United States v. Kaiser, 55

• Decision Date: 13 June 1960
• Docket Number: No. 55,55
• Parties: UNITED STATES, Petitioner, v. Allen KAISER
• Court: U.S. Supreme Court

363 U.S. 299

80 S.Ct. 1204

4 L.Ed.2d 1233

UNITED STATES, Petitioner,

v Allen KAISER.

No. 55.

Argued March 23, 1960.

Decided June 13, 1960.

Mr. Wayne G. Barnett, Washington, D.C., for petitioner.

Mr. Joseph L. Rauh, Jr., Washington, D.C., for respondent.

Mr. Justice BRENNAN announced the judgment of the Court, and delivered an opinion in which THE CHIEF JUSTICE, Mr. Justice BLACK, and Mr. Justice DOUGLAS join.

This case presents the questions whether a labor union's strike assistance, by way of room rent and food vouchers, furnished to a worker participating in a strike constitutes income to him under § 61(a) of the Internal Revenue Code of 1954, 26 U.S.C.A. § 61(a);¹ and whether the assistance furnished to this particular worker, who was in need, constituted a 'gift' to him, and hence was excluded from income by § 102(a) of the Code, 26 U.S.C.A. § 102(a).²

The respondent was employed by the Kohler Company in Wisconsin. The bargaining representative at the Kohler plant was Local 833 of the United Automobile, Aircraft, and Agricultural Implement Workers of America, CIO (UAW). In April 1954, the Local, with the approval of the International Union of the UAW, called a strike against Kohler in support of various bargaining demands in connection with a proposed renewal of their recently expired collective bargaining contract. The respondent was not a member of the Union, but he went out on strike. He had been earning $2.16 an hour at his job. This was his sole source of income, and when he struck he soon found himself in financial need. He went to the Union headquarters and requested assistance. It was the policy of the Union to grant assistance to the many Kohler strikers simply on a need basis. It made no difference whether a striker was a union member. The Union representatives questioned respondent as to his financial resources, and his dependents. He had no other job and needed assistance with respect to the essentials of life. He was single during the period in question, and the Union provided him with a food voucher for $6 a week, redeemable in kind at a local store; the voucher was later increased to $7.50 a week. The Union also paid his room rent, which amounted to $9 a week. If in need, married strikers and married strikers with children received respectively larger food vouchers.³ The over-all policy of the International Union was not to render strike assistance where strikers could obtain state unemployment compensation or local public assistance benefits. But the former condition does not prevail in Wisconsin,⁴ and local public assistance was available only on a showing of a destitution evidently deemed extreme by the Union.

The Union thought that strikers ought to perform picketing duty, but did not require, advise or encourage strikers who were receiving assistance to picket or perform any other activity in furtherance of the strike; but assistance ceased for strikers who obtained work. Respondent performed some picketing, though apparently no considerable amount. After receiving assistance for several months, he joined the Union. This had in no way been required of him or suggested to him in connection with the continued receipt of assistance.

The program of strike assistance was primarily financed through the strike fund of the International Union, which had been raised through crediting to it 25 cents of the $1.25 per capita monthly assessment the International required from the local unions. The Local also had a small strike fund built up through monthly credits of 5 cents of the local members' dues and contributions were received in some degree, not contended to be substantial, from other unions and outsiders. The constitution of the International Union required that it be the authorizing agency for strikes, and imposed on it the general duty to render financial assistance to the members on strike.⁵

During 1954, the Union furnished respondent assistance in the value of $565.54. In computing his federal income tax for the year, he did not include in gross income any amount in respect of the assistance. The District Director of Internal Revenue informed respondent that the $565.54 should have been added to his gross income and the tax due increased by $108 accordingly. Respondent paid this amount, and after administrative rejection of a refund claim, sued for a refund in the District Court for the Eastern District of Wisconsin. A jury trial was had, and the court submitted to the jury the single interrogatory whether the assistance rendered to respondent was a gift. The jury answered in the affirmative; but the court entered judgment for the Government, n.o.v., on the basis that as a matter of law the assistance was income to the respondent, and did not fall within the statutory exclusion for gifts. 158 F.Supp. 865.

By a divided vote, the Court of Appeals for the Seventh Circuit reversed. 262 F.2d 367. It held alternatively that the assistance was not within the concept of income of § 61(a) of the Code, and that in any event the jury's determination that the assistance was a gift, and hence excluded from gross income by § 102(a), had rational support in the evidence and accordingly was within its province as trier of the facts. We granted the Government's petition for certiorari, because of the importance of the issues presented. 359 U.S. 1010, 79 S.Ct. 1150, 3 L.Ed.2d 1035. Later, when the Government petitioned for certiorari in No. 376, Commissioner of Internal Revenue v. Duberstein, and acquiesced in the taxpayer's petition in No. 546, Stanton v. United States, 363 U.S. 278, 80 S.Ct. 1190, it suggested that those cases be set down for argument with the case at bar, because they illustrated in a more general context the 'gift' exclusion issues presented by this case. We agreed, and the cases were argued together. We conclude, on the basis of our opinion in the Duberstein case, 362 U.S. at page 278, 80 S.Ct. at page 1196, that the jury in this case, as finder of the facts, acted within its competence in concluding that the assistance rendered here was a gift within § 102(a). Accordingly, we affirm the judgment of the Court of Appeals. Therefore, we think it unnecessary to consider or express any opinion as to whether the assistance in fact constituted income to the respondent within the meaning of § 61(a).

At trial, counsel for the Government did not make objection to any part of the District Court's charge to the jury or the 'gift' exclusion. In this Court, the charge is belatedly challenged, and only as part of the Government's position that there should be formulated a new 'test' for application in this area.⁶ We have rejected that contention in our opinion in Duberstein. In the absence of specific objection at trial, or of demonstration of any compelling reason for dispensing with such objection, we do not here notice any defect in the charge, in the light of the controlling legal principles as we have reviewed them in Duberstein.

We think, also, that the proofs were adequate to support the conclusion of the jury. Our opinion in Duberstein stresses the basically factual nature of the inquiry as to this issue. The factual inferences to be drawn from the basic facts were here for the jury. They had the power to conclude, on the record, taking into account such factors as the form and amount of the assistance and the conditions of personal need, of lack of other sources of income, compensation, or public assistance, and of dependency status, which surrounded the program under which it was rendered, that while the assistance was furnished only to strikers, it was not a recompense for striking. They could have concluded that the very general language of the Union's constitution, when considered with the nature of the Union as an entity and with the factors to which we have just referred, did not indicate that basically the assistance proceeded from any constraint of moral or legal obligation, of a nature that would preclude it from being a gift. And on all these circumstances, the jury could have concluded that assistance, rendered as it was to a class of persons in the community in economic need, proceeded primarily from generosity or charity, rather than from the incentive of anticipated economic benefit. We can hardly say that, as a matter of law, the fact that these transfers were made to one having a sympathetic interest with the giver prevents them from being a gift. This is present in many cases of the most unquestionable charity.

We need not stop to speculate as to what conclusion we would have drawn had we sat in the jury box rather than those who did. The question is one of the allocation of power to decide the question; and once we say that such conclusions could with reason be reached on the evidence, and that the District Court's instructions are not overthrown, our reviewing authority is exhausted, and we must recognize that the jury was empowered to render the verdict which it did.

Affirmed.

Mr. Justice FRANKFURTER, whom Mr. Justice CLARK joins, concurring in the result.

In 1957 the Commissioner of Internal Revenue ruled that strike benefits paid by unions to strikers on the basis of need, without regard to union membership, were to be regarded as part of the recipient's gross income for income tax purposes. Rev.Rul. 57 1, 1957—1 Cum.Bull. 15. This ruling, if valid, governs this case. The taxpayer assails the ruling on three grounds. First, it is urged that in a series of rulings since 1920 the Commissioner has treated both public and private 'subsistence relief' payments as not constituting gross income; that union strike benefits are not relevantly different from such 'subsistence relief'; and that, with due regard to fair tax administration the Commissioner is constrained so to treat strike benefits in order to accord 'equal treatment.' Second, it is urged that both the Commissioner's rulings and court decisions have evolved an exclusion from the statutory...