RESPONDENT: Commissioner of Internal Revenue
DOCKET NO.: 371
DECIDED BY: Warren Court (1957)
LOWER COURT: United States Court of Appeals for the Ninth Circuit
CITATION: 352 US 1027 (1957)
ARGUED: Mar 07, 1957
DECIDED: Mar 11, 1957
Facts of the case
Media for Lasky v. Commissioner of Internal Revenue
Audio Transcription for Oral Argument - March 07, 1957 in Lasky v. Commissioner of Internal Revenue
Number 371, Bessie Lasky and Jesse L. Lasky, Petitioners versus Commissioner of Internal Revenue.
May it please the Court.
In this case, we have a quite a change of pace from the preceding case.
We have a simple one-issue case with the facts undisputed and there is no question of constitutionality involved.
Our question is this.
Does the Tax Court have the discretionary power inherent in trial courts to vacate its decisions out of time in order to accomplish justice or does the statute, which says that a Tax Court decision becomes final if appeal is not taken within three months deprive it of such power?
This is a case of first impression and this Court has never before passed upon the question.
The facts are very interesting and unusual.
Lasky owned a contractual right to participate in the profits from the motion picture, the story of “Sergeant York”.
In addition, he was employed by Warner Brothers to -- as a producer of motion pictures.
He got into a dispute with Warner Brothers as to the amounts that were due under his participation contract.
In order to avoid litigation, which would have jeopardized his employment, he sold his rights under the participation contract to United Artists for $805,000.
The gain on this sale was reported as a long-term capital gain in the separate returns filed by Lasky and his wife.
Upon audit, the petitioners -- upon audit, the petitioners' tax returns from 1943, the Commissioner determined that the -- each taxpayer owed deficiencies in tax in excess of $224,000.
Lasky employed an outstanding law firm in Los Angeles to contest the deficiency.
Appeal was taken to the Tax Court and the Court was -- and the case was tried in December of 1951.
However, the law firm, which Lasky employed, did not actually try the case but associated another law firm which did try the case.
The case obviously was a close and difficult one because the Tax Court judge took approximately two years and four months to promulgate the findings of fact and opinion.
Now, they were promulgated on April the 8th, 1954.
On the same date, the Tax Court entered its decisions based on the findings of fact and opinion and mailed copies to the first counsel of record.
The decisions in some way were filed in the correspondence file of the case and not in the legal or pleading file and did not come to the attention of counsel.
Now, it's important to know that under the practice of the Tax Court, they first issue findings of facts and opinions.
Thereafter, they enter a decision in accordance with the findings of fact and opinion, which fixes the tax liability in dollars and that this is a separate and distinct document.
An appeal was -- is taken from this decision in dollars and then the limitations runs from the date of the decision, and I say that it was the file -- that these decisions got into the file without counsel knowing about it.
Upon receipt of the findings of fact and the opinion by Lasky's counsel, the conference was held in the office of counsel.
Questions of appeal and other items were discussed.
Lasky was advised that he had three months from the date of the decisions within which to appeal and that the decisions had not been received.
The matter of course was a great concern to Lasky.
So, from time to time, he inquired counsel about the status of his case.