Cantine v. Commissioner (A)

Murdoch,

dissenting: I can not agree with the decision in this case, which holds that the contract, as distinguished from the patents, had a value on March 1, 1913, of not less than $201,101.30. In my opinion there is no satisfactory evidence as to the petitioner’s prospects on March 1, 1913, in regard to the amount which he would ultimately receive and the time when he would receive it. Placing myself back at March 1, 1913, and considering all of the evidence which was presented to me, I am at a loss to say what was the value of the petitioner’s contract on that date. It does not appear that the petitioner could have called for a settlement under his contract on that date nor does it appear on what date thereafter he at that time could have expected a settlement. The amount which he could have expected is equally uncertain, but even if I were to make some guess as to the amount which he would ultimately receive, I have no basis on which to discount that amount to arrive at its value on March 1,1913.

Although it is not essential to the decision of this case to find that the patents had a value on March 1, 1913, of $600,000, nevertheless, I want to point out that I do not agree that the evidence shows this amount to have been the fair market value of the patents on that date. The petitioner stated, that in his opinion, the value of the patents was between $900,000 and $1,000,000 at March 1, 1913, but the evidence failed to disclose that he had any basis for this statement. Another witness placed the value of the patents at $772,000, but his testimony discloses that his opinion was entitled to no weight whatever. Another witness explained why, in his opinion, the patents were worth $600,000, and his testimony is far more convincing than that of any other of the witnesses in this regard. However, in valuing the patents, he attributed to the patents, earnings which, in my opinion, were attributable in part at least to other factors, such as efficient management, good will, valuable trade-marks or trade brands, valuable processes and formulae, and valuable contracts used by the company.