Court Opinion

ID: 4485938
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:34:05.508837+00
Date Added: 2024-06-11T15:03:47.978582
License: Public Domain

Hill J., dissenting: It is my opinion that the record in this case discloses neither a legal nor a moral obligation on the part of petitioner to release its claim for debt against the Spitz estate. If it be assumed that petitioner was either legally or morally obligated to refund the $30,000 paid to it in 1931 in full settlement of its debt against the Spitz estate because such payment was improperly preferential to it as a general creditor, petitioner by such refundment was restored to its former status of a general creditor of the Spitz estate. As a general creditor, it had the legal right to payment of its debt proportionately with other general creditors out of assets of the estate available for payment to general creditors. It does not appear that there were no such assets. In fact, the contrary is indicated. After such refundment was made by petitioner, neither the Spitz estate nor the creditors thereof, nor the heirs of Louis Spitz, deceased, had any claim or claims whatever against petitioner. The general releases by petitioner of claims against the above named parties were executed solely for the purpose of enabling Dimond, petitioner’s president, treasurer, and controlling stockholder, to settle on a compromise basis for $100,000 actions for damages against him in the claimed aggregate amount of more than $2,000,000 for alleged negligence and mismanagement as executor of the Spitz estate. The pending action against Dimond did not involve any alleged liability of the petitioner to the complainants therein. Petitioner was not a party to the action and there is nothing in the record to indicate any obligation or duty, legal or moral, on the part of petitioner either to Dimond or to the complainants in the action to execute such releases. It does not appear that it was within the scope of petitioner’s business to contribute to the payment or settlement of Dimond’s obligations, nor does it appear that such contribution was a nonbusiness transaction entered into for profit. It does not appear that petitioner was to be reimbursed by Dimond for releasing its claim of debt against the Spitz estate. ■ If, however, a claim for such reimbursement did arise out of the transaction, there is no showing that Dimond was not financially able to discharge such obligation. Therefore, as I see it, under the facts of the case and the law applicable thereto, petitioner is not entitled either to the deduction claimed for a business or nonbusiness loss or to a deduction 'for bad debt. TurNek, Disney, Kern, and Opper, //., agree with this dissent.