Court Opinion

ID: 9479653
Source: CourtListenerOpinion
Date Created: 2023-08-05 07:24:34.401383+00
Date Added: 2024-06-11T17:47:10.877986
License: Public Domain

SILER, District Judge,
dissenting.
I concur with that part of the majority opinion set out in II.A., that Section 88 of the Internal Revenue Code applies to the stock transaction involved, but I respectfully dissent in other respects.
Plaintiff had the burden of proof here. See Coleman v. United States, 704 F.2d 326 (6th Cir.1983). However, he met that burden by uncontradicted evidence on several crucial issues. For that reason, I believe that as a matter of law, plaintiffs stock was transferable and not subject to a substantial risk of forfeiture prior to 1981. Therefore, under Section 83, he should have been assessed for income in another year, not for 1981.
When plaintiff in 1977 received the stock of Area Psychological Hospital, Inc. (APH) in exchange for his PC stock, it was restricted by language on the face of the certificate, as stated in the majority opinion. Even though some APH stock certificates to other shareholders referred to a “stock restrictive agreement and pledge agreement,” the evidence was uncontra-dicted that the only restrictive agreement on this APH stock was the pledge agreement. Perhaps the language on the stock certificate could have been more precise, but the plaintiff and Dr. Jerry Edward Gilliland testified that the only restriction on the stock was a financing restriction, not a restriction on the transfer of it.
The sole possible contradiction to that proof was by inference from a buy-sale agreement of May 18, 1977, between University Hospital, Inc. and Dr. Gerald Jones. Although Drs. Bobby Rouse and Gilliland were officers and shareholders of both APH and University Hospital, there was no other evidence linking the buy-sale agreement with Jones to any similar agreement with the plaintiff. In my opinion, an analogous document between different parties does not constitute substantive evidence to rebut the testimony of plaintiff and Gilli-land.
Moreover, even if that constituted evidence on the issue, there was no evidence by the defendant that when the APH stock was subsequently exchanged for Valley Psychiatric Hospital Corporation (VPH) stock in 1980, or when the VPH stock was further exchanged in 1980 for Health Care Corporation (HCC) stock, there were restrictions on the stock. Instead, the government relies upon the implication that as Rouse and Gilliland were basically in control of the stock of all these successor corporations, they restricted it by personal desire and without any legends upon the certificates.
Certainly, Robinson v. Commissioner, 805 F.2d 38 (1st Cir.1986), held that transferability under Section 83 does not depend upon language in any written legend upon the certificates. Nevertheless, as the majority finds, Robinson held that “[tjrans-ferability under § 83(a) depends upon standard practices and assumes observance of contracts.” Id. at 42. Here, however, there was no contract between the plaintiff and Rouse and Gilliland through the corporations, as occurred in Robinson.
Therefore, as a matter of law, there was no evidence to contradict the proof that the stock restrictions were removed at some year prior to 1981. Without that proof, the government cannot prevail, as the stock bore no legends in 1980. Gilliland and Rouse both said that a person who initially acquired stock of APH had to receive shareholder approval and they did not desire a free trade of the shares of APH stock, but it was never proven that there was any standard practice or contract for APH, let alone a standard practice or contract involving the successor corporations, as Robinson required.
*425With regard to some of the remaining issues, although the buy-sale agreement between University Hospital and Jones was not substantive evidence that there was a restrictive agreement on the APH stock, it was admissible to impeach Gilliland by showing that he had a faulty memory concerning details of contracts he signed. The government has not cited any federal rule of evidence under which the document was admissible otherwise. It was obviously not a habit or routine practice under Federal Rule of Evidence 406 of Gilliland, Rouse or their corporations, as it occurred only on one occasion. See Utility Control Corp. v. Prince William Construction Co., 558 F.2d 716 (4th Cir.1977).
I also must disagree with the majority on one other issue, that is, concerning whether the trial court committed error by failing to take some corrective action against the government in closing argument. The government counsel had stated: “So, where is the stock restrictive agreement? That seems to be the $64,000 question in this case. Well, everybody that took the stand said the certificate says it’s in the attorney’s office for the corporation, and the attorney is Mr. Konvalinka’s office, but he has chosen to represent the plaintiff in this case, so he can’t take that stand and explain to us where this restrictive agreement is. Is there something being hidden here?”
This was an improper argument. The potential witness, although a partner to plaintiff’s counsel, was never declared by the court to be unavailable, and the defense never attempted to depose him or call him as a witness.
The attorney was not peculiarly within plaintiff’s power to produce. Moreover, the records of the stock restrictions were not within the scope of any attorney-client privilege, as it was information that the client intended the attorney to impart to others. See United States v. Aronson, 781 F.2d 1580 (11th Cir.1986) (per curiam); United States v. (Under Seal), 748 F.2d 871 (4th Cir.1984); United States v. Davis, 636 F.2d 1028 (5th Cir.1981), cert. denied, 454 U.S. 862, 102 S.Ct. 320, 70 L.Ed.2d 162 (1982); cf. In re Grand Jury Empanelled March 8, 1983, 722 F.2d 294 (6th Cir.1983), cert. dismissed sub nom. Butcher v. United States, 465 U.S. 1085, 104 S.Ct. 1458, 79 L.Ed.2d 774 (1984). Besides, the attorney for the corporation did not have an attorney-client relationship with the plaintiff until his partner later represented plaintiff in this case.
As the witness was not peculiarly within the power of the plaintiff to produce, it was error for defense counsel to have made the argument without prior court approval. See United States v. Beeler, 587 F.2d 340 (6th Cir.1978); United States v. Blakemore, 489 F.2d 193 (6th Cir.1973). It is realized that government counsel did not direct the jury to draw an adverse inference for failure to call the witness, in those exact words, but, as the majority opinion states, United States v. Martin, 696 F.2d 49, 52 (6th Cir.), cert. denied, 460 U.S. 1073, 103 S.Ct. 1532, 75 L.Ed.2d 953 (1983), held that a strong implication could invite such an adverse inference to be drawn under the right circumstances. I believe such a strong implication arose here.
Nevertheless, I would not reverse the trial court on this issue alone. When the argument was made, plaintiff’s counsel did not object immediately, but waited until government counsel’s argument was complete and the jury had retired to deliberate.1 Then he moved the court for a new trial. The better procedure would have been to have requested an admonition, allowing the court to advise the jury that the witness was not solely available to the plaintiff, and no adverse inference should be drawn from his absence. Because no admonition was requested and because there was only this one reference to the failure to produce the witness, the error was harmless. See Chicago College of Osteopathic Medicine v. George A. Fuller Co., 719 F.2d 1335, 1354 (7th Cir.1983).
*426Therefore, I would reverse the trial court for failure to grant a directed verdict and enter judgment on behalf of the taxpayer.

. This, of course, may not be fatal to plaintiffs case, if a miscarriage of justice has resulted. See Klotz v. Sears Roebuck and Company, 267 F.2d 53 (7th Cir.1959).