Rhodes v. Commissioner of Internal Revenue, No. 4594.

CourtUnited States Courts of Appeals. United States Court of Appeals (4th Circuit)
Writing for the CourtPARKER and DOBIE, Circuit , and BARKSDALE
Citation111 F.2d 53
PartiesRHODES v. COMMISSIONER OF INTERNAL REVENUE.
Docket NumberNo. 4594.
Decision Date10 April 1940

111 F.2d 53 (1940)

RHODES
v.
COMMISSIONER OF INTERNAL REVENUE.

No. 4594.

Circuit Court of Appeals, Fourth Circuit.

April 10, 1940.


111 F.2d 54

Theodore B. Benson, of Washington, D. C. (Charles E. Foster, Jr., of Washington, D. C., on the brief), for petitioner.

Lee A. Jackson, Sp. Asst. to Atty. Gen. (Samuel O. Clark, Jr., Asst. Atty. Gen., and Sewall Key, Sp. Asst. to Atty. Gen., on the brief), for respondent.

Before PARKER and DOBIE, Circuit Judges, and BARKSDALE, District Judge.

BARKSDALE, District Judge.

This is a petition to review a decision of the Board of Tax Appeals entered August 4, 1939, determining a deficiency in individual income tax for the calendar year 1933. So far as they are pertinent, the facts of the case may be briefly stated as follows:

The petitioner, Fred B. Rhodes, is now, and was during the tax year 1933, a practicing attorney in the District of Columbia. In 1932, he purchased certain real estate on 13th Street in the City of Washington. During the year 1933, petitioner was a shareholder in, and the President of, the Fidelity Building & Loan Association, a corporation organized under the laws of the District of Columbia. The Building & Loan Association moved into the 13th Street property in August, 1932, and continued to occupy it as a place of business throughout that year and the year 1933 and into the year 1934. Its board of trustees adopted the following resolutions on the dates indicated:

January 30, 1933: "On motion duly made and seconded, the Association was authorized to accept by deed properties at 610 Thirteenth Street, N.W., and at 431 Eleventh Street, S.W., and the board was authorized to appraise said properties for such amount as said properties shall be carried on the books of the Association."

July 17, 1933: "On motion duly made and seconded, and in supplement to motion adopted on January 30, 1933, the Association was authorized to accept from Fred B. Rhodes by deed property at 610 Thirteenth Street, N. W., with the understanding that unless an agreement be reached as to price on said property within two years of the date of this resolution, said property be deeded back to Fred B. Rhodes without cost or obligation to either party."

January 12, 1934:

"Whereas, under date of July 17, 1933, at a regular meeting of the board of trustees of the Fidelity Building & Loan Association, a resolution was unanimously passed, authorizing the Association to accept a deed from Fred B. Rhodes, president of the Fidelity Building & Loan Association, for property 610 Thirteenth Street, N. W., the property being carried in the name of Ruth S. Horner, at a price to be mutually agreed upon, and

"Whereas, the board of trustees, individually examined and appraised said property and determined that the price of One hundred and thirty-eight thousand dollars ($138,000.00) was a fair and reasonable price for said property, and that it would be a profitable purchase for the Association to make at said price, and

"Whereas, the said Fred B. Rhodes agreed to accept said price, less Eighty-one thousand dollars ($81,000.00) the property to be sold subject to an existing trust in that sum, and

"Whereas, in pursuance of said determination the said The Fidelity Building & Loan Association did take up the said building on its books on the 22d day of July, 1933, at the said sum so specified.

"Be it resolved, That the Board of Trustees hereby approves the purchase of said building as of July 20, 1933, at the price designated, and ratifies the action of the Association in placing said building upon its books at the price of said purchase."

The Board of Tax Appeals found that the property was deeded to the Building & Loan Association on April 6, 1933, though no entry was made on its books until July 22, 1933, at which time the property was set up on its books at a value of $138,000, the account of petitioner was credited with the sum of $57,000, and the Association assumed a deed of trust on the property securing $81,000. Of the $57,000, $21,000 was made available to petitioner in 1933 and the remainder in 1934. Petitioner reported the sale of this property in his return for the year 1933, and did not contend otherwise before the Board of Tax Appeals. There was no issue before the Board as to the date of the sale, but in considering another issue the Board did find as a fact that the sale of the real estate took place on July 20th or 22nd, 1933. Petitioner here, for the first time, contends that this sale was not consummated until

111 F.2d 55
the passage of the resolution of January 12, 1934, and that the Board's action in determining that the gain or profit realized from the sale of the property was taxable to petitioner as a part of his income for the year 1933, was erroneous. Respondent objects to the consideration of this contention here because no such issue was made before the Board of Tax Appeals

We will consider this contention first. It is to be noted that here petitioner seeks to raise a new question of law and fact, not raised before the Commissioner or the Board of Tax Appeals, for the purpose of securing a reversal of the decision of the Board of Tax Appeals. Under such circumstances, upon the question of whether or not petitioner may now raise this issue for the first time in this court, we think that this court is bound by the decisions in General Utilities, etc., Co. v. Helvering, 296 U.S. 200, 56 S.Ct. 185, 80 L.Ed. 154, Helvering v. Salvage, 297 U.S. 106, 56 S. Ct. 375, 80 L.Ed. 511, and Helvering v. Wood, 309 U.S. 344, 60 S.Ct. 551, 84 L.Ed. ___, decided February 26, 1940.

In the case of General Utilities etc., Co. v. Helvering, supra, it was held that in reviewing a decision of the Board of Tax Appeals, the Circuit Court of Appeals may not sustain an assessment over the Board's decision upon a ground which was not presented to the Board nor in the petition for review; that the taxpayer is entitled to know with fair certainty the basis of the claim against him. The Commissioner appealed from the Board of Tax Appeals and stated only one ground for review in his petition. Later, the Commissioner urged reversal on another ground. The Circuit Court of Appeals, 4 Cir., 74 F.2d 972, sustained the Board on the first ground, and although the second ground had not been raised before the Board, the Circuit Court of Appeals thought this point should be ruled upon. On appeal, the Supreme Court said, (296 U.S. page 206, 56 S.Ct. page 187, 80 L.Ed. 154): "The second ground of objection, although sustained by the court, was not presented to or ruled upon by the Board. The petition for review relied wholly upon the first point; and, in the circumstances, we think the court should have considered no other. Always a taxpayer is entitled to know with fair certainty the basis of the claim against him. Stipulations concerning facts and any other evidence properly are accommodated to issues adequately raised." The judgment of the Circuit Court of Appeals was reversed.

In Helvering v. Salvage, supra, the court said (297 U.S. page 109, 56 S.Ct. page 377, 80 L.Ed. 511): "The defense of estoppel was not before the Board. Under what we regard as the correct practice, General Utilities & Operating Co. v. Helvering, 296 U.S. 200, 56 S.Ct. 185, 80 L.Ed. 154, * * * the court should have passed the point. Furthermore, the facts disclosed give it no support."

In Helvering v. Wood, supra, which seems to be the latest pronouncement on this subject, the court said 60 S.Ct. 553: "For a wholly different reason, petitioner's argument based on § 22(a) must fail. The Board of Tax Appeals purported to place its decision solely on § 166 and § 167 of the Act, 26 U.S.C.A. §§ 166, 167. Petitioner in his assignments of error specifically mentioned only § 166 and § 167, not § 22(a). In his brief before the Circuit Court of Appeals petitioner expressly waived reliance upon any section other than § 166. Though petitioner in his petition for certiorari relied on § 22(a), respondent in...

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7 practice notes
  • White v. Higgins, No. 3613.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (1st Circuit)
    • December 12, 1940
    ...415, 421, 60 S.Ct. 313, 84 L.Ed. 355; Helvering v. Gowran, 302 U. S. 238, 245, 58 S.Ct 154, 82 L.Ed. 224; Rhodes v. Commissioner, 4 Cir., 111 F.2d 53, 56; In re Schwartz, 2 Cir., 89 F.2d 172, What we might have done is one thing. What we did do is another. Section 213 was not called to our ......
  • Legg's Estate v. Commissioner of Internal Revenue, No. 4649.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (4th Circuit)
    • September 21, 1940
    ...have. It is true, of course, that ordinarily we will not reverse on a ground not raised before the Board. Rhodes v. Commissioner, 4 Cir., 111 F.2d 53. This is a salutary rule even where the ground urged for reversal is a pure question of law; for the raising of a question of law in a lower ......
  • Little v. CIR, No. 5536.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (1st Circuit)
    • January 15, 1960
    ...See Friednash v. Commissioner of Internal Revenue, 9 Cir., 1954, 209 F.2d 601; Rhodes v. Commissioner of Internal Revenue, 4 Cir., 1940, 111 F. 2d 53. The respondent has cited us several cases which state that, for affirmance, if the decision of the Commissioner or Board is correct then the......
  • Hofferbert v. Marshall, No. 6516.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (4th Circuit)
    • December 16, 1952
    ...418, 53 S.Ct. 198, 77 L.Ed. 399; A/S J. Ludwig Mowinckels Rederi v. Accinanto Ltd., 4 Cir., 199 F.2d 134, 145; Rhodes v. Com'r, 4 Cir., 111 F.2d 53. This court is certainly in no position to exercise the reviewing function with respect to matters of accounting which have not been called to ......
  • Request a trial to view additional results
7 cases
  • White v. Higgins, No. 3613.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (1st Circuit)
    • December 12, 1940
    ...415, 421, 60 S.Ct. 313, 84 L.Ed. 355; Helvering v. Gowran, 302 U. S. 238, 245, 58 S.Ct 154, 82 L.Ed. 224; Rhodes v. Commissioner, 4 Cir., 111 F.2d 53, 56; In re Schwartz, 2 Cir., 89 F.2d 172, What we might have done is one thing. What we did do is another. Section 213 was not called to our ......
  • Legg's Estate v. Commissioner of Internal Revenue, No. 4649.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (4th Circuit)
    • September 21, 1940
    ...have. It is true, of course, that ordinarily we will not reverse on a ground not raised before the Board. Rhodes v. Commissioner, 4 Cir., 111 F.2d 53. This is a salutary rule even where the ground urged for reversal is a pure question of law; for the raising of a question of law in a lower ......
  • Little v. CIR, No. 5536.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (1st Circuit)
    • January 15, 1960
    ...See Friednash v. Commissioner of Internal Revenue, 9 Cir., 1954, 209 F.2d 601; Rhodes v. Commissioner of Internal Revenue, 4 Cir., 1940, 111 F. 2d 53. The respondent has cited us several cases which state that, for affirmance, if the decision of the Commissioner or Board is correct then the......
  • Hofferbert v. Marshall, No. 6516.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (4th Circuit)
    • December 16, 1952
    ...418, 53 S.Ct. 198, 77 L.Ed. 399; A/S J. Ludwig Mowinckels Rederi v. Accinanto Ltd., 4 Cir., 199 F.2d 134, 145; Rhodes v. Com'r, 4 Cir., 111 F.2d 53. This court is certainly in no position to exercise the reviewing function with respect to matters of accounting which have not been called to ......
  • Request a trial to view additional results

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