Detroit Trust Company

When John F. Dodge died in January 1920, his will provided for the establishment of a trust managed by the Detroit Trust Company in Detroit, Michigan. In 1919, just the year before, John Dodge, his brother Horace Dodge, James Couzens, and the other minority shareholders in the Ford Motor Company (FMC) were approached about selling their FMC stock. Before the Dodge brothers would sell their shares, they wanted to know what the Federal income taxes would be on the proceeds. The Commissioner of the Bureau of Internal Revenue (BIR) did a study of FMC and concluded that the value that should be assigned to a share of FMC stock as of March 1, 1913 was $9,489.34. The Dodges agreed to sell their stock for $12,500 per share and paid taxes on a capital gain of $3,010.66 per share. In March 1925, the BIR conducted a review of James Couzens' 1919 income tax return, twelve days before the statute of limitations was due to expire. A new study of the 1913 valuation by the BIR claimed a valuation of $9,489.34 was too high and claimed a much lower valuation of $2,600 per share. The BIR notified other former FMC minority shareholders that because of the lowering of the 1913 valuation of the stock, capital gains were increased to $8,900 per share and additional taxes were due. Each of the Dodge brothers' estates received notification of an additional tax due of $5,004,399.20. Nine of the then former minority shareholders protested and petitioned the U. S. Board of Tax Appeals for an abatement of the additional tax. They won the case after three and a half years of legal hearings and appeals. The Additional Tax Case is considered to be a landmark legal decision that has influenced the development of American capitalism ever since.

Henry M. Leland was an engineer at Henry Ford Company, Henry Ford's second automobile manufacturing company. After Henry Ford's departure in 1902, Leland helped reorganize the company and renamed it Cadillac Automobile Company. Leland left Cadillac and in August 1917, Henry M. Leland and his son Wilfred C. Leland incorporated the Lincoln Motor Company in Detroit, Michigan to manufacture Liberty airplane engines for the United States government. After World War I, Leland set out to manufacture a new luxury vehicle but was stymied by over capitalization, high labor costs, and a short but severe post-war recession that prevented large-scale production. The company's board of directors requested a court appointed receiver assume control in November 1921. The Detroit Trust Company was named receiver and liquidation of the company began. Henry and Wilfred Leland worked to repurchase the company either through loans or a partnership with the new owner. Negotiations with Henry and Edsel Ford led to an agreement wherein Henry Ford, through Ford Motor Company, agreed to pay $8 million for the assets of the Lincoln Motor Company in February 1922 and install the Lelands as operating heads of the organization. The Lelands believed that they would be allowed by Henry and Edsel Ford to run the Lincoln Motor Company as they had and use their profits to pay off creditors and stockholders. The situation quickly became untenable and in June 1922, the Leland's were removed from the company. Believing that Henry Ford had broken an understanding to repay Lincoln's original stockholders, Henry Leland filed suit against Ford in November 1927. In 1931, the Michigan Supreme Court judged the Leland suit to be without merit and Henry Leland was forced to notify his original stockholders that they would receive no compensation.