and certainly no criticism can be directed at his contention. However, this is also a matter upon which reasonable men of sincere purpose might likewise differ in arriving at a decision of whether Pool in this particular aspect, which covered some fifteen years of his life, was actually engaged in a 'trade or business'. The Government does not contend that this was just an incidental matter with which Pool had some brief connection. The record is clear, as previously stated, that he devoted much of his time, energy, effort, talent and money to the advancement of the enterprise. From all the evidence the Court clearly gathered the impression that in acting as he did, Pool was acting as a joint venturer in a business undertaking designed to return substantial profits to him. A reading of the cases which involve the construction of the term 'trade or business' discloses as a general proposition of law that it is a question of fact to be determined by the surrounding circumstances of each case as to whether the taxpayer involved is engaged in a particular 'trade or business'; Higgins v. Commissioner, 1941, 312 U.S. 212, 217, 61 S. Ct. 475, 85 L. Ed. 783; Commissioner of Internal Revenue v. Stokes' Estate, 3 Cir., 1953, 200 F.2d 637. The general rule is that the term 'trade or business', as used in the Internal Revenue Code in the section involved in this case as well as other sections, bears a restricted meaning which does not include every activity of an individual engaged in for livelihood or profit. Commissioner of Internal Revenue v. Smith, 2 Cir., 203 F.2d 310. Isolated or occasional transactions do not constitute a business, but varied, continuous and regular activities by a taxpayer in a business venture in which he is not only financially interested but to which he devotes a substantial part of his time may make such a venture a business; Kuhn v. Thompson, D.C.E.D.Ark., decided November 13, 1953 (1954 Prentice Hall, par. 72,358).
Viewing the case in the light of the applicable legal principles, what is the evidence? The undertaking by Pool and his two associates carried with it the prospect of substantial profits. There is no question that had the offer of $ 750,000 been accepted for the patent, Pool and his associates would have profited handsomely. That Pool devoted substantial time, effort and energy to the management of the affairs of the Committee from 1931 to 1945, inclusive, a period of fifteen years, is convincingly established by the evidence. The Committee met at least weekly and sometimes more frequently, for several hours, over the entire fifteen year period, to supervise the exploitation of a valid and valuable patent in which the members had a very substantial interest. We do not have here a case in which a taxpayer has made only a single advance or isolated advances to a business generally carried on by others. Pool made continuing advances over a long period of time and during that entire period devoted substantial time and energy as well as money to the venture. In undertaking to carry out the terms of the resolution of Motorfrigerator Company, above quoted, the jury might well have considered that Pool had in fact obligated himself to advance the money required and may well have felt that this was a substantial reason why this particular venture should be considered as a trade or business of the deceased taxpayer. See Spencer v. Maloney, D.C.D.Or.1947, 73 F.Supp. 657, affirmed 9 Cir., 1949, 172 F.2d 638. I know of no rule which provides that any officer is obligated to make advances to a corporation in which he is interested. That Pool felt he had an obligation so to do under the resolution of the Motorfrigerator Company is likewise crystal clear from the evidence.
Under all of the facts and circumstances can it be said that sufficient evidence has been produced to overcome the presumptively correct determination of the Commissioner that Pool was not so engaged. I think that there has and the jury having made its determination, the Court will adopt its finding as that of an advisory jury, under Rule 52(a) of the Federal Rules of Civil Procedure, in the non-jury case.
The final question decided by the jury was whether the loss on the advances of Irwin H. Pool to the Motorfrigerator Company incurred as the result of a bad debt. The Government strenuously argues that the only business being conducted was that of the corporation itself, that as an officer and director of the corporation Pool made advances for the account of the corporation, and that there was a mere creation of a creditor-debtor relationship. This contention, if sustained by the evidence, would result merely in the creation of a bad debt when loss was inevitable or collection of the debt impossible. But the facts as found by the jury do not bear out this contention. The key to the entire case is the resolution adopted by the stockholders of the company in 1933. Even if, as contended by the Government, the resolution is slightly ambiguous as to whether or not the advances were to be repaid to the investors before distribution of profits, that actions of the Committee under the resolution clearly demonstrated to the Court that these three men were individually engaged in a joint venture with the corporation for profit. It is hardly conceivable that had there been a substantial profit, the advancements (charges) would not have been a first charge on the fund. The evidence establishes that the division of the 25% profit was to be in exact accord with the proportionate investment of each of the three investors in the project. From all the surrounding facts and circumstances it was for the jury to say whether these advances to the corporation were in the nature of loans. From all of the evidence the Court was of the opinion that it was never the intention of any of the Committee to make loans to the company, as such. That the method of operation might create a contrary impression is in the entire aspect of the case not controlling. The jury reached the same conclusion that the trial Judge would have and, therefore, I will adopt the finding of the jury in that regard as the Finding of the Court in the non-jury case. It follows, therefore, that under the stipulation entered into between the Government and the taxpayer, the taxpayer is entitled to recover the amount agreed upon.
For the reasons set forth above, an order will be entered dismissing defendant's motion to vacate the judgment and to enter judgment in its favor in Civil Action No. 13825, and for judgment in the stipulated amount in favor of the plaintiff in Civil Action No. 13826.
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