Court Opinion

ID: 9451367
Source: CourtListenerOpinion
Date Created: 2023-08-04 17:15:51.933881+00
Date Added: 2024-06-11T17:32:41.828816
License: Public Domain

LUMBARD, Chief Judge
(dissenting):
I dissent.
In these often litigated gift versus salary cases, “(w)here the trial has been by a judge without a jury, the judge’s findings must stand unless ‘clearly erroneous.' ” Commissioner v. Duberstein, 363 U.S. 278, 291, 80 S.Ct. 1190, 1200, 4 L.Ed.2d 1218 (1960); Gaugler v. Commissioner, 312 F.2d 681 (2 Cir. 1963). I feel that the decision of the lower court is clearly erroneous and must be reversed since, although there is some evidence to support the lower court, on the entire record I am left with the definite and firm conviction that a mistake has been committed. United States v. United States Gypsum Company, 333 U.S. 364, 395, 68 S.Ct. 525, 92 L.Ed. 746 (1948).
The majority bases its affirmance on the grounds that: (1) several Burnett directors stated that the payments were made as “an act of fairness and generosity,” because it was the “proper and right thing to do” and to “ease the emotional burden” of Mrs. Husting’s sudden loss, and (2) that there was no written or traditional policy of making such payments to deceased employees’ families. Because these factors outweighed other elements in the case which they deem peripheral, the majority concludes that “the payment to Mrs. Husting was predominantly motivated by genuine dona-tive impulses and was sufficiently divorced from the peripheral business purposes it may also have served.”
The principal inquiry for determination by the district court was the “dominant reason” for the transfer from the employer to the employee’s family. Commissioner v. Duberstein, 363 U.S. at 286, 80 S.Ct. 1190. But this does not mean that all the district judge need do is to utter the Duberstein words — “detached and disinterested generosity” and “out of affection, respect, admiration, charity or like impulse,” 363 U.S. at 285, 80 S.Ct. at 1197 — and that we are bound to affirm if he makes obeisance to those words.
Young, one of the directors, stated that in the advertising business, “our main *43equity is people” and that skilled people, who are in great demand, are attracted to a company in part, “because of fringe benefits introduced into the business.” Heath, another director, said that the company derives “a big” benefit from this kind of payment and “there is nothing more important than the morale value” to the employees. Similar feelings were voiced by Wyman, and another director, Tyler, who said, in response to the question, “What benefit accrued to the company from this payment?,” “A feeling increased more really from other employees who felt that should the same circumstances befall them, that the company would show some personal interest in their widow or family.”
From 1952 through 1964, payments of approximately $110,000 were made to the families or relatives of deceased Burnett employees. Although Husting was the first officer to die, the fact that payments had been made to the families of five1 employees who predeceased Hus-ting is strong evidence to support a finding that there had developed a conscious plan by Burnett to make these payments on a regular basis to all employees. I fail to see why the fact that payments to the families of only five employees who predeceased Husting negate? the existence of a plan, especially becáuse the directors testified that Burnett was a young company and that deaths were only starting to occur regularly in the Burnett staff. Does such a plan begin after six cases, or ten, or how many?
While not per se decisive, I am also influenced by the fact that Burnett took a tax deduction for the payments to Mrs. Husting, by the fact that the payments were called “salary continuation” and by the fact that the payments equalled exactly one-half of Husting’s annual salary. If on this record the district court is left free to call the payment to Mrs. Husting a gift, it is difficult to imagine just what kind of payment could not be treated as a gift.
In sum, I fail to see how the lower court could have concluded that the “dominant purpose” of the transfer was donative. Since I feel it was clearly erroneous so to hold, I vote to reverse and to enter judgment for the Commissioner.

. Sue footnote 11 in majority opinion.