Cross v. United States, 466

• Decision Date: 07 August 1964
• Docket Number: Docket 28763.,No. 466,466
• Citation: 336 F.2d 431
• Parties: Ephraim CROSS and Mary Cross, Plaintiffs-Appellees, v. UNITED STATES of America, Defendant-Appellant.
• Court: U.S. Court of Appeals — Second Circuit

336 F.2d 431 (1964)

Ephraim CROSS and Mary Cross, Plaintiffs-Appellees, v. UNITED STATES of America, Defendant-Appellant.

No. 466, Docket 28763.

United States Court of Appeals Second Circuit.

Argued June 1, 1964.

Decided August 7, 1964.

Clarence M. Dunnaville, Jr., Asst. U. S. Atty. (Robert M. Morgenthau, U. S. Atty., for the Southern District of New York, Arthur S. Olick, New York City, of counsel), for the United States.

Stanley Faulkner, New York City, for plaintiffs-appellees.

Before MOORE, KAUFMAN and MARSHALL, Circuit Judges.

MOORE, Circuit Judge:

In this income tax refund suit, plaintiffs-appellees claim that they were entitled to a deduction of $1,300 on their joint return for the year 1954 because of expenses incurred by Professor Ephraim Cross in connection with his summer travel to various Mediterranean and European countries. Upon appellees' motion for summary judgment, the district court, whose examination of the facts included the affidavits of several professors tending to indicate the desirability of foreign travel for a teacher of languages as well as the pre-trial deposition of Professor Cross, concluded that there was no genuine issue as to any material fact, and granted appellees' motion. 222 F.Supp. 157 (S.D.N.Y.1963). The Government opposed the summary judgment procedure, claiming a right to cross-examine appellees as to the nature of their expenses and the educational benefits allegedly sought and also to cross-examine the affiant professors. On this appeal the only issue is whether there are triable issues of fact which render the award of summary judgment erroneous.

In 1954 Professor Cross was an Assistant Professor at City College in New York where he taught French, Spanish and romance linguistics (described by him as the study of the development of Latin into the romance languages, the study of the various dialects and the historic stages of those dialects). He, his wife and a pet dog sailed from New York on June 30, 1954 aboard a French freighter. The ship put in briefly in Portugal, Morocco, Tangiers, Oran, Algiers, Naples and Genoa and appellees spent a day or so in each place. When the freighter arrived at Marseilles, twenty-one days after leaving New York, appellees separated. Mrs. Cross joined a friend and continued touring while Professor Cross and their pet dog travelled to Paris. Although he did not pursue a formal course of study or engage in research, Professor Cross did visit schools, courts of law, churches, book publishers, theaters, motion pictures, restaurants, cafes and other places of amusement, read newspapers, listen to radio broadcasts, converse with students and teachers and attend political meetings. He rejoined his wife in this country on September 23, 1954 after his return aboard a French passenger liner.

Section 162(a), Int.Rev.Code of 1954 permits a deduction for "all the ordinary and necessary expenses paid or incurred * * * in carrying on any trade or business * * *." The Regulations promulgated under that section, Treas. Reg. 1.162-5, state:

"Expenses for education — (a) Expenditures made by a taxpayer for his education are deductible if they are for education (including research activities) undertaken primarily for the purpose of:

"(1) Maintaining or improving skills required by the taxpayer in his employment or trade or business, * * *

* * * * * *

"Whether or not education is of the type referred to in subparagraph (1) of this paragraph shall be determined upon the basis of all the facts of each case. If it is customary for other established members of the taxpayer\'s trade or business to undertake such education, the taxpayer will ordinarily be considered to have undertaken this education for the purposes described in subparagraph (1) of this paragraph.

* * * * * *

"(c) In general, a taxpayer\'s expenditures for travel (including travel while on sabbatical leave) as a form of education shall be considered as primarily personal in nature and therefore not deductible."

Appellees claim, and the district court held, that all of Professor Cross's expenses are deductible. Professor Cross asserted in his deposition, which was taken for discovery purposes and did not include cross-examination,

"My purpose in making the trip was to maintain my contacts with my foreign languages for the purpose of maintaining and improving my skill as a linguist and teacher of languages, and to make my general teaching more effective, and to extend my contacts with foreign culture which I have to teach in connection with my teaching of foreign languages per se, and this can be done effectively and properly only by going into a foreign language area."

The Government disputes this explanation. It contends that all or at least part of Professor Cross's travel was a vacation and thus a personal living expense for which a deduction is not allowed under Section 162, Int.Rev.Code of 1954. Moreover, the Government challenges the amount of the claimed deduction and questions whether any portion of that sum was expended on behalf of Mrs. Cross.

We believe that summary judgment was improvidently granted and that the Government is entitled to a trial at which all the circumstances may be developed for the consideration of the trier of fact. Rule 56(c), Fed.R.Civ.P. permits summary judgment only where "there is no genuine issue as to any material fact," a state of affairs not normally encountered where the problem is whether expenses are ordinary and necessary in carrying on a taxpayer's trade or business. See, e. g., Commissioner of Internal Revenue v. Heininger, 320 U.S. 467, 475, 64 S.Ct. 249, 88 L.Ed. 171 (1962); Welsh v. United States, 329 F. 2d 145 (6th Cir. 1964); Condit v. Commissioner, 329 F.2d 153, 154 (6th Cir. 1964); Coughlin v. Commissioner, 203 F.2d 307 (2d Cir. 1953); Adelson v. United States, 221 F.Supp. 31 (S.D.Cal. 1963). Before travelling expenses can be allowed as deductible, there must be a factual determination of what parts, if any, are to be...