Document: 363 U.S. 278 80 S.Ct. 1190 4 L.Ed.2d 1218 COMMISSIONER OF INTERNAL REVENUE, Petitioner,v.Mose DUBERSTEIN et al. Alden D. STANTON al., Petitioners, v. UNITED STATES of America. Nos. 376, 546. Argued March 23, 24, 1960. Decided June 13, No. 376: Mr. Philip Elman, Washington, D.C., for petitioner. Sidney G. Kusworm, Sr., Dayton, Ohio, respondents. 546: Clendon H. Lee, New York City, petitioners. Wayne Barnett, respondent. Justice BRENNAN delivered the opinion Court. 1 These two cases concern provision Internal Revenue Code which excludes from gross income an taxpayer 'the value property acquired by gift.'1 They pose frequently recurrent question whether a specific transfer to in fact amounted 'gift' him within meaning statute. The importance decision facts requires that we state them some detail. 2 Commissioner Duberstein. taxpayer, Duberstein,2 was president Duberstein Iron & Metal Company, corporation with headquarters Ohio. For years taxpayer's company had done business Mohawk Corporation, whose were City. one Berman. and Berman generally used telephone transact their companies' each other, consisted buying selling metals. testified, without elaboration, he knew 'personally' known about seven years. From time conversations, would ask latter potential customers Mohawk's products Duberstein's itself not interested. provided names these items. 3 One day 1951 telephoned said information given proved so helpful wanted give present. stated owed nothing. Cadillac as gift Duberstein, should send it; insisted accept car, finally did so, protesting however intended be compensated information. At already Oldsmobile, felt need another car. testified think have sent if furnished customers. It appeared later deducted expense on its corporate tax return. include 1951, deeming it gift. asserted deficiency car's against him, proceedings review Tax Court affirmed Commissioner's determination. 'The record is significantly barren evidence revealing any intention part payor make * only justifiable inference automobile remuneration services rendered Duberstein.' Appeals Sixth Circuit reversed. 265 F.2d 28, 30. 5 546, Stanton United States. Stanton, been approximately 10 employ Trinity Church He comptroller corporation, Operating church set up fully owned subsidiary manage real estate holdings, more extensive than simply property. His salary end his employment there 1942 $22,500 year. Effective November 30, 1942, resigned both positions go into himself. Company's directors, who seem included rector vestrymen church, passed following resolution upon resignation: 'Be resolved appreciation gratuity hereby awarded Twenty Thousand Dollars, payable equal instalments Two Dollars at every month commencing December, 1942; that, discontinuance services, Corporation released all rights claims pension retirement benefits accrued 1942.' 6 action explained directors based 'Mr. liked Vestry personally. pleasing personality. come when Trinity's affairs difficult situation. splendid piece work, felt. Besides members personally.' And another: '(W)e unanimous wishing loyally faithfully served very time. We thought highest regard. understood going entitled good will.' 7 On other hand, suggestion ill-feeling between arising out recent termination Watkins, treasurer, departure evidently attended acrimony. special board meeting October intervened Watkins' side asked reconsideration matter. minutes reflect 'resentment expressed 'presumptuous' Board, taken after long deliberation, changed.' Board adhered determination Watkins separated employment, giving opportunity resign rather discharged. days revealed resigned; previous terminating then viewed effective; voted payment six months' similar quoted regard but use term 'gratuity.' meeting, announced order avoid such embarrassment or willingness desired, tendering resignation. tabled, though dissent. next week, 5, again tendered resignation this accepted. 8 'gratuity' duly paid. So smaller Stanton's (and Company's) secretary, under resolution, her same corporations shared payments. There undisputed testimony no enforceable resignation, last proviso inserted abundance caution. received cash refund contributions plans, more. required perform further 9 failed payments income. After administrative rejection claim, sued States District Eastern York. 137 F.Supp. 803. trial judge, sitting jury, made simple finding 'gift,'3 judgment entered taxpayer. Second 268 727. Government, urging clarification problem typified necessary, approaches Courts Circuits conflict, petitioned certiorari acquiesced petition basis, because administration laws, granted cases. 361 923, 291, 239. 11 exclusion federal laws first statute4 authority Sixteenth Amendment, has feature statutes ever since. applied particular transfers always matter contention.5 Specific illuminating legislative history point does appear exist. Analogies inferences drawn revenue provisions, taxes, are dubious. See Lockard Commissioner, Cir., 166 4099 statutory shaped largely decisional law. With this, turn contentions Government 12 First. suggests promulgate new 'test' area serve standard lower courts dealing numerous arise.6 reject invitation. governing principles necessarily general spelled opinions Court, which, present framework, lend definitive statement produce talisman solution concrete bar fair examples settings usually arises. situations context overtones—an employer making retiring employee; businessman something advantage business. In context, law established prior here. 13 course here makes plain statute common-law sense, colloquial sense. This indicated voluntarily executed another, consideration compensation therefor, gift, shown mere absence legal moral obligation establish Old Colony Trust Co. 279 716, 730, 49 499, 504, 73 L.Ed. 918. And, importantly, proceeds primarily constraining force duty,' incentive anticipated benefit' economic nature, Bogardus 302 34, 41, 58 61, 65, 82 32, conversely, '(w) return rendered, irrelevant donor derives benefit it.' Robertson States, 343 711, 714, 72 994, 996, 96 1237.7 A 'detached disinterested generosity,' LoBue, 351 243, 246, 76 800, 803, 100 1142; 'out affection, respect, admiration, charity like impulses.' supra, page 996. regard, most critical consideration, agreed leading case here, transferor's 'intention.' 43, 32. 'What controls payment, voluntary, made.' Id., 45, 66 (dissenting opinion).8 14 says 'intention' transferor cannot mean what concept call 'donative intent.' agreement, our decisions support this. Moreover, donor's characterization determinative—that must objective inquiry called amounts reality. 40, 64. scarcely needs adding parties' expectations hopes treatment conduct themselves nothing do 15 suggested criterion apt rephrased terms 'motive' confess skepticism verbal mutation practical consequence. take proper criterion, inquires basic reason fact—the dominant explains transfer. Further profitable go. 16 Second. Government's proposed 'test,' while apparently precise formulation, depends frankly 'principles' 'presumptions' derived decided cases, concededly subject various exceptions; involves corollaries, add Were test law, presuppositions consequences, passing beyond requirements before us, painting large canvas indeed broad brush. propositions following: That employee, even ought, large, taxable; inconsistent payment's being deductible expense; 'personal' elements; properly assets. admits exceptions qualifications propositions. think, extent they correct, maxims experience tribunals tried enunciated explaining factual determinations. Some represent truisms: doubtless is, statistically speaking, exceptional employee Others overstatements possible evidentiary relevant totality circumstances case: over-all treats deduction, entity. But absolute terms. Neither factor shibboleth. taxing nondeductibility condition exclusion; nor draw distinction, terms, individuals, availability transferee. conclusion reached factors. 17 Specifically, trier careful allow issue receipt liability, propriety, fiduciary attaching someone else. major corollary ordinary matter, and, specifically, can thing deduction necessary expense. As said, find basis statute; determinative rule 'law,' trying involving donee's liability elaborate inquiries local peripheral deductibility expenses. former might frequent investigators important several summon delicate aid another.9 Or perhaps vexed 'constructive' distribution property, purposes, agents sponsored transfer.10 considerations, also, reinforce us urged may, nonabsolute form crystallizations experience, prove persuasive case, neither they, detailed made, laid down 18 Third. Decision presented ultimately application fact-finding tribunal's mainsprings human case. nontechnical nature standard, close relationship date multiplicity elements, combinations, creating necessity ascribing each, confirm primary weight conclusions fact. Baker Texas Pacific R. Co., 359 227, 79 664, 756; Heininger, 320 467, 475, 64 249, 254, 88 171; Yellow Cab 338 338, 341, 70 177, 179, 94 150; opinion).11 19 may satisfy academic desire tidiness, symmetry precision area, system determinations fact-finders ordinarily does. see implicit gifts, variety forums tried. If fear undue uncertainty overmuch litigation, Congress singling certain factors matters, field exclusion's application, prizes awards.12 Doubtless diversity result will tend lessened somewhat since decisions, those instance turning issues fact, reported, natural tendency professional triers follow another's determinations, matters. remains basically case-by-case basis. 20 consequence appellate quite restricted. Where jury correct instructions, reasonable men could reach differing issue. 228, 665. judge judge's findings stand unless 'clearly erroneous.' Fed.Rules Civ.Proc. 52(a), 28 U.S.C.A. 'A erroneous' although it, reviewing court entire left definite firm conviction mistake committed.' Gypsum 333 364, 395, 68 525, 542, 92 746. applies also facts, id., 394, 541, many occasions area. Cf. Graver Tank Mfg. Linde Air Products 339 605, 609—610, 854, 856, 857, 1097. explicit attached identical I.R.C. § 7482(a), 26 7482(a).13 21 Fourth. majority accord just outlined. applying forth, seems warranted concluding despite parties obligation, bottom recompense past inducement service future. say 'mere suspicion' Court's part. To appears sort informed bring task. 22 disagreement. four unelaborated 'gift.'14 sure, conciseness strived for, prolixity avoided, findings; but, comes where become sparse conclusory revelation determining be. Matton Oil Transfer Corp. Dynamic, 123 999, 1000—1001. Such conclusory, constitute compliance Rule 52's direction 'find specially separately thereon.' While complex one, ultimate fulfillment requirements. affords semblance indication approached appears, conclusive. stand, looking toward adequate joined WHITTAKER, agrees inadequate, concur opinion. 23 Accordingly, reversed, vacated, remanded ordered. 24 Judgment 376 546 proceedings. 25 HARLAN concurs 376. affirm reasons FRANKFURTER. agreeing involve 'a mixed fact,' U.S., 39, 64, 27 DOUGLAS dissents, view fashioned nearly quarter century ago 61. BLACK, concurring dissenting. 29 I agree clearly erroneous reversing 30 dissent found $20,000 transferred ten years' therefore exempt taxation 1939, 22(b)(3), 22(b)(3) (now 1954, 102(a), 102(a)). wrong judgment. conflicting drawn, show satisfactory, well personally service, pay added compensation, prompted genuine 'gift,' award 246—247, 802—803, 1142. 'constituted reported *.' words, discussed above detail, doubt crucial, adequately supported clearer. reinstate 31 FRANKFURTER, dissenting 32 indicates, brought partly claimed difference interest better desirable constitutes purposes ascertaining 'gross income' Code. soon emerged imposition authorized became evident inherent difficulties subtleties easily yield formulation sufficiently confine narrow limits it. core conception reflected non-legal, non-technical notion benefaction unentangled aspect worldly requital, divers blends personal pecuniary relationships industrial society inevitably niceties adjudication put rest kind formulation. 33 Despite acute arguments thorough re-examination full canvass attempted fresh analysis problem, rejected invitation fashion anything litmus paper excludable Nor aspects namely, relation non-obligatory relationship. futility attempting define, language circumscribing applicable, situation arise, greater explicitness isolating emphasizing militate situations. 34 Thus, regarding recurring involved cases—things employees employers entangled occasioned performance service—the strong implication nature. entirely different member family implications directly otherwise. No single appropriately deals types 'gift.' normally suppose father son contrary shown, now forceful apply presumptive placing burden beneficiary wholly unrelated enterprise. however, declined analyze concluded 'that cases.' 35 authoritative addition decisions. Recognizing here' essential infusion controlling qualification, recognition 'for seek among competing aims motives ones dominated conduct.' opinion). All me try improve 'already out' leave old phrases float thereby volume exegesis phrases. 36 Especially believe directed rely 'experience conduct' 'informed affairs' appraising Varying conceptions 'mainsprings experiences assumptions man, affairs,' diverse often drastically conflicting. What sets bodies sail illimitable ocean individual beliefs experiences. hardly fail invite, encourage, too individualized diversities am afraid phrasings practicalities administration, uniform vast country ours, embarrassed. By 37 Judge Hand particularly sense sheer benevolence generous lagniappe, extra thrown legally morally given. lawyer adopted hardheaded businessmen, contained abandon 'pension benefits.' lessen significance clause 'to assurance doubly sure.' 728. confirmed words 'in Manager Estate Comptroller throughout years, President Inc.' document, light adverted opinion, least diminished trial. Thus totally sustain place attributable generosity secular functions officer Since fails judge. operative 1939 Code, 22(b)(3). corresponding 102(a). husband referred wife joint returns. note 14, infra. II.B., c. 16, 38 Stat. 167. officially problem. Parrott B.T.A. 1. stated: 'Gifts defined distinguished reasons.' including 'tips' classic See, e.g., Roberts 176 221. parts touch holding, read stating establishes. little distinction views Bogardus. 44, 66, prevailing 'seems' hold relieved tax' strikes held event, interpreted afterwards. principal difference, lies Cardozo once described memorable 'ordinary necessary' business: 'One struggles vain formula supply ready touchstone. law; way life. Life fullness answer riddle.' Welch Helvering, 290 111, 115, 54 8, 9, 78 212. comment fits bar. Cf., Nelson 203 Bogardus, divided scope extended fact-finder's receipt, instant fact.' took justifying assuming fairly review. view. approach ruling division afforded subsequent respect presenting elements untechnical here—that expense—was treated supra. Dobson 489, 498, n. 22, 239, 245, 248, adversely criticized, insofar reviewable course, longer ordains fact-finder infra, criticism sound 74, 1954 Previously, holdings receipts 'Pot O' Gold' radio giveaway, Washburn T.C. 1333, Ross Essay Prize, McDermott U.S.App.D.C. 176, 150 585, 'gifts.' obviate rulings. S.Rep. 1622, 83d Cong., 2d Sess., p. 178. imply approval exclusion. shall exclusive jurisdiction manner district civil actions came through amendment 1141(a) 1948 (§ Judicial Act, 62 991). purpose legislation remove favored position (in comparison Claims rulings matters) enjoyed 11, Grace Bros., Inc., 173 170, 173. 'Findings Fact Conclusions Law' orally, simply: Directors Incorporated, 19, resignations accepted plaintiff controller Church, whereby plaintiff, Allen (sic) amount monthly installments $2,000 constituted taxable 1943.'

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