Barnett v. Texas & P. Ry. Co.

See case details

BARNETT v. TEXAS & P. RY. CO.

No. 98

Circuit Court of Appeals, Second Circuit

Nov. 29, 1944.

145 F.2d 800

The orders of the Tax Court appealed from as to Walter A. Frederich and Lena Frederich, his wife, Docket No. 112245, and Margaret Swisher Seever, Docket No. 112478, are erroneous and are reversed and set aside, and the cause is remanded with directions to the Tax Court to pass on the question of whether or not Walter A. Frederich is entitled to a credit for overpayment of income taxes of the estate of the decedent on account of reporting that the estate owned fifty per cent of the profits of the business instead of forty per cent, as determined by the State Court.

Reversed and remanded.

HOLMES, Circuit Judge (dissenting).

The only question for decision is whether there was substantial evidence to support the finding of the Tax Court that the calendar years 1937, 1938, and 1939 did not constitute a period of administration or settlement of the estate.

Herman Frederich died on January 6, 1934. His individual debts were paid in that year. At the close of 1934, the partnership liabilities were $14,624.37; at the close of 1935, they were $9,966.53; and at the close of 1936, they were $30,931.95. During these years, the partnership earnings were roughly $43,200, $41,200, and $71,200, respectively. Surely these earnings were adequate in each year to defray the obligations of the partnership without fear of forced liquidation.

Letters of administration were not issued upon the decedent‘s estate until December 21, 1938. Thereafter, the only administrative action taken prior to October, 1941, was the filing of an estate tax return. After the close of 1934, the only act remaining to be performed to complete the administration of the estate, except for the filing of the estate tax return, was the distribution of the estate to the heirs at law. These duties did not reasonably require six years to perform.

The Tax Court found that the time required for performance of the usual administrator‘s duties did not extend into the taxable years here involved. This finding is entitled to finality, since it is amply sustained by the record. The probate court did not determine the issue here involved; the question was not presented to it; the issue was not in controversy.

I think the judgment appealed from should be affirmed.

Osmond K. Fraenkel, of New York City, for appellant.

Cravath, Swaine & Moore, of New York City (Albert R. Connelly and Frank M. McGarry, both of New York City, of counsel), for appellee.

Before SWAN, CLARK, and FRANK, Circuit Judges.

FRANK, Circuit Judge.

Defendant contends that the district court correctly held that its decision was compelled by the “solicitation” doctrine of

Green v. Chicago, B. & Q. R. Co., 205 U.S. 530, 27 S.Ct. 595, 51 L.Ed. 916. But in

International Harvester v. Kentucky, 234 U.S. 579, 586, 34 S.Ct. 944, 58 L.Ed. 1479, the Court referred to the

Green case as “extreme.” In

Hutchinson v. Chase & Gilbert, 2 Cir., 45 F.2d 139, 141, this court, per Judge L. Hand, said: “Possibly the maintenance of a regular agency for the solicitation of business will serve without more. The answer made in

Green v. C., B. & Q. R. R. Co., 205 U.S. 530, 27 S.Ct. 595, 51 L.Ed. 916, and

People‘s Tobacco Co. v. American Tobacco Company, 246 U.S. 79, 38 S.Ct. 233, 62 L.Ed. 587, Ann.Cas.1918C, 537, perhaps becomes somewhat doubtful in the light of

International Harvester Co. v. Kentucky, 234 U.S. 579, 34 S.Ct. 944, 58 L.Ed. 1479, and if it still remains true, it readily yields to slight additions.” See also

Jacobowitz v. Thomson, 2 Cir., 141 F.2d 72.¹ Here there were more than “slight additions“, i. e., the actual selling of tickets for transportation on defendant‘s line and the issuance of bills of lading in New York (to say nothing of the handling of complaints.)² It is urged that not many of these acts occurred each year. But those acts were authorized by defendant which put no limit on the number of such acts that its employees might perform. We think that the authorized performance of such acts constitutes doing business in New York, even if the volume of freight and passenger business initiated in New York is not as great as, we may surmise, defendant would like it to be. As plaintiff is a citizen and resident of New York, it cannot be said that the suit is an undue burden on interstate commerce. Cf.

Baltimore & Ohio R. Co. v. Kepner, 314 U.S. 44, 51, 62 S.Ct. 6, 86 L.Ed. 28, 136 A.L.R. 1222;

Miles v. Illinois Central R. Co., 315 U.S. 698, 701, 62 S.Ct. 827, 86 L.Ed. 1129, 146 A.L.R. 1104.³ Accordingly, on the facts of this case,⁴ we decide that defendant was doing business in New York and that it was properly served there by service on Hunt.

Reversed.

SWAN, Circuit Judge (dissenting).

I agree with the view of the district judge that the case is controlled by

Green v. Chicago, B. & Q. R. Co., 205 U.S. 530, 27 S.Ct. 595, 51 L.Ed. 916, and

Philadelphia & Reading Ry. Co. v. McKibbin, 243 U.S. 264, 268, 37 S.Ct. 280, 61 L.Ed. 710.

Notes

1

The “solicitation” rule was recently criticized severely by Judge Rutledge (now Mr. Justice Rutledge) in

Frene v. Louisville Cement Co., 77 U.S.App.D.C. 129, 134 F.2d 511, 516, 146 A.L.R. 926. As that case dealt not with a railroad but a commercial business, we cite it not as a precedent but for its general discussion.

2

Cf.

St. Louis, Southwestern R. Co. of Texas v. Alexander, 227 U.S. 218, 33 S.Ct. 245, 57 L.Ed. 486, Ann.Cas.1915B, 77;

Missouri, K. & T. R. Co. v. Reynolds, 255 U.S. 565, 41 S.Ct. 446, 65 L.Ed. 788.

3

Defendant suggests that it established its office in New York and its present mode of activity there in reliance upon such precedents as

Green v. Chicago, B. & Q. R. Co., supra. But

International Harvester v. Kentucky, supra, decided in 1914, and

Hutchinson v. Chase & Gilbert, supra, decided in 1930, gave defendant warning that such precedents were not likely to protect it from such suits as this.

4

That each such case turns on its own facts, see e.g.,

International Harvester v. Kentucky, supra. As to the character and reviewability of the determination of “fact” in such cases, cf.

Baumgartner v. United States, 322 U.S. 665, 671, 64 S.Ct. 1240.

Case Details

Case Name: Barnett v. Texas & P. Ry. Co.

Court Name: Court of Appeals for the Second Circuit

Date Published: Nov 29, 1944

Citation: 145 F.2d 800

Docket Number: 98

Court Abbreviation: 2d Cir.