Reporter's Statement of the Case 94 C. CIS. 4. After the stock market crash in 1929 plaintiff signed a guaranty of account for W. P. Wink, dated November 28, 1929, which reads as follows: In consideration of your carrying the account of W. P. Wink or of your opening any new account or accounts for the said W. P. Wink under such terms and conditions as you may deem best, I hereby agree to guarantee and hold you harmless from and to promptly pay you on demand any debit balance now or hereafter due thereon and any and all losses now existing on said account or accounts or hereafter arising thereon or therefrom. It is understood that no cash or securities may be withdrawn from or stocks purchased or sold for the account of W. P. Wink without instructions from me. An identical guaranty of account was signed for W. J. Wink on the same date. 5. On December 31, 1931, all the securities in the account of W. P. Wink had been sold, leaving a debit balance of $95,501.78. On the same day all the securities in W. J. Wink's account had been sold, leaving a debit balance in this account of $47,625.28. On this date plaintiff paid these debit balances. 6. On the date these balances were paid by the plaintiff, W. J. Wink was insolvent, exclusive of the debt created in plaintiff's favor by the payment of this debit balance. He was then employed at a salary of $250.00 a month. On December 31, 1931 W. J. Wink's indebtedness to the plaintiff was worthless, and on that date was known to the plaintiff to be worthless. On that date W. P. Wink owned his home, against which there was no encumbrance. The testimony does not disclose the value of his home. Exclusive of the debt owing to the plaintiff, his assets were just about sufficient to pay his debts. He was then employed by the Fisher Body Commissary Trust, from which he had realized income as follows: Year: 1929. 1930. 1931. Amount $14,350. 00 12, 825.00 10, 325.00 511 Opinion of the Court On that date plaintiff's claim against W. P. Wink could not have been collected in full, but it was collectible in part; in what part the testimony does not show. 7. Within the first six weeks of 1932, when plaintiff was closing his books for 1931, the indebtedness of W. P. Wink and W. J. Wink were charged on plaintiff's books to an account denominated "losses on guaranteed margin accounts." The accounts did not appear on plaintiff's books in any other way. The court decided that the plaintiff was not entitled to recover. WHITAKER, Judge, delivered the opinion of the court: The plaintiff sues to recover income taxes alleged to have been erroneously collected because the Commissioner of Internal Revenue refused to allow a deduction of alleged bad debts of $143,127.06. The defendant says the deduction is not allowable because (1) the amount claimed was not a debt; (2) because it was not ascertained to be worthless; and (3) because it was not charged off within the year. The facts surrounding the creation of the alleged debts, briefly stated, are as follows: On October 5, 1925, W. P. Wink, plaintiff's father-in-law, opened an account for himself with Paine, Webber & Company, stock brokers, and also opened an account for his son, W. J. Wink. At the time he deposited for himself with these brokers $45,000, and he deposited with them $12,500 for his son, W. J. Wink. The understanding was that the accounts of both W. P. Wink and W. J. Wink were to be handled exclusively by the plaintiff, but for the benefit of W. P. Wink and W. J. Wink, respectively. As a result of trading in these accounts, W. P. Wink had an equity with these brokers on November 28, 1928, of about $170,000, and W. J. Wink had an equity of about $50,000. On this date plaintiff was carrying with them two accounts for himself, three accounts as agent for others, and six accounts for parties named, including the two Winks. He then wrote his brokers authorizing them to apply any margin in any of the accounts against any future deficit in the Opinion of the Court 94 C. Cls. others, if the deficit was not paid on demand. A year later, after the stock market crash, he personally guaranteed any deficit then in the two Wink accounts or that might thereafter arise. On December 31, 1931, all of the securities in the account of W. P. Wink had been sold, and there was a deficit of $95,501.78, and there was a deficit in W. J. Wink's account of $47,625.28 after all the securities had been sold. On this date these deficits were paid by the plaintiff. It is the total of the two, $143,127.06, that the plaintiff seeks to deduct as a bad debt. There is no direct testimony to show whether these guaranties and the subsequent payments were purely voluntary on plaintiff's part, or were done at the request of the two Winks. Plaintiff took the stand but was silent on the subject. Neither of the Winks testified, and there is no explanation of why they did not. Had there been promises to repay or requests that he guarantee the accounts, from which an implied promise would arise, it easily could have been proven. Plaintiff's silence on the subject and his failure to put the Winks on the stand is a strong indication there was no such promise, express or implied. If plaintiff was a pure volunteer, of course the Winks did not become indebted to him. Plaintiff traded in the accounts as his own, even to the point of authorizing the brokers to apply the margin in any one of the eleven accounts he was handling for himself and others to the deficit in any of the other accounts. So far as is shown, he did not consult the Winks or anyone else about anything he did with respect to them, including the giving of the guaranties. The most that appears is that the Winks had knowledge of the fact that plaintiff had guaranteed them. From this alone can there be implied a promise to repay whatever he might lose as a result of the guaranty? We think not. Other circumstances negative such an implication, the fact that no testimony was offered to show an express promise or a request for the guaranties, the relationship of the parties, the fact that plaintiff had the exclusive management of the accounts and that there had been large equities in each, and that these had been lost 511 Syllabus under plaintiff's management, that plaintiff was a wealthy man and the Winks people of quite moderate means. For aught that appears, plaintiff may have thought he had held on too long and had lost for his father-in-law and brotherin-law the margins that had been built up, when he should not have done so, and so was willing to take a chance on his own account of further losses-which he could afford and they could not-in order to try to recoup some of the decline. Whether this is so, we do not know. We do not know what the understanding was, if any. It was within plaintiff's power to disclose the whole transaction, but he did not do so. From this there arises a presumption that the facts, if disclosed, would be more harmful to him than helpful. We must hold accordingly that there arose no indebtedness from the Winks to plaintiff on account of the payment by him of the deficits. This makes it unnecessary to consider the defendant's other defenses. Plaintiff's petition must be dismissed. It is so ordered. MADDEN, Judge; JONES, Judge; LITTLETON, Judge; and WHALEY, Chief Justice, concur. THE CALVERT DISTILLING COMPANY v. [No. 45059. Decided October 6, 1941] On Demurrer Parity payments under Agricultural Adjustment Act; trust fund.— Where plaintiff, a distiller, under the terms of a marketing agreement for the "Distilled Spirits Industry," to which marketing agreement plaintiff was a party, under the provisions of the Agricultural Adjustment Act, made payments to the Secretary of Agriculture representing the difference between the price paid by plaintiff for cereal grains or products thereof used by plaintiff in the manufacture of distilled spirits and the "parity" price of such grains or products; it is held that neither the terms of the act nor the provisions of the marketing agreement required the establishment of a trust fund for the benefit of plaintiff and associated distilleries, and no such trust fund was established in which plaintiff might claim an interest. Opinion of the Court 94 C. Cls. Same; payments unconditional.-Payments made under the Agricultural Adjustment Act were unconditional. Same; special account an accounting transaction.-The establishment by the Treasury of a special account to which "parity" payments were credited was an accounting transaction indicating that that particular amount of money rather than that the particular dollars was to be used for a special purpose. Same; written agreement.-There was no implied contract in the marketing agreement which was in writing and was an express contract. Mr. Josiah Willard for the plaintiff. Messrs. White and Case were on the briefs. Mr. Elihu Schott, with whom was Mr. Assistant Attorney General Francis M. Shea, for the defendant. Messrs. J. Robert Anderson and J. H. Reddy were on the briefs. The facts sufficiently appear from the opinion of the court. JONES, Judge, delivered the opinion of the court: The plaintiff, successor by merger to the rights of the Maryland Distillery, Incorporated, brings this action to recover payments amounting to $18,959.05 made to the Secretary of Agriculture under a marketing agreement for The Distilled Spirits Industry entered into on December 9, 1933. In 1933 Congress enacted the Agricultural Adjustment Act. One of the features of the act provided for the establishment of voluntary marketing agreements to be signed by the Secretary of Agriculture and by those engaged in any particular line of industry. One of those marketing agreements covered the "Distilled Spirits Industry." The text of that agreement is attached to the petition as "Exhibit A." By the terms of the marketing agreement each contracting distiller, including plaintiff, agreed to pay for all cereal grains or products thereof used by him in the manufacture of distilled spirits, a total amount per unit not less than the fair exchange value thereof. The, fair exchange value is defined in the Agricultural Adjustment Act, approved May |