Court Opinion

ID: 4495886
Source: CourtListenerOpinion
Date Created: 2020-01-23 18:14:34.023604+00
Date Added: 2024-06-11T14:54:13.364322
License: Public Domain

Leech,
dissenting: The decision of a hard case, upon apparent equitable grounds, frequently results in bad law. In my judgment, this is such a case, and the result reached in the majority opinion is wrong.
This Board has no equity powers. Northport Shores, Inc., 31 B. T. A. 1013.
Our concern here is the legal income tax liability, for 1932, of the present petitioner — nothing else.
The controlling statute, itself, here, not any regulation, makes the filing of a bond the condition precedent to the relief petitioner seeks. The enjoyment of that relief depends wholly upon compliance with that statutory condition precedent. Rock Island, A. & L. R. R. Co. v. United States, 254 U. S. 141.
As construed by the authorized regulation, obviously actual compliance was absent and literally impossible. But, it is said the present record discloses substantial compliance with the statute as construed by the pertinent regulation.
That regulation was clearly reasonable. It is not attacked in the majority opinion. It was promulgated by express statutory authority. So, I think, the rule adopted by the Board in reference to a somewhat comparable situation, in Alfred E. Hamill, 30 B. T. A. 955, and cited with approval many times since, is applicable here. This Board there said:
* * * Fortified with such a clear sanction in the statutory grant of power, the administrative determination in such a case must survive all but the strongest attack. Short of being arbitrary or capricious or based on a clear demonstration of error, the determination in any single instance ought not to be disturbed. This is not a matter of jurisdiction; for the Board clearly has the power of review’, Blair v. Oesterlein Machine Co., 275 U. S. 220, but is rather an attitude of the Board in the exercise of its jurisdiction not to inter*556fere lightly with general administrative matters which the Congress has entrusted to the Commissioner’s discretion.
The inquiry here is not whether, if we were exercising our discretion on the acceptance or rejection of the proffered bond, we would have accepted it under the circumstances. We do not have that discretionary function. Nor is our inquiry whether the Commissioner’s acceptance of the tendered bond would have exceeded his discretion. Our function is much more narrow. That function is to decide only whether the discretion, clearly existing in the Commissioner, was here exercised by him in an arbitrary and capricious manner.
The record discloses the following relevant facts:
1. February 2, 1925 — Installment sale made.
2. February 5, 1982 — Decedent died.
3. June 6, 1932 — Revenue Act of 1932 approved (retroactive to January 1, 1932, as to the pertinent provision).
4. February 9, 1933 — Regulations 77 promulgated;
5. February 27, 1933 — Regulations 77 released to public.
6. March 15, 1933 — Return filed for decedent.
7. April 26, 1933 — Form of bond first became available.
8. About March 15, 1934 — Legatees reported income on first note.
9. May 1, 1934 — Executor first learned of provisions for bond requirement and applied for Form 1132, the prescribed bond.
10. June 4, 1934 — Executor’s application to file that bond denied.
11. March 13, 1935 — Deficiency letter mailed.
12. About March 15, 1935 — Legatees reported income on last two notes.
The majority opinion holds these facts constituted a compliance with the statute and regulation, so substantial, that the Commissioner was guilty of an abuse of his discretion in refusing to accept the bond here involved, which was tendered almost two years after the statute permitting its filing became law, and over one year after the regulations authorized by that law were promulgated and the form of the bond there prescribed became available to the public. And this conclusion is reached, though the taxpayer did nothing even in an attempted compliance with the statute or regulation until that late date, only because, until a few days before the bond was actually tendered, he did not know, of the law. See Export Leaf Tobacco Co. v. Commissioner, 78 Fed. (2d) 163, affirming 31 B. T. A. 28; certiorari denied, 296 U. S. 627; Radiant Class Co. v. Burnet, 54 Fed. (2d) 718, affirming 16 B. T. A. 610; Flambeau Public Service Co., 27 B. T. A. 299.
Under such circumstances, and in view of the cited rule the Board adopted in the Hamill case, and has since consistently followed, this record does not convince me that the refusal of the Commissioner to accept the petitioner’s bond was arbitrary.
Black, Smith, and Mellott agree with this dissent.