Court Opinion

ID: 9639694
Source: CourtListenerOpinion
Date Created: 2023-08-22 16:45:16.496881+00
Date Added: 2024-06-11T18:10:21.061355
License: Public Domain

L. HAND, Circuit Judge
(dissenting).
I feel as acutely as my brothers the extreme hardship of assessing a tax against these taxpayers — particularly against her who must pay a deficiency of over $53,000. Nevertheless, harsh as that is, we cannot intervene unless there was no substantial evidence to support the Tax Court’s finding of value. There was an active, though limited, market, for the most part apparently created by subsidiary companies, which, we may assume, were manipulating the price to support their own securities. For how long and at what levels they would have continued to do so, we have not the faintest intimation. All we do know is that for the last three months of 1936 at least $400,000 par value of the certificates were sold at between 54 and 40, and that for the first nine months of 1937, one broker (much the largest trader, it is true) bought over $600,000, of which less than $56,000 — about nine percent— were sold below 35. The total par value of the taxpayers’ certificates was about $350,000, about one third of the amount sold in the only year of which we have any record. One could not of course throw such a block on the market all at once and get anything approaching 35 for it; but I submit that we have no warrant whatever for saying that, fed gradually by a skilful broker, the whole amount could not have been sold at an average of 35. Some of it could certainly have been sold in the forties; some of it probably at fifty. What the average would turn out to be probably depended as I have said altogether upon the price to which the subsidiary companies thought they could afford to let the price drop without spoiling their own market. The only testimony is that the broker who had sold nearly all of what was sold, thought that he could have “liquidated” the taxpayers’ certificates within two years; by that I assume he meant that he could have sold them at prices not inordinately below the quotations.
In such a setting any price within certain limits — say 35 and 20 — is as likely to be right as any other; the truth being that no price is better than a guess. The Tax Court has made its guess, and it is the only tribunal vested with authority to do so. We are now saying that there was no substantial evidence to support that guess, in which we are quite right; but we are sending the case back to make another guess, which in the nature of things we must know will have as little to rest upon as the first. That seems to me quite beyond our function; the fact that we should have ourselves fixed a lower price — -I should also have done so — does not give us authority to compel the Tax Court to do so. The case lies within that penumbra between light and darkness where the first tribunal should be final. The actual value fixed has more to recommend it than for example that which we sustained in Elverson Corporation v. Helvering, 2 Cir., 122 F.2d 295, 298.
Finally, we seem to me to be altogether losing sight of the rule that it always rests on the taxpayer to show that the assessment was wrong.