Court Opinion

ID: 9450471
Source: CourtListenerOpinion
Date Created: 2023-08-04 16:49:36.457098+00
Date Added: 2024-06-11T17:32:20.767991
License: Public Domain

DAVIS, Judge
(concurring in part and dissenting in part):
To my mind, a “sharply defined” policy barring much of the claimed deduction (see Tank Truck Rentals, Inc. v. Commissioner, 356 U.S. 30, 33-34, 78 S.Ct. 507 (1958); Lilly v. Commissioner, 343 U.S. 90, 96-97, 72 S.Ct. 479 (1952); Commissioner v. Heininger, 320 U.S. 467, 473-74, 64 S.Ct. 249 (1943)) is supplied by Section 741.1 of the Iowa Code (quoted in the court’s opinion). That provision (headed “Accepting or giving”) made it unlawful for the taxpayer to “give directly or indirectly” “any gift” or “gratuity” — “connected with, relating to, or growing out of” a “business transaction”- — to “a public officer, acting in behalf of a principal” in that “business' transaction.” The larger expenditures for the benefit of the governmental officials in this ease were gifts or gratuities made to them only because they represented (“act[ed] in behalf of a principal”) state, county, or municipal units which had bought or might buy from the taxpayer; these gifts or gratuities were not private favors but were clearly connected with, related to, and grew out of business transactions, past and potential, between the taxpayer and the employing agencies. To the ordinary eye, the fit is snug enough.
The court, however, puts this statute aside as limited solely to kick-backs paid on particular sales or purchases. The words are not so restricted, and no Iowa decision or ruling carries that suggestion. Kick-backs on specific transactions are largely prohibited by other parts of the Iowa Code (see the court’s footnote 8, especially § 741.9, “State employees not to receive gratuities”). Section 741.1 seems definitely to go further. I cannot join in drawing the contrary inference from the mere absence of reported or known cases applying the section to gifts or gratuities like those made by taxpayer, or from opinions of the state Attorney General which happen to be concerned with kick-backs strictly, or with other situations quite different from that facing us. The use of the singular, “business transaction”, is not very meaningful in an enactment which broadly covers “any gift, commission, *620discount, bonus, or gratuity connected with, relating to, or growing out of” a business transaction (emphasis added) ; the gifts and gratuities here were certainly connected and related to, and grew out of, past and anticipated business transactions between taxpayer and the state, county, and municipal governments.10 And the differing wording of § 741.6 (“Institutional officers not to receive gratuities”), covering one special sector of Iowa officialdom, does not persuade me that the legislature desired to forbid only those employees from receiving gifts and gratuities from vendors. Section 741.6 sweeps over all “dealers in goods, merchandise, or supplies which may be used in any of said institutions” (emphasis added), not merely those who actually trade with the Board of Control or its constituents; § 741.1, even as I read it, is appreciably narrower.
I do not hesitate to acknowledge that the reprehensible character of taxpayer’s coddling of these public servants moves me to read § 741.1, since its words permit, as extending to the worst of this conduct. If some organ of Iowa law had construed it otherwise,11 we would, of course, bow. But we have very little but the statute itself to guide us, and so far as its terms allow we should assume that it covers practices as “fraught with temptation” and subversive of public impartiality as many of taxpayer’s expenditures. See United States v. Mississippi Valley Generating Co., 364 U.S. 520, 549-550, 81 S.Ct. 294, 5 L.Ed.2d 268 (1961); Michigan Steel Box Co. v. United States, 49 Ct.Cl. 421, 439 (1914); Eisenberg, Conflicts of Interest Situations and Remedies, 13 Rutgers L.Rev. 666, 669-70 (1959) ; Association of the Bar of the City of New York, Special Committee on the Federal Conflict of Interest Laws, Conflict of Interest and Federal Service (1960) , pp. 19-20. The law does not always take morality into partnership, but neither does it abhor virtue. In this case, Iowa, as I interpret the legislation, lets its law accord with morals rather than with current “business practice.”
From the condemnation of § 741.1 I would exclude the Christmas gifts (usually costing less than five dollars); the free lunches, dinners, and cocktail parties; and the free tickets to local events. In the taxable years (1953-1956), our national morals, and presumably Iowa morals as well, did not bar public employees from accepting such minor and relatively inexpensive favors; they were not considered substantial enough to be characterized as a “gift” or “gratuity”. But that cannot be said of the sponsored trips to other cities and states for fishing or sports; the golf tournament; and apparently, also, a part of the convention expense. A recipient of such largesse would know, even a decade ago, that he had been given something of real and substantial value.
To the extent indicated, I concur in the result reached by the court, though not in its opinion. Otherwise I dissent;

. One of taxpayer’s salesmen Justified (in a memo dated November 30, 1953), an expenditure of $364.82 for a trip with public officials to a Notre Dame football game: “Trip to Notre Dame, had two from Cedar Co., two from City of Du-buque, and one from Dubuque County. Think it will pay out OK. Tell better after City deal.” On December 14, 1953, taxpayer made a sale to the City of Du-buque, amounting to $11,985.16.

. In Kirtz v. United States, 157 Ct.Cl. 824, 304 F.2d 460 (1962), the court felt that the Ohio State Insurance Commissioner had in effect determined that the challenged rebates did not violate state law.