Court Opinion

ID: 9654018
Source: CourtListenerOpinion
Date Created: 2023-08-23 18:02:11.722877+00
Date Added: 2024-06-11T18:13:04.674715
License: Public Domain

SIBLEY, Circuit Judge
(dissenting).
.What Mrs. Foster got by her husband’s will in October, 1913, was not timber on the market and worth the market price, but timber off the market and already sold for $5 per thousand feet, deliverable in the future, and to be paid for as delivered, without interest. The contract of sale is not in the record, but the excerpts from it make it out a binding contract of sale, with no option feature, except that, if the purchaser fails to pay as agreed, the seller has an option to end the contract without liability on the buyer for breach beyond paying for what had been already cut. The entire lot of timber was tied into one whole by Mr. Foster’s contract. Under it a situation existed very much like that where the coal in an exhaustible mine or oil in an exhaustible oil pool has been similarly sold. The fair unit value of the seller’s exhaustible property after making the contract will not depend on the market value from time to time of the thing sold, for it is no longer on the market. One buying from Mrs. Foster in October, 1913, her timber rights as fixed by the contract would consider the market price of timber only in connection with the possibility of the contract becoming forfeited, and would be governed more directly by the sale price and the probable average time he would be out of his money. Against interest, loss of timber and taxes on the timber not reimbursed, he would figure the gain by the growth of the timber. If the latter would offset the former, the reasonable value per thousand feet of the timber would equal the sale price. If not, a reduction in value would be made to take care of the difference. Therefore, in fixing the fair market value in 1913 of this timber, the probable time that the contract then had to run, the average cost of carrying the timber, the offsetting growth, and the sale price would be the most important elements to consider. Mrs. Foster and her coexecutor in an inventory made at the very date in question valued this timber thus, circumstanced at $3.50 per thousand. As plainly appears by their then explanation found *519in the footnote to the majority opinion, the valuation was not a guess, but arrived at by a consideration of the elements above pointed out as proper to be considered. To cut 300,000,000 feet at a rate of 18,000,000 per year, probably the known capacity of the sawmill, would require 10% years, and would fix an average loss of interest for 8% years. The length of time and amount involved are so great as to render it probable that compound rather than simple interest would be figured by an investor. An investment of $3.50, with compound interest at 6 per cent, for 8% years, would amount to $5.07. At 8 per cent., a legal rate in Texas, it would be much more. The «$5 per thousand to he received would leave a loss in interest in addition to loss of timber and taxes. The growth of the timber must have been considered to offset those losses in order to fix a then average value so high as $3.50. Mrs. Foster’s interests as executrix and as devisee were the same. A statement made by her as executrix is evidence against her individually. Waterman v. Moody, 92 Vt. 218, 103 A. 325; Dowling v. Feeley, 72 Ga. 559. Beginning in 1913, Mrs. Foster continuously carried her investment, on her hooks at $3.50' per thousand. These are weighty admissions by her directly on the point at issue. The Board had a right to reject the explanation that $3.50 was an arbitrary figure. If the appraisal by Mrs. Foster had been one for estate taxes, it would have been final evidence of the value of what she received. Regulation 45, art. 1562; Regulation 62, art. 1563. It is sufficient evidence, and I think near the truth. Value as a fact is a matter to be determined by the Board. Avery v. Commissioner (C. C. A.) 22 F.(2d) 6, 55 A. L. R. 1277; Anchor Co. v. Commissioner (C. C. A.) 42 F.(2d) 99; Am Plus Storage Battery Co. v. Commissioner (C. C. A.) 35 F.(2d) 167.