William Goldman Theatres, Inc. v. Comm'r of Internal Revenue, Docket No. 29450.

CourtUnited States Tax Court
Writing for the CourtJOHNSON
Citation19 T.C. 637
PartiesWILLIAM GOLDMAN THEATRES, INC., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
Docket NumberDocket No. 29450.
Decision Date09 January 1953

19 T.C. 637

WILLIAM GOLDMAN THEATRES, INC., PETITIONER,
v.
COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Docket No. 29450.

Tax Court of the United States.

Promulgated January 9, 1953.


[19 T.C. 637]

Samuel H. Levy, Esq., and Bernard Wolfman, Esq., for the petitioner.

Jules I. Whitman, Esq., for the respondent.

INCOME— PUNITIVE DAMAGES.— Petitioner, as an injured party, received a damage judgement in an antitrust suit. Held, one-third of the award was compensatory damages for loss of profits and taxable as income. Held, further, that two-thirds of the award was punitive damages and not taxable.

The respondent determined deficiencies in petitioner's income tax for the years 1947 and 1948 in the amount of $1,847.19 and $92,874.70, respectively. The deficiency determined for the year 1947 is not in issue.

Two of the three allegations of error for the year 1948 were resolved by stipulation of the parties. The sole remaining issue before us is whether a two-thirds portion of the aggregate award received by petitioner in an antitrust suit was taxable income.

FINDINGS OF FACT.

The facts are stipulated and are so found.

The petitioner is a Delaware corporation authorized to do business in the Commonwealth of Pennsylvania and has it principal place of business at Philadelphia, Pennsylvania. Petitioner's income tax return for 1948 was filed with the collector of internal revenue for the district of Pennsylvania.

Petitioner's business during the year 1948 consisted of the operation of motion picture houses and the exhibition of motion pictures produced and distributed by other persons and corporations. On December 8, 1942, petitioner instituted a civil action in the District Court of the United States for the eastern District of Pennsylvania against certain motion picture distributors; petitioner alleged that the named defendants violated the Federal antitrust laws. The action was brought under section 4 of the Act of Congress of October 15, 1914, entitled ‘An Act to supplement existing laws against unlawful restraints and monopolies and for other purposes,‘ as amended and supplemented (15 U.S.C.A. 15), commonly known as the Clayton Act, and sections 1 and 2 of the Act of Congress of July 2, 1890, entitled ‘An Act to protect trade and commerce against unlawful restraints and monopolies‘ (15 U.S.C.A. 1), said Act being commonly

[19 T.C. 638]

known as the Sherman Anti-Trust Act, and the Act of Congress of June 19, 1936 (15 U.S.C.A. 13), commonly known as the Robinson-Patman Act. Petitioner's complaint was in part as follows:

28. As a result of the discrimination against plaintiff which defendants accomplished through said monopoly, plaintiff has been unable to operate the Erlanger Theatre and has thereby suffered great loss and damage, to wit, the sum of $450,000.00.

WHEREFORE, plaintiff prays:

(e) That the defendants be decreed to pay to the plaintiff triple all such damages as may have been sustained by the plaintiff as above, to wit, the sum of $1,350,000.00.

After the case was presented to the district court a judgement was entered in favor of the defendants. William Goldman Theatres, Inc. v. Loew's, Inc., 54 F.Supp. 1011.

On appeal the United States Court of Appeals for the Third Circuit reversed the judgment of the district court; the Court of Appeals held that a conspiracy existed as charged. William Goldman Theatres, inc. v. Loew's, Inc., 150 F. 2d 738. Pursuant to an agreement of the parties and pending the court's decision on the question of liability under the Sherman Act, William Goldman Theatres, Inc., offered no evidence relating to the issue of damages at the first stage of the trial. After the Court of Appeals held the evidence sufficient to sustain the charge of conspiracy in restraint of trade, the district court heard evidence directed solely to the question of damages.

On September 10, 1946, the district court made its findings with respect to damages. The damages were based solely on the petitioner's loss of profits at the Erlanger Theatre. The court's finding is as follows:

I, therefore, find as a fact that the plaintiff, but for the wrongful acts of the defendants, would have earned profits at the Erlanger Theatre amounting to $125,000 during the damage period.

William Goldman, Theatres, Inc. v. Loew's Inc., 69 F.Supp. 103.

On December 18, 1946, the district court entered a final decree based on the findings as set forth in the opinion of September 10, 1946. Paragraph four of the opinion provides:

The amount of the plaintiff's damages is $125,000 and the defendant shall pay to the plaintiff threefold that amount, or $375,000. Interest to date is not allowed.

On January 6, 1948, the Court of Appeals for the Third Circuit affirmed the judgment of the district court in a per curiam opinion. William Goldman Theatres, Inc. v. Loew's, Inc., 164 F. 2d 1021. Certiorari was denied by the United States Supreme Court, 334 U.S. 811.

On May 28, 1948, the defendants paid the petitioner the sum of $375,000. Of this amount petitioner, on its income tax return for

[19 T.C. 639]

the year 1948, included in gross income the amount of $125,000. The balance...

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7 practice notes
  • Commissioner of Internal Revenue v. Glenshaw Glass Company, No. 199
    • United States
    • United States Supreme Court
    • March 28, 1955
    ...In a single opinion, 211 F.2d 928, the Court of Appeals affirmed the Tax Court's separate rulings in favor of the taxpayers. 18 T.C. 860; 19 T.C. 637. Because of the frequent recurrence of the question and differing interpretations by the lower courts of this Court's decisions bearing upon ......
  • Commissioner of Internal Rev. v. Glenshaw Glass Co., No. 11073
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • April 9, 1954
    ...gains or profits and income derived from any source whatever. * * *" 4 The Tax Court opinions are reported at 18 T.C. 860 (Glenshaw) and 19 T.C. 637 (Goldman). See also Obear Nester Glass Co., 20 T.C. 1102, and Telefilm, Inc., 21 T.C. ___, similar 5 The Commissioner and Glenshaw do not now ......
  • Commissioner of Int. Rev. v. Obear-Nester Glass Co., No. 11140.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • November 15, 1954
    ...Glass Co. v. Commissioner of Internal Revenue, 18 T.C. 860, 868, and William Goldman Theatres, Inc., v. Commissioner of Internal Revenue, 19 T.C. 637. These two cases were considered together and affirmed in one opinion, 3 Cir., 211 F.2d 928. On the surface the authorities seem to be unanim......
  • Freeman v. Comm'r of Internal Revenue, Docket No. 71275.
    • United States
    • United States Tax Court
    • November 25, 1959
    ...supra. Commissioner v. Glenshaw Glass Co., 348 U.S. 426 (1955), rehearing denied 349 U.S. 925 (1955), reversing 18 T.C. 860 (1952) and 19 T.C. 637 (1953). Respondent's determination that the amount in controversy is all taxable as ordinary income is, of course, presumptively correct and the......
  • Request a trial to view additional results
7 cases
  • Commissioner of Internal Revenue v. Glenshaw Glass Company, No. 199
    • United States
    • United States Supreme Court
    • March 28, 1955
    ...In a single opinion, 211 F.2d 928, the Court of Appeals affirmed the Tax Court's separate rulings in favor of the taxpayers. 18 T.C. 860; 19 T.C. 637. Because of the frequent recurrence of the question and differing interpretations by the lower courts of this Court's decisions bearing upon ......
  • Commissioner of Internal Rev. v. Glenshaw Glass Co., No. 11073
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • April 9, 1954
    ...gains or profits and income derived from any source whatever. * * *" 4 The Tax Court opinions are reported at 18 T.C. 860 (Glenshaw) and 19 T.C. 637 (Goldman). See also Obear Nester Glass Co., 20 T.C. 1102, and Telefilm, Inc., 21 T.C. ___, similar 5 The Commissioner and Glenshaw do not now ......
  • Commissioner of Int. Rev. v. Obear-Nester Glass Co., No. 11140.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • November 15, 1954
    ...Glass Co. v. Commissioner of Internal Revenue, 18 T.C. 860, 868, and William Goldman Theatres, Inc., v. Commissioner of Internal Revenue, 19 T.C. 637. These two cases were considered together and affirmed in one opinion, 3 Cir., 211 F.2d 928. On the surface the authorities seem to be unanim......
  • Freeman v. Comm'r of Internal Revenue, Docket No. 71275.
    • United States
    • United States Tax Court
    • November 25, 1959
    ...supra. Commissioner v. Glenshaw Glass Co., 348 U.S. 426 (1955), rehearing denied 349 U.S. 925 (1955), reversing 18 T.C. 860 (1952) and 19 T.C. 637 (1953). Respondent's determination that the amount in controversy is all taxable as ordinary income is, of course, presumptively correct and the......
  • Request a trial to view additional results

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