Whipple v. Comm'r of Corporations & Taxation

• Decision Date: 25 May 1928
• Parties: WHIPPLE v. COMMISSIONER OF CORPORATIONS AND TAXATION.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

263 Mass. 476

161 N.E. 593

WHIPPLE

v.COMMISSIONER OF CORPORATIONS AND TAXATION.

Supreme Judicial Court of Massachusetts, Suffolk.

May 25, 1928.

Exceptions from Superior Court, Suffolk County; E. B. Bishop, Judge.

Suits by Sherman L. Whipple against Henry F. Long, Tax Commissioner, for abatement of taxes. From a decree dismissing one of complainant's petitioners, complainant brings exceptions, and, from a decree granting abatement under another petition, the Commissioner brings exceptions. Exceptions overruled in both cases.

E. O. Proctor, of Boston, for petitioner.

F. D. Putnam, Asst. Atty. Gen., for respondent.

SANDERSON, J.

In the first bill of exceptions the question presented is whether the complainant appealed from the refusal of the defendant to grant his petitions for abatement within the time fixed by law. The respondent sent notice of disallowance of the petitions for abatement by registered mail on July 23, 1924, postage prepaid, return receipt requested, addressed to the petitioner at his legal address given in his tax return. The letter was received at that address July 24, 1924, receipted for by a person employed there as a domestic, and apparently the only person in charge at the time, who placed it on the library table with other mail of the petitioner. He came to his residence on one or more nights between July 24 and August 3, but did not notice the letter and it remained unopened until August 11, 1924. The statute requires the commissioner to notify the petitioner of his decision by registered letter, and any person aggrieved by his refusal to abate the tax may appeal therefrom by filing a complaint in the superior court within ten days after the notice by the commissioner of his decision. G. L. c. 62, § 43 and section 47, as amended by St. 1923, c. 287, § 4. The commissioner gave the notice in the manner required by the statute, and the time within which the taxpayer might file a complaint for abatement was thereby fixed. The fact that the notice was not brought to the petitioner's attention in time to file the complaint within the statutory period does not give him an extension of time. See Farquhar v. New England Trust Co. (Mass.) 158 N. E. 836. Inasmuch as the case turns on the language of the section of the statute under which the complaint is brought, neither statutes with different requirements nor decisions based on such statutes are controlling. The decree dismissing the petition because not filed in time was right, and the plaintiff's exceptions must be overruled.

In the second case the complaint is for abatement of the tax assessed in 1924 on the complainant's income for the calendar year 1923.

The complainant, whose principal business is the practice of the law, lost $27,304.24 during that year in the operation of his farm and sought to deduct from his professional income that sum as a business loss. The commissioner refused to allow the deduction, as result of which the tax paid was $440.51 more than it would have been if the deduction had been allowed. The judge of the superior court decided that this loss was a business loss and that the petitioner was entitled to the abatement sought.

The estate owned by the complainant, purchased for a summer residence, comprises several hundred acres with the buildings thereon. About the year 1912 he decided to operate a part of the property as a farm, with the belief that he would be able, after bringing the land back to a state of fertility, to till the farm, as distinguished from the residential property, without loss and perhaps at a profit. After experimenting with sheep and abandoning that experiment when found to be unprofitable, he turned his attention to the breeding of Guernsey cattle. Success in this business requires not only pure bred but registered stock, and he undertook to perfect a herd by securing animals of good strain at reasonable prices and then to build up the herd gradually. High prices are obtained for pure bred registered animals which produce a large amount of butter fat and at the same time are of proper form and color, and an owner cannot know whether his experiments in breeding will be successful until a substantial period of time has elapsed. The complainant's early efforts failed to produce the type of animal that would bring the higher prices, a result found to be attributable to the sires. The breeding plans were then changed and heifers are now produced which give promise to being cows of value. His present herd consists of eighty-five to ninety animals. The poultry business and the raising of trout are included as a part of the farm. The evidence was uncontradicted that the latter industry had procured a profit each year, but from the first the farm as a whole has shown an annual loss, which in 1926 and in each of the eight preceding years was in excess of $19,000. The receipts from the farm in 1923 were over $25,000; the largest single item of income being for milk. The complainant has spent a comparatively small part of his time at the farm, but he has at all times employed a superintendent with an agricultural college training, under whom the twenty or more employees work, and he confers with him on important matters of policy, the complainant's orders being final. He has improved the land, introduced pure bred stock, operated a dairy and sold some of the animals. Plans have been adopted to reduce losses, eliminate waste and increase efficiency. Accurate farm accounts have been kept similar to those found in an ordinary business enterprise; these are forwarded to and supervised at the complainant's Boston office and the same care is taken with them as if the farm were making a profit. Supplies from the farm used by the petitioner or members of his family are charged to him or them at the same prices paid by the general public and all surplus products are sold at regular market prices.

It is apparent from the testimony that efforts have been directed by the complainant toward the production of Guernsey cattle which...