Commissioner v. Duberstein

PETITIONER: Commissioner
RESPONDENT: Duberstein.
LOCATION: Dry Docks at Reed, WV

DECIDED BY: Warren Court (1958-1962)
LOWER COURT: United States Court of Appeals for the Sixth Circuit

CITATION: 363 US 278 (1960)
ARGUED: Mar 23, 1960
DECIDED: Jun 13, 1960

Facts of the case


Media for Commissioner v. Duberstein

Audio Transcription for Oral Argument - March 23, 1960 in Commissioner v. Duberstein

Earl Warren:

Number 376, Commissioner of Internal Revenue, versus, Mose Duberstein, et al.

Mr. Elman.

Philip Elman:

Mr. Chief Justice, may it please the Court.

This case, which is here from the Sixth Circuit and the next case, the Stanton case, which is here from the Second Circuit, also presents the question of distinguishing between gifts and income for federal tax purposes.

As Mr. Rauh pointed out unlike the Kaiser case, these two cases present the issue in the more familiar general context of payments in commercial and employment relationships and they do not involve the special differentiating factors as to strike benefit payments upon which Mr. Rauh has relied.

The facts of the Duberstein case are extremely simple.

They are not in dispute and indeed, they are based entirely upon the testimony of the taxpayer himself and his account.

Mr. Duberstein is the president of an Iron and Metal Company in Dayton, Ohio.

That company did business with another corporation in New York City, the Mohawk Metal Company of which the president was Mr. Berman.

And the transactions between these two companies were usually conducted over the telephone, conversations between these two men.

And occasionally, Mr. Berman would inquire of Mr. Duberstein if he knew the names of certain customers who used chemical products which were sold by the Mohawk Company but not by Duberstein's company and if Mr. Duberstein had such information, he would furnish it to Mr. Berman.

He testified and we accept his testimony entirely that he gave this information pituitously without any hope or expectation of payment or reward.

Nonetheless, in 1951, as Mr. Rauh has told you, he received from the Mohawk Company, a Cadillac for which the company paid $4250 and the ultimate question in the case is whether that's a gift or income to Mr. Duberstein.

Now, the circumstances in which that Cadillac was given were described by Mr. Duberstein.

And again, I wish to make it clear that we accept this testimony and all the implications of it entirely.

Mr. Berman called Mr. Duberstein on the telephone from New York and he, Mr. Berman, told that due to the fact that the information I had given him was so helpful that he felt he wanted to give me a present and I told him he didn't owe me anything and he said, “Well, he had a Cadillac car as a gift.”

Now I should send to New York to receive it which I finally did.

I told him he owed me nothing and I didn't expect anything for the information.

I didn't intend to be compensated, but he insisted that I accept this Cadillac car.

On cross-examination, he was asked whether he thought he would have gotten this car, had he not given the information to Mr. Berman.

His answer was, “I don't think so.”

Mr. Duberstein --

Earl Warren:

What is the question again, please?

Philip Elman:

The question was, “Mr. Duberstein, this information, I believe, you testified proved valuable to Mohawk.

Had you not given him this information, would you still have gotten this Cadillac car” and the taxpayer answered, “I don't think so.”

Earl Warren:

Mr. Elman, may I ask you this question that may not bear in your case particularly, but suppose he had expected something without an agreement, but suppose he thought “Well, I get them these customers, I will get something,” would that affect your case any?

Philip Elman:

I don't think it would be necessary to support our position here.

We would merely confirm what we think to be perfectly clear from the taxpayer's own testimony that this car was given in payment of services rendered, whether or not the recipient received it, we think it's wholly immaterial.

Earl Warren:


May I ask a question, (Inaudible)