Howard v. Commissioner of Internal Revenue

Fifth Circuit

Howard v. Commissioner of Internal Revenue

29 F.2d 895, 7 A.F.T.R. (P-H) 8378, 1928 U.S. App. LEXIS 2842, 7 A.F.T.R. (RIA) 8378

CourtCourt of Appeals for the Fifth Circuit

DecidedDecember 20, 1928

Docket5322

StatusPublished

Cited by3 cases

This text of 29 F.2d 895 (Howard v. Commissioner of Internal Revenue) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Howard v. Commissioner of Internal Revenue, 29 F.2d 895, 7 A.F.T.R. (P-H) 8378, 1928 U.S. App. LEXIS 2842, 7 A.F.T.R. (RIA) 8378 (5th Cir. 1928).

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Opinion

WALKER, Circuit Judge.

The decision presented for review was to the effect that, in computing the petitioner’s federal income tax for the year 1921, the amount of fees received by him for services as an attorney under contracts with the cities of Houston, Navasota, and .Victoria, Tex., should be included in his gross income. Those fees were paid for services rendered by the petitioner to the municipalities mentioned, in four suits, one by the city of Houston to compel the separation of a railway grade crossing, and the others by public service corporations to enjoin the cities named from fixing rates to be charged by those corporations. It was not disputed that the cities named are .within the terms of a Texas statute conferring on cities and towns power to regulate rates to he charged by public service corporations within such municipalities (2 Yemen’s Annotated Statutes of Texas, art. 1119), or that governmental functions were exercised by the municipalities in compelling a separation of railway grade crossings and in regulating rates mentioned.

The petitioner’s connection with the exercise by the municipalities of governmental functions was in no sense remote. His agency in each of the cases was one created and controlled by the municipality exclusively to enable the latter to perform a governmental function; that agency being the direct means used to enforce a governmental power. The conclusion that the amount of compensation paid to the petitioner for rendering such services is not subject to the federal income tax is in accordance with the decision now rendered in the case of Blair, Commissioner, v. Mathews, 29 F.(2d) 892, U. S. Circuit Court of Appeals, Fifth Circuit. Following that decision, the petition is granted, and the order under review is reversed.

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WALKER, Circuit Judge.

The decision presented for review was to the effect that, in computing the petitioner’s federal income tax for the year 1921, the amount of fees received by him for services as an attorney under contracts with the cities of Houston, Navasota, and .Victoria, Tex., should be included in his gross income. Those fees were paid for services rendered by the petitioner to the municipalities mentioned, in four suits, one by the city of Houston to compel the separation of a railway grade crossing, and the others by public service corporations to enjoin the cities named from fixing rates to be charged by those corporations. It was not disputed that the cities named are .within the terms of a Texas statute conferring on cities and towns power to regulate rates to he charged by public service corporations within such municipalities (2 Yemen’s Annotated Statutes of Texas, art. 1119), or that governmental functions were exercised by the municipalities in compelling a separation of railway grade crossings and in regulating rates mentioned.

The petitioner’s connection with the exercise by the municipalities of governmental functions was in no sense remote. His agency in each of the cases was one created and controlled by the municipality exclusively to enable the latter to perform a governmental function; that agency being the direct means used to enforce a governmental power. The conclusion that the amount of compensation paid to the petitioner for rendering such services is not subject to the federal income tax is in accordance with the decision now rendered in the case of Blair, Commissioner, v. Mathews, 29 F.(2d) 892, U. S. Circuit Court of Appeals, Fifth Circuit. Following that decision, the petition is granted, and the order under review is reversed.

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29 F.2d 895, 7 A.F.T.R. (P-H) 8378, 1928 U.S. App. LEXIS 2842, 7 A.F.T.R. (RIA) 8378, Counsel Stack Legal Research, https://law.counselstack.com/opinion/howard-v-commissioner-of-internal-revenue-ca5-1928.

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