# Transcript of Record — United States v. Flannery > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386006_0232%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Transcript of Record - **Published:** January 1, 1925 - **Citation:** 268 U.S. 98 ## Text SUPREME COURT OF THE UNITED STATES OcTOBER TERM, 1924 No. 527 THE UNITED STATES, APPELLANT vs. HARRIET ROGERS FLANNERY AND J. ROGERS FLAN- NERY, EXECUTORS OF THE ESTATE OF JAMES FLANNERY, DECEASED APPEAL FROM THE COURT OF CLAIMS. J. INDEX Original Print rn Cee SNe OF SPREE RDNA os UNITED STATES VS. HABRIET ROGERS FLANNERY ET AL. 7 “(5) Losses sustained during the taxable year and not compen- sated for by insurance or otherwise if incurred in any transaction entered into for profit, though not connected with the trade or busi- ness.” There are a number of other authorized deductions. The act anticipated the question as to what are “ losses ” that are thus authorized to be deducted because it prescribes a “basis for de- termining gain or loss,” and provides: «Sgcrion 202 (a). That for the purpose of ascertaining the gain derived or loss sustained from the sale or other disposition of prop- erty, real, personal, or mixed, the basis shall be— “(1) In the case of property acquired before March 1, 1913, the fair market price or value of such property as of that date; and «(2) In the case of property acquired on or after that date, the cost thereof * * *. In interpreting these provisions it is a cardinal rule that the in- tention of Congress be given effect. Where the statute is expressed in plain and unambiguous terms, Congress should be intended to mean what they have plainly expressed. Chief Justice Marshall in United States v. Fisher, 2 Cranch 358, 386, said: “ Where the intent is plain nothing is left to construction.” In St. Paul R. R. Co. v. Phelps, 137 U. S. 528, 536, it is said that where a statute is clear and free from ait ambiguity, the letter of it is not to be disregarded in favor of a mere presumption as to what is termed the policy of the Government, even though it may be the settled policy of a depart- ment. In Jnsurance Co. v. Ritchie, 5 Wall. 541, 545, the court say that when terms are unambiguous we may not speculate on prob- abilities of intention. And in the State Tonnage Tax Cases, 12 Wall. 204, 217, it is said: “ Legislative enactments, where the language is unambiguous, can not be changed by construction, nor can the language be divested of its plain and obvious meaning.” See Crawford v. Brooks, 195 U. S. 176, 189; Franklin Sugar Co. v. United States, 202 U. S. 580, 582; White v. United States, 191 U. S. 545, 551. It is a primary and general rule of statutory construction that the intent of the lawmaker is to be found in the language 11 that he has used. See Goldenberg Case, 168 U. S. 95, 102. In Bates Refrigerating Co. v. Sulzberger, 157 U. S. 1, 33, the following language is adopted: “It is not only the safer course to adhere to the words of a statute construed in their ordinary im- port, instead of entering into any inquiry as to the supposed inten- tion of Congress, but it is the imperative duty of the court to do so.” See Lake County v. Rollins, 130 U. S. 662, 670. Another familiar rule is that the statute must be construed as a whole. Its clauses are not to be segregated, but every part is to be construed with reference to every other part. See Blair v. Chicago, 201 U.S. 400, 463; Market Co. v. Hoffman, 101 U. S. 112, 115; Pollard v. Bailey, 20 Wall. 520, 525. These rules are the more applicable when it be- comes the duty of a court to construe a taxing statute because such 8 UNITED STATES VS. HARRIET ROGERS FLANNERY ET AL, a statute directly concerns the individual citizen as well as others, and the popular or received import of its words should furnish. the general rule of its interpretation to the end that its provisions may be the better understood by those who must pay the taxes which it imposes. See Maillard v. Lawrence, 16 How. 251, 261. In the revenue act of 1918 Congress was imposing a tax on the net income of the individual, among others, and defined gross in. come. It provided that in computing this taxable net income there should be allowed certain “ deductions.” ‘These deductions included losses sustained during the taxable year if incurred in trade or busi- ness, of if incurred in any transaction entered into for profit though not connected with trade or business. If the question of the mean- ing of these deductible losses were left to section 214 alone its solu- tion would be more difficult, but it was not permitted to rest in such uncertainty. By section 202 (a) a basis is established for the pur- pose of ascertaining the loss sustained from the sale of property, and in the case of property acquired before March 1, 1913, this basis is the fair market price or value of such property as of that date. With this value found and the sale price fixed, the loss sus- tained, if any, is the difference between these amounts. ‘The sub- ject matter of section 214 is the ascertainment of net income less certain authorized deductions. Many of these deductions are allow- able only because Congress authorized them, and what deductions should be allowed is plainly a matter of legislative discretion. The present case has to do with losses sustained, and the loss which Congress authorized to be deducted was a loss measured by the difference between the price stated at one time and another time. Manifestly the meaning of losses sustained as the words ap- pear in section 214 is not to be determined independently of other parts of the act. Even a technical word is not construed technically where otherwise defined in the statute itself. See Pirie v. Chicago Title Co., 182 U. S. 438, 448. Congress could have omitted the basis for determining loss, but it did not do that, and inserted sec- tion 202 instead. The losses sustained which are authorized to be deducted are losses ascertained as the act requires. It thus defines what are deductible losses. They are not required to be such as could arise if the property were sold for less than it cost. Con- gress could have required that such a loss be shown, but it did otherwise. It carefully distinguished between “ property acquired before March 1, 1913,’ and property acquired on or after 12 that date. As to the former, the price or value as of March 1, 1913, governs, and as to the latter, “ the cost thereof ” governs. The first of these distinctions is wiped out if the cost prior to March 1 be required, and the second clause is useless if the original cost of the property must in every case be used in ascertaining the deductible loss. A fact not to be lost sight of is that Congress has authorized de- ductions in computing the net income and that the statutory rule for ascertaining the loss sustained is a prescribed method of finding RR TEN ERT FH ET PEND SATE YEE EE ARI GTI RIE NS EE HS AN a TR UNITED STATES VS. HARRIET ROGERS FLANNERY ET AL. 9 these authorized deductions. This stetutory rule as applicable to property acquired before March 1 does not purport to show what is called in defendant’s brief an “actual * loss, by which is meant a loss based on the original cost and selling price; but as applied to property acquired on or after March 1, 1913, the statute does con- template an actual loss before it is properly deductible. Differently expressed, the statute adopts « more or less arbitrary basis for ascer- taining a “loss sustained” on property acquired before March 1, 1913, and sold after the passage of the act of 1918, and it was competent for Congress to adopt this basis and authorize the re- sultant deduction. Speaking for the court, Mr. Justice Harlan, in Bate Refrigerating Co. v. Sulzberger, 157 U. S. 1, 36, said: “In our judgmer * the language used is so plain and unambiguous that a refusal to recognize its natural, obvious meaning would be justly regarded as indicating a purpose to change the law by judicial ac- tion, based upon some supposed policy of Congress.” We think it the duty of this court to give effect to the language of the enactment. Upon the question under consideration we find no mate: 7 differ- ence between the revenue act of 1918 and the two prior enactments of 1916 and 1917, 39 Stat. 756; 39 Stat. 1000, and the view we have taken is in keeping with the regulations of the Treasury (Treas. Dec. 2831) in force until July 28, 1921. (See Treasury Decision 3206.) It is urged, however, that the cases of Goodrich v. Edwards, 955 U. S. 527, and Walsh v. Brewster, 255 U. S. 536, are decisive of the question. These cases deal with the question of “ gain” in the act of 1916. They do not discuss or decide whether a loss claimed and ascertained as in this case is a proper deduction in compiiting net income of the individual under the revenue act of 1918. That the right to tax income and the right to authorize deductions are gov- erned by different considerations is manifest. Our conclusion i: that the plaintiffs are entitled to recover. And it is so ordered. Hay, Judge; Downey, Judge, and Boorn, Judge, concur. 13 V. Judgment ‘At a Court of Claims held in the city of Washington on the nineteenth day of May, A. D. 1924, judgment was orde -d to be entered as follows: The court, upon due consideration of the premises, find in favor of the plaintiffs, and do order and adjudge that the plaintiffs, as aforesaid, are entitled to recover and shall have and recover of and from the United States the sum of seven thousand four hundred and forty dollars and sixty-seven cents ($7,440.67), with interest thereon at the rate of 6 per cent per annum from June 11, 1923. By the Court. VI. Petition for and order allowing appeal filed June 27, 1924 From the judgment rendered in the above-entitled cause on the 19th day of May, 1924, in favor of claimants, the defendants, by 10 their Attorney General, on the 27th day of June, 1924, make a cation for, and give notice of, an appeal to the Supreme Court the United States. UNITED STATES VS. HARRIET ROGERS FLANNERY ET Als Rosert H. Loverr, Assistant Attorney General. Ordered : That the above application for appeal be allowed as prayed for, June 30, 1924. By the Court. 14 In Court of Claims (Title omitted.) Clerk’s certificate I, F. C. Kleinschmidt, assistant clerk Court of Claims, certify that the foregoing are true transcripts of the pleadings in the above- entitled cause; of the argument and submission of case; of the find- ings of fact, conclusion of law and opinion of the court by Camp- bell, Ch. J.; of the judgment of the court; of the defendant’s appli- cation for an appeal and of the order of the cc irt allowing said application. In testimony whereof I have hereunto set my hand and affixed the seal of said court at Washington City this seventh day of July, A. D. 1924. [ SEAL. | F. C. Kiemscumipr, Assistant Clerk Court of Claims. (Indorsement on cover:) File No. 30,492. Court of Claims. Term No. 527. The United States, appellant, vs. Harriet Rogers Flannery and J. Rogers Flannery, executors of the estate of James J. Flannery, deceased. Filed July 9th, 1924. File No. 30,492. O --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386006_0232%3A1. Public record. Not legal advice.