OPINION.

GOODRICH: This case has been twice tried. The first hearing was opened on circuit at St. Paul, Minnesota, and, after extending for some days, was continued and transferred to the Washington, D. C., calendar where it was later completed. A voluminous record, including various exhibits and depositions, was made at this hearing. Within a few days after the trial was completed, before the transcript was made up or briefs were filed, the Member who sat as a Division to hear the case was stricken suddenly and died. Thereafter, respondent filed a motion for a rehearing, asking also that, except for certain depositions, all the evidence received at the first hearing be rejected or suppressed. As grounds for his motion. respondent recited the death of the presiding Member and claimed that, because of his illness, the Member during trial was laboring under an evident physical and mental disability which markedly interferred with his ability to properly conduct the case, with the result that the record was confused, befogged, erroneous and useless. He alleged also misconduct on the part of counsel for petitioner during trial. This motion was resisted by petitioner which, by counsel, contended that the presiding Member was fully capable of hearing the case and conducted the trial properly; that respondent, because he presented his case, was now estopped from moving to reject the record; that petitioner had incurred heavy expense in appearing at the first hearing, and was unable to again bear that cost, and that the record therein was complete, satisfactory and sufficient to serve as a basis for decision of the issues. Further, petitioner denied misconduct of its counsel during trial but asserted misconduct on the part of respondent's counsel.

Both parties, by counsel, were heard in argument upon this motion. Thereafter the full Board considered all phases of the motion and decided that a rehearing should be granted. Accordingly, an order was entered granting respondent's motion, and the case was set for trial on the circuit calendar at St. Paul at petitioner's request. Before the date of trial, petitioner filed a motion which, as amended, prayed for an order submitting the case upon the record as made at the first hearing. This motion being resisted by respondent, the parties were heard on argument and permitted to file briefs, after consideration of which the motion was denied and counsel advised that only such parts of the record made at the first trial as might be properly introduced in evidence at the second trial would be considered. Thereafter, by agreement of the parties, and in order to spare them expense and inconvenience, the case was transferred to the trial calendar at Washington, D. C., and set for hearing.

At trial, both parties appeared by counsel. Petitioner, when called upon to introduce evidence in proof of its case, objected to the taking of any additional testimony on the ground that all testimony had theretofore been taken and trial closed, and that the record contained nothing to indicate that further testimony should be taken. This objection raised no issue not previously considered, both upon respondent's motion for new trial and upon petitioner's motion to submit the case upon the former record, and was overruled, to which petitioner excepted. Again petitioner was specifically called upon for proof of its case, whereupon its counsel again insisted that the case be submitted upon the record as made, stating:

We offer no proof at this time, except the record itself as it now stands, * * and ask the Board to consider the record as originally made in this case.

Counsel then added that he was not offering the former record in evidence, but urged that the case be decided upon it. Again counsel moved that all the testimony theretofore offered in the case by petitioner be considered, stating that it would rest on the record as made.

Whether petitioner's statements, which are conflicting, amount only to a renewal of its previous motions to submit the case upon the former record or effect an offer in toto of the evidence taken at the former trial is not clear. However, the motion was overruled, whereupon counsel excepted, and refused to offer any further evidence, either by witnesses personally appearing, by the testimony of any particular witness formerly taken, or by particular deposition or exhibit. Then respondent, being called upon, proceeded to introduce evidence in support of the affirmative allegations of his amended answer, to all of which petitioner objected generally and was overruled. While petitioner's continuing general objections to the introduction of respondent's evidence were overruled, certain of its specific objections made to questions asked the witnesses or documents offered were deemed proper and were sustained. Petitioner participated in the trial as thus indicated and by the exercise of its right to cross-examine respondent's witnesses.

Since petitioner introduced no evidence, we must sustain respondent's determinations of deficiencies as set out in the original notice of deficiency and give him judgment thereon because of failure of petitioner's proof and, consequently, we need not here consider the issues raised in opposition to respondent's original determinations. nor need we concern ourselves with the facts thereunder. In so holding we are deciding adversely to petitioner's principal contention, which is that our decision in this case must be based upon the evidence taken at the first trial. Petitioner denies that we have the power to order a new trial in any cause, or that we may dis

regard, reject or suppress evidence once introduced before us. It further urges that, even conceding our authority to order a new trial, still all the evidence previously taken must be considered as a part of the record because such evidence is a public record which we can not overlook and, secondly, because this Board, being by statute bound by the rules of evidence pertaining to courts of equity in the District of Columbia, may receive and consider upon new trial only such evidence as would be received and considered by such courts in a similar situation. In other words, petitioner regards us as a court of equity, permitted to order a rehearing only under those conditions in which such a court could do so, and then, having done so, subject to the general restrictions obtaining to such a court that no evidence may be gone into which was in the case at the original hearing or capable then of being produced; that no witness orginally examined before the master may be reexamined without special order of the court, and that such an order, if obtained, is limited to facts not testified to by the witness and not then in issue, citing Jenkins v. Eldredge, 3 Story, 299; 13 Fed. Cases 504; Read v. Patterson, 44 N. J. Equity 211; Scales v. Nichols & Scales, 2 Yerger's Reports 126; 10 Tenn. 126; Buffington v. Harvey, 95 U. S. 99; Whiting v. Bank of United States, 13 Pet. 6; Deitch v. Staub, 115 Fed. 309.

The problem raised by petitioner is a serious one. It arises because of the confusion surrounding the status of this Board, its powers, its jurisdiction and its functions, and it is serious because upon its determination depends the correctness of our action upon a considerable number of cases. We are often importuned, both by the Government and by taxpayers, by motions for reopening of cases, both before and after decision has been entered, for the purpose of obtaining new trial, reconsideration, permitting of further argument, and the introduction of further evidence or the correction of inadvertent mistakes. We have been, and are, passing upon such motions as our discretion dictates in an attempt to discharge our duties as we conceive them to be, and on occasion for good cause shown, have granted such motions and taken such further action in proceedings before us as seemed necessary to a just determination of the claims of the parties. Generally, the parties have attributed to us, as a matter of course, the authority necessary to act in such matters, apparently assuming that any tribunal which can hear and determine a controversy has the inherent power to rehear and redetermine it. But, although no issue has been made of it before the courts reviewing our decisions, our power has not been entirely unchallenged nor free from comment.1 The issue was squarely

1 "New Trials and Rehearings in the Board of Tax Appeals." Arthur B. Hyman, Esq. The Tax Magazine, September, 1932.

raised in the case of Continental Oil Co., 23 B. T. A. 311, by petitioner in opposing a motion for rehearing filed by the Government but was not there decided, for the case was disposed of upon other grounds. It was recently suggested by the United States Circuit Court of Appeals for the Fourth Circuit in its decision in Lexington Ice & Coal Co. v. Burnet, 62 Fed. (2d) 906, that we should promulgate rules for such motions. This we had deemed unnecessary, believing those matters to lie entirely within our discretion, but, be that as it may, the fact remains that such requests, many numerically, though few in proportion to the total number of proceedings before us, are submitted to us and we pass upon them. Therefore. it is essential that our power therein be determined, for, certainly, we will not consciously assume and exercise an authority which we do not lawfully possess.

2

A study of the legislative history surrounding the creation and enlargement of the Board reveals the intention and understanding of the Congress with respect to its jurisdiction and powers. With the various changes made by the Congress to the original plan of organization, with its character as it existed under the Revenue Act of 1924, when proceedings before it were in the nature of a “preliminary skirmish," we are not here concerned, for it is apparent that in enacting the provisions of the Revenue Act of 1926 affecting the Board, and particularly that giving the Board jurisdiction to determine the correct amount of a taxpayer's liability, either as a deficiency or an overpayment, the Congress was content that it had established the Board as a legislative (in contradistinction to constitutional), inferior tribunal, having judicial powers within its limited jurisdiction and capable of handing down, not merely administrative determinations, but judicial decisions. See Edward L. Scheidenhelm Co., 1 B. T. A. 864; Southern California Loan Assn., 4 B. T. A. 223.

This the Congress apparently believed it had power to do, and it seems clear that the name by which it was designated has no effect

Blair v. Oesterlein Machine Co., 275 U. S. 220; Williamsport Wire Rope Co. v. United States, 277 U. S. 551; Blair v. Curran, 24 Fed. (2d) 390; Brampton Woolen Co. v. Field, 56 Fed. (2d) 23.

"The power of Congress to create tribunals for the determination of judicial questions is not confined to the creation of inferior courts under Article III of the Constitution.

"The third class of federal tribunals includes those courts and other tribunals created to determine judicially questions arising between the United States as a sovereign gov ernment and private individuals, with reference to the exercise of sovereign powers in connection with its own revenues, grants, debts, military forces, duties toward Indian tribes, and the like.

"The territorial courts and special tribunals are commonly referred to as 'legislative tribunals' in contradistinction to the so-called constitutional courts. • The term 'legislative tribunal' applies to all tribunals of the above character whether they have been specifically placed in the Executive Branch of the Government, as in the case of ad

5

upon the nature of the powers of the tribunal. In the discussion of the bill by the Ways and Means Committee of the House the following appears relative to provisions affecting appeals of Board deci

sions:

* *

No other court in the world tries cases which in the aggregate involve such great amounts. Under the new appellate procedure from the board (hereinafter discussed) the jurisdiction of the board in tax matters is similar to that heretofore held by judges of the Federal district courts.

*

*

Court Review-Questions of fact and law. The procedure is made to conform as nearly as may be to the procedure in the case of an original action in a Federal district court.

*

In the view of the committee the decisions of the board are judicial and not legislative or administrative determinations. * The imposition upon the court of the duty of reviewing judicial decisions, such as those of the board, is not the imposition of a non-judicial duty, *. Such review of a judicial, as distinguished from a legislative or administrative determination may be had as to either questions of law or of fact. The proposed procedure, however, for reasons of policy and not of law, limits court review solely to questions of law as heretofore described.

A similar statement is contained in the report of the Senate Committee on Finance."

Again, when considering the Revenue Bill of 1928, the view of the Congress was expressed in the following excerpts from the reports 7:

A recent decision by the circuit court of appeals for the seventh circuit indicates that there is some disposition to regard the Board of Tax Appeals as an investigative rather than a judicial body, and to require it to reach its decisions not merely on the basis of the evidence presented in the record, but on the basis of such additional evidence outside the record as may be necessary fully to develop the taxpayer's case. The committee is of the opinion that the board's function is purely judicial, and in order to clarify the situation has provided that no decision of the board (whether rendered before or after the bill becomes law) should hereafter be modified or reversed because the board or any of its divisions has failed to consider evidence not adduced before the board or division. At the same time the committee has provided that the rules of practice and procedure of the board shall, just as the Federal equity rules, have the force and effect of law. [Italics supplied.]

On this proposal the Senate Finance Committee expressed itself thus 8:

In view of certain expressions in a recent court opinion, the House bill in Section 601 provides that no decision of the board shall be modified or reversed ministrative tribunals, or whether they may be considered as a part of the Judicial Branch of the Government as in the case of the District of Columbia.

"Legislative tribunals are often authorized by statute to exercise jurisdiction the same as or similar to that exercised by Federal constitutional courts, and in that sense they are vested with judicial power that is similar to the judicial power of such constitutional courts." [See brief prepared by H. R. Judiciary Committee, 68 Cong. Rec. 3187, and cases there cited.]

▲ Goldsmith v. Board, 270 U. S. 117, citing Manning v. French, 149 Mass. 391.

* H. R. #1, 69th Cong., 1st sess.. D. 17.

* Senate Report #52, 69th Cong., 1st sess., p. 37.

H. R. #2, 70th Cong., p. 30.

*S. R. #960, 70th Cong., p. 38.