Court Opinion

ID: 9445254
Source: CourtListenerOpinion
Date Created: 2023-08-03 21:23:54.227002+00
Date Added: 2024-06-11T17:30:11.149646
License: Public Domain

PHILLIPS, Circuit Judge
(dissenting).
In Nicholas v. Davis, 10 Cir., 204 F.2d 200, at page 202, we said:
“When controlling, positive, and uncontradicted evidence is introduced, and when it is unimpeached by cross-examination or otherwise, is not inherently improper [improbable], and no circumstance reflected on the record casts doubt on its verity, then under the principles laid down in Chesapeake & Ohio Ry. Co. v. Martin, 283 U.S. 209, 215-220, 51 *39S.Ct. 453, 75 L.Ed. 983, it may not be disregarded, even though adduced from interested witnesses, and no question of credibility or issue of fact is presented for determination by the jury.”
Derby was actively engaged in the oil business from 1906 to 1946. He organized the Derby Oil Company about 1920 and served as its president until 1939. In the latter year he resigned as president, but continued to serve without salary as the director and chairman of its board until 1944. He was also interested in three other companies, which engaged in the development and operation of oil properties. In 1946, he sold all of his interests in the Derby and other companies. Since that time he has not been actively engaged in the oil business, except as an investor.
Mr. Derby has owned, bred and raced harness horses since about 1917. While he was active in the oil business he devoted little of his personal time to the horse racing business. After his retirement about 1944, he began to devote a substantial part of his time to the breeding and racing of harness horses, greatly expanded that business, and actively managed and directed it.
He testified unequivocally that he was engaged in the breeding and racing of harness horses for profit in the tax years in question. He introduced evidence of many facts and circumstances fully substantiating that statement. Much of that ¡evidence came from witnesses other than Derby.
The only countervailing evidence came from the cross-examination of Derby’s witnesses and Derby’s income tax returns for the years 1921 to 1949, inclusive, showing a continued history of losses by Derby in the harness horse racing business. However, Derby introduced evidence showing that he probably would have made a profit for the tax years in question, but for fortuitous circumstances, such as accidents and injuries to his horses. He had reasonable expectation of winning races in the tax years in question, from which he would have realized profits from purses, which would not only have showed a profit from the years in question, but would have wiped out much of his prior losses.
I am of the opinion that Derby established by controlling, positive and uncon-tradicted evidence, which was unim-peached by cross-examination or otherwise, and which was not inherently improbable, that he engaged in the breeding and racing of harness horses for a profit in the tax years in question.
The conclusion I have reached finds strong support in the closely analogous case of Wilson v. Eisner, 2 Cir., 282 F. 38. See also Whitney v. Commissioner, 3 Cir., 73 F.2d 589 and Commissioner of Internal Revenue v. Widener, 3 Cir., 33 F.2d 833.
For the reasons indicated, I would affirm the judgment below.