Court Opinion

ID: 9637697
Source: CourtListenerOpinion
Date Created: 2023-08-22 15:15:58.703035+00
Date Added: 2024-06-11T18:09:59.252307
License: Public Domain

L. HAND, Circuit Judge
(dissenting).
Section 301 of the Act of 1937 forbade the deduction of losses realized by means of sales made between persons in certain specified relations. It had been found that such sales were often only colorable; the buyer would hold the goods for the seller’s benefit while the seller deducted the loss. Since it was difficult to tell when the sale was real and when it was sham, Congress banned deductions realized upon all such sales, incidentally depriving many real sellers of the privilege of deducting their losses. The question before us is *662whether the words, “sales or exchanges * * * directly or indirectly,” read in the light of this purpose, cover the transaction described by Judge SWAN. I concede that for most purposes and in the ordinary sense there was no sale at all; the seller did not transfer the goods to the buyer, but to unknown buyers other than he; the buyer did not pay the money to the seller, but to unknown sellers other than she; there was not even one price, strictly speaking, though the variation between the buying and selling prices did not count practically. Still I think that there was an “indirect sale” within the meaning of § 301. Suppose — to take a nearer instance — that the buying and selling orders had been put in at the same time. It would still be true that there were two transactions; a sale to one set of persons, and a purchase from another; and the prices would also almost certainly have varied to some extent, if only because of the commissions, taxes and the like. Yet, one would have to be a very convinced literalist to say that the section did not cover a device by which the plain purpose of the statute could be frustrated, and by which that inquiry would become inevitable which it wished to avoid. Unless we must confine “indirectly” to cases where the seller passes title to an intermediary who has agreed to pass it to the ultimate buyer at the same price, we should call such a transaction an “indirect sale.” I can see no reason so to confine it.
That is not of course the transaction before us, for the buyer waited a day — in one case two — and he was not bound to buy if in the meantime the price went up enough to make the bonds no longer a good investment. But neither of these circumstances, nor both together, make a valid distinction, when as here the purchase has been arranged as a correlative of the sale, and when it in fact goes through; for at the end of their series of steps the parties have succeeded in putting themselves in substantially the same position as though they had dealt directly with each other. The “wash sales” section — § 118 of the Act of 1936, 26 U.S.C.A. Int.Rev. Code § 118 — shows that Congress did not regard the chance taken by an investor who sold and rebought within thirty days, as enough of a break in his ownership to “realize” a loss; the situation here is somewhat like that. I submit that in § 301 it does no undue violence to the natural meaning of the words to describe these two transactions here as together constituting an “indirect sale”; else the evasion becomes almost as easy as though the orders were put in at the same time. Nor do I feel embarrassment in making the sale depend upon whether the buyer buys, at least if he buys at substantially the same price. I should not for example hesitate to call it an “indirect sale” between husband and wife, if she were to sell Whiteacre to a third person but give her husband an option to take it over at the same price.
Compunctions about judicial legislation are right enough as long as we have any genuine doubt as to the breadth of the legislature’s intent; and no doubt the most important single factor in ascertaining its intent is the words it employs. But the colloquial words of a statute have not the fixed and artificial content of scientific symbols; they have a penumbra, a dim fringe, a connotation, for they express an attitude of will, into which it is our duty to penetrate and which we must enforce ungrudgingly when we can ascertain it, regardless of imprecision in its expression. Johnson v. United States, 1 Cir., 163 F. 30, 32. Here we can have no doubt of the purpose, of what Congress was aiming at; and that, I submit, we truncate, if we do not include transactions by which, in accordance with a preexisting design, property passes by whatever combination of moves at a substantially unchanged price from one member to the other of any of the specified pairs. Finally there is no difference between on the one hand, selling units of fungibles and buying other units, and on the other the sale of single units. That seems so obvious that I shall not labor the point; once more § 118 of the Act of 1936 is an apt analogy.