119 F. Supp. 12 | D. Del. | 1954
Suit was brought against former Collectors and present Director of Internal Revenue to recover income taxes and interest plaintiff paid under deficiency assessments. For 1946, $27,296.23 was in issue, and for 1947, $16,596.89, both plus interest. Validity of the assessments hinges on the bona fides of a partnership formed October 15, 1945, by plaintiff, his wife and son.
The case was tried by jury. Plaintiff’s motion for a directed verdict was denied. The court submitted five interrogatories
1. At roots of this case lie two determinations of intent. One, is whether plaintiff had a bona fide donative intent to sever his ownership from two-thirds of his business and transfer it to his wife and son. The other, is whether there was a bona fide intent of the parties to join together as partners. Both are not legal but factual issues. Commissioner of Internal Revenue v. Culbertson, 337 U.S. 733, 69 S.Ct. 1210, 93 L.Ed. 1659; Lamb v. Smith, 3 Cir., 183 F.2d 938. Both have been specifically answered by the jury against plaintiff. The basic error of plaintiff’s arguments to the contrary is his assumption
Exemplary of discrepancies are these:
1. Plaintiff’s gross exaggeration of the time spent by the son in the business ;
2. An additional buttress of the jury verdict is the substantial doubt plaintiff sustained the “heavy burden [of proof] on the taxpayer to show the bona fide intent of the parties to join together as partners.” Commissioner of Internal Revenue v. Culbertson, 337 U.S. 733, 744, 69 S.Ct. 1210, 1215. True, the paper formalities were practically pat, but the three principal parties were vague, hesitant, and unconvincing when cross-examined as to details.
3. No sufficient 'reason is presented to prompt grant of a new trial. Plaintiff’s Objections to the instructions stem from the belief they bound him to prove, as an essential of his case, both capital and personal services had been contributed to the business by the wife and son. Under the Culbertson decision, supra,, either is suf'ficient, and'the charge actually does not read counter to that opinion. The ■ court’s definition of “business pur'pose”
4. Attack is also made upon the instructions concerning the elementary propositions “income must be taxed, to those who earn it” and “who primarily éa'fn'ed' it.”
5. The penultimate reason plaintiff proffers for a new trial concerns the colloquy
6. Plaintiff’s remaining argument charges the court with hastening and coercing the jury in reaching its verdict. This does not convince me of •error, nor, does the whole record
At 11:40 o’clock P,M., the foreman volunteered, information of progress, of switching “from- an- almost tie vote to a practically unanimous vote on one of the .first four questions, and I would think it reasonable' to expect that there would be considerable correlation in the answers to those four questions.” The foreman continued without comment from the court, praising the jurors, saying, “Our- relationships are excellent. It is certainly not hopeless that we can’t work with each other, and although I would like very much to go home tonight, I think that we have gone to the expense and trouble that we have, and frankly I think it is my duty to society that we continue to struggle with this thing.” Originating with the jury without prompting from the court, this splendid spirit of cooperation disproves the charge of judicial- coercion. The court’s reply to the jury’s offer, indeed eagerness, to continue deliberations was an appreciative “I won’t hold you after midnight”. Thereupon the foreman asked permission to disclose the numerical split. The court said it was “willing to be told if counsel are”. Plaintiff’s counsel agreed. At the time, -defendants’ counsel objected to hear- . ing the jury reveal “which way it is going”, and that precise information was withheld. Plaintiff’s counsel had the same opportunity to protest. There being no objection from counsel, the foreman advised there was an 11 to 1 vote at the moment on “one of the first four questions”, having been 7 to 5 at the time of the 10 P.M. report. The court then erred in saying the answer to the first interrogatory would automatically decide answers to the following three.
Plaintiff’s motions are denied.
. “1. Was Elizabeth G. Maloney in good faith joined together with her husband, William J. Maloney, Sr., for the purpose of presently carrying on business and sharing in the profits or losses, and acting with a business purpose, really and' truly intended to join together in the then present conduct of a partnership enterprise known as the Maloney Leather Company throughout the taxable year 1946?”
The second interrogatory asked the same question about William J. Maloney, Jr. The third and fourth were the same but referred to the taxable year 1947, one being as to the wife and the other to the son.
The fifth read: “Did Mr. Maloney make valid and bona fide gifts to his wife and son which were used and invested in the Maloney Leather Company business? You will answer that question ‘Yes’ or ‘No’ as to each of the two persons as follows: (a) As to Mrs. Maloney; (b) as to Mr. Maloney, Jr.
. Record, pp. 12, 27, 101, 102, 315, Gov’t Ex. 6.
. R. 12, 27, 311-314, 104-108, 305, 324-325.
. R. 12, 315, 316, 321, 323, 324, 138, 328.
. R. 362-364.
. R. 184-185, 358-359;
. E. g. R. 255-264, 309, 329-336, 142-144, 154-158.
. See Attorney General v. Drummond, 1 Drury & Warren 353, 368, where Lord Chancellor Sugden said:
“Tell me what you have done under such a deed, and I will tell you what that deed means.”
. “When I speak'’of a ‘business’ purpose’, I mean whether any purpose for the benefit of the partnership was served by the alleged inclusion of the wife and son-as. partners herein.” Ohg. 22.
. Plaintiff’s Reply Brief, p. 20.
. Ohg. pp. 17-21.
. E. g. Ohg. 28.
. Chg. 18: “capital and services”.
. Chg. 22, 24, 29, 30. ’ „
. R. 219-219a; 287-288; 365-367.
. E. 219a.
. E. 201, 220.
. E. 366.
. E. 366-367.
. Chg. 37-42.
. The court soon .thereafter admitted to the jury this was an error and clearly ,: corrected it. Chg. 41.
. Chg. 40-41.