Cocke v. Humphreys Day

LOONEY, J. Humphreys & Day, attorneys of New York City, sued A. A. Cocke and wife to recover an attorney’s fee for alleged services rendered in securing the abatement of a claim made by the United States government against them for income tax and penalties for the year 1921. The government, through proper officials, assessed against defendants for the year 1921 an additional amount as income tax and imposed a penalty of 50 per cent., altogether amounting to something over $30,000, and filed notice of the assessment in the office of the county clerk of Dallas county, Tex., and in the office of the clerk of the United States District Court for the Northern District of Texas, at Dallas,* thereby creating a lien against their nonexempt property. Defendants insisted that the tax and penalty were unauthorized, and with the view of securing the abatement of same, and the release of their property from the lien, engaged the services of plaintiffs to represent them before the Bureau of Internal Revenue. The contract between the parties is in. the form of a letter, addressed by plaintiffs to Mr. Cocke, and accepted by him, as follows: “April 12, 1923. “Mr. Arthur A. Cocke, 404 Andrews Building, Dallas, Texas — Dear Mr. Cocke: This will confirm the terms of our employment, under which we are to handle the question of additional assessment against you and Mrs. Cocke, levied by the Bureau of Internal Revenue for 1921, for which we are to receive as retainer the sum of $100. “In view of the fact that the income item will be taxed in either 1921 or 1922, the question of a reduction of the tax liability thereon does not present a strong objection. However, we will defend the assessment of $5,479.83 which has been made against each of you on the basis of a reasonable fee, not to exceed an amount equal to 20 per cent, of the total amount we are able to have vacated and set aside. If we are able to defeat the government’s ’allegation of fraud, and set aside both of these penalties, it will mean a saving of $10,959.66, which will be the basis of the computation of the fee. “Owing to the fact that you are regularly practicing law, we further agree to reduce our fee to the extent of the usual forwaz-ding percentage; that is, we will allow one-third to you and two-thirds to ourselves. Of course, it is understood and agreed that our fee will be due. and payable when you receive the proper evidences from the bureau that the penalties have been vacated and set aside and the lien on -your property discharged. You will be required to furnish a power of attorney to us, or such individual as we may designate, to handle any mat-tez-s pertaining to your taxes in conference at Washington. “Very truly yours, Humphreys & Day. “(Executed in duplicate.) “Accepted this 12th day of April; 1923, by “[Signed] A. A. Cocke.” Subsequent to this employment, plaintiffs arranged with' the bureau for a hearing, which was held on July 13 and 14, 1923, before a board of three attorneys, acting under the Solicitor for the Bureau of Internal Revenue, and at the hearing Mr. Humphreys, of Humphreys & Day, represented defendants. At the conclusion of this hearing no announcement was made by the board as to their decision, but Mr. Cocke left the hearing discouraged, and fearful that the decision would be adverse to him; so he sought the advice of other attorneys, Mr. Millard v. West of Washington, D. C., and his associate, Mr. [893] James W. Goode, oí Chicago. Mr. West, encouraged him to believe that he was right in his contention and ought to win. At this juncture, Mr. Cocke returned to his home at Dallas, and was later advised by Mr. West that he had arranged for a rehearing before the board for July 31, 1923; thereupon Mr. Cocke returned to Washington, and on this trip Mrs. Cocke accompanied him. On request the board postponed the rehearing until August 17th, at which time the matter was again presented, this time by Mr. Goode, representing the defendants. No direct communication to defendants was made, announcing the result of the hearing; but on November 26, 1923, they received notice that the lien for the tax and penalties on their property had been released, and on April 12, 1924, were notified that their tax returns had been audited, and a mistake against them of an overassessment of $390 had been discovered, which amount was refunded to them by the government. Thus it appears that the additional tax and penalties assessed were abated, the lien on their property released, and the matter finally disposed of by the Bureau of Internal Revenue in defendants’ favor. Plaintiffs sued on the contract to recover two-thirds of 20 per cent, of the penalties remitted (the retainer of $100 having theretofore been paid), together with interest, on the theory that they won the case for defendants before the board of attorneys, securing the abatement of the tax and penalty and the release of their property from the lien. Defendants answered that the plaintiffs neglected the case and lost, that other attorneys had to be employed at an expense of $3,000, and that the case was ultimately won wholly through, the efforts of the other attorneys. This presented the dominant issue in regard to which the evidence was in irreconcilable conflict. In support of this contention defendants offered to testify that on July 31, 1923, subsequent to the hearing in which plaintiffs participated, Mr. Allen, chairman of the board that conducted the hearing for the Solicitor’s Department, announced in open session that the decision of the board was adverse to the defendants, and that the prior findings and assessment made by the Commissioner were sustained. This evidence was objected to by plaintiffs, and excluded by the court, on the ground that the written order or finding of the board constituted better evidence as to what was done than the oral statement of Mr. Allen. Defendants excepted to this ruling, and by proper assignments and propositions have brought up the question for review.- The excluded evidence was relevant and material on the main issue of fact presented by the pleadings, and if erroneously excluded the case must be reversed. The board handling this matter seems to have acted informally, in a round-table discussion, and it does not appear but that their entire proceedings rested in parol. Before evidence can.be excluded on the-ground that it is secondary, it must appear, either from the nature of the fact to be proven or by evidence introduced by the objecting party, that there is in existence higher evidence and of what it consists. Sweet v. Birmingham, etc., 145 Ala. 667, 39 So. 767; Terre Haute, etc., v. Stockwell, 118 Ind. 98, 20 N. E. 650; Hadden v. Binville, 86 Md. 210, 38 A. 37, 900; 22 C. J. 977, § 1223c. This rule is stated in Corpus Juris, supra, as follows: “Before evidence can be excluded on the ground that it is secondary, it must appear, either from the nature of the fact to be proven or by evidence introduced by the objecting party, that there is higher evidence in existence and of what that evidence consists.” The burden of proof rested on plaintiffs to show there was in existence better evidence, and of what it consisted, as to the action of the board, and, having failed to do this, we are of the opinion that the court erred in excluding the evidence, for which the judgment will be reversed and the cause remanded. In view of another trial, we refrain from the expression of an opinion on any controverted issue of fact, or from any general discussion of the evidence. Reversed and remanded.