corporation acquired a parcel of real estate, erected a building thereon, bought additional machinery and equipment and proceeded to manufacture the patented container and also machines for lease or sale to individual manufacturers who might wish to make their own containers. In order to have an outlet for its product, it purchased a creamery, to which it sold fibre containers manufactured by it. In the latter part of 1916 it moved to its new factory and continued its manufacturing operations there until 1923. In February, 1924, it was decided to liquidate.
    XXXI. From 1917 to 1923, inclusive, the book profits and losses of the Weis Fibre Container Corporation were as follows:
    Profit
    19X7_ $14,515.00
    1918_ 29, 957. 90
    1919_- 36, 802.06
    Loss
    1920_ $34.38
    1921_ 139,287.56
    1922_ 120,801.70
    1923_Approx— 80, 000. 00
    XXXII. If the value to be given to the Weis Fibre Container stock which plaintiff actually received be $21.25 rather than $25, and his alleged profit be based on the value of all of the shares which he held in the Weis-Van Wormer Company, then his alleged profit was only $187,295.83, which would produce an additional tax of $5,134.80 less than the amount which he was compelled to pay by the Commissioner of Internal Revenue.
    
      The court decided that plaintiff was not entitled to recover.
   Booth, Judge,

This is a suit to recover income taxes. No jurisdictional question is involved. The plaintiff was financially interested to a great extent in three manufacturing corporations and this fact renders it necessary to consider the relationship of all three to each other and to the return made by the plaintiff for the purpose of income taxation.

The Weis Manufacturing Company is a Michigan corporation, engaged in manufacturing filing cabinets, bookcases, card cabinets, etc. The plaintiff was its president and general manager, also the largest single stockholder therein. The company had been incorporated prior to 1911, was a close corporation owned exclusively by the plaintiff, his five brothers and two sisters, and was doing a prosperous business. In 1911, John B. Van Wormer, an applicant for a patent covering a fibre container, a device designed by the inventor to supplant the use of glass milk bottles, interested the plaintiff in the exploitation of the same. Van Wormer had incorporated a company in the State of Ohio for this express purpose, but had not attained success. The plaintiff, as well as all the remaining holders of stock in the Weis Manufacturing Company, joined Van Wormer in the organization and incorporation under the laws of Michigan of the Weis-Van Wormer Company. This occurred about March 25, 1911.

The new company was incorporated with an authorized capital stock of $30,000, divided into 3,000 shares of the par value of $10 each. To this company Van Wormer assigned all his patent rights and the assets of his Ohio corporation for a consideration of one-fourth of its capital stock, it being further agreed that the remaining shares of stock should be issued to the stockholders of the Weis Manufacturing Company, in consideration of which financial assistance was to be rendered by the latter to the Weis-Van Wormer Company in developing and marketing the fibre container. These agreements were observed and the stock issued in pursuance thereof.

The Weis-Van Wormer Company did not succeed. On December 29, 1914, it was indebted to the Weis Manufacturing Company in at least the sum of $50,549.74. Van Wormer had sold his interest in the company and retired therefrom, and the entire control of its business, including the patent for the container, had on February 24,1914, been by express contract assigned to the Weis Manufacturing Company for the sum of $25 per annum. On December 29,1914, the stockholders of the Weis-Van Wormer Company unanimously adopted a resolution to pay to the Weis Manufacturing Company the sum of $75,000 to be released from the contract of February. 24, 1914. This sum was to be paid in cash or in stock of a new company to be thereafter organized to take over all the assets of the Weis-Van Wormer Company. The resolution further provided for the organization of the new company and the sale to it of all the assets of the Weis-Van Wormer Company for $1,000,000, to be paid in stock of the new company when the assets were turned over. The new company ivas to be known as the Weis Fibre Container Corporation.

The Weis Fibre Container Corporation was on March 4, 1915, incorporated under the laws of South Dakota. The authorized capital stock was $2,000,000, divided into 80,000 shares of the par value of $25 each. In 1916 the assets of the Weis-Van Wormer Company were turned over as agreed; but the corporation, while dormant, was not dissolved until April 11, 1918. Three thousand shares of the stock of the new corporation, of the par value of $75,000, were issued to the stockholders of the Weis Manufacturing Company as per agreement; 20,000 shares of the par value of $500,000 were likewise issued direct to the stockholders of the Weis Manufacturing Company, and the entire 23,000 shares divided among its stockholders in proportion to their holdings in the Weis-Van Wormer Company, the stockholders of the Weis-Van Wormer Company and the Weis Manufacturing Company being identical at the time. This was done as a matter of convenience. The remaining 20,000 shares issued to the stockholders of the Weis-Van Wormer Company were held in escrow until the stock of the new corporation paid a dividend of 6%. This event never transpired and the stock was eventually turned back into the treasury. Of the- remaining 37,000 shares, a sufficient number were sold to the public at $25 per share to bring into the treasury of the corporation $800,000 in cash, less the commission paid for effectuating their sale.

The plaintiff owned 1,460 shares of the capital stock of the Weis-Van Wormer Company and was to receive in exchange therefor 19,461 shares of the capital stock of the Weis Fibre Container Corporation, or an exchange on the ratio of 13% per one. He actually received certificates for one-half of 19,461, or 9,730% shares, the remaining half being held by the corporation in escrow. Plaintiff in making his return for income taxation for the year 1916 valued this stock at $1.26 per share. The Commissioner of Internal Revenue declined to accept the valuation and assessed an additional tax against the plaintiff of $16,241.40, the commissioner insisting that under the revenue law the plaintiff made a profit by the transaction of the difference between the market value of the 1,460 shares of stock which the plaintiff owned in the Weis-Van Wormer Company on March 1, 1913, which the plaintiff concedes to be $13.33% per share, and the market value of the stock he acquired in the Weis Fibre Container Corporation at the time he acquired it, reaching a conclusion that inasmuch as $800,000 worth of the stock of the latter company had been absorbed by the public at $25 per share during the year 1916, that was its market value.

The plaintiff, after having an adverse ruling on his applications for abatement and refund, paid under protest the additional tax of $16,241.40, and $920.34 interest, making a total of $17,161.74, and it is for the recovery of this sum, with interest, the present suit is brought. The pertinent parts of the revenue act of 1916 are sections 1, 2, and 3 (39 Stat. 796). They are quite familiar and we need not set them forth.

The plaintiff contends that the case is within the decision of the Supreme Court in Weiss v. Stearn, 265 U. S. 242. That to all real intent and purpose it was but a reorganization or exchange of their stock in the old corporation for stock in the new, both having the same assets and hence no taxable gain. With this contention we are unable to agree. Discarding form and observing substance, the findings clearly show that the plaintiff exchanged 1,640 shares of stock in the Weis-Van Wormer Company valued as of March 1, 1913, at $13.33% per share for 19,461 shares of stock in the Weis Fibre Container Corporation, selling on the market in 1916 at $25 per share. The findings, we think, also bring this case within the following cases decided by the Supreme Court: United States v. Phellis, 257 U. S. 156; Cullinan v. Walker, 262 U. S. 134; Marr v. United States, 268 U. S. 536. The stock of the Fibre Container Corporation which ultimately reached the plaintiff as a shareholder of the Weis Manufacturing Company was a portion of the stock paid to the Weis Manufacturing Company in liquidation of the liabilities of the Weis-Van Wormer to the Weis Manufacturing Company and by the latter distributed among its shareholders as a dividend.

Geaham, Judge; Hat, Judge; DowNet, Judge; and Campbell, Chief Justice, concur.  