—the court held that rent paid by the lessee to the stockholders of the lessor was corporate income of the lessor and could be taxed as such, but said at page 728: "We are not concerned with the questions how the plaintiff can pay the tax or how the Government is going to collect it."

—it is held, affirming the decision below (239 Fed. 739), that dividends paid directly to stockholders of lessor, as rental, are income to lessor under the income tax law of 1913.

—the corporation leased its properties and agreed that the rental should be paid to its stockholders and bondholders.

It is well settled that where a corporation leases its property and the rental price is paid directly to its stockholders, such payment constitutes taxable income to the corporation.

—held that rental payments made to shareholders of the lessor corporation pursuant to a covenant in the lease, constituted income to the lessor for purposes of taxation.

Furthermore, it is held that, under this form of lease, each of the lessor's stockholders has an individual, direct claim against the lessee for his full and undiminished share of the annual rents; that share must be paid to the individual stockholder without interference by the lessor, the tax-collecting agency, or anyone else

Corporation liable to tax, though engaged in no business, deriving all income as rent from its property

The result thus reached was not novel; it was not predicated upon attempting to frustrate a tax avoidance scheme, the lease having been executed in 1864; and it was in accord with similar results already reached in a variety of other cases

Even if, under the local law of any litigation which might be founded on these leases, these designated payees might as third parties beneficiary enforce payment from the lessee directly to them, this would not prove that the owner had no interest in the amount or that it was not his income.

For additional cases in which a lessor railroad was held liable to taxation on obligations discharged by its lessee see: Providence and Worcester RR, 5 BT A. 1186 (1927); Houston Belt & Terminal Ry., 6 BT A. 1364 (1927)(taxes); Renssalaer & Saratoga R.