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<case id="50779" source="Oyez API" schema="simple-legal-case-xml-v1"><name>United States v. Generes</name><docketNumber>70-28</docketNumber><term>1971</term><court><name>Burger Court (1971-1972)</name><identifier>burger3</identifier><href>https://api.oyez.org/courts/burger3</href></court><parties><firstParty role="Petitioner">United States</firstParty><secondParty role="Respondent">Allen H. Generes and Edna Generes</secondParty></parties><dates><date type="argued">1971-11-08</date><date type="decided">1972-02-23</date></dates><citation><volume>405</volume><page>93</page><year>1972</year><href>https://api.oyez.org/case_citation/case_citation/14707</href><justia_url>https://supreme.justia.com/cases/federal/us/405/93/</justia_url></citation><jurisdiction>Writ of <i>certiorari</i></jurisdiction><facts><html><p>In 1954, Allen Generes and his son-in-law William Kelly formed Kelly-Generes Construction Co., Inc. Generes and Kelly each owned 44% of the stock, with the remaining 12% owned by Generes’ son and another son-in-law. Generes was the president of the corporation and did not deal with the day-to-day running of the business. In addition to his position as president, he held another full-time position as the president of a savings and loan association. In 1958, Generes and Kelly signed an indemnity agreement for the corporation. In 1962, the corporation seriously underbid two contracts and went deeply into debt. Generes loaned the corporation money, but it went bankrupt, and he was unable to receive reimbursement.</p>
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<p>On his 1962 tax return, Generes claimed the money the corporation lost as business bad debt and his direct loans to the corporation as nonbusiness bad debt. He filed a claim for a refund on the business bad debt. This claim was the subject of a jury trial in which the jury was asked to determine whether Generes’ signing of the indemnity agreement was “proximately related to his trade or business of being an employee “of the corporation. The government requested a jury instruction to clarify that “significant” motivation satisfies the requirement, but the court refused and instructed the jury that “dominant” motivation was sufficient. The jury found in favor of Generes. The U.S. Court of Appeals for the Fifth Circuit affirmed and held that the significant motivation standard was acceptable.</p>
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<p> </p>
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</html><text>In 1954, Allen Generes and his son-in-law William Kelly formed Kelly-Generes Construction Co., Inc. Generes and Kelly each owned 44% of the stock, with the remaining 12% owned by Generes’ son and another son-in-law. Generes was the president of the corporation and did not deal with the day-to-day running of the business. In addition to his position as president, he held another full-time position as the president of a savings and loan association. In 1958, Generes and Kelly signed an indemnity agreement for the corporation. In 1962, the corporation seriously underbid two contracts and went deeply into debt. Generes loaned the corporation money, but it went bankrupt, and he was unable to receive reimbursement.
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On his 1962 tax return, Generes claimed the money the corporation lost as business bad debt and his direct loans to the corporation as nonbusiness bad debt. He filed a claim for a refund on the business bad debt. This claim was the subject of a jury trial in which the jury was asked to determine whether Generes’ signing of the indemnity agreement was “proximately related to his trade or business of being an employee “of the corporation. The government requested a jury instruction to clarify that “significant” motivation satisfies the requirement, but the court refused and instructed the jury that “dominant” motivation was sufficient. The jury found in favor of Generes. The U.S. Court of Appeals for the Fifth Circuit affirmed and held that the significant motivation standard was acceptable.</text></facts><questions /><conclusion><html><p>No. Justice Harry A. Blackmun delivered the opinion for the 4-3 plurality. The Supreme Court held that the significant motivation standard did not provide sufficient guidance to the trier of fact and that the dominant motivation standard should have been used. Under this standard, Generes’ actions were in his own interest and not those of the corporation, so he cannot claim the corporation’s loss as business bad debt.</p>
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<p>In his concurring opinion, Justice Thurgood Marshall wrote that the congressional intent behind the statute distinguishing nonbusiness bad debt from business bad debt was to prevent family members from loaning money they knew they would not get back and getting tax refunds for it. He argued that the dominant motivation standard best protects Congress’ interests.</p>
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<p>Justice Byron R. White wrote a partial concurrence and partial dissent in which he argued that the plurality should not have ruled on the merits of the case but should have remanded the case for a new trial under the new standard. Justice William J. Brennan, Jr., joined in the partial concurrence and partial dissent. In his dissenting opinion, Justice William O. Douglas wrote that the wording of the statute does not require proof of a dominant motivation. He also argued that there was sufficient evidence that Generes’ actions were “proximately related” to his business interests.</p>
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<p>Justice Lewis F. Powell, Jr. and Justice William H. Rehnquist did not participate in the discussion or decision of this case.</p>
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<p> </p>
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</html><text>No. Justice Harry A. Blackmun delivered the opinion for the 4-3 plurality. The Supreme Court held that the significant motivation standard did not provide sufficient guidance to the trier of fact and that the dominant motivation standard should have been used. Under this standard, Generes’ actions were in his own interest and not those of the corporation, so he cannot claim the corporation’s loss as business bad debt.
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In his concurring opinion, Justice Thurgood Marshall wrote that the congressional intent behind the statute distinguishing nonbusiness bad debt from business bad debt was to prevent family members from loaning money they knew they would not get back and getting tax refunds for it. He argued that the dominant motivation standard best protects Congress’ interests.
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Justice Byron R. White wrote a partial concurrence and partial dissent in which he argued that the plurality should not have ruled on the merits of the case but should have remanded the case for a new trial under the new standard. Justice William J. Brennan, Jr., joined in the partial concurrence and partial dissent. In his dissenting opinion, Justice William O. Douglas wrote that the wording of the statute does not require proof of a dominant motivation. He also argued that there was sufficient evidence that Generes’ actions were “proximately related” to his business interests.
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Justice Lewis F. Powell, Jr. and Justice William H. Rehnquist did not participate in the discussion or decision of this case.</text></conclusion><advocates><advocate for="for petitioner"><name>Matthew J. Zinn</name><href>https://api.oyez.org/people/matthew_j_zinn</href></advocate><advocate for="for respondents"><name>Max Nathan, Jr.</name><href>https://api.oyez.org/people/max_nathan_jr</href></advocate></advocates><decisions><decision type="majority opinion" winning_party="United States"><description /><votes majority="6" minority="1"><vote opinion_type="dissent" vote="minority" seniority="2"><justice>William O. Douglas</justice><justice_href>https://api.oyez.org/people/william_o_douglas</justice_href></vote><vote opinion_type="none" vote="majority" seniority="4"><justice>Potter Stewart</justice><justice_href>https://api.oyez.org/people/potter_stewart</justice_href></vote><vote opinion_type="concurrence" vote="majority" seniority="6"><justice>Thurgood Marshall</justice><justice_href>https://api.oyez.org/people/thurgood_marshall</justice_href></vote><vote opinion_type="none" vote="majority" seniority="3"><justice>William J. Brennan, Jr.</justice><justice_href>https://api.oyez.org/people/william_j_brennan_jr</justice_href></vote><vote opinion_type="special concurrence" vote="majority" seniority="5"><justice>Byron R. White</justice><justice_href>https://api.oyez.org/people/byron_r_white</justice_href></vote><vote opinion_type="none" vote="majority" seniority="1"><justice>Warren E. Burger</justice><justice_href>https://api.oyez.org/people/warren_e_burger</justice_href></vote><vote opinion_type="majority" vote="majority" seniority="7"><justice>Harry A. Blackmun</justice><justice_href>https://api.oyez.org/people/harry_a_blackmun</justice_href></vote><vote opinion_type="none" vote="none" seniority="8"><justice>Lewis F. Powell, Jr.</justice><justice_href>https://api.oyez.org/people/lewis_f_powell_jr</justice_href></vote><vote opinion_type="none" vote="none" seniority="9"><justice>William H. Rehnquist</justice><justice_href>https://api.oyez.org/people/william_h_rehnquist</justice_href></vote></votes></decision></decisions><source><href>https://api.oyez.org/cases/1971/70-28</href><raw_file>D:\PyCharm Community Edition 2024.3.1.1\PythonProject\IBM Z Datathon\json_data\api.oyez.org_cases_1971_70-28.json</raw_file></source></case> |
