*1 MILLER. PENNSYLVANIA R. CO. its own distinguish Appeals here calling Higgins conclusion in the No. than dealings speculative the stock Circuit Court Fifth Circuit. and fre- size their investive quency. Taxpayer had not Higgins 12, 1941. Paris) and em- (one one but two offices Rehearing Jan. Denied He ployed secretary several. not one however, interested, mainly conserving enhancing his own estate. Commis- present case, Kales v. In the inas sioner,16 taxpayer principally “ad- capital secur- venturing his own [her] ities, continuously yet oc- actively purchase We cupied in their and sale.” it is dif- Judge agree with Patterson distinction.17 but not one of ference Supreme indication gave Court made of may be legal difference granted cer- factual difference when on the Higgins tiorari Circuit con- decision the Second flicted with Kales v. Commissioner.18 taxpayer tax advan- holding selling tages short while the the bear long, also securities she should determina- burdens. The Commissioner's deficiency ground that the on the long account credited her could dividends charged offset dividends not be her upheld. The div- stock should be short stock on the idend short expenditures may capital the nature of taxpayer covers be deducted until the the transaction is short sale. When completed be added thus the dividends her basis. cost Appeals also The Board Tax taxpayer paid the commission the to deduct her on sales of securities and brokers Such deductions were unau-
commodities. holding in view of our that tax- thorized payer engaged was not in the trade or busi- security investment.19 ness of of Tax Ap- decision of the Board
peals is reversed. 16 Cir., Cir., taxpay F.2d F.2d 649 because the purchas engaged in ers were found to be selling as a securities business. result we have reached is “The Spreckels Commissioner, he reconciled with Kales v. Commis to sioner,” Higgins May 15, 1941, deduc Commissioner, tions were disallowed because the Court 795, find no distinction between com could Higgins Commissioner, 312 U. purchases mission on which have been S. Supreme held nondeductible Court permitted Winmill, Helvering, The deductions were Commissioner v. Commissioner, Winmill F. Neuberger paid Commissioner, those sales.
lfrl
pellee
appellant’s originating carriers
shipment,
lading were
and bills of
orig-
accepted
for the
issued and
thereon
diversion
each
inal
and for
connecting,
original,
thereof.
The
participating
delivering carriers
Inter-
transportation
on file with
had
tariffs
Commerce
Commission
state
rates,
promulgating freight
here involved were
accordance
damaged
were
those tariffs. The onions
when
and in
unsalable condition
an
consignee
livery
attempted, and the
They
were sold
refused
them.
re-
greatly
ap-
price,
proceeds
duced
freight
payment of
remaining due on
charges. The balance
freight
subject matter
charges is the
HUTCHESON,
Judge,
Circuit
dissent-
Appellee filed written claims
of this suit.
ing.
damage
occurring
reason of the
loss
consignments,
which were dis-
all"of
prior May
the carrier
1936. This suit was filed June
Appellant
recovery of
contends that the
damages by
should not have
allowed,
because the
shipments
lading covering
bills of
the
destroyed
liability for such
the carrier’s
years
damages after
from
one
claims,
loss
the denial of
and for the
further
that the claim for
reason
two-year-and-one-day
was barred
Holt,
Sherman, Tex.,
Jesse
lading.
provision of
limitation
the bills of
appellant.
portion
relied
The
bills
Woodrow,
F.A.
Nossaman and Otis H.
upon required suits on such claims to be in-
Sherman,
appellee.
Tex., for
both of
carrier within two
stituted
years
after notice
one
HOLMES,
Before
given,
of the claim was
disallowance
McCORD,
Judges.
Circuit
there-
and “where
not instituted
with”
in accordance
these
HOLMES,
Judge.
“no
unpaid
This
a suit
collect
shall not be
such claims
charges arising
shipments
from
of onions
consigned
appellant’s railways.
over
The
crux of
lies in the
question
for decision
distinction between
affirmative action
consignor,
than two
more
interposed
a defense
in re
for relief and
day after
loss claims
had been denied
extinguishment of
duction or
carrier,
recoup-
to assert
portion
The cited
cause of action.
shipments
ment
caused
upon
is a limitation
negligence
the carrier. The
which suits to enforce
jury,
to a
which returned a
was tried
instituted,
and limits the
verdict
in favor
the carrier
re
period of existence of an action for
unpaid freight
charges,
amount
carrier,
covery against
equal
in an
found
defense
re
appeal
damages. This
from
Appellee’s
coupment.
answer set
on the verdict.
entered
reason of the
suffered
loss
he
These were the established facts: Three of the
therefor;
ap-
rather,
challenged
onions
he
cars of
were delivered
intrinsically defensive
good con-
is a doctrine of an
equity
the carrier
reason,
equitable
him
the cause nature founded
science
recover from
transaction, why the
inhering in the same
alleged.
of action
equity
good
claim in
recoupment was
doctrine of
Though
science should be reduced.7
*3
adopt
law,
and was
derived from
civil
pellee’s
af-
action to recover
law.1 Under
part
ed as a
of the common
firmatively
damages
he sustained
way
claim, by
it
to
a defendant
is entitled
by
in the bill
was cut off
deduction,
de
all
allowances or
action was
at
time this
accruing
him in
mands
against him,
to claim
that forms
transaction
recoupment
The de-
way
remained.
a set-off or coun
the action. This is not
properly
properly
fense was
asserted and
sense,
terclaim in the strict
Accordingly,
sustained.
but
not in the nature of a cross
pealed
from affirmed.
any
it lessens
rather
or defeats
plaintiff.2
goes to
It
existence
Judge (dissent-
claim,
plaintiff’s
is limited
and
ing)-
part
com
Being
a
of the
thereof.3
clear
counter
think it
that defendant’s
1840,
England
mon
law of
it was
claim,
adopted
pressly
State
of Texas
handling
on which the
made,
contract
where this
was
and has
due,
was
not available to it.
sued for
was
unimpaired
existed since in
form in that
because, (1) by
It
not
available
state.4
2(b)
sentence of Sec.
Recoupment goes to the
suits
lading,1
founda
“where
or
claims are not filed
claim;
plaintiff’s
available
are not
thereon in accordance
instituted
defense, although
as
as an
provisions,
a
affirmative
foregoing-
with
no carrier
cause of action it
be barred
limit
shall be
and
claims
liable
recoupment,
paid,”
ation.5
defense of
which shall not be
claim was extin-
(2)
arises out
the same
as guished,
extinguished,
transaction
and
if it
claim,
was,
Texas,
long
as
survives
rule in
under
settled
claim
cause of action
exists.6
claim
available
a counter
and
W.
Cleveland
Austin,
1915C,
1925;
and
page
rys,
69
ty
Arkansas
62 A.
14
riss-Buick
State v.
Ala.
S.W.2d
[4]
Grigsby
3
2 Chitty
1 Edge
Peterson, Tex.Com.App.,
Co. of
Davenport
Revised
L.R.A.
Neely,
Bull v.
Williams
Am.Rep.
Machinery
authorities
1124, L.R.A.1915E,
Nelson v.
1011;
Arkansas Brick
33
Tex.
Moor Iron
New
Brick
Clinic Foundation
232;
supra;
United
So.
L.R.A.,N.S.,
v.
Civil Statutes
Tex.
4
Pleading,
Great So.
York,
v.
L.R.A.,N.S. 858;
Co.,
Reib,
there
Neely,
Co.,
Webb v.
Hubbard,
San
Conner v.
States,
6
98
Beecher
Pennewill,
105
cited.
Antonio
Vol.
Co., supra;
Ark.
v. Brown Hoist
376;
Life
S.W..778;
American
Tex.
of Texas
46 Vt.
1, page
434;
Ins. Co. v.
24
Smith,
S.W. 142.
Ann.Cas.
Williams
Baldwin,
Del.,
Humph-
State v.
R.C.L.,
Mason
135
Sure-
Mor-
163;
171;
Art.
153
S.
Peterson, Tex.Com.App.,
jury
no carrier hereunder
livery,
cordance
the notice. Where claims
months after
57;
55 Conn.
Cf. Stone v.
282.
rier
months after
port),
reasonable
ery,
or suits
carrier
1
7
any part
“As
Williams
from the
claims must be filed in
Wood on
on whose
receiving
.or,
or
then within nine
issuing
are not
carrier had
shall
81
419,
delay
condition
shall
White,
export
v.
case of failure to
delivery
delivery
Limitations,
line the
this bill of
or
12 A.
be
parts
Neely,
instituted
not be
occurred,
when notice in
instituted
301
delivery
foregoing
traffic,
disallowed
precedent
of the
thereof
401,
supra;
loss, damage,
to the claimant
months
No. 63.
Circuit Court of Second Circuit.
Writ of Certiorari Denied Mar. 86 L.Ed.-.