Court Opinion

ID: 9446552
Source: CourtListenerOpinion
Date Created: 2023-08-03 21:58:16.968237+00
Date Added: 2024-06-11T17:30:41.923858
License: Public Domain

KNOCH, Circuit Judge
(dissenting).
As indicated in the opinion of Chief Judge DUFFY, the sole question here presented is whether strike benefits received from a union by a striking worker are taxable income to him.
Chief Judge DUFFY concludes that the benefits received are nontaxable gifts. After careful consideration of the case, I regretfully find myself unable to agree.
It is true that the plaintiff, a non-member of the Union, was given strike benefits only after he had shown himself to be in need of food, clothing and shelter. The amount of aid given was based, not on his former earnings, but on his personal need, marital status and number of dependents. Such benefits would not have been given, or would have terminated, regardless of his continued participation in the strike, had his need ceased to exist through receipt of income from any other source by him or a member of his family.
However, his need was a secondary qualification to which consideration was given only after he had met the primary *371qualification: participation in the strike. Had he not met that primary qualification, he would have received no benefits. Had he ceased to meet that primary qualification, his benefits would have terminated notwithstanding the extent of his personal need, or whether he was a member of the Union or not. The fact that these benefits were paid to members and non-members alike emphasizes the real reason for payment, namely, either class must be in necessitous circumstances, but, above all, must be on strike.
The District Court clearly indicated that the case was allowed to go to the jury only to present a full record on appeal.
Determination of the character of the strike benefits presented a question of law. All the facts, including the Union’s motivation and intent, were fully disclosed by stipulation of facts and uncontroverted testimony. Bogardus v. Commissioner, 1937, 302 U.S. 34, 58 S.Ct. 61, 82 L.Ed 32; Old Colony Trust Co. v. Commissioner, 1928, 279 U.S. 716, 49 S.Ct. 499, 73 L.Ed. 918.
The Union did require consideration for the strike benefits bestowed on plaintiff. It was stipulated by the parties:
“The International Union grants strike benefits to non-members of the Union, who participate in a strike, if they do not have sufficient income to purchase food or to meet an emergency situation. The Union treats such non-members on the same basis as members of the Union, but non-members as well as members must be strikers before they may receive assistance from the Union.”
The Court instructed the jury that compensation for refraining from labor is taxable income. The majority opinion holds that this was a question to be resolved by the jury. In the light of the stipulated facts it is my opinion that there was a question of law only, and that no factual issue remained to be presented to the jury.
I would affirm the District Judge’s ruling that “ ‘viewing the evidence and all reasonable inferences that may be drawn therefrom in the light most favorable to plaintiff’ (citing cases) as a matter of law the strike benefits constituted taxable income and not a gift.”
The District Court inferred Congressional approval from repeated re-enactment of the applicable sections of the Code, in the light of the 1920 ruling (described in the majority opinion) and 38 years of consistent administrative interpretation and practice. As many persons who have paid a similar tax are said to be awaiting the outcome of this cause, a policy question exists as to the advisability of making strike benefits tax free.
This dissent having been predicated on a totally different ground, however, these matters are not reached.