Massey Motors, Inc. v. United States

PETITIONER: Massey Motors, Inc.
RESPONDENT: United States
LOCATION: Fleetwood Paving Co.

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

CITATION: 364 US 92 (1960)
ARGUED: Mar 29, 1960 / Mar 30, 1960
DECIDED: Jun 27, 1960

Facts of the case


Media for Massey Motors, Inc. v. United States

Audio Transcription for Oral Argument - March 30, 1960 (Part 2) in Massey Motors, Inc. v. United States
Audio Transcription for Oral Argument - March 29, 1960 in Massey Motors, Inc. v. United States

Audio Transcription for Oral Argument - March 30, 1960 (Part 1) in Massey Motors, Inc. v. United States

Earl Warren:

Number 141, Massey Motors, Incorporated, Petitioner, versus United States.

Mr. Frazier, you may proceed.

William R. Frazier:

Thank you, Mr. Chief Justice Warren, may it please the Court.

I of course, have -- have the opportunity to hear the rather voluminous arguments of my predecessors in the two cases, namely Evans and Hertz.

And I'm very much interested in it naturally.

I will attempt not to be repetitious as much as I can.

Frankly, I think, the issues have been somewhat unduly clouded.

Firstly, I would like --

William J. Brennan, Jr.:

That's in understatement.[Laughter]

William R. Frazier:

First, Your Honors, I would like to make this comment.

Apparently for some reason there, my client, Massey Motors, has gotten too hot to handle, as far as these three cases can -- are concerned, but I would like to point out Your Honors that I -- my case was a first of these cases won by a taxpayer.

And my colleagues, Mr. Bernhard here, was very, very willing to cite my case both in the Hertz case, before the lower court and it was -- and it was commented on, with approval, by the Ninth Circuit in the (Inaudible) case.

I have other of these cases too, Your Honor, which they also cite in their brief.

Namely, of Lynch-Davidson cases which are now on appeal before us -- Fifth Circuit and Davidson versus Tomlinson.

To be in with Your Honors, it seems to me that this whole point involved here today, is as much a pure question of tax law as can be brought before a court.

You can't completely, as I understand it, divorce the facts from the lawsuit.

But in this situation, we come down to almost a pure question of law.

And I'll try to state it once again.

The question, as I understand it, is for the purposes of depreciation.


The term, “useful life” under the 1939 Code, met the physical or economic life to the asset as we, the taxpayer, contend or whether as the Government contends, it is the useful life as shown by the particular trade practices of a particular individual taxpayer.

Now, the question of salvage value, of course, is a reciprocal of the definition of useful life.

It follows like day from night or night from day.

Once you determine the proper legal definition of the term, useful life for purposes of depreciation under Section 23 (l) of the 1939 Code, the reciprocal factor, namely, salvage value, will follow.

And I mean by this, if the Court should agree with the Government that for this purpose, the term useful life means the useful life in the taxpayer's business is undisputed that in the Massey case, our actual use was one year.

That Your Honors is a trade practice in the automobile industry.

All that you know, from your own common knowledge, that automobile dealers keep their personnel in current model cars and if that the manufacturers change these models approximately once each 12 months, sometimes a little more frequently, sometimes less frequently, but approximately one year.

In this rental car business, it's clear that they do likewise.

They must, as a matter of competition, keep their units that they're offering for rental, new cars.

They gain operating advantages by way of expenses that way.