Court Opinion

ID: 4488667
Source: CourtListenerOpinion
Date Created: 2020-01-17 22:01:25.887234+00
Date Added: 2024-06-11T15:04:10.554819
License: Public Domain

Love,
dissenting: I can not agree with the decision or the opinion in this case.
While this is a fact case in that the decision depends on the finding, as existent or nonexistent, of certain facts, it is not a case calling for a “ jury verdict ” on the credibility of witnesses and the weight to be given their testimony. All the evidentiary facts are accepted as proven. The Board is called upon, after considering all those evi-dentiary facts to reach a conclusion as to the existence or nonexistence of ultimate facts which must determine the decision in the case.
On the issue of limitation the ultimate facts to be found to sustain the plea of limitation are:
*613(a) That George V. Newton was the authorized attorney of Mrs. Niels Esperson with authority to represent her in the Bureau of Internal Revenue in the income-tax -matter of the Estate of Niels Esperson, deceased.
(b) That Newton, as the authorized attorney of Mrs. Esperson made a request of the Commissioner as contemplated and provided for in section 250 (d) of the Revenue Act of 1921. Counsel for the Commissioner did not contend that the request contemplated by said section 250 (d) could not be legally made by a duly authorized representative of the taxpayer. He did, however, challenge the validity of the authorization, largely on the ground that it was not proven that a written power of attorney ever existed. The prevailing opinion challenges the sufficiency of the request. The statute does not prescribe the form or the detail substance of the request that it provides for. All that is required is that a written request be made.
Newton, purporting to act as the duly authorized attorney for Mrs. Esperson, held a number of conferences with the duly authorized representatives of the Commissioner with reference to the Esperson tax cases. There is no evidence that his authority to so act wras ever challenged in such conferences. He wrote the letter dated January 7, 1924, purporting to act as the attorney for Mrs. Esperson and it was accepted and acted on by the Commissioner as an authorized communication as is undeniably shown by the Commissioner’s answer to that letter dated January 12, 1924. A written power of attorney is not necessary to confer such authority. The written document, if such exists, is only the evidence of such authority. That authority may be shown by other evidence. Mrs. Esper-son at all times recognized Newton as her attorney, and accepted his services as such. The Commissioner, for at least two or three years, recognized Newton as Mrs. Esperson’s attorney' in the handling of these tax matters, and challenged such authority only after his determination of the deficiency.
May I ask the question what the decision would be if the letter in question were an agreement to extend the period of limitation. Even were the taxpayer a corporation, where the rule of evidence of authorization is held to be more stringent than with individuals, I believe any court would be amply justified in holding and would hold that authorization had been proven.
We come now to discuss the substance or purport of the letter dated January 7, 1924. In the prevailing opinion it is pointed out that in that letter, Newton made no mention of section 250 (d) and that the evidence is not convincing that he meant to invoke the provisions of that statute. The evident purpose of that statute was to force the closing of cases involving income tax due by estates of deceased *614persons, and Newton, in that letter, assigned as his reasons for making the request those very grounds. The Commissioner was not misled, as his reply clearly shows. His reply dated January 12, 1924, promised that “ the case will be given immediate consideration under the provisions of section 250 (d) Revenue Act of 1921.” That letter of the Commissioner conclusively proves that he recognized Newton as being authorized to make the request, and recognized the letter as such request under the provisions of section 250 (d) of the Revenue Act of 1921.
The determination and assessment of the tax were not made within one year from date of Newton’s letter, as provided for in section 250 (d) and as promised in the Commissioner’s letter of January 12, 1924. By reason of that situation petitioner interposed her plea of limitation in bar, and I believe that plea should be sustained.
I will now discuss the case with reference to the alleged sale of the 8,100 shares of the Invincible Oil Corporation stock. The uncontro-verted facts in the case, briefly summarized are:
1. In 1921 Niels Esperson was the owner of 8,100 shares of Invincible Oil Corporation stock, the market price of which had materially declined since its purchase by him.
2. By reason of that fact he was desirous of disposing of said stock in such a way as to entitle him to take a deduction on his income-tax return as a loss.
3. In order to effectuate his purpose, he placed the stock in the hands of his broker with instructions to sell the same; and at the same time gave instructions that the same number of shares be purchased for and in the name of two of his employees, Brown and Peters.
4. The brokers, in carrying out the instructions of Esperson, on October 17, 18, 19, 20, 21, and 26, 1921, sold said stocks in blocks on the New York Stock Exchange in accordance with the rules and procedure of that Exchange. On the same several days they purchased, in the name of Brown and Peters, an amount of stock equal to that sold on that day for Esperson.
5. On each of those several days there was sold on the New York Stock Exchange, Invincible Oil Corporation stock, several thousand shares in excess of number of shares of the Esperson stock sold.
6. The certificates for the purchased stock were made in the name of Brown and Peters respectively, billed and mailed to them.
7. Brokers’ commissions were charged to and paid by Esperson on the sale, and like commissions.on the purchases, were charged to, and paid by Brown and Peters, respectively.
8. Esperson furnished to Brown and Peters the money to pay for the stock so issued to them, which amounts were charged to Brown and Peters on Esperson’s books.
*6159. Esperson died in 1922, and in 1923, Mrs. Esperson, the executrix and sole legatee of his estate, took over, or back, said stock from Brown and Peters and canceled the charges against them.
Upon the foregoing array of evidentiary facts, the Board is called upon to reach a conclusion of fact as to whether or not Esperson, in fact, sold his stock. The prevailing opinion reaches the conclusion that Brown and Peters were mere dummies in .the transaction and that the ostensible sale to them was in fact a sale to Esperson himself, and that because Esperson was the seller, and also the buyer, and because one can not sell property to himself, there was, in fact no sale at all.
Esperson died before the hearing in this case and even before the controversy arose. In his income-tax return for 1921, he took a deduction for one-half the loss claimed by him to have been sustained in that transaction and his wife in her return took a deduction for the other one-half. By reason of his death, his testimony as .to any contract or arrangement with Brown and Peters, if any, was not available. All we have in the way of evidence was necessarily from other sources and its substance is stated hereinbefore.
Waiving for the moment the question as to whether or not a person, when dealing through a broker on the New York Stock Exchange, can in law sell something and buy it in for himself, I may point out, as is pointed out in the prevailing opinion, that a pretended sale on that Exchange which is not in fact a sale is contrary to the rules of the Exchange. It is indicated in the prevailing opinion that the brokers knew that the seller and purchaser were one and the same person. I believe that is an unwarranted conclusion. An officer of any organization is presumed to comply with its rules and perform his duty relative thereto. All the evidence in this case harmonizes with the theory of a bona -fide sale. Not one of the items of evidence is inconsistent with bona fides. It is true that the facts and circumstances may arouse suspicion of mala fides, but cases should not be decided on suspicion. It is said that one can not sell to himself. If, by that declaration, it is meant that one, without the intervention of an intermediary agency, can not sell to himself, I might be willing to accept the statement as good law. But where an intermediary agency intervenes, I can not accept the statement as good law. I dare say such transactions occur on stock exchange every day for various and sundry reasons. It often occurs in trustee sales where the one who owns the beneficial interest in the property has it sold by the trustee and bids it in. Less frequently, but sometimes, it occurs that, in order to clear title or for other reasons, the owner of the fee, the mortgagor, will let the property be sold by the trustee and bid in the same.
*616In the case at bar, it is conceded that at the date of the transaction in question Esperson had a perfect right to sell his stock and on the same, or any other day, buy an equal amount of the same kind of stock, and take his loss on the sale. In fact, I believe it is conceded that if in fact he sold to a stranger he could buy back the same stock on the same day it was sold. There is nothing in the record that proves in a legal way that the stock bought for Brown and Peters was the same sold on behalf of Esperson. There is nothing stronger to my mind than a suspicion that it was the same stock. Admitting for the sake of argument that it was the same stock, I can not perceive that any legal or equitable impediment exists that would preclude a holding that it made no difference. That there was a sale, at least in form and according to the rules of the Exchange, made on the part of Esperson of his stock, and a purchase on the part of Brown and Peters, can not be denied. Even if Esperson intended that Brown and Peters should hold the stock for him, nevertheless there was a sale, and the legal title passed to Brown and Peters, and only an equitable title remained in Esperson.
There is nothing in the record except some suspicious circumstances, that could have prevented Brown and Peters from forcing Esperson, prior to his death, or Mrs. Esperson after his death, to accept the amount of the purchase price plus interest, in the event they should have found it to their interest to pay it. There may, possibly, have been an agreement between Esperson and Brown and Peters which a court of equity would enforce, that would have prevented such a situation but there is no evidence in this record to support a finding to that effect.
I believe that the decision in this case on the merits of the Gase should be for- the petitioner.