Document: 519 U.S. 79117 S.Ct. 452136 L.Ed.2d 454 Kevin M. O'GILVIE and Stephanie L. O'Gilvie, minors, Petitioners,v.UNITED STATES.Kelly O'GILVIE, Petitioner,v.UNITED STATES. Nos. 95-966, 95-977. Supreme Court of the United States Argued Oct. 9, 1996. Decided Dec. 10, 1996*. Syllabus ** Petitioners, husband two children a woman who died toxic shock syndrome, received jury award $1,525,000 actual damages $10 million punitive in tort suit based on Kansas law against maker product that caused decedent's death. They paid federal income tax insofar as award's proceeds represented damages, but immediately sought refund. Procedurally speaking, this litigation represents consolidation cases brought same Federal District Court: husband's Government for refund, Government's to recover refund had made earlier. The found petitioners under 26 U.S.C. § 104(a)(2), which, it read 1988, excluded from ''gross income,'' ''amount any . account personal injuries or sickness.'' (Emphasis added.) court held merits italicized language includes thereby excluding such gross income. Tenth Circuit reversed, holding exclusionary provision does not cover damages. Held: 1. Petitioners' were ''on of'' injuries; hence gross-income-exclusion apply are taxable. Pp. ___-___. (a) Although phrase unambiguously define itself, several factors prompt agree with when interprets those injury lawsuit awarded by reason of, because injuries, do compensate injury, private fines levied civil juries punish reprehensible conduct deter its future occurrence. For one thing, interpretation gives meaning consistent dictionary definition. More important, Commissioner v. Schleier, 515 ----, 115 2159, 132 294, came close resolving statute's ambiguity favor said statute covers pain suffering medical expenses, lost wages an ordinary case they ''designed victims,'' id., at n. 5, S.Ct., 2165, elements ''punitive nature,'' 2165. reading also is more faithful statutory provision's history basic tax-related purpose compensatory restore victim's lost, nontaxable ''capital.'' Petitioners suggest no very good why Congress might have wanted exclusion covered these which substitute normally untaxed (or financial) quality, good, ''asset'' kind loss. (b) three arguments contrary-that certain words phrases original, current, version work their favor; may be justified Congress' desire generous victims avoid administrative pro blems separating portions global settlement determining extent itself intended compensate; position supported 1989 amendment specifically says connection involving physical sickness-are sufficiently persuasive overcome interpretation. 2. case-specific procedural arguments-that was untimely original notice appeal filed few days late-are rejected. 66 F.3d 1550 (C.A.10 1995), affirmed. BREYER, J., delivered opinion Court, REHNQUIST, C.J., STEVENS, KENNEDY, SOUTER, GINSBURG, JJ., joined. SCALIA, dissenting opinion, O'CONNOR THOMAS, Stephen R. McAllister, Lawrence, KS, No. 95-966. Linda D. King, Wichita, petitioner Kent Jones, Washington, D.C., respondent. Justice BREYER Court. 1 Internal Revenue Code 2 (whether agreement whether lump sums periodic payments) sickness. '' 104(a)(2) (1988 ed.) (emphasis added). 3 issue before us applies (and makes nontaxable) plaintiff injuries. We conclude here 4 * Betty 1983 syndrome. Her husband, Kelly, (on his own behalf her estate) O'Gilvie's Eventually, he net Insofar 5 concerns petitioners' legal entitlement Kelly's 7405(b) (authorizing suits refunds erroneously made). ''damages sickness,'' entitling Kelly obtain, keep, Appeals Circuit, however, reversed Along Fourth, Ninth Circuits, Because Sixth has contrary, Circuits divided about proper provision. granted certiorari resolve conflict. II 6 ''by suit,''-indeed ''by'' ''suit'' ''personal injuries.'' Contrast Burke, 504 229, 112 1867, 119 34 (1992) (§ applicable backpay Title VII Civil Rights Act 1964 claim upon 'tort type rights,' 234, 1870); Commissione r 294 (1995) (alternative holding) (Age Discrimination Employment 1967 (ADEA) similar Burke respect). These circumstances bring within provision, only if ''received'' And itself. 7 On linguistic words, petitioners, require than ''but-for'' between ''any'' would virtually all scope since: ''but there lawsuit, damages.'' 8 alternative interpretation, impose stronger causal connection, making To put matter specifically, make section inapplicable where 9 'are compensation [but][i]nstead occurrence.' International Brotherhood Electrical Workers Foust, 442 42, 48, 99 2121, 2125, 60 698 (1979), quoting Gertz Robert Welch, Inc., 418 323, 350, 94 2997, 3012, 41 789 (1974) (footnote omitted). 10 ''received rather defendant's jury's need it. Hence, despite some historical uncertainty matter, see Rev. Rul. 75-45, 1975-1 Cum. Bull. 47, revoked 84-108, 1984-2 32, now concludes fall outside coverage. 11 statute. See, e.g., Webster's Third New Dictionary 13 (1981) (''for sake of: of''). 12 supra, we favor. That did involve suit; involved liquidated charging violation Age Act. Nonetheless, deciding issues presented ADEA damages), contrasted recovery ''not simply taxpayer settlement, each element satisfies requirement 'on sickness.' Id., 2164. 14 In covered, 5; instead, 'punitive nature,' 2165 (quoting Trans World Airlines, Inc. Thurston, 469 111, 125, 105 613, 624, 83 523 (1985)). 15 Applying reasoning lead conclusion U.S., --- -, nature.' Ibid. gave other reasons our Schleier well, explicitly labeled ''independent'' ground support decision, 2166. cannot accept dictum. 16 find well reveals. begins approximately 1918. At time, recently decided principle restoration capital income; fell definition ''income'' imposed tax. E.g., Doyle Mitchell Brothers Co., 247 179, 187, 38 467, 469-470, 62 L.Ed. 1054 (1918); Southern Pacific Co. Lowe, 330, 335, 540, 542, 1142 (1918). Attorney General then advised Secretary Treasury accident insurance policy should treated primarily 17 ''substitute source periodical merely tak[ing] place human ability destroyed accident. therefore [nontaxable] 'capital' distinguished 'income' receipts.'' 31 Op. Atty. Gen. 304, 308 Department added 18 ''upon principles amount individual result compromise sustained him through [that is] taxable T.D. 2747, 20 Treas. Int. 457 19 Soon thereafter, enacted first predecessor us. ''[a]mounts received, health workmen's acts, sickness, plus 1918, ch. 18, 213(b)(6), 40 Stat. 1066. 21 cited materials structure, suggests sought, enacting statute, codify Treasury's approach. A contemporaneous House Report, relevant, confirms similarity approach, says: 22 ''Under present doubtful amounts insurance, required included proposed bill provides shall income.'' H.R.Rep. 767, pp. 9-10 23 This approach reflects strong trying interpret reach beyond that, up loss, seek victim whole, or, speaking loosely, ''return financial capital.'' 24 concede go what expect purely tax-policy-related ''human capital'' rationale justify. excludes taxation aim well-being-personal assets taxed them. It substitute, say, wages, been earned extent, can compensated better off perspective taken place. 25 But say cutting totally free moorings failure separate proceeds) change focus tax-equality objective providing important part even entirety rationale. All current (the wording changed significantly original) focus. Finally, asked answer. Those ''asset.'' require, strongly suggest, evidence congressional generosity concern convenience stretched bounds distinguish noncompensatory 27 Of course, just said, argue and, example, much thing. is, both instances, windfall. circumstance alone, coverage degree not. Moreover, argument assumes something anomaly; so, justify extension anomaly creation another. See Wolfman, Current Issues Tax Policy, U. Ark. Little Rock L.J. 543, 549-550 (1994) (''[T]o build upon'' perspective, less easily explained portion ''of otherwise rational exemption injury,'' ''does sense''). 28 sorts contrary. First, emphasize stress word ''any note versions referred money (from compensation, example) ''amounts compensation,'' while refer received'' without adding limiting ''as compensation.'' 104(a); add version, injuries'' to, modified, view second sentence Regulation adopted 1958 29 ''The term 'damages agreement' means (other compensation) prosecution action rights, entered into lieu prosecution.'' CFR 1.104-1(c) (1996)). 30 arguments, show reasonably different ways-the assumption analysis rests. nor history. help Regulation's offset sentence, sets forth independent requirement. S.Ct ., 2167. Appendix, infra, __. Second, purposes led exclude, exclude doing so avoids problems compensate. 32 Our problem degree. presumably limits. distinguishing likely serious than, among (which difficulty treatment wages). Cf. supra p. 456. And, identifying ostensibly exist where, here, relevant state clear compensatory, entirely punitive. Brewer Home-Stake Production 200 Kan. 96, 100, 434 P.2d 828, 831 (1967) (''[E]xemplary regarded degree''); accord, Smith Printup, 254 315, 866 985 (1993); Folks Power & Light 243 57, 755 1319 (1988); Nordstrom Miller, 227 59, 605 545 (1980). 33 Third, rely later law. 1989, amended ''shall 104(a) (1994). 35 Why, ask, removing (in nonphysical cases) unless believed amendment's absence, coverage? 36 short answer question thought then-current damages-in injuries-was unclear, clarify respect leave fact indeed uncertain time supports view. Compare Roemer Commissioner, 716 F.2d 693 (C.A.9 1983); Miller 93 T.C. WL 104238 (1989), rev'd 914 586 (C.A.4 1990). 37 legislative history, offers further support. grew out Senate's refusal Senate willing specify could cases. 101-247, 1355, U.S.Code Cong. Admin.News 1906, 2825, H.R. Conf. Rep. 101-386, 622-623 (1989). primary focus, pre-existing event, control earlier Price, 361 80 326, 334 (1960); Higgins Smith, 473, 355, 84 406 (1940). cf. 235, 6, 1871-1872, (including passing reference amendment, dicta, somewhat like petitioners). 39 (Although neither party argued 1605 Small Business Job Protection 1996, Pub.L. 104-188, 110 1838, excepts most provided 104(a)(2). prospective application, here. Conference Report new ''[n]o inference intended'' prior amendment. 104-737, 301 (1996).) upshot persuasive. set above, __-__, III raised issues, specific posture litigation. O'Gilvie point initially accepted wrote checks July 1990. mind 1992, years later, them seeking return made. ''civil name States'' ''portion refunded''). limitations specifies allowed begun after refund.'' 6532(b). 42 1990, limitation period runs date receipt-if, argues, ''making refund-the timely. on, from, mailed (presumably 7, 8) too late. 43 view, correct admits interpretations. ordinarily mistaken payments ''accrues receipt payment,'' Bedford Lloyd Investment Associates, 363 Mass. 112, 119, 292 N.E.2d 688, 692 (1973); accord Sizemore E.T. Barwick Industries, 225 Tenn. 226, 233, 465 S.W.2d 873, 876 (1971) ('' 'the payment receipt' ''), unless, cases, accrues still mistake's discovery, Allen Lamkin, When Statute Limitations Begins Run Against Action Recover Money Paid By Mistake, 79 A.L.R.3d 754, 766-769 (1977). aware nature traditional mistake-an roots old common-law ''assumpsit'' ''money received.'' Bedford, 118, 688. lower courts commentators reached conclusion. Carter, 906 1375 1990); Akers States, 541 F.Supp. 65, 67 (M.D.Tenn.1981); Woodmansee, 388 36, 46 (N.D.Cal.1975), grounds, 578 1302 1978); J. Mertens, Law Income Taxation 54A.69 (1995); Kafka Cavanagh, Litigation Controversies 20.03, 20-15 (2d ed.1995). dicta Wurts, 303 414, 417-418, 58 637, 639, 82 932 (1938), Court's normal practice construing ambiguous statutes Badaracco 464 386, 391, 104 756, 761, 78 549 (1984). 44 children's ''date mailing'' produces marginally greater certainty, rule postmark establish date. indication receipt'' proved difficult administer actions erroneously. check clears, all, outer bound. 45 considered judgment because, describes underlying opinion. determination forth. APPENDIX TO OPINION OF THE COURT Section 104(a), follows: 47 ''Compensation sickness 48 ''(a) general.-Except attributable excess of) deductions 213 (relating medical, etc., expenses) year, include- 49 ''(1) acts sickness; 50 ''(2) 51 ''(3) employee, (A) contributions employer includible (B) employer); 52 ''(4) pension, annuity, allowance resulting active service armed forces country Coast Geodetic Survey Public Health Service, disability annuity payable provisions 808 Foreign Service 1980; 53 ''(5) incurred direct violent attack State determines terrorist occurred employee engaged performance official duties States.'' ed.). 54 amended, adding, things, following language: 55 ''Paragraph (2) 56 provides: 57 ''Section agreement) agreement)' (1996). whom THOMAS join, dissenting. 59 stood phrase, isolation, susceptible broader well. Ante, __-__. I agree. greatly understates complained describing nothing causality, ante, seems me proximate cause damages; awarded. called sure, intentional, blameworthy conduct, coequal negligent intentional) occupies role causality regard Both types injury. nub me, this: If asked, lawyer another system, ''What States?'' surely ''Compensatory damages-the former inflicting latter them.'' If, asserts, used category, people sometimes imprecise. notion carefully precisely segregate fanciful. exact understood intend. 61 What think fair isolation becomes clearer context. quickly erroneous premise behind Ambiguity existed, end textual inquiry. Statutory construction, ''holistic endeavor.'' Sav. Assn. Tex. Timbers Inwood Forest Ltd., 484 365, 371, 108 626, 630, 98 740 (1988). ''A seem often clarified remainder scheme.'' appears 104(a)(1), parallels respects use critical of'': 63 [G]ross 64 65 104(a)(1) for'' reads mean sound ''[W]hen legislature uses another, meanings intended.'' 2A N. Singer, Sutherland Construction 46.07 (5th ed.1992 Supp.1996). Russello 16, 23, 296, 300, (1983). construction limits, course: Use terminology differing contexts little significance. contrasting appear adjoining address subject identical grammatical structure. contrast usages striking 1918 combined subsections (a)(1) (a)(2) 104, together (a)(3) sickness), single subsection, provided: 68 'Gross income' [d]oes include : 69 ''(6) Amounts 213(b)(6) 1065-66 70 clear. Had written Instead, tacked additional ''plus etc.'' apparent except exclusion. 71 maintains, ''more [its] history.'' ''history'' refers sort discussed-prior enactments approved Congresses revised ones produce text. Indeed, small Congress, since Committee cites, standing uninformative, saying ''[u]nder [personal] 65th Cong., 2d Sess., snippet citing pertinent antecedent basis recent judicial decisions personal-injury capital. __-__ (citing (1918)). 72 One Members unrealistic knew Executive-Branch opinion) meant capital, ''doubt'' referred. course draw logical conclusion, applied obviously undeniably mere capital,'' namely, reimbursement income, large proportion (indeed perhaps majority) award. concedes asserts inconsistency enough ''to moorings,'' __, assume Decision, however ''capital'' Decision limited exempted ''an entire thesis taxability rests proposition overlooked obvious almost always overlook ''smart-money.'' 73 So, trace reasoning: must whose text ''return-of-capital'' theory, though, inconsistently common category supposedly this, diligent figure mistrusting inclusive consulting surmising underlay discerning lost-income compensatories, punitives. sure guide, doubly surrounding provisions. 74 poses question, ''why [in ] needed being not), suffices surmise inadvertently embraced future-income Or error found, wrong rejects hand: Excluding ''avoids settlement.'' ----. How substantial particular suggested statistics percent disposed 92 either (such summary judgment) trial. B. Ostrom Kauder, Examining Work Courts, 1994, (1996); Administrative Office Mecham, Judicial Courts: 1995 Director 162-164. issue, imposing parties necessity allocating (with concomitant suggestion intentional wrongdoing allocation entails), reviewing allocation, incentive inflate tax-free portion. response adequate (if required) including ''[t]he Perhaps so; simple splitting atom; way refutes complicated explain inclusion already abandoned purity 75 remaining offered decision (1995), ''close resolving''-in favor-the permits disagree. faced sickness'' 104(a)(2)'s As dissent accurately observed, 2170 (opinion O'CONNOR, J.), ''the key analysis'' necessarily entail hardly hand, ''respondent's u nlawful termination psychological 'personal' comparable intangible automobile accident,'' ''it respondent's back injury.'' respondent countered least settlement'' linked statement seeks press today's nature, compensatory. ---- - 2164-2165 5. 76 recites though whereas quite different: Since punishment rise (non-personal-injury) action, ''linked to'' incidental entitled intimated indisputably odd come resolving'' it) discussion numerous considerations text, highlighted search opinions dictum bearing closer (1992), confers ''tort rights'' (qualifying plaintiff's exemption) entitles ''a trial 'both equitable relief, circumstances, damages' awarded.'' 240, 1873-1874 Johnson Railway Express Agency, 421 454, 460, 95 1716, 1720, 295 (1975)). 77 really way. deduct unnecessary discussed government's commenced two-year specified note, resolution demand addressed, rejecting run mailing check. So long trigger, decide trigger check's clearance. stated, respectfully Together 95-977, court. syllabus constitutes prepared Reporter Decisions reader. Detroit Timber Lumber 321, 337, 282, 287, 499.

Category: 11