207 F.2d 711 (7th Cir. 1953), 10822, C.I.R. v. Oates

Docket Nº:10822.
Citation:207 F.2d 711
Case Date:November 04, 1953
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit

Page 711

207 F.2d 711 (7th Cir. 1953)




No. 10822.

United States Court of Appeals, Seventh Circuit.

Nov. 4, 1953

H. Brian Holland, Asst. Atty. Gen., George F. Lynch, Asst. to Atty. Gen., U.S. Dept. of Justice, Washington, D.C., Ellis N. Slack and Helen Goodner, Sp. Assts. to Atty. Gen., Washington, D.C., for petitioner.

J. Gilmer Korner, Jr., Stanley Worth, Washington, D.C., Ray Garrett, Robert H. Kinderman, Chicago, Ill., Blair, Korner, Doyle & Appel, Washington, D.C., Sidley, Austin, Burgess & Smith, Chicago, Ill., of counsel for respondent.

Before DUFFY, LINDLEY and SWAIM, Circuit Judges.

LINDLEY, Circuit Judge.

The Commissioner of Internal Revenue seeks to reverse the decision of the Tax Court reported in 18 T.C. 570. In view of the fact that the findings of the trial court are full and complete and are, as we believe, fully sustained by the evidence, we shall try to avoid needless reiteration.

As appears more fully in the reported decision, the amount of the compensation of a general agent of the Northwestern Life Insurance Company, such as the taxpayer, depends not only on the amount paid as initial premium on a policy but also, in a lesser degree, upon the renewal premiums collected thereon during the next succeeding nine years. The original agency contract with the company provided that upon retirement, a general agent would receive commissions on renewal premiums as they were collected by the company during the nine-year period following the date of his retirement. Under the provisions of the contract as it then read, a retiring agent received a comparatively large amount as commissions during the first year. This sum decreased to less and less each year thereafter until, at the end of the ninth

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year, he received no further payments. Thus his income from renewal commissions progressively decreased as he grew older. The agents having become discontented with this unfortunate result, negotiations between them and the company were entered into in 1943 looking to a revision of the contract, culminating in March 1944, in an amendment which provided in short that commissions accruing after retirement of the agent would be paid in fixed monthly installments, irrespective of the time when the company collected them. The installments were to be paid over a period of not more than 180 months, but the agent might elect to receive them in fewer months, and was also given the option of remaining under the old...

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