Hall v. Burnet, 5173

• Citation: 54 F.2d 443
• Decision Date: 16 November 1931
• Docket Number: No. 5173,5174.,5173
• Parties: HALL v. BURNET, Internal Revenue Commissioner (two cases).
• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)

54 F.2d 443 (1931)

HALL v. BURNET, Internal Revenue Commissioner (two cases).

Nos. 5173, 5174.

Court of Appeals of District of Columbia.

Argued October 9, 1931.

Decided November 16, 1931.

John A. Selby and Henry Ravenel, both of Washington, D. C., for appellant.

C. M. Charest, Prew Savoy, and J. Louis Monarch, all of Washington, D. C., and Morton P. Fisher, of Baltimore, Md., for appellee.

Before MARTIN, Chief Justice, and ROBB, VAN ORSDEL, HITZ, and GRONER, Associate Justices.

HITZ, Associate Justice.

The appeals in these cases are from final orders of the Board of Tax Appeals entered September 30, 1929, finding deficiencies in income taxes for the years 1921 to 1924, inclusive.

They come to this court by petition for review, filed January 22, 1930, under the Revenue Act of 1926, chapter 27, sections 1001, 1002, and 1003 (26 USCA §§ 1224-1226).

The sole question involved is the taxability as income to an insurance agent of payments made to his wife by his company pursuant to an assignment to her of an interest in his contract for commissions on renewals.

By contract executed September 23, 1905, appellant, then and now a resident of Fort Wayne, Ind., entered the employ of the Lincoln National Life Insurance Company on the basis of an annual salary of $2,600, with commissions on all renewal premiums paid the company from year to year on life insurance written and issued by the company during the continuance of the contract.

On January 2, 1921, he and his second wife made a contract defining her rights in his property for the protection of his children by an earlier marriage, in consideration of which she renounced her dower.

Among other provisions thereof, he sold, assigned, and transferred to her an undivided interest in the contract with his company, to the extent of $33,333.33 per annum, to be paid her for the three years 1921, 1922, and 1923.

By supplemental agreement of December 28, 1923, he similarly assigned $42,178.27 to be paid her during the years 1924 and 1925.

The company accepted the assignments, made the payments as provided, which Mrs. Hall retained and made return thereof as part of her income, while appellant made no return of such moneys.

The Commissioner and the Board of Tax Appeals held that he should have made such return, the board saying in its opinion: "We believe the agreement of the petitioner with his wife and the assignments made pursuant thereto merely constituted the assignment of the petitioner's future income and that the amounts received by Mrs. Hall were income to the petitioner. This conclusion is based primarily upon Woods v. Lewellyn C. C. A. 252 F. 106."

But a reading of Woods v. Lewellyn, does not impress us with its applicability.

There, as here, the tax sought to be imposed was on commissions on renewal insurance received under an insurance agent's contract, but the question for decision in that case, in marked contrast with the question for decision here, was not by whom payable; but whether, under the act of 1913, agent's commissions...