Norfolk Nat. Bank of C. and T. v. Commissioner of Int. Rev.

NORTHCOTT, Circuit Judge

(dissenting).

I am of the opinion that the judgment should be affirmed. The interest in question was paid upon the notes executed by the two corporations and the group of individuals. It is true that the interest came to the bank from the city of Norfolk and Isle of Wight eounty through a trustee, but it was applied upon the obligations of the two corporations and the group of individuals held by the bank. The loans were made by the bank to the two corporations and the group of individuals, and it is, in my opinion, immaterial as to whom the bank paid the money. The amount paid, to whomsoever paid, was secured from the bank as a loan, not by the city or eounty, but by the corporations and the individuals. Had the city and county failed to pay the interest, certainly the bank could have. held the makers of the notes for the sums in default. Nor did the makers of the obligations securing the loans from the bank stand in the relation of accommodation indorsers, because the borrowers were.undoubtedly interested in the construction of the roads in question, and thereby derived a direct benefit from the making of the loans. They cannot therefore be regarded as accommodation indorsers. They were beneficiaries of the transaction.

Profits made from contracts had with federal, state, and municipal governments axe admittedly taxable. The negotiators of the loans here in. question procured the bank to < advance the money and procured the agreements of the city and eounty to pay the interest. They made a profit on the transaction because of the benefit derived by them from the construction of the roads.

We have repeatedly held that findings of fact of the Board of Tax Appeals, based upon substantial evidence, cannot be reviewed by us and that we cannot substitute our judgment for the judgment of the Board as to questions of fact. Gossett v. Commissioner (C. C. A.) 59 F.(2d) 365 ; Merchants Transfer & Storage Co. v. Burnet (C. C. A.) 49 F.(2d) 56 , and authorities there cited. I am of the opinion that the findings of fact of the Board were amply sustained by the evidence, and that the ultimate finding of fact as made by the Board was correct.