My views do not accord with those of the majority. In my opinion, rehearing should be granted. In a recent decision, rendered December 15, 1948, by the Tax Court of the United States, in a case entitled Jack Dempsey's Punch Bowl, Inc., Petitioner, v. Commissioner of Internal Revenue, Respondent,11 T.C. 1030, a deduction of $12,000 of the $36,724.72 paid by petitioner to former Heavyweight Boxing Champion, Jack Dempsey, for the use of his name and for personal appearances, was contested by the Commissioner of Internal Revenue as excessive. Hence, it was claimed to be not deductible for tax purposes. Apprehensive lest he might not prevail on the merits of his claim, the Commissioner pointed to the regulation relied upon in our opinion heretofore filed, Article H-1707(3) of 1942 edition of the Navy Department of Bureau of Personnel Manual, expressing the Department's "expectation" that while on active duty officers and men would devote their whole time to naval duties and not engage in private employment, "except in such cases as may be specifically authorized by the Bureau of Naval Personnel."
The Court treated the contention as one of little merit. It said:
"Respondent points out that Dempsey did not receive permission from the proper authorities in the Navy Department to appear in petitioner's restaurant after receiving his commission from the United States Coast Guard. From this fact he states `a serious question of public policy is presented as to whether the payments should be recognized for tax purposes even if otherwise allowable.' He cited no authority for this statement and we have been unable to find any valid reason to support respondent's suggestion. The facts show that Dempsey's appearances at petitioner's restaurant had the approval of his immediate superior officers; indeed, they accompanied him there on several occasions. Respondent, however, says this is not enough, that he should have had the approval of the chief of the Bureau of Naval Personnel. We believe the effect of respondent's argument is an attempt to have this tribunal enforce naval regulations, which function, of course, is not vested in this Court."
In the case at bar the appellant chose to treat the donning of his country's uniform by the appellee as automatically cancelling his contract, relieving it of all further responsibility or liability thereunder, without more ado. It is, indeed, a poor reward to its patriotic sons by the people of a grateful republic to let them know entry into its *Page 144 armed services in time of peril operates ipso facto to cancel all existing contracts calling for personal services on their part, regardless of their ability to perform them. Such will be the effect if, upon retrial of this case, it shall be held the appellee cannot recover if he failed to have authority from Bureau of Naval Personnel to perform services under his contract with appellant, which it purposely refrained from tendering him, upon the assumption that entering the Navy automaticaly cancelled the contract.
Apparently, the sole reason for returning the cause for retrial is to give appellee an opportunity to show authority from the Bureau to perform under his contract. Since the occasion for requesting such authority never arose, no work being tendered him by appellant, the judgment rendered in appellee's favor should be affirmed. Indeed, it would have been altogether inconsistent with appellant's position to tender work to appellee, its contention being that entry into the armed services, automatically and without more, cancelled the contract. It so advised him by letter. It should be made to stand or fall here on the correctness of that position. Our opinion on file at one point seems to recognize this as the decisive question. It states:
"Appellant finally contends that when appellee was placed on active duty in the naval service, there was such a changed condition as to destroy the basis of the contract. Consequently, the decisive question for our determination is whether the contractual obligations terminated, in law, upon appellee's entry upon active naval service."
The question said to be decisive should have been answered in the negative and the judgment affirmed on the strength of it. I take my share of the blame for failing to appreciate earlier that appellant's act in repudiating the contract, on the assumption the question we hold to be decisive should be resolved in its favor, calls on us to affirm the judgment against it, if to be resolved otherwise.
Where as here, and as our opinion filed admits, by far the greater part of his services (90 per cent.) were as a consultant and could be rendered away from the project, and "if appellee's presence were required in Capitan, having access to transportation by plane to and from Capitan, his services were immediately available, not merely twice monthly but from time to time as needed," it certainly is a deserved tribute to the patriotic service on which one of the contracting parties was engaged, and becomes a matter of legitimate inquiry, to ascertain whether notwithstanding his presence in the armed services, he still is able to perform his contract. *Page 145
I am quite unable to bring myself into agreement with any reasoning that would deny one on active military duty for his country in time of war a concession so lacking in burden on the other party. It is interesting to note that in the issue of the Federal Register appearing on November 14, 1947, a revision of Title 34 was published in which regulation quoted in our opinion was recodified as § 14.1707(c) of Part 14, and the text was changed to read as follows:
"When so placed on active duty, officers and enlisted personnel shall not engage in private employment or enterprise which will interfere in any way with their naval duties."
It seems not unlikely, especially in view of the use of the word "expected" in the subject regulation as originally framed, that the amended regulation was adopted merely to conform to the practice prevailing under the same as it stood. Whether so or not, I cannot bring myself to agree that entry into the country's armed services ipso facto cancels one's contract to render personal services, regardless of one's ability to do so. Such was the position taken by appellant below and its stated reason for not tendering appellee work under the contract in the face of the latter's assurance of willingness and ability to perform. In my opinion, the case is one which fully warrants a rehearing. The majority holding otherwise, I dissent.