*3292 1. A valuation of stock as of March 1, 1913, made by the Commissioner's predecessor in office at the request of a taxpayer before any sale had been consummated, does not preclude the Commissioner from placing a different valuation on the stock as of that date in determining tax liability resulting from the sale thereof. James Couzens,11 B.T.A. 1040">11 B.T.A. 1040; Rosetta V. Hauss,12 B.T.A. 755">12 B.T.A. 755.
2. Upon the authority of the cases cited above, held that shares of stock of the Ford Motor Co. sold by the taxpayer had a fair market value on March 1, 1913, of $10,000 per share.
3. A waiver of the time prescribed by law for the assessment of Federal income and profits taxes executed by an administrator pursuant to the provisions of the Federal revenue laws, is not rendered invalid by provisions of state law or the decision of state courts prohibiting executors or administrators from waiving the running of the statute of limitations as to claims against the estate.
4. Where the Commissioner, after the enactment of the Revenue Act of 1924, determines a deficiency in taxes imposed by prior revenue acts, section 280 of the Act of 1924 requires that the*3293 taxes be assessed and collected in the same manner as taxes imposed by the Act of 1924, and the mailing of a notice of a deficiency pursuant to section 274(a) of that Act, prior to the expiration of the statute of limitations against assessment, operates under section 277(b) to extend the period within which assessment and collection might be made.
5. In determining whether a contribution by a taxpayer was made within the taxable year the facts, rather than the manner in which the transaction was treated on the taxpayer's books, are controlling.
6. The act of drawing a check to the order of a charitable organization is nothing more than an attempt to make a gift, and the gift is not completed until the check is paid, accepted, or certified by the bank.
7. A check does not operate as an assignment of any part of the fund against which it is drawn, and is subject to revocation, either by the act of the drawer, or by operation of law in the event of the death of the drawer, prior to acceptance or certification by the bank; and, where checks were drawn to the order of charitable organizations during the taxable year, and some were presented in the following year before the*3294 death of the drawer, and some were presented in that year after the death of the drawer, held that the contributions were not completed and therefore were not deductible in the taxable year.
8. The value of real estate conveyed to a charitable organization held deductible as a contribution made in the taxable year where the deed was executed and delivered during that year to a third person with instructions to record and deliver it to the grantee, and the Commissioner, who raised the issue whether the gift was completed within the taxable year, failed to prove that delivery of the deed to the third person was insufficient to pass title to the grantee.
9. A stockholder gave an option to purchase his stock and thereafter consented to a sale of the option in consideration of an agreement by the holder thereof to divide the purchase price between himself and certain third parties. The option was thereupon sold and the purchase price was divided pursuant to the agreement. Held that the stockholder realized no income from the sale of the option.
*203 BEFORE STERNHAGEN, MARQUETTE, AND VAN FOSSAN.
This proceeding, which is one of nine proceedings consolidated for hearing, is for the redetermination of a deficiency in income tax asserted by the respondent for the year 1919 in the amount of $5,004,398.20, as set forth in a deficiency letter dated April 7, 1925. The deficiency arises from the action of the respondent in determining that certain shares of the capital stock of the Ford Motor Co. of Michigan, which were sold by John F. Dodge in 1919, had a fair market value of $2,634 per share on March 1, 1913, instead of $9,489.34 per share as reported in the income-tax return filed on behalf of John F. Dodge for the year 1919, and in computing the profits from said sale on the basis of a March 1, 1913, value*3296 of $2,634 per share. In his amended answer the respondent alleges that the said shares of the capital stock of the Ford Motor Co. had a fair market value on March 1, 1913, of not more than $3,547.84 per share; that in the income-tax return for the year 1919 filed on behalf of John F. Dodge there were wrongfully claimed and taken deductions from gross income on account of contributions or gifts alleged to have been made in that year in the amount of $135,000 to the Salvation Army, $25,000 to the Detroit Patriotic Fund, $250,000 to the First Presbyterian Church of Detroit, and $62,597.96 to the Detroit Woman's Federation Club; that there was wrongfully and illegally omitted from said return income for the year 1919 in the amount of $225,000 received by John F. Dodge in that year as part of the price for which he sold his shares of the capital stock of the Ford Motor Co.; that the income of John F. Dodge for the year 1919 should be adjusted by computing the profit from the sale of said shares of the capital stock of the Ford Motor Co. on the basis of a fair market value of $3,547.84 per share on March 1, 1913, by disallowing said deductions taken in the return filed on behalf of John*3297 F. Dodge for the year 1919 on account of said contributions of gifts to the Salvation Army and other institutions mentioned, and by adding to income said additional amount of $225,000 received as part of the consideration for the sale of said shares of stock of the Ford Motor Co., and that the deficiency in tax for the year 1919 is $4,846,541.51.
*204 FINDINGS OF FACT.
1. John F. Dodge died testate on January 14, 1920, a resident of Wayne County, Michigan, and on January 3, 1922, Matilda R. Dodge, widow of John F. Dodge, and Howard B. Bloomer, were duly appointed and qualified as administrators with the will annexed of the decedent, and on January 8, 1924, the said Matilda R. Dodge and the Detroit Trust Co. were duly appointed and qualified as trustees under said will. This action is brought by the administrators with the will annexed and said trustees on behalf of said decedent.
2. On March 1, 1913, and prior thereto, and until June 17, 1919, John F. Dodge was the owner of 1,000 shares of the capital stock of the Ford Motor Co., a Michigan corporation, out of a total of 20,000 shares of such stock outstanding. This stock was acquired by John F. Dodge prior to March 1, 1913, at*3298 a cost which was less than its fair market value on that date.
3. Shortly before April 15, 1919, Henry Ford and Edsel Ford, who were then the owners of approximately 58 1/2 per cent of the capital stock of the Ford Motor Co., desired to purchase the remaining 41 1/2 per cent of the stock owned by the minority stockholders, including that owned by John F. Dodge. Without the knowledge of John F. Dodge they engaged the services of the Old Colony Trust Co. of Boston and its representatives to purchase the stock for them as undisclosed principals. Pursuant to such arrangement and immediately prior to April 15, 1919, Stuart W. Webb, then an officer of and acting for the Trust Company and the undisclosed principals, accompanied by other representatives of the company, went to Detroit, Mich., to negotiate for the purchase of the stock of all minority stockholders of the Ford Motor Co., including the 1,000 shares thereof then owned by John F. Dodge.
4. There are hereby incorporated herein and made a part hereof, paragraphs numbered 4 to 28, inclusive, of the findings of fact in the case of *3299 .
5. The contents of the letter of May 19, 1919, from Commissioner Roper to Arthur A. Ballantine, which letter is set forth in full in paragraph 26 of the findings of fact in the case of , were communicated to John F. Dodge and he instructed his attorney, Howard B. Bloomer, to negotiate the sale of the stock of the Ford Motor Co. owned by him, John F. Dodge, on the basis of the understanding as to March 1, 1913, value of said stock as set forth in said letter from Commissioner Roper to Ballantine.
6. On June 17, 1919, John F. Dodge entered into a certain written agreement for the sale of his 1,000 shares of the capital stock of the Ford Motor Co. to Stuart W. Webb at a price of $12,500 per share, *205 and under that agreement said stock was delivered to the purchaser and said purchase price paid.
7. John F. Dodge died on January 14, 1920, and on April 15, 1920, although the last will and testamend of John F. Dodge had not been admitted to probate and record and no one had been officially appointed to make a return for him, a return was filed with the collector at Detroit, Mich., for*3300 and on behalf of John F. Dodge for the calendar year 1919, which return was signed by Howard B. Bloomer. Bloomer had previously been granted an extension of 30 days by the collector for the filing of the return. Said return disclosed a total net income of $2,624,254.80 subject to normal tax, and a total net income of $2,937,930.31 subject to surtax, and tax due thereon in the amount of $2,052,977.58, of which there was paid at the date of the filing of the return the amount of $513,244.40. There was included in the gross income shown on the return the amount of $3,010,660 as the profit derived by John F. Dodge on the sale of his shares of the capital stock of the Ford Motor Co., this amount being the difference between the selling price of $12,500,000 and the March 1, 1913, value of the stock, $9,489,340, computed on the basis of $9,489.34 per share in accordance with the letter of Commissioner Roper to Ballantine, and in computing net income there were deducted the following amounts as contributions or gifts made during the year 1919 to corporations organized and operated exclusively for religious, charitable, scientific or educational purposes:
| Salvation Army | $137,400.00 |
| Detroit Patriotic Fund | 45,833.50 |
| First Presbyterian Church | 250,500.00 |
| Detroit Woman's Federation Club | 62,597.96 |
*3301 On June 8, 1920, the tax disclosed by said return was assessed by the then Commissioner of Internal Revenue, William M. Williams.
8. Commissioner Williams went out of office April 11, 1921. Millard F. West became Acting Commissioner of Internal Revenue on that date. West's term as Acting Commissioner ended May 26, 1921, and he was succeeded by Commissioner David H. Blair, who has continued in office since.
9. There are hereby incorporated and made a part hereof, paragraphs 141 to 332, inclusive, of the findings of fact in the case of
10. The fair market price or value on March 1, 1913, of the 1,000 shares of the capital stock of the Ford Motor Co. which were owned by John F. Dodge on that date and sold by him on June 17, 1919, was $10,000,000.
11. Early in the year 1919 the Detroit Patriotic Fund, an organization undertaking to supply charitable needs in Detroit, assumed the obligation of raising for the Salvation Army the amount of *206 $135,000. About Christmas in the year 1919, Colonel Albert E. Kimball of the Salvation Army talked with John F. Dodge and from the conversation understood that Dodge was going to take*3302 care of the Salvation Army budget of $135,000. On December 31, 1919, Dodge told Howard B. Bloomer, his personal attorney, that he was that day drawing checks aggregating $135,000 to the order of the Salvation Army and that somebody was coming after the checks on that day. On that date Jonn F. Dodge drew two checks, one for $40,000 and the other for $95,000 against a joint account maintained by him and Horace E. Dodge in the Old Detroit National Bank, both payable to the Salvation Army Peace Time Fund. John F. Dodge died on January 14, 1920. The checks were later found in Dodge's desk and there is no evidence of who put them there. Dodge probably never returned to his office after December 31, 1919. On February 7, 1920, the two checks were presented to the First and Old Detroit National Bank, the then name of the drawee bank, for certification and were on that date certified by said bank, and on February 12, 1920, they were delivered to the payee thereof by Howard B. Bloomer and were cashed by the payee on February 13, 1920. The total amount of said checks was taken as a deduction from gross income in the individual income-tax return filed for John F. Dodge for the year 1919*3303 and constituted a portion of the item of $137,400 mentioned in paragraph 7 hereof.
12. On December 31, 1919, John F. Dodge drew a check against a joint account maintained by him and Horace E. Dodge in the Old Detroit National Bank for $25,000, payable to the "Detroit Patriotic Fund, subscription in full, Patriotic Charity Fund Campaign." The check was mailed to the payee on December 31, 1919, and was received by the payee on January 2, 1920. On January 6, 1920, said check was deposited by the payee in the Bank of Detroit, and on January 7, 1920, it was presented to and paid by the First and Old Detroit National Bank, the then name of the drawee bank. The amount of this check was claimed as a deduction from gross income in the individual income-tax return filed for John F. Dodge for the calendar year 1919 and is included in the item of $45,833.50 mentioned in paragraph 7 hereof.
13. On December 31, 1919, John F. Dodge called to his office by telephone, Dr. Joseph A. Vance, pastor of the First Presbyterian Church of Detroit, Dr. Jaquess, then in Presbyterian extension work, and several of the trustees of the Presbyterian Church. At a meeting that forenoon in Dodge's office, *3304 at which Vance, Jaquess, said trustees, and Howard B. Bloomer, attorney for Dodge, were present. Dodge stated that he was giving $100,000 to the trustees of the Presbyterian Church for the erection of a community building in Hamtramck*207 and also $150,000 to the Endowment Fund of the First Presbyterian Church. He stated that he wished to make and complete the gift on that date in order that it might be counted as a 1919 gift; that he had other business to transact with his attorney, Bloomer, and that he would sign checks for the amount of $250,000 and deliver them to Bloomer on that date, the delivery to Bloomer to be delivery of the checks to the Presbyterian Church. On that date Dodge drew two checks against a joint account maintained by him and Horace E. Dodge in the Old Detroit National Bank of Detroit, Mich., one thereof being for the amount of $150,000, payable to "The Trustees of the First Presbyterian Church Endowment Fund" and the other for $100,000, payable to the "Trustees of the First Presbyterian Church for Hamtramck Branch of the First Presbyterian Church Mission." These checks were given to Bloomer on the afternoon of December 31. No condition was imposed*3305 upon the delivery of the checks and Bloomer telephoned Dr. Jaquess that night and told him that he, Bloomer, had the checks for the church. Bloomer at all times considered that he held these checks as the representative or agent of the Presbyterian Church. On January 13, 1920, said checks were presented to the First and Old Detroit National Bank, the then name of the drawee bank, for certification and were on that date certified by said bank and deposited in the Detroit Trust Co., Detroit, Mich., and two certificates of deposit were thereupon issued by said Detroit Trust Co., one to the order to "The Trustees of the First Presbyterian Church Endowment Fund, First Protestant Society of Detroit" in the amount of $150,000, and the other to the order of the "Trustees of First Presbyterian Church for Hamtramck Branch of First Presbyterian Church Mission, First Potestant Society" in the amount of $100,000. The amount of said checks was taken as a deduction from gross income in the individual income-tax return filed for John F. Dodge for the calendar year 1919 and constituted a portion of the item of $250,500 mentioned in paragraph 7 hereof.
14. Prior to December 31, 1919, John F. *3306 Dodge owned the real estate which the Detroit Woman's Federation Club occupied, having purchased it and made an addition to the building specifically for the use of the club. Prior to December 31, 1919, Dodge had stated that he was going to deed the property to the club. On December 31, 1919, Dodge handed Bloomer, his attorney, the deed to the property and told Bloomer to put the deed on record and then give it to the club. Bloomer put the deed in his safe and being very busy did not think of it again until after John F. Dodge's death, which occurred on January 14, 1920. On February 2, 1920, Bloomer caused the deed to be recorded in the office of the Registrar of Deeds for Wayne County, Michigan, and on March 6, 1920, he delivered *208 the deed to the Detroit Woman's Federation Club. In the individual income-tax return filed for John F. Dodge for the calendar year 1919 there was deducted from gross income as the value of the property described in said deed the amount of $62,597.96. This is the item of $62,597.96 mentioned in paragraph 7 hereof. The value of the property conveyed by said deed was $47,597.96.
15. The books of account of John F. Dodge were kept and his*3307 income-tax return was made on the cash receipts and disbursements basis. The checks mentioned in paragraphs 11, 12, and 13 hereof were posted to the check register of John F. Dodge as disbursements of December 31, 1919. They were posted from the check register to the ledger account of John F. Dodge as disbursements of December 31, 1919, shortly thereafter in the regular course of business. The books of John F. Dodge were closed immediately after the end of the calendar year, which was also his fiscal year, and the said checks were treated as 1919 disbursements. The same practice was involved in closing the books of John F. Dodge for the years 1917 and 1918, the checks issued prior to the end of the closing period being treated as disbursements for the year in which they were issued.
16. On April 3, 1919, John F. Dodge and Horace E. Dodge, each then being the owner of 1,000 shares of the stock of the Ford Motor Co., gave options upon their shares of stock to one Emanuel T. Berger. These options gave Berger or his assigns the right at any time within one month to purchase said stock at $12,500 per share, plus any and all dividends ordered paid by the Supreme Court of Michigan, *3308 and any amount which might be levied or assessed by the United States or the State of Michigan for income taxes, excess-profits taxes, surtaxes, or any other tax. These options were later extended until noon, July 1, 1919. About the 8th or 9th of June, 1919, John F. Dodge discussed with Bloomer, his attorney, the prospective sale by the two Dodges of their Ford stock to Stuart W. Webb. Dodge said that Webb had offered Berger $675,000 for the surrender of his options but that he, Dodge, would not consider the Webb offer until after the expiration of the Berger options, unless Berger would surrender his options, and that if he would surrender them the Dodges would give a new option to Bloomer and McMeans, secretary to the two Dodges, which would be worth $675,000 and which should be divided among Berger, Bloomer, and McMeans. Dodge instructed Bloomer to see Berger and put this proposition to him, which Bloomer did the next day. After some preliminary negotiations, an agreement in writing was made by and between Berger and Webb, by which Webb agreed to pay Berger $675,000 in consideration of the surrender by Berger of his options. This agreement was dated June 17, 1919, and simultaneously*3309 with the execution thereof Berger executed an assignment of his rights *209 under said agreement to the Old Detroit National Bank and signed a letter to that bank directing it to pay the $675,000 collected under the agreement in equal parts to himself, McMeans and Bloomer. On July 16, 1919, the Old Detroit National Bank received from Webb $675,000 "On account of the Berger option agreement dated June 17, 1919," and paid it over in equal parts to Berger, McMeans, and Bloomer by cashier's checks dated July 17, 1919.
17. On January 10, 1921, Deputy Commissioner G. W. Newton addressed a letter to Howard B. Bloomer, agent for John F. Dodge, with respect to certain adjustments made by the Bureau of Internal Revenue covering the income-tax return filed for John F. Dodge for the year 1919, wherein additional tax in the amount of $533,634.39 was alleged to be due, said additional tax being based upon adjustments covering only, (1) a dividend of $963,769.25 received by John F. Dodge in the year 1919 from the Ford Motor Co., which dividend John F. Dodge had reported in his amended income-tax return for the year 1916 as income taxable in that year, and (2) disallowance of a deduction*3310 for a contribution of $100 made by John F. Dodge to the Roosevelt Memorial Fund. Said additional tax was assessed April 12, 1921, on the March, 1921, List, and a claim for abatement thereof was filed on April 26, 1921. Said claim for abatement of said additional tax was denied by the Income Tax Unit on May 28, 1921. Howard B. Bloomer, as special administrator of the estate of John F. Dodge, addressed a letter to the Commissioner appealing on behalf of the estate of John F. Dodge to the Committee on Appeals and Review from the decision and refusal of the Income Tax Unit to abate said additional tax of $533,634.39, and requested a hearing in the matter. A hearing was thereafter had before the Committee on Appeals and Review upon said appeal and on April 24, 1922, a letter was addressed to Messrs. McGregor and Bloomer at Detroit, Mich., by F. G. Smith, Secretary of the Committee on Appeals and Review, advising them that the Committee on Appeals and Review had recommended that the action of the Income Tax Unit be sustained and that the appeal be denied. On June 12, 1922, E. H. Batson, Deputy Commissioner, through B. S. Kimball, Head of Division, addressed a letter to the said Howard*3311 B. Bloomer, administrator of the estate of John F. Dodge, stating that the action of the Income Tax Unit with respect to the claim for abatement of said additional tax had been sustained by the Committee on Appeals and Review and that said claim had been rejected. Thereafter, the said Howard B. Bloomer, Administrator, received a notice and demand for payment of said additional tax and interest thereon from the collector at Detroit and on June 22, 1922, the estate of John F. *210 Dodge, deceased, paid under protest to the collector at Detroit the said additional tax in the amount of $533,634.39.
18. On July 10, 1922, E. H. Batson, Deputy Commissioner, by J. M. Quinton, Assistant Head of Division, addressed a letter to Howard B. Bloomer, administrator of the estate of John F. Dodge. Said letter referred to the fact that the Bureau of Internal Revenue had made an audit of the 1918, 1919, and 1920 income-tax returns filed by or for John F. Dodge and the return filed by the estate of John F. Dodge for the period January 15 to December 31, 1920, and stated that said audit disclosed that additional tax liability existed for the year 1918 in the amount of $2,707.89. Said letter*3312 also contained the statement that "the returns of John F. Dodge for 1919 and the period January 1, 1920, to January 14, 1920, and for the estate of John F. Dodge for the period January 15, 1920, to December 31, 1920, had been accepted as correct." On July 21, 1922, E. A. Barnes, attorney for the estate of John F. Dodge, deceased, addressed a letter to the Commissioner referring therein to the fact that Bloomer, as administrator of the estate of John F. Dodge, had turned over to Barnes as attorney for said estate, the letter from Deputy Commissioner Batson of July 10, 1922, and stating that he, Barnes, after a study of the statute and regulations admitted the correctness of Batson's letter of July 10, 1922, and asked for a delay of a few days for the purpose of permitting the matter to be audited by an accountant that he, Barnes, had employed. Thereafter, on July 27, 1922, Barnes addressed a second letter to the Commissioner in response to the Batson letter of July 10, wherein he informed the Commissioner that after an audit check by the accountant the additional tax liability disclosed in the Batson letter of July 10, 1922, had been found to be correct. Barnes appended to said letter*3313 of July 27, 1922, an agreement consenting to the assessment of the additional tax disclosed by the Batson letter of July 10, 1922.
19. During the period November 6 to November 25, 1922, L. H. Rushbrook and F. L. Van Haaften, field agents in the Bureau of Internal Revenue, made an examination of the books and records of John F. Dodge, deceased, for the years 1917 to 1919, inclusive, and for the period ended January 14, 1920, and made a report of their examination under date of December 8, 1922. A copy of said report was mailed to Howard B. Bloomer, administrator of the estate of John F. Dodge, deceased, on December 11, 1922. On April 2, 1923, a supplemental report on the individual income-tax return of John F. Dodge, deceased, for the year 1919 was transmitted to the Commissioner of Internal Revenue.
20. On May 28, 1923, a claim for refund of said additional tax of $533,634.39 paid under protest on June 22, 1922, by the estate of John *211 F. Dodge, was sworn to and filed with the collector at Detroit by Howard B. Bloomer, administrator of said estate, and an oral hearing thereon requested. On September 18, 1923, a letter was sent by Commissioner David H. Blair to*3314 said Howard B. Bloomer in relation to the assessment of additional income taxes for the year 1919 against the estate of John F. Dodge and denying the request made by Bloomer that the matter be referred to the Attorney General for his opinion.
21. On January 3, 1924, a "thirty-day" letter was addressed by J. G. Bright, Deputy Commissioner, to Howard B. Bloomer, executor of the estate of John F. Dodge, referring to a reexamination of the individual income-tax returns filed by or for John F. Dodge for the calendar years 1917, 1918, and 1919, and for the period January 1 to January 14, 1920, inclusive, and proposing additional tax for the year 1919 in the amount of $212,869.06. On April 12, 1924, a protest against said additional tax was filed for the estate of John F. Dodge by Howard B. Bloomer, and on October 13, 1924, a letter was addressed by J. G. Bright, Deputy Commissioner, to Howard B. Bloomer, stating that said protest had been referred to the Solicitor of Internal Revenue for his opinion thereon. An oral hearing on said protest was had in the Solicitor's office and under date of April 14, 1925, the Solicitor rendered his opinion thereon, recommending to the Commissioner*3315 that the protest be sustained in part and denied in part.
22. No part of said additional taxes in the amounts of $533,634.39 and $212,869.06, respectively, assessed or proposed to be assessed against the estate of John F. Dodge for the year 1919, is due to any change made or proposed to be made in the valuation of $9,489.34 per share made by Commissioner Roper and used in the original return filed for John F. Dodge for the year 1919 as the basis for computing the profit realized by John F. Dodge in that year from the sale of his shares of the capital stock of the Ford Motor Co.
23. Prior to January 1, 1925, the administrators with the will annexed of the estate of John F. Dodge, deceased, paid to the United States Government estate taxes in the amount of $7,916,795.92, with interest thereon in the amount of $958.04, and thereafter, on December 22, 1925, said administrators with the will annexed, and the qualified trustees named in the will of said John F. Dodge, deceased, filed in the office of the collector at Detroit their claim for refund of such portion of said estate tax as would be refundable to them should the estate of John F. Dodge be found liable for any additional*3316 income taxes for the calendar year 1919.
24. Prior to January 1, 1925, the estate of John F. Dodge, deceased, paid to the State of Michigan, inheritance tax in the amount *212 of $936,652.91, and interest thereon in the amount of $143,151.53. On May 14, 1925, said estate paid to the State of Minnesota, inheritance tax in the amount of $4,762.87.
25. On January 31, 1925, the Commissioner and Howard B. Bloomer, as administrator with the will annexed of the estate of John F. Dodge, deceased, entered into a written agreement, which is in the words and figures following, to wit:
JANUARY 31, 1925.
INCOME AND PROFITS TAX WAIVER.
(For taxable years ended prior to March 1, 1921.)
In pursuance of the provisions of existing Internal Revenue Laws, Estate of John F. Dodge, a taxpayer of Detroit, Michigan, and the Commissioner of Internal Revenue, hereby waive the time prescribed by law for making any assessment of the amount of income, excess-priofits, or war-profits taxes due under any return made by or on behalf of said taxpayer for the year 1919 under existing revenue acts, or under prior revenue acts. This waiver of the time for making any assessment as aforesaid*3317 shall remain in effect until December 31, 1925, and shall then expire except that if a notice of a deficiency in tax is sent to said taxpayer by registered mail before said date and (1) no appeal is filed therefrom with the United States Board of Tax Appeals, then said date shall be extended sixty days, or (2) if an appeal is filed with said Board then said date shall be extended by the number of days between the date of mailing of said notice of deficiency and the date of final decision by said Board.
ESTATE OF JOHN F. DODGE, Taxpayer,
By HOWARD B. BLOOMER,
Administrator with the Will Annexed.
D. H. BLAIR, Commissioner.
If this waiver is executed on behalf of a corporation, it must be signed by such officer or officers of the corporation as are empowered under the laws of the State in which the corporation is located to sign for the corporation, in addition to which, the seal, if any, of the corporation must be affixed.
26. On March 12, 1925, J. G. Bright, Deputy Commissioner, mailed to the said Howard B. Bloomer, a letter which is as follows:
TREASURY DEPARTMENT,
Washington, March 12, 1925.
Mr. HOWARD B. BLOOMER,
Administrator, Estate of John*3318 F. Dodge,
840 Penobscot Building, Detroit, Michigan.
SIR: An adjustment of the income tax return filed by John F. Dodge for the year 1919 discloses a deficiency in tax amounting to $5,004,398.20, as shown in the following statement:
Block D as reported, 1,000 shares Ford Motor Company Stock:
| Sale price | $12,500,000 |
| March 1, 1913, value | 9,489,340 |
| Profit | 3,010,660 |
| March 1, 1913, value reported | $9,489,340.00 |
| March 1, 1913, value corrected | 2,634,000.00 |
| Profit understated | 6,855,340.00 |
| Normal and surtax at 73% | |
| Additional tax | 5,004,398.20 |
*213 If you protest against the determination of the deficiency the Bureau desires to proceed in the regular manner to the consideration of any information submitted by you. However, the period within which the Commissioner may assess additional taxes for the year 1919 will expire in the near future, and in order to avoid the necessity of making an immediate assessment prior to such consideration, it is requested that you sign and return the enclosed form of waiver to this office within fifteen days of the date of this letter.
In the event the waiver is not received within the time stated above for its*3319 filing, it will be necessary to make assessment under the provisions of section 274(d) of the Revenue Act of 1924.
J. G. BRIGHT,Deputy Commissioner.
27. On April 7, 1925, the Commissioner, by J. G. Bright, Deputy Commissioner, mailed to Howard B. Bloomer, administrator of the estate of John F. Dodge, a "sixty-day" letter, the deficiency letter herein, which is as follows:
TREASURY DEPARTMENT,
Washington, April 7, 1925.
Mr. HOWARD B. BLOOMER,
Administrator, Estate of John F. Dodge,840 Penobscot Building, Detroit, Michigan.
SIR: An examination of the income tax return filed by John F. Dodge for the year 1919 discloses additional tax in the amount of $5,004,398.20, which was indicated to you in a letter dated March 12, 1925.
In accordance with the provisions of Section 274 of the Revenue Act of 1924, you are allowed 60 days from the date of this letter within which to file an appeal to the United States Board of Tax Appeals contesting in whole or in part the correctness of this determination.
Where a taxpayer has been given an opportunity to appeal to the United States Board of Tax Appeals and has not done so within the 60 days prescribed and*3320 an assessment has been made, or where a taxpayer has appealed and an assessment in accordance with the final decision on such appeal has been made, no claim in abatement in respect of any part of the deficiency will be entertained.
If you acquiesce in this determination and do not desire to file an appeal, you are requested to sign the enclosed agreement consenting to the assessment of the deficiency and forward it to the Commissioner of Internal Revenue, Washington, D.C., for the attention of IT:PA-5:IIP. In the event that you acquiesce in a part of the determination, this agreement should be executed with respect to the items agreed to.
Respectfully,
D. H. BLAIR, Commissioner.
By J. G. BRIGHT,
Deputy Commissioner.
Enclosures: Statements.
*214 28. The estate of John F. Dodge appealed to this Board from the determination of the Commissioner as set forth in the deficiency letter of April 7, 1925, and the petitioner was filed on June 4, 1925. The respondent filed an answer to the petition and on December 27, 1926, upon leave duly granted, filed an amended answer thereto. In his amended answer the respondent alleged that the shares of the capital stock*3321 of the Ford Motor Co. had a fair market value on March 1, 1913, of not more than $3,547.84 per share; that in the income-tax return filed on behalf of John F. Dodge for the year 1919 there were wrongfully claimed and taken as deductions from gross income the amount of $135,000 contributed by John F. Dodge to the Salvation Army as set forth in paragraph 11 hereof; $25,000 contributed by John F. Dodge to the Detroit Patriotic Fund, as set forth in paragraph 12 hereof; $250,000 contributed by John F. Dodge to the First Presbyterian Church of Detroit, as set forth in paragraph 13 hereof, and $62,597.96 contributed by John F. Dodge to the Detroit Woman's Federation Club as set forth in paragraph 14 hereof; that there was wrongfully and illegally omitted from said return, income in the amount of $225,000, alleged to have been received by John F. Dodge in the year 1919 from the Old Colony Trust Co., through Stuard W. Webb, its agent, in connection with the Berger option, under the circumstances set forth in paragraph 16 hereof; that the income of John F. Dodge for the year 1919 should be adjusted by computing the profit from the sale of his shares of the capital stock of the Ford Motor Co. *3322 on the basis of a fair market value of $3,547.84 per share on March 1, 1913, by disallowing the said deductions taken in the return filed for or on behalf of John F. Dodge for the year 1919 on account of said contributions or gifts to the Salvation Army, the Detroit Patriotic Fund, the First Presbyterian Church of Detroit, and the Detroit Woman's Federation Club, and by adding to income said additional amount of $225,000 alleged to have been received by John F. Dodge in connection with the Berger option, and that the deficiency in tax for the year 1919 is $4,846,541.51.
OPINION.
MARQUETTE: This proceeding is one of nine proceedings consolidated for hearing because a large volume of the evidence was relevant and material to all of them, and having in common two issues, as follows: (1) Whether, under the circumstances shown by the evidence, the question of the fair market price or value on March 1, 1913, of the stock of the Ford Motor Co. and the basis for computing the gain on its sale in 1919, was open to the respondent in determining a deficiency or rejecting a claim in abatement antecedent to this proceeding, and is open for redetermination in this proceeding, and, if *215 *3323 so, (2) what was the fiar market price or value of the stock of the Ford Motor Co. on March 1, 1913.
These issues have been decided by this Board in the cases of , and , and upon the authority of those decisions we hold that the respondent had the right to determine the fair market price or value on March 1, 1913, of the petitioner's stock in the Ford Motor Co., and upon the evidence we find that the fair market price or value of said stock on March 1, 1913, was at the rate of $10,000 per share. Therefore, the basis for computing the gain from the sale of the stock owned by John F. Dodge was $10,000,000 and the gain was $2,500,000 instead of $3,010,660 as returned.
The original petitioner and answer herein raised only the two issues above stated. However, by an amended answer in the nature of a cross-petition, the respondent affirmatively alleged that there were wrongfully claimed and taken in the return filed for John F. Dodge for the year 1919, certain deductions on account of contributions of gifts alleged to have been made by John F. Dodge in that year; that there was omitted from the return, income*3324 in the amount of $225,000 realized by him in connection with the Berger option, and that his income for the year 1919 should be adjusted accordingly. The petitioners filed a replication to the amended answer, denying all the allegations of new matter contained in the amended answer, and also alleging that the assessment of any additional tax arising from the disallowance of the deductions mentioned, and from the addition to income of said amount of $225,000, is barred by the statute of limitations.
Three additional issues are therefore raised by the amended answer and replication, namely: (1) Is the assessment of the additional tax, in so far as it arises from the respondent's action in disallowing the deductions mentioned and in adding to the income of John F. Dodge for 1919 the said amount of $225,000, barred by the statute of limitations? (2) Were the amounts of the contributions or gifts in question proper deductions in computing the net income of John F. Dodge for 1919? (3) Did John F. Dodge realize any income in 1919 in connection with the Berger option?
In considering the question of whether assessment and collection of the additional tax first set up by the respondent*3325 in his amended answer are barred by the statute of limitations, we do not deem it necessary to engage in an extended discussion or exposition of the law applicable thereto. While we are of the opinion that independently of any written waiver or consent executed by the petitioner and the respondent, assessment and collection of such additional tax are, under the evidence herein, not barred, we find that the petitioner *216 Howard B. Bloomer and the respondent have executed such a waiver or consent, which effectually disposes of the question presented. The income-tax return of John F. Dodge for the year 1919 was filed on April 30, 1920. On January 31, 1925, Bloomer, as administrator with the will annexed of the estate of John F. Dodge, and the respondent, executed a written consent which provided that they -
* * * Hereby waive the time prescribed by law for making any assessment of the amount of income, excess-profits, or war-profits taxes due under any return made by or on behalf of said taxpayer for the year 1919 under existing revenue acts, or under prior revenue acts. This waiver of the time for making any assessment as aforesaid shall remain in effect until December 31, 1925, and*3326 shall then expire except that if a notice of a deficiency in tax is sent to said taxpayer by registered mail before said date and (1) no appeal is filed therefrom with the United States Board of Tax Appeals then said date shall be extended sixty days, or (2) if an appeal is filed with said Board then said date shall be extended by the number of days between the date of mailing of said notice of deficiency and the date of final decision by said Board.
The deficiency letter was mailed to the petitioner on April 7, 1925, and the petition herein was filed June 4, 1925, and if said consent was valid, the time within which assessment of "taxes due under any return made by or on behalf of said taxpayer for the year 1919" was thereby extended by the number of days between the date of mailing of the deficiency letter and the date of the final decision of this Board on the appeal.
But the petitioners urge that under the law of Michigan an executor or administrator can not waive the running of the statute of limitations as to claims against the estate, citing *3327 ; ; , and that the consent executed by Bloomer is invalid and of no force and effect. This argument, however, presents no difficulty here. Regardless of what the law of Michigan is on the subject, it can not operate to interfere with the power of the United States to lay and collect taxes. As pointed out in , Congress has "power not only to provide the method of laying and collecting taxes, but the method of refunding taxes illegally collected. It has the power in prescribing that method to provide not only the statute of limitation but the right to waive the limitation, and this right was given to the taxpayer. It can not be contended that the power of Congress to confer the right can be taken away by a state statute, much less by a decision of a state court. To say that the right can be granted or the privilege of exercising it can be limited or taken away by a state statute or a decision of a state court, would be in effect to destroy the right and thus nullify the act*3328 of Congress." The court held that a waiver executed by Mary S. Aldridge as executrix, pursuant to the provisions of the *217 Revenue Act of 1921, was valid notwithstanding the fact that the courts of Mississippi, which had jurisdiction of the estate, had held that a personal representative of a decedent could not waive the statute of limitations as to a debt asserted against the estate. To the same effect is . We agree with the reasoning and the conclusions of the courts in the two cases just cited and consider that the decisions therein should be followed here. We accordingly hold that the written consent executed by Bloomer as administrator with the will annexed of the estate of John F. Dodge on January 31, 1925, is valid and that the respondent having made claim for the additional taxes in question before the hearing of this proceeding, this Board has jurisdiction to determine the correct amount of the deficiency, even though the amount so determined is greater than the amount set forth in the deficiency notice. Section 274(e) of the Revenue Act of 1926.
The petitioners urge, however, that since section 274(a) *3329 of the Revenue Act of 1924 provides that,"If, in the case of any taxpayer the Commissioner determines that there is a deficiency in respect of the tax imposed by this title, the taxpayer * * * shall be notified of such deficiency by registered mail," it only provides for a notice of deficiency in the case of a tax imposed by the Revenue Act of 1924 and does not cover cases of deficiencies in taxes imposed by prior acts, and that the deficiency notice herein, since it relates only to taxes for 1919, did not operate to suspend the running of the statute of limitation as provided by section 277(b) of the Revenue Act of 1924. They say, therefore, that the return of John F. Dodge having been filed on April 15, 1920, and no deficiency notice having been sent to the petitioners within the meaning of section 274(a) of the Revenue Act of 1924, assessment and collection of the additional tax became barred on April 15, 1925. We think this contention is without merit. Section 280 of the Revenue Act of 1924 provides:
SEC. 280. If after the enactment of this Act the Commissioner determines that any assessment should be made in respect of any income, war-profits, or excess-profits tax imposed*3330 by the Revenue Act of 1916, the Revenue Act of 1917, the Revenue Act of 1918, or the Revenue Act of 1921, or by any such Act as amended, the amount which should be assessed (whether as deficiency or as interest, penalty, or other addition to the tax) shall be computed as if this Act had not been enacted, but the amount so computed shall be assessed, collected, and paid in the same manner and subject to the same provisions and limitations (including the provisions in case of delinquency in payment after notice and demand) as in the case of the taxes imposed by this title, except as otherwise provided in section 277.
It is clear from section 280 of the Revenue Act of 1924 that if, after the enactment of the Revenue Act of 1924 the Commissioner determined *218 that additional taxes were due from a taxpayer under the Revenue Acts of 1916, 1917, 1918, or 1921, he was required to compute them under the appropriate prior act and to assess and collect them in the same manner as he would assess and collect taxes under the Revenue Act of 1924. Such assessment and collection under the Revenue Act of 1924 required that a deficiency notice be sent to the taxpayer and, if sent prior to*3331 the running of the statute of limitations against assessment, the notice operated to toll the statute under section 277(b) of the Revenue Act of 1924. We are of the opinion that a deficiency notice was authorized and required in the instant case, and that such notice having been mailed to the petitioners prior to April 15, 1925, it operated under section 277(b) of the Revenue Act of 1924 to extend the period within which assessment and collection of the deficiency might be made, and also to extend the period within which the waiver filed by the petitioners shall remain in effect.
The contributions or gifts which are involved in this proceeding were claimed as deductions from gross income on the return filed for John F. Dodge for the year 1919 under authority of section 214(a)(11) of the Revenue Act of 1918, which provides that in computing the net income of individuals there shall be allowed as deductions:
(11) Contributions or gifts made within the taxable year to corporations organized and operated exclusively for religious, charitable, scientific, or educational purposes, or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to*3332 the benefit of any private stockholder or individual, or to the special fund for vocational rehabilitation authorized by section 7 of the Vocational Rehabilitation Act, to an amount not in excess of 15 per centum of the taxpayer's net income as computed without the benefit of this paragraph. Such contributions or gifts shall be allowable as deductions only if verified under rules and regulations prescribed by the Commissioner, with the approval of the Secretary. In the case of a nonresident alien individual this deduction shall be allowed only as to contributions or gifts made to domestic corporations, or to such vocational rehabilitation fund.
It is clear from the record herein that the contributions or gifts were actually made to corporations of the class enumerated in section 214(a)(11) of the Revenue Act of 1918. On that proposition there appears to be no dispute between the parties to this proceeding. They do not agree, however, as to when the contributions or gifts were made, the petitioners contending that they were made in 1919 and are deductible from income for that year, and the respondent, that they were not made until 1920 within the meaning of the Revenue Act.
*3333 The evidence shows that the books of John F. Dodge were kept and that the returns of income were made on the cash receipts and disbursements basis. It was the custom, however, of his bookkeeper *219 or secretary to enter all checks in the check register and ledger as disbursements for the year in which they were issued, and it is urged by the petitioners that such a method is proper when books are kept on the cash receipts and disbursements basis and clearly reflect income, and that the checks drawn by Dodge on December 31, 1919, to the Salvation Army, the Presbyterian Church, and the Detroit Patriotic Fund, are proper deductions from income for 1919 although they were not paid until 1920. But as we have pointed out in :
* * * Nor do we think the method of bookkeeping employed in accounting for discount could make it income if it did not fall within the definition of income. The mere placing of amounts on the books and reporting them as income can not change the facts any more than the placing of losses on the books constitute them proper deductions if they are not such in fact. The facts must control, and bookkeeping*3334 entries are only evidence of the facts.
See also Even Realty Co. 1. B.T.A. 355, and B. B. Todd, 1. B.T.A. 662. Regardless, therefore, of the method by which these checks were treated by Dodge's bookkeeper, we must look to the facts and ascertain therefrom whether the contributions or gifts in question were made in 1919 or 1920 within the meaning of the Revenue Act of 1918.
In C. H. Musselman, 1. B.T.A. 41, we held that where a taxpayer on the accrual basis made a subscription to a charitable organization in 1918 and liability for payment fully attached in that year, the contribution was made in 1918 within the meaning of the Revenue Act of 1918 and was a proper deduction from 1918 income, although the subscription was not paid until 1919. We apprehend that conversely, if a taxpayer is on the cash receipts and disbursements basis, a contribution is not made even though liability for payment has attached, until it is completed by payment either in money or money's worth.
It is well settled in the United States that one can not make his own check the subject of a gift so that in the absence of payment it can be enforced against the donor or his representatives. *3335 In theory of law the attempted gift of a check is not executed by delivery until the bank has paid, accepted, or certified it. ; ; ; ; affd. ; ; ; . This rule is founded on the lack of consideration for the check and the fact that it may be revoked by the donor before its presentation for payment and is revoked by the death of the donor. But the petitioners urge that the checks involved in this proceeding did *220 not constitute mere gifts, but were in payment of enforceable subscription or contribution contracts, or were themselves enforceable subscription or contribution contracts which were worth their face value. In support of this contention they cite *3336 ; ; ; ; ; , and other cases.
While it is true that in those cases the courts held that the subscription or promise to contribute to religious or charitable institutions were valid and enforceable, we do not consider them authority for holding that the instant transactions were based on enforceable contracts or promises, or that the delivery of the checks constituted such enforceable contracts or promises. In each of the cases cited the court found that there was a consideration for the promise, consisting of the subscriptions of other persons, or that the promissee in reliance upon the promise had acted to its detriment. No such situation exists in this case and the transactions involving the checks in question can not be considered as more than attempts on the part of John F. Dodge to make gifts; and they were not completed until the checks were paid, *3337 accepted or certified by the banks. In the case of , which is directly in point here, the court said:
Under the facts as we are now assuming them to be, there can be no question about the donative purpose of Mrs. Bowdoin in giving to this hospital her check for $3,000. * * * It is well settled that a gift can not be effected by the delivery of a check upon an ordinary bank of deposit where the drawer's account is good for the amount. The reason is that until the check is cashed the drawer may stop payment. In such a case the donative purpose may be absolute when the check is given, and ten minutes, or ten hours, or ten days later, at any time before the check has been cashed, such donative purpose may be wholly changed and abrogated. The fundamental principle of the law of gifts is that the gift, to be effective, must place the thing donated beyond the control of the donor. * * *
* * * Until a legal gift has been effected so as to vest property in the donee, the only party who has any right calling for consideration in the transaction is the donor, and that right is a part of the great and sacred right*3338 which the law insures to every one under certain limitations and conditions to dispose of his own property in accordance with his own wish and will.
We are of the opinion that the gifts or contributions to the Salvation Army, the Detroit Patriotic Fund, and the Presbyterian Church, involved herein, were not completed until the year 1920 and that therefore the amounts thereof are not deductible from income for 1919.
The statutes of Michigan provide that a check of itself does not operate as an assignment of any part of the funds to the credit of *221 the drawer in the bank, and that the bank is not liable to the holder until it accepts or certifies the check. As to the rights of a payee of a check in States where this rule is in effect, it is stated in 5 Ruling Case Law, at page 489:
* * * That the drawing and delivery of a check do not operate as an assignment, in any sense, of the drawer's rights as against the drawee, unless the check is in some way accepted by the drawee, and hence that as between the drawer and the payee or holder, the check does not operate as an assignment of so much of the fund as is drawn upon, or of the drawer's rights as against the drawee. *3339 In other words, checks drawn in the ordinary form, not describing any particular fund, or using any words of transfer of the whole or any part of the account standing to the credit of the drawer, but containing only the request directed to the bank to pay to the order of a payee a certain sum of money, are not, in the absence of acceptance, an assignment of the funds of the drawer either at law or in equity. According to the view in case of nonpayment, the recourse of the holder is against the drawer and the indorser, if any. The drawer alone can bring suit to recover the funds against which the check was drawn, and ordinarily he only can maintain an action for failure to pay on presentment. He may revoke the check, and countermand its payment before acceptance, and if unaccepted, his death will operate as a revocation, and it seems that his insolvency has the same effect.
It is also the rule that the death of a drawer of a check, as a matter of law, countermands or revokes the authority of the drawee to pay the check unless it has been certified or accepted by the drawee. See 5 Ruling Case Law, p. 529, and cases cited therein.
The two checks drawn by John F. Dodge to*3340 the order of the Salvation Army were not delivered, accepted, certified, or paid until subsequent to Dodge's death in 1920. As to that transaction we have no hesitancy in holding, without further discussion, that there was no gift or contribution in 1919 and the amount of the checks is not deductible in computing Dodge's income for that year.
Relative to the checks to the Presbyterian Church and the Detroit Patriotic Fund, we find that they were not presented to, accepted, or paid by the bank until 1920. They did not constitute an assignment of any part of the funds standing to the credit of Dodge in the bank and unless and until accepted or certified by the bank they could have been revoked or countermanded by Dodge, and in the event of his death before acceptance or payment would have been stopped by operation of law.
It is apparent, we think, that the gift was not completed, so long as it was within the power of the donor to revoke it by stopping payment on the check. In this case John F. Dodge gave checks or orders to a third party but he did not actually part with his property until the checks were paid.
The circumstances surrounding the contribution or gift made by*3341 John F. Dodge to the Detroit Woman's Federation Club are essentially *222 different from those that obtained relative to the checks which we have just discussed. A gift or contribution of land is completed by delivery of a deed therefor to the grantee, either actually or constructively. And the delivery, under certain circumstances, may be effective to pass title if made to a third party for the use of the grantee. In Thompson on Real Property, vol. 4, pages 958 and 959, it is stated:
* * * It is not essential that the delivery be to the grantee himself. It may be made to the grantee's agent, and even to a third person who is not his agent, for the grantee's use, provided the grantee afterward assents to the deed or receives it. A deed may be delivered to a third person as to the agent or bailee of the grantee, though the latter has not at the time constituted him such. * * * If a deed be delivered absolutely, and beyond the grantor's control and right of dominion, for the grantee's use, to a person not at the time authorized by him to receive it, and the grantee afterwards accepts it, or authorizes the custodian to accept it, the deed is effectual from the time it was*3342 placed in the hands of such person.
The issue relative to this contribution or gift was raised affirmatively by the respondent in his amended answer and the burden is upon him to establish by at least a preponderance of the evidence that the gift or contribution was not completed in 1919. The evidence clearly establishes that Dodge desired to make the gift in 1919 and was advised that it would have to be fully consummated and completed in 1919 to make the amount thereof deductible from income in that year. He executed the deed and delivered it to Bloomer in 1919, with instructions to put it on record and give it to the Club, which was later done. There was a delivery of the deed in 1919 to a third person for the benefit of the grantee, and it was subsequently delivered by such third person to the grantee and was accepted. As above stated, a valid delivery may be made in that manner so as to pass title if the grantor at the time of the delivery to the third person parts with all control and right of dominion over the property, and especially if the third person is authorized by the grantee to accept the deed. The burden of proof as to this issue being on the respondent, it rests*3343 with him to show other facts to establish that the delivery to Bloomer was ineffective to pass title to the grantee. He has failed to meet that burden, and we accordingly resolve the issue in favor of the petitioners and decline to disturb the deduction from gross income for 1919 heretofore allowed on account of this contribution or gift in so far as it does not exceed $47,597.96.
The last question is whether John F. Dodge realized any income from the sale of the Berger option. We are of opinion that he did not. The facts are simply these: Berger had an option on the stock of the two Dodges effective until July 1, 1919. Webb, who desired to acquire the stock of the Dodges offered to buy the Berger option in order to obviate it as a bar to his own negotiations. The Dodges, *223 hearing of this fact, threatened to refuse to deal with Webb until subsequent to July 1, 1919, unless Berger would agree to divide with Bloomer and McMeans whatever he received from the sale of the option. By refusing to deal with Webb, the Dodges had it in their power to render the Berger option worthless to Webb so that he would not purchase it. Berger agreed to do as the Dodges directed and*3344 upon the sale of the option to Webb for $675,000 he paid, or caused to be paid to Bloomer and McMeans $225,000 each. But we are unable to perceive that the Dodges realized anything from the transaction. They had it in their power to force, and did force Berger to divide with Bloomer and McMeans the proceeds of the sale of the option, but they made nothing for themselves. The Dodges contracted to sell, and did sell their stock for $25,000,000. They received that amount and nothing more. We therefore hold that the respondent was in error in adding to the income of John F. Dodge any amount as profit from the sale of the Berger option.
Reviewed by the Board.
Judgment will be entered under Rule 50.
SMITH, MORRIS, ARUNDELL, and MILLIKEN did not participate in the consideration or decision of this proceeding.