Court Opinion

ID: 9653038
Source: CourtListenerOpinion
Date Created: 2023-08-23 17:37:27.371423+00
Date Added: 2024-06-11T18:12:55.956847
License: Public Domain

MORTON, Circuit Judge
(dissenting).
It seems to me that the statement in the opinion of the circumstances under .which findings of fact by the Board of Tax ■Appeals will be disregarded or revised is too restricted. It is certainly contrary to the view which prevails in the Second and Fourth Circuits (Jewett v. Commissioner, 61 F.(2d) 471 (C. C. A. 2); Commissioner v. Dyer, (C. C. A. 2) 74 F.(2d) 685; Mead Coal Co. v. Commissioner, 72 F.(2d) 22 (C. C. A. 4); and it appears to be inconsistent with the way in which analogous questions have been dealt with by the Supreme Court for a number of years. Our own opinions have not been consistent in the language in which the rule has been stated; it would serve no useful purpose to discuss them. But the test which we have actually applied has, I think, been practically uniform and far broader than that laid down in the majority opinion. In Gregory v. Helvering, 293 U. S. 465, 55 S. Ct. 266, 268, 79 L. Ed. —, the question was whether a purported reorganization of a corporation was real and bona fide, or was a colorable pretense made in order to evade taxation. The Board of Tax Appeals held that the reorganization was real; the Circuit Court of Appeals in the Second Circuit held that the reorganization was fictitious. On certiorari the Supreme Court said: “In these circumstances, the facts speak for themselves and are susceptible of but one interpretation.” It held that “The whole undertaking * * * was in fact an elaborate and devious form of conveyance masquerading as a corporate reorganization, and nothing else.” (Italics supplied.) The complicated facts of the alleged reorganization were re-examined both in the Circuit Court of Appeals and in the Supreme Court in a manner practically like an appeal in equity; the findings of the Board of Tax Appeals were reversed. There was no suggestion in the opinion in either court that the review was limited to questions of law or that re-examination of the facts was not open. Nor was any such contention made by the commissioner; in that case he was the appealing party. In Interstate Commerce Commission v. Louisville & Nashville R. Co., 227 U. S. 88, 91, 33 S. Ct. 185, 187, 57 L. Ed. 431, it was said that a finding by an administrative tribunal “contrary to the ‘indisputable character of the evidence’ ” would be set aside. I understand that to be still law and to be applicable to decision of the Board of Tax Appeals. It obviously requires- an examination of the evidence, as was in fact done in the Gregory Case, and in the other cases cited, to determine whether the “indisputable character” of it had been ignored. The statement in the opinion in the Phillips Case, 283 U. S. 589, 51 S. Ct. 608, 75 L. Ed. 1289, as to the legal sufficiency of evidence, is to be read in the light of previous and subsequent decisions. There is no question but what findings of the Board of Tax Appeals carry great weight and ought not to be set aside unless shown to be “contrary to the indisputable character of the evidence,” which is probably a somewhat heavier burden of proof than is described by the expression, “clearly wrong.” There is little help in chopping words. No decision with which I am familiar has laid down nearly as narrow a test as that in the majority opinion that, viz., that “the courts may modify or reverse a decision of the Board only when it is not in accordance with law.” Even in the Tracy Case (C. C. A.) 53 F.(2d) 575, 579, relied on in the majority opinion, the court said: “The evidence is legally sufficient to sustain the finding if there be substantial evidence to support it, and the record as a whole does not clearly, convincingly, or even possibly, ‘indisputably’ require a contrary conclusion” — which is very different from the rule stated in the opinion.
The test stated in the Louisville & Nashville Case, supra, has in effect been used in this and other circuits for a number of years. It seems to me a very good one. It has worked well — on the one side not opening the courts so widely that appeals -from administrative decisions have become an *501abuse, and on the other side protecting the individual and the government against arbitrary or eccentric decisions by such Boards. It is in my judgment very unwise at the present time to narrow or weaken this established rule, which I am confident has been of great practical benefit.
As to the facts in this particular case, I can only say that the testimony of Mrs. Slayton and her son appears to me on the record, as it did to the member of the Board who heard them testify, to be that of truthful witnesses. No fact was shown which contradicted it or was inconsistent with it. If true, it explained the appearance of fraud which the circumstances bore, in a manner consistent with honesty and good faith. Transactions which appear to be honest and above board sometimes upon examination prove to be quite otherwise; and the converse is equally true, circumstances which arouse suspicion of crime or of fraud some- ' times turn .out to be in that respect deceptive and misleading.