Court Opinion

ID: 9443353
Source: CourtListenerOpinion
Date Created: 2023-08-03 19:18:09.982518+00
Date Added: 2024-06-11T17:29:27.620558
License: Public Domain

JOHNSEN, Circuit Judge
(dissenting).
The majority opinion recognizes the principle of the Fay case, 2 Cir., 120 F.2d 253, and the Rogers case, 9 Cir., 120 F.2d 244; Id., 9 Cir., 122 F.2d 485, that general termite damage is not a loss arising from “other casualty”, within the meaning of section 23(e) (3) of the Internal Revenue Code, because it represents mere “progressive deterioration of property through a steadily operating cause”, but at the same time the opinion removes from the application of this principle such termite damage as occurs and is discovered during the tax year that the infestation has taken place.
My difficulty with this view is that it seems to me inconsistent with the underlying concept and scheme of the statute. To me, section 23(e) (3) is designed to cover character or kinds of operating forces, which will give rise to a deductible loss, without regard to the degree of their play. Thus, manifestly, “fires, storms, shipwreck” represent types of causes with whose extent of operation the statute has no concern. The term “other casualty”, in its associa-tionship, must equally be read, I think, to embrace only such types of causes.
In other words, an operating force is, I believe, either wholly within or wholly without the provisions of the statute, as a .basis for loss deduction. It is difficult for me to see how under the language of the statute the consequences of termites or any other operating force can be said to constitute a casualty loss for a certain period of time and a non-casualty loss thereafter. To my mind, a cause, operating throughout in the same manner, either constitutes a casualty force in its entire operation or else it does not do so at all. Time of discovery in such a situation may affect the scope of the injury done, but it does not give rise to any metamorphosis in the nature of the force, the mode of its operation, or the character of the result. This is true as to “fires, storms, shipwreck,” and it seems to me too that it equally must 'be regarded as characterizing any “other casualty” force under the statute.
I am unable to read the Fay and Rogers cases, supra, to imply any distinction between the termite damage done to the first foot of timber in a structure and that done to the one-hundredth foot. It is the operation of the termites, after their entry and multiplication, which causes the damage, and that operation is the same upon the one-hundredth foot as upon the first. Throughout, the whole thing is, as the Fay and Rogers cases recognize, “a gradual process,” and the damage done is “not a sudden occurrence,” within the concept of what constitutes, from its nature, mode of operation and character of result, a “casualty” force. *52The only difference in suddenness which can be said to exist between a situation where the operation of the termites is discovered after only a few feet of timber have been damaged, as here, and one where a hundred feet or more have been so damaged, is in the relativeness of the time elapsed before detection. That same element of suddenness would exist in relation to a difference in the time of discovery of “dry rot.” It is not this kind of suddenness to which the Fay and Rogers cases refer as characterizing losses “from fires, storms, shipwreck, or other casualty”.