Court Opinion

ID: 4496131
Source: CourtListenerOpinion
Date Created: 2020-01-23 18:14:41.707588+00
Date Added: 2024-06-11T15:04:03.323334
License: Public Domain

MoRRis,
dissenting: I disagree with the views of the majority and am of the opinion that the petitioner should be sustained. The majority opinion attaches considerable importance to the fact that in the two suits instituted by the Pacific Trading Co. the petitioner was not a party and there was no judgment in its favor. The respondent conceded, however, that if claims had not been filed for part of the money all of it would have been taxable in a prior year, thus basing his determination solely on the adverse claims. Prior to the taxable year it had been determined that the Pacific Trading Co. was entitled to recover- and the amount of the judgment had been actually paid to the surviving trustee. The liability was no longer contingent. The facts show that all of the capital stock of the Pacific Trading Co. upon incorporation was issued to the petitioner and it claimed ownership thereafter. Under such circumstances I think the amount of the judgment was accruable prior to the taxable year. See Lichtenberger-Ferguson Co. v. Welch, 54 Fed. (2d) 570.
*684In the other action judgment was rendered for the petitioner in the preceding taxable year and it was stipulated that no appeal was taken therefrom. In my opinion the purport of that stipulation was to eliminate the principal ground upon which the conclusion of the majority is based, namely that the judgment did not become final until the taxable year. That the parties so regarded it is evidenced by the respondent’s argument in support of his conclusion that the appropriation for the payment of the judgment was not passed until during the taxable year in question, therefore the amount thereof could not be accrued until that time. I disagree with that conclusion. It seems to me that when the United States Government specifically authorized the bringing of suits it recognized liability and tacitly promised to pay any successful litigant the sums found by the authorized court to be due. Payment is not essential under the accrual system of accounting. Where the liability is fixed it is only necessary that payment be contemplated in the ordinary course of events. The judgment rendered in the preceding taxable year definitely determined the amount of petitioner’s recovery. Under the circumstances it was entitled to regard payment thereof as certain. I therefore think judgment should be rendered for the petitioner.