Westvaco Corp. v. United States

DAVIS, Judge,

concurring in the result:

In this case it is agreed by all that (a) plaintiff suffered an actual and measurable loss from injuries to non-merchantable timber (as well as from injuries to merchantable timber), and (b) plaintiff had allocated a portion of its timber basis to the non-merchantable growth that suffered such casualty injuries. On these facts I agree — in general for the reasons given in Judge Smith’s opinion — with the court’s conclusions both that each of plaintiffs management districts constitutes a single, identifiable property for determining the full amount of the casualty losses as well as for determining the limitation on allowance of the deduction for such losses, and also that the case must be remanded to the Trial Division for proof of the difference in fair market value of each of thé affected districts before and after the respective casualties.

However — and this is primarily why I write separately — I do not believe that our result, on these facts, conflicts with the holdings in Rosenthal v. Commissioner, 416 F.2d 491 (2d Cir. 1969) or Harper v. United States, 396 F.2d 223 (4th Cir. 1968), or that we need or should criticize or disavow those holdings on the different facts which those two courts considered they had before them. In both of those instances, unlike the present case, the Courts of Appeals found or assumed that the taxpayers had proved no loss from injuries to non-merchantable timber and also • that the taxpayers had allocated no part of their basis to such non-merchantable growth. It was in the light of those signifi *480 cantly different facts that those courts reached their different conclusions and it is in the light of those dissimilar facts that I am unwilling to say now that those courts were necessarily wrong, or to give any definitive view on such a separate case.

The Rosenthal opinion stresses that the taxpayers there had "not even attempted to assign a dollar amount to [the non-merchantable] loss” but had "estimated the whole amount of their claimed loss (approximately $130,000) solely in terms of the board feet of timber actually destroyed.” 416 F.2d at 498 . The court then said that "we must conclude that the taxpayers have failed to show any loss to the remainder of their tract.” Ibid. The court also emphasized that the taxpayers had no basis in the non-merchantable growth and therefore were barred from complaining that they were not allowed a casualty loss for that type of growth. 416 F.2d at 498-99 . See also 416 F.2d at 494-95, n.9 . 1 My understanding of the majority opinion is that its conclusion took serious account of those specific facts of that case, and accordingly treated the casualty loss there (which the court said affected only merchantable timber, i.e. depletable timber) as if only cords or boards of merchantable wood were involved. In those limited circumstances it may well be (we need not decide) that the basis for casualty loss purposes can be the same as the basis derived from use of the depletion rate for merchantable timber. 2

For these reasons I distinguish Rosenthal and Harper on the ground of the critically different fact-situations with which those courts dealt. Our case is substantially dissimilar — in that here there was a proved loss to non-merchantable, non-depletable growth and a basis allocated to that type of growth — and, even if the 2nd and 4th circuits were right on their particular facts, we can properly reach a different *481 result without trenching on or censuring the other courts’ holdings.

It is not part of my function, as I see it, to decide whether or not the court was right or wrong in its determination of the facts. I have to accept the facts on which the majority of the court made its ruling.

The earlier circuit court opinion in Harper is a very short per curiam, but the court did take pains to note that the taxpayers had failed to show that the storm damage would in any way affect the marketability of the remaining trees. 396 F.2d at 224 . The Rosenthal opinion pointed out that, like the Rosenthal taxpayers, the Harper taxpayers had estimated the amount of their loss solely in terms of the amount and value of the timber actually destroyed and did not assign any dollar amount to any alleged loss of the timber remaining on the tract. The 2nd Circuit treated Harper os parallel in its facts to Rosenthal. 416 F.2d at 499 .