Wiseley v. Commissioner of Internal Revenue, 11146.

• Decision Date: 24 November 1950
• Docket Number: No. 11146.,11146.
• Citation: 185 F.2d 263
• Parties: WISELEY v. COMMISSIONER OF INTERNAL REVENUE.
• Court: U.S. Court of Appeals — Sixth Circuit

185 F.2d 263 (1950)

WISELEY v. COMMISSIONER OF INTERNAL REVENUE.

No. 11146.

United States Court of Appeals Sixth Circuit.

November 24, 1950.

Charles P. Taft, Cincinnati, Ohio, for petitioner.

S. Dee Hanson, Washington, D. C., Theron Lamar Caudle, Ellis N. Slack, Robert N. Anderson, and S. Dee Hanson, all of Washington, D. C., on the brief, for respondent.

Before HICKS, Chief Judge, and SIMONS and McALLISTER, Circuit Judges.

HICKS, Chief Judge.

Petitioner, Frank M. Wiseley, seeks a review of the decision of the Tax Court affirming the action of the Commissioner of Internal Revenue in assessing against him a deficiency in income taxes for the calendar year 1942 in the sum of $4,203.94 and a penalty of $2,101.97; and in assessing penalties against him of $6,149.20, $8,373.25 and $7,110.88 for the years 1943, 1944 and 1945.

There is substantial evidence to support the findings touching the deficiency for the year 1942 and the decision of the Tax Court in relation thereto is accordingly affirmed.

We are not in accord with the conclusion reached by the Tax Court with reference to the penalty assessments for any of the years involved. The Commissioner predicated these penalties upon Sec. 293(b) of the Internal Revenue Code, 26 U.S.C.A. § 293(b), which reads as follows: "(b) Fraud. If any part of any deficiency is due to fraud with intent to evade tax, then 50 per centum of the total amount of the deficiency (in addition to such deficiency) shall be so assessed, collected, and paid, in lieu of the 50 per centum addition to the tax provided in section 3612(d)(2)."

Petitioner Wiseley is a physician. He graduated in medicine in 1924 and was one of twenty-five or more physicians practicing in his native city of Findlay, Ohio, a city of about 26,000 people at the outbreak of World War II. At that time he was forty-five years of age, married and had a highly respected family. He was Chairman of the Red Cross for his county and was the medical consultant on internal medicine for the draft boards in his area, and also a member, from the same area, of the Procurement and Assignment Committee of twelve doctors for the State of Ohio. This committee was set up by the Government to assist in determining which doctors could best be spared for service in the armed forces. War activities reduced the number of physicians in Findlay from about twenty-five to eleven.

Petitioner had his office, consisting of six small rooms, three on each side of a center hall in the First National Bank building. At the beginning of 1942 he had two women assistants, one of whom left him in July and the other in October.

On account of the reduction in the number of physicians in Findlay, petitioner, in addition to his own work, became burdened with the industrial practice of the two main war industries in the city, each with at least 1,200 employees, and with other minor industries. One of these large concerns required him to physically examine every new employee and for the others he treated all accident cases, either day or night, and all eye cases, for, on account of the war, there were no eye physicians left in Findlay. He worked from fourteen to sixteen hours a day seven days a week and took no holidays or vacations. As incredible as it may seem, he saw a top limit of from 85 to 87 patients a day, and he testified that on one day he saw 120. The assistant who left him in July was replaced by Miss Cobb, a registered nurse, twenty-nine years old. Petitioner was unable to procure any additional assistants during the war period except an eighteen year old high school graduate who worked from June 1943 until December 1944, and another sixteen year old high school graduate who came in March 1945 and left in December. Neither of these girls could do bookkeeping and their work on the books produced complaints from patients.

Miss Cobb was the receptionist and technician. She did all X-rays, all basal metabolisms, all electro-cardiographs, prepared all tonsils for operation, and assisted in all settings of fractures and mechanical operations. She did this character of work wherever it was necessary, either at the office, in the homes of the patients, or at the hospital. She was so over-burdened as to cause many inconveniences and some financial losses to petitioner. That she was kept busy is recognized in the opinion of the Tax Court. She was also the only bookkeeper. Petitioner was not a bookkeeper. He had an adding machine but he didn't know how to use it. Miss Cobb was not experienced in bookkeeping but she kept the books and records as well as she could. She was never able to keep the records up to date although she worked at this particular feature on Sundays and in the evenings. As might naturally be expected, her health declined and finally in June 1945 she collapsed and was away from the office for several months. While she worked she made collections and kept the money and checks in a safe in the office. She did the banking and kept enough money on deposit in the bank to pay expenses. Petitioner scarcely ever wrote checks. He would occasionally take money from the safe and place it in a bank safety deposit box from...