Donald v. JJ White Lumber Co.

• Decision Date: 16 January 1934
• Docket Number: No. 7185.,7185.
• Citation: 68 F.2d 441
• Parties: DONALD, Collector of Internal Revenue, v. J. J. WHITE LUMBER CO.
• Court: U.S. Court of Appeals — Fifth Circuit

68 F.2d 441 (1934)

DONALD, Collector of Internal Revenue, v. J. J. WHITE LUMBER CO.

No. 7185.

Circuit Court of Appeals, Fifth Circuit.

January 16, 1934.

R. M. Bourdeaux, U. S. Atty., of Meridian, Miss., and Sewall Key, Erwin N. Griswold, and W. F. Evans, Sp. Assts. to Atty. Gen., for appellant.

John J. Finnorn, of New Orleans, La., and H. H. Creekmore, of Jackson, Miss., for appellee.

Before BRYAN, HUTCHESON, and WALKER, Circuit Judges.

BRYAN, Circuit Judge.

The government collected taxes for the years 1917 to 1924, inclusive, upon the income derived by appellee from a tract of timber which it owned, and which it had acquired prior to March 1, 1913, the effective date of the first income tax law. The value of the timber as of March 1, 1913, it is agreed by the parties, is the correct basis of allowances for depletion in arriving at the amount of income taxes for any subsequent year. This being so, the basic value remains the same during all the taxable years above mentioned. The smaller the value placed upon the timber, the greater would be the income subject to taxation. The value of the timber was determined by the Commissioner of Internal Revenue to be $5.25 per thousand feet, and upon such valuation he made his assessment of the amounts of taxes which appellee was required to pay. This is the third action which appellee has brought for a refund, and the only one in which an appeal has been taken. The only difference here material in the three actions is the taxable years involved in each. Appellee brought his first action against the Commissioner of Internal Revenue and before the Board of Tax Appeals, which determined the value of the timber to be $5.34 per thousand feet. 24 B. T. A. 274. The second action, like the present one, was brought against the collector of internal revenue in the federal District Court for the Southern District of Mississippi. In it the value of the timber was placed at $7 per thousand feet. In this third action appellee recovered a judgment which was also based upon a valuation of the timber at $7 per thousand feet. The judgment in the first action was entered December 4, 1931; in the second, April 9, 1932. The third was brought July 9, 1932. The evidence upon the last trial is not before us. The only assignment of error insisted upon or open for consideration complains of the action of the trial court in sustaining a demurrer to appellant's special plea which set out the judgment of the Board of Tax Appeals and its finding of fact to the effect that the timber was worth $5.34 per thousand feet, which finding it is contended is binding upon appellee and estops it to assert that the timber as of March 1, 1913, had a greater or higher value. One ground of appellee's demurrer was that it was not estopped by the judgment of the Board of Tax Appeals to claim a higher value because of the later judgment of the District Court in the second suit. The judgment in the second suit, that is to say, in the first suit before the District Court, was referred to in the petition in the instant suit as having established the value of the timber, though it was not in terms pleaded. In that suit the judgment of the Board of Tax Appeals was not pleaded, offered in evidence, or in any way relied on by appellant. Upon appellee's suggestion of a diminution of the record, it is made to appear that upon the trial of this case the District Court had before it...