Blair v. Mathews

• Decision Date: 20 December 1928
• Docket Number: 5475.,No. 5466,5466
• Citation: 29 F.2d 892
• Parties: BLAIR, Commissioner of Internal Revenue, v. MATHEWS. MATHEWS v. COMMISSIONER OF INTERNAL REVENUE.
• Court: U.S. Court of Appeals — Fifth Circuit

29 F.2d 892 (1928)

BLAIR, Commissioner of Internal Revenue, v. MATHEWS.

MATHEWS v. COMMISSIONER OF INTERNAL REVENUE.

Nos. 5466, 5475.

Circuit Court of Appeals, Fifth Circuit.

December 20, 1928.

In No. 5466:

Mabel Walker Willebrandt, Asst. Atty. Gen., Helen R. Carloss, Sp. Asst. Atty. Gen., C. M. Charest, Gen. Counsel, Bureau of Internal Revenue, and V. J. Heffernan, Sp. Atty., Bureau of Internal Revenue, both of Washington, D. C., and Sewall Key, Sp. Asst. Atty. Gen., for petitioner.

John E. Mathews, of Jacksonville, Fla. for respondent.

In No. 5475:

John E. Mathews, of Jacksonville, Fla., and George Palmer Garrett, of Orlando, Fla. as Amicus Curiæ, for petitioner.

Mabel Walker Willebrandt, Asst. Atty. Gen., Helen R. Carloss, Sp. Asst. Atty. Gen., C. M. Charest, Gen. Counsel, Bureau of Internal Revenue, of Washington, D. C., Sewall Key, Sp. Asst. Atty. Gen., and V. J. Heffernan, Sp. Atty., Bureau of Internal Revenue, of Washington, D. C., for respondent.

Before WALKER, BRYAN, and FOSTER, Circuit Judges.

WALKER, Circuit Judge.

On January 3, 1923, John E. Mathews (herein referred to as the taxpayer) became county attorney of Duval county, Florida, under a contract or arrangement between him and the board of county commissioners of that county, which provided for his attending to all legal matters for the county, for his receiving $200 per month as his compensation for attending all meetings of the board and giving advice concerning all routine matters coming before the board, and that for defending or prosecuting lawsuits in which the county is a party or interested, or attending to all legal matters in connection with bond issues, he was to receive the usual compensation allowed in that jurisdiction. The appointment was for the period of two years. The taxpayer was required to attend all meetings of the board, and during 1923 there were approximately two meetings a week. Prior to his appointment the taxpayer had been actively engaged in the practice of law, and during 1923 he continued his practice, maintaining a separate law office, but he was always at the beck and call of the county commissioners. He was carried on the pay roll of the county.

A return made by the taxpayer showed that no tax was payable on his income for the year 1923. A deficiency letter of the Commissioner of Internal Revenue (herein referred to as the Commissioner), and an accompanying statement, both dated October 6, 1925, notified the taxpayer of a deficiency of $1,073.53 in income tax for the year 1923, and that "the deficiency in tax results from the inclusion in gross income for the year 1923 of certain compensation received by you as county attorney of Duval county, Florida." From the determination of the Commissioner the taxpayer appealed to the Board of Tax Appeals. That board made an order of redetermination, fixing the deficiency in income of the taxpayer for the year 1923 in the sum of $836.60.

The record discloses that that amount was the result of deducting from $18,395.55, the amount of net income upon which the deficiency determined by the Commissioner was based, the sum of $2,400 as salary received by the taxpayer as an employee of Duval county, and computing the tax on the balance. Both the taxpayer and the Commissioner filed a petition for review of that decision of the Board of Tax Appeals. The taxpayer complains of the action of the board in deciding that there was any deficiency in income tax of the taxpayer for the year 1923. The Commissioner complains of the action of the Board of Tax Appeals in deciding that the sum of $2,400 received by the taxpayer from Duval county was exempt from federal income tax.

In behalf of the Commissioner it was suggested in argument that, even if all the compensation received by the taxpayer for services rendered pursuant to the contract mentioned was exempt from the federal income tax, the Board of Tax Appeals was justified in treating only the sum of $2,400 as exempt, because the evidence before the board did not show the amount of compensation so received in excess of $2,400. We think there is no merit in this suggestion. The notice given by the Commissioner to the taxpayer of the determination of a deficiency of $1,073.53 showed that all of that deficiency resulted from including in the taxpayer's gross income for the year 1923 compensation received by him as county...