Court Opinion

ID: 9641994
Source: CourtListenerOpinion
Date Created: 2023-08-22 17:45:15.761673+00
Date Added: 2024-06-11T18:10:41.681038
License: Public Domain

DENISON, Circuit Judge
(dissenting).
I am unable to concur.. Omitting the relatively unimportant $2,000 item, the substance of the vendee’s agreement with the taxpayer-mortgagor-vendor was that the remaining unpaid $135,000 balance of the agreed price should be paid in five annual installments of $9,000 each, to be paid by the vendee to the vendor, and concurrently (mainly), in nine annual installments of $10,000 each, to be paid by the vendee to the vendor’s mortgagee, in serial discharge of the vendor’s obligation. As to the 1926-30 part of the period, the vendee’s written contract substantially was: “Each year I will pay (a) to you $9,000, and (b) for your use and benefit and to pay your debt, $10,000.” All agree that promise (a) is an “evidence of indebtedness”; I cannot see that promise (b) is for this definitory pur*1009pose essentially different. The “evidence” is the same in (b) and in (a). There is no reason why “indebtedness” should have any technical or limited meaning; 1 it is often used as an equivalent of: “obligation”; and I think should bo so read here. There is no underlying reason why the existence of taxable income arising from a transaction should depend upon the choice of one of the two equivalent forms in which it could be cast; and yet the language of a statute may clearly require taxing one form and exempting the other. Not so, where a reasonable construction of the chosen words may include both forms.
Further, I agree that article 44 of Regulation 69, as amended, is a valid regulation; but 'I see no reason why it was not likewise also valid in its earlier unamended form. That earlier form excluded from “initial payments” the amount of all mortgages, whether the purchaser “assumed” or took “subject to”; and if applied to this case would require affirmance of the judgment below. The earlier form is the applicable one. It was promulgated August 28, 1926. The tax now involved was paid in 1926; the liability was challenged in 1927 and claim for refund was made in February, 1928; it was rejected June 20, 1928; and this suit was begun September 20, 1928. The amendment, which first proposed the “basis” as an element, was made January 8, 1929.

 Webster’s New International: “Indebtedness”— debts collectively. “Debt” — what one is bound to pay to another or perform for his benefit; obligation.