United States v. Butler

49 F.2d 52, 2 U.S. Tax Cas. (CCH) 721, 9 A.F.T.R. (P-H) 1265, 1931 U.S. App. LEXIS 3127

• Court: Court of Appeals for the Fifth Circuit
• Decided: April 17, 1931
• Docket: 5876
• Status: Published

Opinions

FOSTER, Circuit Judge.

, Appellee sued to recover income taxes amounting to about $2,000, which had been assessed on compensation received by him as attorney for Duval county, Fla., for the years 1919, 1920, 1921, and 1922, paid under protest. From an adverse judgment the United States appeals.

The findings of fact of the District Court are not objected to. The. following material facts appear from the record: Appellee was employed February 4, 1919, by the board of commissioners of Duval county, Fla., to represent it as its legal advisor. His term was to run as long as his services were satisfactory, and it extended through the year 1922, until the then hoard went out of office. His salary was fixed by resolutions of the board and covered compensation for attendance at all meetings of the board, preparation of resolutions and contracts, legal advice, and services in litigated matters of an ordinary nature. He was carried on the" pay roll of the board and was paid his salary monthly. In addition he was allowed extra .compensation for services in connection with certain litigated cases and bond issues. During the entire period of his employment he was continuously under the direction and control of the board. He frequently advised with and received instruction from them. He was employed to represent the county in all matters of a legal nature and was expected, without express orders from the board, to represent and defend the county in all such matters. He was not employed in each particular instance. He maintained his private law office but devoted 75 per cent, of his time to attending to his duties as attorney for the board, which he did not allow his private practice to interfere with.

This case is identical as to its facts with the case presented in Blair v. Mathews, 29 F.(2d) 892, in which we held in favor of the taxpayer. However, the government relies upon the leading ease of Metcalf & Eddy v. Mitchell, 269 U. S. 514, 46 S. Ct. 172, 70 L. Ed. 384, and subsequent decisions, applying the principles announced in that case to various other combinations of facts.

We may assume that under the ruling in the Metealf & Eddy Case that appellee was not an officer, -as his position was not created by express statute, he did not take an oath, and his tenure of office, emoluments, and duties were not fixed by law. We may also pass without decision the question as to whether the tax upon his compensation was an interference with the governmental functions of the board of commissioners. The question therefore presented for decision is whether appellee was an employee of a political subdivision of a state and whether as such his compensation was exempt from taxation, under the provisions of section 1211 of the Revenue Act of 1926 (26 USCA § 1065 b), and similar taxing statutes. The decision of this questipn depends upon whether the facts in the case at bar are so similar to those appearing in the Metealf & Eddy Case as to require a reversal.

In the Metealf & Eddy Case it was held that they were independent contractors and not either officers or employees. The opinion does not review the facts in detail but the following clearly appears: Metealf and Eddy were consulting engineers. They were employed by various subdivisions of different states under contracts for their services in connection with particular projects. None of their engagements was for work of a continuous character. Their compensation was fixed by their contracts for each separate project. They were at liberty to engage in other concurrent employment. They were expected to use their judgment and skill in doing their work and were not subject to the control of the- subdivisions employing them.

Except that appellee was required to use his judgment and skill as a lawyer in serving the board, there is no similarity between his employment and that of Metealf and Eddy. Unlike Metcalf and Eddy, he was continuously employed by one political subdivision to render any and all legal services that might be required. The board of commissioners had first call upon his services and the right to demand and use all his time. He was not at liberty to take other employment if his services were required by the board. That he indulged to some extent in private practice is immaterial. ' It is quite usual for attorneys-occupying a public position to engage in private practice if time and opportunity permit. It is also immaterial that he was allowed extra fees for certain services. That was merely a method of measuring his compensation.

The government also relies upon the case of Howard v. Commissioner (C. C.) 29 F. (2d) 895, reversed on the authority of Metcalf & Eddy v. Mitchell, 269 U. S. 526, 46 S. Ct. 172, 70 L. Ed. 384. In that ease we did not consider whether Howard was an officer or an employee of a political subdivision of the state of Texas. He had been employed in four separate suits by cities in Texas, and we held that in representing them he was exercising governmental functions as their agent which were in no sense remote. That ease may be differentiated the same as the Metcalf & Eddy Case.

The conclusion reached on the facts iq this case is that appellee was an employee of a political subdivision of the state of Florida within the meaning of the statute and his compensation as such was exempt from federal income taxes.

Affirmed.