Woody v. United States

• Decision Date: 10 November 1966
• Docket Number: No. 20824.,20824.
• Citation: 368 F.2d 668
• Parties: Ronald WOODY and Shirley Woody, Appellants, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

368 F.2d 668 (1966)

Ronald WOODY and Shirley Woody, Appellants, v. UNITED STATES of America, Appellee.

No. 20824.

United States Court of Appeals Ninth Circuit.

November 10, 1966.

Bernard, Shevach, Bonyhadi & Hall, Portland, Or., for appellants.

Richard C. Pugh, Acting Asst. Atty. Gen., Meyer Rothwacks, Melva M. Graney, Fred E. Youngman, Attys., Dept. of Justice, Washington, D. C., Sidney I. Lezar, U. S. Atty., Portland, Or., for appellee.

Before BARNES, CECIL^*, and JERTBERG, Circuit Judges.

JERTBERG, Circuit Judge:

This is an appeal from the judgment of the District Court dismissing appellant's claim for tax refund pursuant to the jury's response to special interrogatories regarding whether strike benefits received by appellant were gift or income for income tax purposes. We hold that the jury instructions were correct and that the evidence is sufficient to support the jury's finding that the benefits were not gifts. We therefore affirm the dismissal.

Taxpayer Ronald Woody, appellant herein, and wife, both residents of Oregon, filed a joint income tax return for the year 1960.¹ In that return, Woody reported as non-taxable gifts the strike benefits totaling $5,286.00 which he had received during 1960. The Commissioner determined that these benefits were properly taxable as income and asserted a deficiency of $736.84. Appellant paid the disputed tax with interest on July 30, 1963, and November 1, 1963. A timely claim for refund of the tax was filed on November 1, 1963, and rejected on February 18, 1964. The present action was filed in the Federal District Court for the District of Oregon on November 24, 1964.

At all times relevant to this case, appellant was a member of Stereotypers and Electrotypers' International Union, Local No. 48, hereinafter referred to as Local 48. Appellant was a journeyman stereotyper employed by the Journal Publishing Company of Portland, Oregon, publishers of a newspaper known as the "Journal." In 1959, there arose a labor dispute between the Union and the two daily Portland, Oregon newspapers, the "Journal" and the "Oregonian." When negotiations broke down, the members of Local 48 voted to go out on strike. The strike was duly authorized by the Local Union and the International Union on November 3, 1959. Appellant voted in favor of the strike. The strike commenced on November 10, 1959, and affected about 600 employees of the two newspapers.

During the strike, benefits were paid to the strikers through Local 48. Article XII, Sec. 14 of the Constitution of the International Union required the International's Executive Board to pay to the Local Union during the first eight weeks of an authorized strike an amount totaling $70 per week for each journeyman on strike and $47.50 per week for each apprentice on strike. After the initial eight-week period, such payments could be continued or terminated at the discretion of the Board. The Board made the required payments, which extended into the early part of 1960, and thereafter, the payments were continued as an exercise of the Board's discretion.

Two other sources contributed to the strike fund from which Local 48 paid its strike benefits. The Pacific Slope Conference Mutual Aid Pact, otherwise known as the Pacific Slope Conference, a regional grouping of local unions in the Western States, organized primarily to provide a pool of funds for strikes and other emergencies, contributed a maximum of $15 per week for each striking journeyman, and $7.50 per week for each striking apprentice. In addition, contributions from other unions and individuals totaled a maximum of $15 per journeyman and $30 per apprentice. Thus, the total strike benefits from the three sources were $100 per week for each journeyman and $85 per week for each apprentice.

The pre-strike annual gross earnings of a journeyman were $6,569.20. The same pre-strike earnings for an apprentice were a minimum of $3,284.60 and a maximum of $5,912.28, depending on the number of years served.

Recipients of the strike benefits totaled as many as 56 during 1960. But the number decreased as the strike wore on. In June, 1962, the International Union and the Pacific Slope Conference terminated their contributions indefinitely. Local 48 continued its payments until 1963, when the International and Pacific Conference resumed theirs. But by November, 1964, all strike benefit payments from any source had ceased.

To be eligible for these benefits, appellant had to do no more than be and remain on strike. He was required only to be a union member in good standing and to sign in daily at Strike Headquarters. He was not required to picket or solicit cancellation of subscriptions to the struck newspapers, although he did do this on a voluntary basis. If a striking union member secured other employment, his strike benefit pay was reduced one-fifth for each day he was otherwise employed, and anyone doing four days' work in any single week received no strike benefits for that week, in accordance with the provisions of Article XII, Sec. 14A of the International Constitution and Article IV, Sec. 2 of the Pacific Slope Conference Mutual Aid Pact. There is no indication in the record whether appellant ever received such casual employment, although he did look for work.

At no time during the strike did appellant apply for welfare or relief assistance from state or local agencies. As a striker, he was ineligible for welfare under the policies established by these agencies. He and his fellow strikers were also denied unemployment compensation.

Trial was had before a judge and jury. At the close of the evidence, the case was submitted to the jury on special interrogatories, three in number, each dealing with the payments received through Local 48 from one of the three sources: the International, the Conference, and other unions and individuals. The interrogatories were as follows:

"I.

"Were the $70.00 per week payments contributed to plaintiffs, through Local No. 48, by the International Union, gifts, as that word has been defined to you?

* * * * * *

"II.

"Were the $15.00 per week payments contributed to plaintiffs, through Local No. 48, by Pacific Slope Conference, gifts, as that word has been defined to you?

* * * * * *

"III.

"Were the $15.00 per week payments contributed to plaintiffs, through Local No. 48, by other contributing unions and individuals, gifts, as that word has been defined to you?

* * * * * *"

The jury replied in the negative to the first two interrogatories and answered "No Verdict" on the third. On the basis of these replies, the District Judge dismissed appellant's refund claim pertaining to the sources in the first two interrogatories. As to the claim based on the third source, a mistrial was declared and the claim dismissed, without prejudice to appellant's right to file a motion to reinstate the claim. On this appeal, the appellant is not questioning the trial court's disposition of such claim.

The question of whether a monetary payment is a gift and therefore non-taxable for income tax purposes is basically an issue of fact. "But the question here remains basically one of fact for determination on a case-by-case basis." Commissioner v. Duberstein, 363 U.S. 278, 290, 80 S.Ct. 1190, 1199, 4 L.Ed.2d 1218 (1960). In Duberstein, the Court made quite plain, after a full airing of the difficulties involved, that this issue was to be committed to the trier of fact.

"Decision of the issue presented in these cases must be based ultimately on the application of the fact-finding tribunal\'s experience with the mainsprings of human conduct to the totality of the facts of each case. The non-technical nature of the statutory standard, the close relationship of it to the data of practical human experience, and the multiplicity of relevant factual elements, with their various combinations, creating the necessity of ascribing the proper force to each, confirm us in our conclusions that primary weight in this area must be given to the conclusions of the trier of fact." 363 U.S. at 289, 80 S.Ct. at 1198.

Accordingly, this court is confined to the normal strictures of appellate review of the fact-finder's determinations. "Where a jury has tried the matter upon correct instructions, the only inquiry is whether it cannot be said that reasonable men could reach differing conclusions on the issue." Commissioner v. Duberstein, supra, at 290-291, 80 S.Ct. at 1199.

These principles were applied by the Court in a case handed down the same day as Duberstein, involving strike benefits paid by a union to a striking non-member. In that case, the jury had determined that the benefits, in the form of redeemable food vouchers and payment of the non-member's room rent, were gifts. United States v. Kaiser, 363 U.S. 299, 80 S.Ct. 1204, 4 L.Ed.2d 1233 (1960). The Court carefully limited its review to a determination of whether the jury's verdict had reasonable support in the record.

"We need not stop to speculate as to what conclusion we would have drawn had we sat in the jury box rather than those who did. The question is one of the allocation of power to decide the question; and once we say that such conclusions could with reason be reached on the evidence, and that the District Court\'s instructions are not overthrown, our reviewing authority is exhausted, and we must recognize that the jury was empowered to render the verdict which it

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