Court Opinion

ID: 9650838
Source: CourtListenerOpinion
Date Created: 2023-08-23 15:53:03.569367+00
Date Added: 2024-06-11T18:12:26.450506
License: Public Domain

MAJOR, Circuit Judge
(dissenting).
I agree with the conclusion respondent was a bona fide non-resident of the United States during the taxable year, is one of law subject to judicial review. It is my opinion, however, that as a matter of law, the Board reached the correct conclusion and its decision should be affirmed.
The reasons given by the Board in its opinion for its decision are of such a convincing character as to justify their inclusion here. It said: “ * * * He was not a mere visitor, transient, or temporary sojourner in France. He went there to live and to conduct the business of Dillon, Read & Co. for a long period of time. He had been there for more than ten years when he left in the latter part of 1935 for a short visit to the United States. He had an established place of abode or residence in France for a number of years before, during, and after 1936. Apparently he had an intention to return permanently to the United States eventually, but his departure in 1935 was not to carry out any such intention. On the contrary, his intention at that time was to continue to reside in France for a lengthy, if indefinite, period of years. He came to the United States in December 1935 purely as a visitor and temporary sojourner. He did not intend to take up residence in this country or to discontinue his residence in France. He left all of his personal belongings and household furnishings in France, with the exception of those personal belongings which he needed for the period of his visit. He had no household furnishings in this country and he acquired none. He intended to go back to France and use the household furnishings in his French residence. He had no permanent place of abode in this country and he did not intend to acquire any at any time during his visit. The furnished house in San Mateo was rented for a few months only to accommodate him during his visit. He was prevented by illness from returning to his residence in France, but he retained his intention to return there just as soon as his health would permit. Eventually, he did return and he continued to reside in France for several years. His business was in France, not here. The income was earned as a result of services performed outside the United States. The fact that he was actually physically present in the United States during the entire calendar year 1936 loses its importance in the face of his French connections, his intention to return to France, his lack of intent to establish any residence in the United States, the absence of any residence here, and the circumstances which prevented him from carrying out his intention to return to France.”
The Board, properly, in my opinion, failed to find anything either in the Legislative history of the act or in the holdings of the Bureau of Internal Revenue which aids in the solution of the involved question. Equally impotent are the cases relied upon by the majority as authority for reversing the Board’s decision. The recent cases of State of Texas v. State of Florida, 306 U.S. 398, 59 S.Ct. 563, 83 L.Ed. 817, 121 A.L.R. 1179, and District of Columbia v. Murphy, 314 U.S. 441, 62 S.Ct. 303, 86 L.Ed. -, tend to support rather than contradict the Board’s decision. In each of these cases the court decided the domicile of the involved taxpayers. In the Texas case there was a contest between Massachusetts and other states as to the domicile of the taxpayer as the basis for death taxes. In deciding that his domicile was Massachusetts, notwithstanding that he had large interests, and spent much of his time in other states, the court, 306 U.S. on page 425, 59 S.Ct. on page 576, 83 L.Ed. 817, 121 A.L.R. 1179, said: “* * * When he had established himself there all the circumstances of his life indicated that his real attitudq, and intention with respect to his residence there were to make it his principal home or abiding place to the exclusion of others. * * * ”•
The Murphy case involved the question of the domicile of the certain taxpayers within the meaning of the Income Tax Act which imposed a tax on “the taxable income of every individual domiciled in the District of Columbia.” D.C.Code Supp. V. T. 20, § 980a(a). The court discusses numerous tests to be applied in making such *492determination, the gist of which is contained in the statement on page 454 of 314 U.S., on page 309 of 62 S.Ct., 86 L.Ed. — : “On the other hand, we hold that persons are domiciled here who live here and have no fixed and definite intent to return and make their homes where they were formerly domiciled. * * * ”
Under these authorities there would seem to he little, if any, question hut that the place of domicile of respondent, during the taxable year, was in France. Recognizing the distinction sometimes made that the word “residence” is of more limited scope than the word “domicile” (see page 451 of the Murphy case in 314 U.S., 62 S.Ct. 303, 86 L.Ed. -), I am of the view that the domicile or home of a person ordinarily is a material factor to be considered in determining his residence. Under the circumstances of the instant case, it is well nigh conclusive.
I assume there could be no question but that respondent was a bona fide non-resident of the United States, both prior and subsequent to the year 1936. Conversely stated, he was a bona fide resident of France. As pointed out, I think there can be no question, under the recent decisions of the Supreme Court above referred to, but that his domicile was also in France. Inasmuch as his domicile was largely a matter of purpose and intent, it follows that such domicile was maintained during the year 1936. The question then arises as to when and how this admittedly nonresident altered his status and became a resident of the United States. If such a transformation was accomplished, it was without intent or purpose on his part, but by circumstances over which he had no control, and by separating his residence from that of his established domicile.
In its brief, petitioner argues: “* * * ‘Residence’ is the place of abode whether permanent or temporary. It is the same as habitancy, the locality or place where one is personally present and living, the place of bodily presence, a physical fact. * * * ”
The opinion appears to embrace this argument. I think it is a fallacy and certainly so as applied to the facts of this case. If this position is tenable, then a citizen would be in jeopardy of having his residence changed when he left home for a visit or on business. The change might become actual if his absence was longer than anticipated, even though occasioned by circumstances over which he had no control. So far as I am aware, no court has placed such a narrow interpretation upon the term “residence” even though it has been recognized as a term more limited than that of “domicile.” A person’s residence is not determined by the whereabouts of his suitcase.
I also disagree with the treatment which the opinion accords the question: “Was the income received from sources without the United States for services performed without the United States?” It must be true that the income received by respondent in 1936 was not for personal services rendered either in the United States or France during that year. This is evident from the fact that he was ill during that entire period. The opinion, so I think, erroneously interprets the applicable provision to require that the services performed without the United States be “during the taxable period.” These words do not appear in the statutory provision and it has been expressly held in Muhleman v. Hoey, 2 Cir., 124 F.2d 414, 415, that it is immaterial whether or not the services were rendered during the year for which the income was earned.
Petitioner is in a precarious situation. He dare not argue that the money received by respondent was a gift, as that would make it exempt. He merely argues that no services were rendered for which the money was received. In my judgment the Board logically disposed of petitioner’s contention in this respect as follows: “ * * * Although the decedent was away from his place of business and was too ill to perform his duties during 1936, nevertheless, he had rendered services in the past, he was expected to continue to render services in the future, and his employer continued his salary during his illness. Cf. Lucas v. Ox Fibre Brush Co., 281 U.S. 115 [50 S.Ct. 273, 74 L.Ed. 733]. His place of employment was in France. He served the company only by rendering personal services. Apparently, the decedent had developed an office organization and a clientele for his employer so that the business could go on even in his absence. His employer wanted to hold him as an employee. It is difficult to draw any other conclusion from the fact that the employer paid him the $37,400 in 1936. * * * ”