United States v. Kaiser, 363 U.S. 299 (1960)

MR. JUSTICE DOUGLAS, concurring.

While I join the opinion of my Brother BRENNAN, my view of the merits is so divergent from the rest that a word of explanation is needed. Bogardus v. Commissioner, 302 U.S. 34, 41, in holding payments by stockholders to employees were, on the facts there present, gifts, said:

There is entirely lacking the constraining force of any moral or legal duty, as well as the incentive of anticipated benefit of any kind beyond the satisfaction which flows from the performance of a generous act.

Had a motion for a directed verdict been made by respondent at the close of the evidence, I think, with all deference, that it should have been granted, since my idea of a "gift" within the meaning of the Internal Revenue Code is a much broader concept than that of my Brethren. As the opinion of the Court points out, this striker (who became a union member without solicitation several months after he began receiving benefits) had no legal or moral duty to picket, or to do any other act in furtherance of the strike. There is no evidence that the union made these payments to keep this striker in line. It is said that these strike payments serve the union’s cause in promoting the strike. Yet the whole setting of the case indicates to me these payments were welfare, plain and simple. Unions, like employers, may have charitable impulses and incentives. Here only the needy got the relief.

1. Section 102(a) provides: "Gross income does not include the value of property acquired by gift, bequest, devise, or inheritance." 26 U.S.C. § 102(a).

2. Although the plurality opinion apparently considers it unnecessary to decide whether the strike benefits received by respondent constitute "income," and deals only with the question whether they were excludable "gifts," I think it is clear that those payments were "income." Strike benefits constitute realized gains to their recipients, as a partial substitute for lost wages, rather than lost capital, and are materially different in nature from the various categories of realized gains which have been treated as nontaxable through administrative fiat. (See the Treasury Rulings detailed in MR. JUSTICE FRANKFURTER’s concurring opinion.) Strike benefits are, therefore, within the reach of the "gross income" provision of the Code. See Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 429-430.

3. The evidence shows an administrative letter was written by the International to its locals describing the nature and purpose of its strike fund as follows:

The International Union, UAW-CIO, has also established a Strike Fund to further assist Local Unions in winning current strikes and to build a fund to protect our members in any future strikes. The Strike Fund of the International Union, UAW-CIO, is not large enough to provide strike assistance on the basis of right, and is not sufficient to meet all of the needs of our members during strike periods.

4. While the Court of Appeals emphasized respondent’s status as a nonmember when he began receiving strike benefits from the union, the parties’ stipulation nullifies any possible basis for distinguishing between members and nonmembers in deciding the question before us, and indeed the Court does not purport to rest its decision on any such distinction.

5. That voluntary payments by a union may be and often are made with the requisite donative intent is not to be doubted. This was illustrated by the testimony of two union officials at the trial of this case. The Secretary-Treasurer testified about expenditures from the union’s strike fund to assist in emergencies caused by a tornado at Flint, Michigan, and by a flood in Connecticut. A regional officer testified that the union purchased furniture for a member whose home and its furnishings had burned, viewing that action, somewhat differently than these strike benefits, as an "outright donation" by the union. But plainly such were not the generous and charitable impulses that impelled the union to pay the strike benefits to respondent and other strikers to sustain them while they waged the union’s Kohler strike.