
    RODNEY, Inc., v. COMMISSIONER OF INTERNAL REVENUE.
    No. 36.
    Circuit Court of Appeals, Second Circuit.
    Nov. 16, 1944.
    LeBoeuf & Lamb, of New York City (Horace R. Lamb, and Leo A. Diamond, both of counsel), for petitioner.
    Samuel O. Clark, Jr., Sewall Key, and L. W. Post, all of Washington, D. C., for respondent.
    Before SWAN, AUGUSTUS N. HAND, and FRANK, Circuit Judges.
   FRANK, Circuit Judge.

We think that the Tax Court cor- ' rectly held that the assumption by taxpayer on June 17, 1938, of the liabilities of Gladstone in exchange for Gladstone’s assets was a capital transaction in the nature of consideration for the receipt of the assets of Gladstone, and that interest paid in that year, which had accrued before such purchase, was not “interest” within the meaning of § 23(b). Nor do we think that the payment of $32,569.33 representing interest accrued prior to June 17, 1938, can be regarded as the declaration of a dividend by taxpayer to Mrs. Scott. It constituted the payment of a debt assumed by taxpayer which it was obligated to pay and was not a voluntary distribution by its board of directors.

Affirmed.  