Opinion of the Court. 257 U.S. 37 L. D. 78; House Doc. No. 5, pp. xii-xiii, 56th Cong., 1st sess.; Utah Power & Light Co. v. United States, supra. Even if the meaning were not otherwise made plain, we should be slow to reject the construction thus put on the section by the head of the department charged with administering it. Logan v. Davis, 233 U. S. 613, 627. The appellants take the position that the purposes for which they are selling the electric power are such as to make their use of the right of way a use for "purposes of a public nature" in the sense of that section. But of this it suffices to say that whether such a use be regarded as falling under that head or under the one described as the development of power," it is a use which the section permits only where it is subsidiary to irrigation. It cannot take the place of the latter as the main purpose. With this understanding of the statutes under which the right of way was obtained, we pass the controverted charge of fraud in procuring the Secretary's approval and come at once to the question of forfeiture. The right of way, as we have seen, was granted on an implied condition that it should revert to the United States in the event the grantee ceased to use or retain it for the purpose indicated in the statutes. That purposethe main and controlling one-was irrigation. The agreed statement of facts shows that the right of way never has been used for irrigation, and also that the appellants are effectually and permanently precluded from using it for that purpose by reason of an agreement entered into by the grantee and of a judicial decree to the rendition of which the grantee expressly consented. Thus it appears that the condition on which the grant was made has been not only broken but also rendered impossible of performance. This entitles the United States to assert and enforce a forfeiture of the grant; and it is for this purpose that the present suit is brought. True, Congress has neither declared a forfeiture nor directed the suit; but this is not a valid objection. In the absence of some legislative direction to the contrary, and there is none, the general authority of the Attorney General in respect of the pleas of the United States and the litigation which is necessary to establish and safeguard its rights affords. ample warrant for the institution and prosecution by him of a suit such as this. United States v. San Jacinto Tin Co., 125 U. S. 273, 278-285. A suit brought in virtue of that authority and otherwise appropriate to the occasion is authorized by law in the sense of our decisions. See United States v. Repentigny, 5 Wall. 211, 267-268; Atlantic & Pacific R. R. Co. v. Mingus, 165 U. S. 413, 430– 434; Spokane & British Columbia Ry. Co. v. Washington & Great Northern Ry. Co., 219 U. S. 166, 173-174. This suit meets these requirements. The appellants invoke the rule that a court of equity usually is reluctant to lend its aid in enforcing a forfeiture. But where, as here, the right to the forfeiture is clear and is asserted in the public interest, equitable relief, if otherwise appropriate, is not withheld. Farnsworth v. Minnesota & Pacific R. R. Co., 92 U. S. 49, 68; Union Land & Stock Co. v. United States, 257 Fed. 635. The statute placing a limitation of six years on the time within which "suits to vacate and annul patents " may be brought (Act March 3, 1891, c. 559, 26 Stat. 1093) is also relied on. But in so far as this suit seeks to enforce a forfeiture for a breach of a condition subsequent it plainly is not a suit to vacate or annul a patent and so is not within the statute. We conclude that the United States is entitled to a decree declaring and enforcing a forfeiture. This renders it unnecessary to deal with the other phase of the suit. The decree of the Circuit Court of Appeals is accordingly so modified as to direct the District Court to enter a decree declaring and enforcing a forfeiture of the right of way, and also enjoining the appellants from further occupying or using the land, unless within some reasonable time, to be fixed by that court, they apply for and obtain a right or license to use the same under the Act of February 15, 1901, or some other applicable statute, and as so modified is affirmed. Decree modified and affirmed. UNITED STATES v. PHELLIS. APPEAL FROM THE COURT OF CLAIMS. No. 260. Argued October 11, 1921.-Decided November 21, 1921. 1. Substance and not form should control in the application of the Sixteenth Amendment and the income tax laws enacted under it. P. 168. 2. The Income Tax Law of October 3, 1913, in declaring that the tax shall be laid on gains, profits and income derived from dividends, means, not that everything in the form of a dividend must be treated as income, but that income derived in the way of dividends shall be taxed. P. 168. 3. Income defined (p. 169) as in Eisner v. Macomber, 252 U. S. 189. 4. With the concurrence of 90% of the stockholders of a corporation, a plan of reorganization was effected, pursuant to which a new corporation with an authorized capital stock nearly four times as great in par value as the aggregate stock and bonded indebtedness of the old was formed under the laws of a different State, all the assets of the old were transferred to the new, as a going concern, including the good will and a large surplus, and, in consideration, the old corporation retained money enough to redeem part of its bonds and received (1) the new company's debenture, stock of par value sufficient to redeem the remainder, retire its own preferred stock and leave in its treasury an amount equal in par value to its own outstanding common stock, and (2) the new company's common stock of par value double the amount of the old company's outstanding common stock, which the latter immediately distributed to its common stockholders as a dividend, paying them two shares of the new for each of the old. Upon completion of the transaction, October 1, 1915, the personnel of the stockholders and officers of the two corporations was identical, the stockholders having pro 156. Argument for the United States. portionate holdings in each; but less than one-half of the new company's authorized stock had been issued. Thereafter, the old corporation continued as a going concern, but, except for the redemption of its bonds and retirement of its preferred stock, and the holding of the debenture stock equal to its common, and collection and disposition of the dividends thereon, did no business. Held: (a) The shares of the new company's common stock which passed to the old company and through it to its stockholders as a dividend, representing its surplus, were income of the shareholders, taxable under the Act of October 3, 1913. P. 169. (b) And this, although the market value of the stockholder's old shares before the dividend was the same as that of his old and new shares after it. P. 170. (c) The new company must be regarded, not as substantially identical with the old, but as a separate entity, and its stockholders as having property rights and interests materially different from those incident to ownership of stock in the old company. P. 172. (d) The new common stock in the treasury of the old company being treasury assets representing accumulated profits and capable of distribution, its distribution transferred to the several stockholders new individual property, which they were severally entitled to enjoy or to sell,-their individual income. P. 174. 56 Ct. Clms. 157, reversed. APPEAL from a judgment sustaining a claim for a refund of moneys paid under protest in discharge of an income tax assessment. Mr. Solicitor General Beck, with whom Mr. Carl A. Mapes, Mr. Newton K. Fox and Mr. Andrew J. Aldridge were on the brief, for the United States. The New Jersey corporation could have distributed its large surplus in cash or in specie, either as securities or, if divisible, tangible property. In either case the distribution would have been income. However, it sold its entire plant to a new corporation. The fact that the new corporation was formed by the managing body of the old and that there was a momentary identity of stockholders can not in any way affect the question. They formed the new corporation in another State and with such franchises as that State granted corporations of this character. Argument for the United States. 257 U.S. Whether these franchises, as granted by Delaware, were the same or different from the franchise granted to the old company by New Jersey does not appear. Presumably, the promoters of the new company found some advantage in securing a different corporate situs. The new corporation had a much larger authorized capital stock. The relations between the stockholders inter sese were likewise changed in regard to the amounts, kinds and proportions of stock authorized. Moreover, the Delaware company retained in its treasury one-half of its stock which was not issued; but, as it was authorized, its possible issue was contemplated. Therefore, potentially, the relative proportions of the common owners of this property would be very much changed, and the stockholders greatly augmented in numbers, if and when one-half of the whole capital stock of the new corporation was, as was possible, sold to the public. The old company continued its operations as a company. Thenceforth it had the stock in question, out of which it proceeded to retire its bonded indebtedness and, so far as possible, its preferred stock, and it held the precise equivalent of its common stock in valuable interestbearing assets, and a large surplus, which it divided among its stockholders. Nothing prevented it from taking its existing assets, purchasing a new plant, and competing with the new company. For all legal and practical purposes the two corporations were separate. The identity of management and stockholders were potentially and probably but temporary. And when we are considering whether these corporations are or are not separate entities, the possibilities or powers affect the question quite as much as the temporary realities. The fact that the distribution of securities by the New Jersey corporation was contemporaneous with the sale of its assets is also immaterial. It is not important when these transactions took place, but what was their essen |