Court Opinion

ID: 6885565
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:27:33.212289+00
Date Added: 2024-06-11T16:05:42.368554
License: Public Domain

WOODROUGH, Circuit Judge
(dissenting).
As stated in the majority opinion, the question in this case is one of fact, and it seems to me this court has simply substituted its own inferences from ambiguous and inconclusive circumstances for the finding of the fact made by the trial court. Such is not the function of the appellate court, as I understand it, and though the tax is small the principle is of great importance and I dissent on the one ground only.
There was no demonstrative evidence that the taxpayer’s stock in Lane, Piper and Jaffray, Inc., had any potential value after December, 1931, and the company was admittedly always insolvent long before, after and on that date. It owed great sums to the banks and they required certain stockholders who were already personally liable for the company’s debts to deposit their own securities as collateral to the obligations.
After the company failed to open for business at the beginning of the year 1932, those who had made the pledges with the banks carried on in the office of their new company (bearing two of the same distinguished names) until by the gains from their work and some advances in the stock market the old company’s assets sufficed to satisfy the banks and enable the owners to recover their pledges. When that was accomplished the old company was closed out and dissolved as far as could be done with unpaid debts still outstanding. It seems obvious to me that if what was done was what the banks and the pledgors intended to do, there was never any chance for stockholders of the old company like the plaintiff. There was nothing to indicate any intention contrary to what was done. Both Mr. Piper and Mr. Jaffray made dollar sales of their stock in Lane, Piper and Jaffray, Inc., and claimed a loss long before 1935, and there is no intimation of anything improper about the course taken. But the testimony in the case concerning stock market fluctuations that occurred and the opinions of the taxpayer and his expert about the future of the market (to which this court gives weight and the judge who saw and heard the witnesses did not) were not, and in the situation presented could not be demonstrative of the ultimate issue.
I did on reading the record, form an opinion on that issue in accord with the Commissioner and the trial court. But I attach no importance to my opinion. It merely reflects that minds will differ on this record. As to identifiable events, I think the investment bank’s closure of its door to the public on the first of the year 1932 was an identifiable event, rather than its decision to close arrived at in 1931. Though the last straw breaks the camel’s back, minds will differ about which straw. *306Fortunately the tax commissioner looks to the tax year rather than to the moment" of breakage, and his allocation of the loss to 1932 had substantial support, as did the trial court’s finding that it occurred prior to 1935.