U.S. Supreme Court
RUDOLPH v. UNITED STATES, 370 U.S. 269 (1962)370 U.S. 269
RUDOLPH ET UX. v. UNITED STATES.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT.
Argued April 3, 1962.
Decided June 18, 1962.
An insurance company paid the expenses of a group of its agents and their wives, including petitioners, to New York City to attend an annual convention, and the Commissioner assessed the value of the trip to petitioners as taxable income. In a suit for refund, the District Court found that the trip was provided by the company primarily for the purpose of affording a pleasure trip in the nature of a bonus, reward, and compensation for a job well done and that, from the point of view of petitioners, it was primarily a pleasure trip and that, therefore, the value of the trip was income and the costs were personal and nondeductible. The Court of Appeals approved these findings. Held: Since the ultimate facts are subject to the "clearly erroneous" rule and their review would be of no importance save to the litigants themselves, the writ of certiorari is dismissed as improvidently granted. Pp. 269-270.
Reported below: 291 F.2d 841.
Richard A. Freling argued the cause for petitioners. With him on the briefs was Felix Atwood.
John B. Jones, Jr. argued the cause for the United States. With him on the briefs were Solicitor General Cox, Assistant Attorney General Oberdorfer, Wayne G. Barnett, I. Henry Kutz and Norman H. Wolfe.
Charles W. Merritt filed a brief for the American Hotel Association, as amicus curiae, urging reversal.
The petition for certiorari in this case was granted because it was thought to present important questions involving the definition of "income" and "ordinary and necessary" business expenses under the Internal Revenue Code. 368 U.S. 913. An insurance company provided
a trip from its home office in Dallas, Texas, to New York City for a group of its agents and their wives. Rudolph and his wife were among the beneficiaries of this trip, and the Commissioner assessed its value to them as taxable income.* It appears to be agreed between the parties that the tax consequences of the trip turn upon the Rudolphs' "dominant motive and purpose" in taking the trip and the company's in offering it. In this regard the District Court, on a suit for a refund, found that the trip was provided by the company for "the primary purpose of affording a pleasure trip . . . in the nature of a bonus, reward, and compensation for a job well done" and that from the point of view of the Rudolphs it "was primarily a pleasure trip in the nature of a vacation . . . ." 189 F. Supp. 2, 4-5. The Court of Appeals approved these findings. 291 F.2d 841. Such ultimate facts are subject to the "clearly erroneous" rule, cf. Commissioner v. Duberstein, 363 U.S. 278, 289-291 (1960), and their review would be of no importance save to the litigants themselves. The appropriate disposition in such a situation is to dismiss the writ as improvidently granted. See Rice v. Sioux City Memorial Park Cemetery, 349 U.S. 70, 78 n. 2 (1955).
MR. JUSTICE FRANKFURTER took no part in the decision of this case.
MR. JUSTICE WHITE took no part in the consideration or decision of this case.
[Footnote *] A joint return had been filed.
Separate opinion of MR. JUSTICE HARLAN.
Although the reasons given by the Court for dismissing the writ as improvidently granted should have been persuasive against granting certiorari, now that the case is here I think it better to decide it, two members of the Court having dissented on the merits. [370 U.S. 269, 271]
Full Text of Opinion