Rudolph v. United States
372 U.S. 269 (1962)

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U.S. Supreme Court

Rudolph v. United States, 372 U.S. 269 (1962)

Rudolph v. United States

No. 396

Argued April 3, 1962

Decided June 18, 1962

372 U.S. 269

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

Syllabus

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. 372 U. S. 269-270.

Reported below: 291 F. 2d 841.

PER CURIAM.

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

Page 372 U. S. 270

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, 363 U. S. 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, 349 U. S. 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.

* 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.

Page 372 U. S. 271

The courts below concluded (1) that the value of this "all expense" trip to the company-sponsored insurance convention constituted "gross income" to the petitioners within the meaning of § 61 of the Internal Revenue Code of 1954, and (2) that the amount reflected was not deductible as an "ordinary and necessary" business expense under § 162 of the Code. [Footnote 1] Both conclusions are, in my opinion, unassailable unless the findings of fact on which they rested are to be impeached by us as clearly erroneous. I do not think they can be on this record, especially in light of the "seasoned and wise rule of this Court" which "makes concurrent findings of two courts below final here in the absence of very exceptional showing of error." Comstock v. Group of Institutional Investors,335 U. S. 211, 335 U. S. 214.

The basic facts, found by the District Court, are as follows. Petitioners, husband and wife, reside in Dallas, Texas, where the home office of the husband's employer, the Southland Life Insurance Company, is located. By having sold a predetermined amount of insurance, the husband qualified to attend the company's convention in New York City in 1956 and, in line with company policy, to bring his wife with him. The petitioners, together with 150 other employees and officers of the insurance company and 141 wives, traveled to and from New York City on special trains, and were housed in a single hotel during their two and one-half day visit. One morning was devoted to a "business meeting" and group luncheon, the rest of the time in New York City to "travel, sightseeing, entertainment, fellowship, or free time." The entire trip lasted one week.

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