Selwyn Operating Corporation v. COMMISSIONER OF INTERNAL REVENUE

• Decision Date: 16 April 1928
• Docket Number: Docket No. 4851.
• Citation: 11 BTA 593
• Parties: SELWYN OPERATING CORPORATION, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
• Court: U.S. Board of Tax Appeals

11 B.T.A. 593 (1928)

SELWYN OPERATING CORPORATION, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Docket No. 4851.

Board of Tax Appeals.

Promulgated April 16, 1928.

Ben Jenkins, Esq., D. J. Shorb, Esq., and Earle W. Wallick, Esq., for the petitioner.

J. Arthur Adams, Esq., for the respondent.

MEMORANDUM AND ORDER.

TRUSSELL:

This matter comes before us upon motion of the petitioner filed October 26, 1927, to set aside a final order of redetermination entered on May 7, 1927, and for leave to file an amended petition. This amended petition, submitted, recites an absolutely different state of facts from those set up in the original petition and testified to by petitioner's witnesses on the hearing, and alleges that petitioner was not an organized corporation until December 12, 1920, and only began business on that date and had no taxable income whatsoever during the calendar years 1919 and 1920. It asks a rehearing of the appeal.

The original petition in this case, filed on June 13, 1925, appealed from respondent's determination of petitioner's tax liability for the calendar years 1919 and 1920. It charged error on the part of respondent in denying petitioner classification as a personal service corporation during those years. It asked in the alternative a computation of tax under section 303 or section 328 of the Revenue Act of 1918. It alleged that petitioner was a corporation organized in 1918 and operated as such during the taxable years in question.

This appeal was heard on December 7, 1925, and proof presented by petitioner of its character as a corporation, certain of its officers testifying to having served as such during the taxable years involved. On December 8, 1926, the Board rendered its decision (reported in 5 B. T. A. 723) denying petitioner classification as a personal service corporation, but holding that it was entitled to computation of its tax under section 328 of the Revenue Act of 1918. After several hearings upon a motion by respondent for redetermination of the deficiencies under the decision rendered, a final order was entered on May 7, 1927, determining the deficiencies for the two years to be $18,070.87 and $27,574.15, respectively.

The rule is clear and unquestioned that, although a motion or petition for a new trial or rehearing is addressed to the discretion of the court and this discretion may be broadly exercised, there must be some legal ground for the action sought, both alleged in the pleading and proven to the satisfaction of the court. State v. Place (S. D.), 107 N. W. 829; Ohio Railroad Co. v. Stein (Ind.), 31 N. E. 180; 19 L. R. A. 733.

A new trial or rehearing is granted to avoid the doing of some injustice in carrying into effect the judgment, for the reason that it is predicated on a trial in which some substantial error was committed by which the losing parties' rights were prejudiced or there was fraud or mistake or since the trial new evidence has been discovered which if introduced at the trial would have probably changed the finding. 20 R. C. L. 218; State v. Fisher (Mo.), 130 S. W. 35; Crim v. Handley, 94 U. S. 652; Martinton v. Fairbanks, 112 U. S. 670; Capital Traction Co. v. Hobb, 174 U. S. 1.

A rehearing will not be granted merely because the losing party or his counsel did not exercise prudence or erred in judgment and can probably make a better case or defense on another trial. Fincher v. Malcomson (Cal.), 30 Pac. 835; Holderman v. Jones (Kans.), 34 Pac. 352; Malry v. Grant (Tex.), 48 S. W. 615.

The petition for rehearing sought to be filed herein is merely an expression of petitioner's desire to be given an opportunity to present his case again and to introduce an entirely new and contradictory set of facts to those testified to on the former hearing. It is wholly insufficient in that it fails to state a legal ground for the action sought or facts that would show a legal ground, nor is it supported by affidavits or other proof detailing the facts relied upon. Grier v. State (Ga.), 123 S. E. 210; Walton v. Bushy (Ga.), 94 S. E. 562; Hobbs v. Smith (Okla.), 115 Pac. 347; 34 L. R. A. (N. S.) 697; Root v. Brewster (Ia.), 36 N. W. 649; Wright v. Abbott (Mass.), 36 N. E. 62; Cupps v. State (Wis.), 98 N. W. 946.

Setting aside for the moment the question of the technical deficiency in form of the petition and the absence of supporting affidavits, it may be gathered from the statement of petitioner's counsel on the hearing of the motion that the only ground of the application is a wish to...