O'MALLEY v. Ames
| Decision Date | 16 June 1952 |
| Docket Number | No. 14304.,14304. |
| Citation | 197 F.2d 256 |
| Parties | O'MALLEY, Collector of Internal Revenue, v. AMES. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Melva M. Graney, Special Asst. to the Atty. Gen. (Ellis N. Slack, Acting Asst. Atty. Gen., A. F. Prescott, Special Asst. to the Atty. Gen. and Joseph T. Votava, U. S. Atty., Omaha, Neb., on the brief), for appellant.
C. Petrus Peterson, Lincoln, Neb. (James N. Ackerman, Lincoln, Neb., on the brief) for appellee.
Before GARDNER, Chief Judge, and WOODROUGH and RIDDICK, Circuit Judges.
This appeal is from a judgment in favor of appellee, the taxpayer, against appellant as Collector of Internal Revenue in an action to recover the amount of a deficiency assessment levied by the Collector of Internal Revenue against appellee and paid by him under protest. We shall refer to the parties as they were designated in the trial court.
In 1943 plaintiff exchanged 180 shares of stock in Bankers Life Insurance Company of Nebraska for 18,000 trust certificates of a conceded value of $540,000. For each share of Bankers Life plaintiff received property worth $3,000. His stock in Bankers Life was acquired by him prior to March 1, 1913. For the year 1941 plaintiff filed an income tax return showing taxes due in the sum of $11,866.55, which he paid. The Commissioner, however, increased the income reported and assessed a deficiency against him which he paid. The increase in income resulted from Commissioner's action in reducing plaintiff's basis on Bankers Life stock realized in 1941 from $1373 a share, as reported by him, to $150 a share, and by reducing the basis of the trust certificates sold in 1941 from $30 a unit to $27 a unit. Having paid under protest the additional tax resulting from Commissioner's deficiency assessment plaintiff brought this action to recover the amount so paid by him on the ground that the fair market value of his 180 shares of Bankers Life stock on March 1, 1913 was $540,000, or $3,000 a share, and that the value of the trust certificates received by him in 1941 was $540,000, with the result that he realized no capital gain on the exchange.
On trial the court found that the value of the trust certificates when received by plaintiff in 1941 was $540,000, or $30 each; in fact, this finding was made pursuant to stipulation of the parties at the opening of the trial. The court found that the fair market value of plaintiff's Bankers Life stock on March 1, 1913 was $1400 per share or a total of $252,000. Based on these findings the court entered judgment for plaintiff in the sum of $36,372.68, with interest.
Bankers Life was incorporated as a life insurance company under the laws of the State of Nebraska on April 6, 1887, with a capital of $100,000 divided into 1,000 shares of the par value of $100 per share, and all of this stock was outstanding on March 1, 1913. The stock was closely held on March 1, 1913, there being but five stockholders and no stockholder had a majority. Plaintiff owned 22.5 per cent of the stock; H. S. Wilson owned 31.5 per cent of the stock and D. W. Cook owned 30 per cent of the stock, the three named stockholders together owning 84 per cent of the stock. There had been no sales of this stock at or prior to 1913 and it was not a listed stock. Further facts will be developed in the course of this opinion.
In seeking reversal defendant contends that the trial court erred in finding that the March 1, 1913 fair market value of plaintiff's 180 shares of Bankers Life stock was $252,000, or $1400 a share. No question is presented as to the competency or admissibility of evidence and the sole question before us is as to the sufficiency of the evidence to sustain the challenged finding of fact. In considering this issue we must presume that the finding of fact is correct and should not be disturbed unless clearly erroneous. Rule 52 (a), Federal Rules of Civil Procedure, 28 U.S.C.A. Where, as here, the issues are tried to the court without a jury it is the function of the trial court to consider the credibility of the witnesses, to weigh the evidence and to draw inferences therefrom. Skelly Oil Co. v. Holloway, 8 Cir., 171 F.2d 670. Where a finding is challenged as being unsupported by the evidence it is not the province of this court to retry the case nor to substitute its judgment or conclusion for that of the trial court but to determine whether or not the finding is supported by substantial evidence or whether it is clearly against the weight of the evidence and hence "clearly erroneous."
The issue which the court was required to determine was the fair market value of this stock on March 1, 1913. Fair market value is the price at which...
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...Hamm v. C.I.R., 325 F.2d 934, 937 (8th Cir. 1963), cert. denied, 377 U.S. 993, 84 S.Ct. 1920, 12 L.Ed.2d 1046 (1964); O'Malley v. Ames, 197 F.2d 256, 258 (8th Cir. 1952); Weber v. Rasquin, 101 F.2d 62, 64 (2nd Cir. 1939). Such a price necessarily accounts for all factors relevant to value. ......
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