Helvering v. Eubank

• Citation: 311 U.S. 122,85 L.Ed. 81,61 S.Ct. 149
• Decision Date: 25 November 1940
• Docket Number: No. 205,205
• Parties: HELVERING, Com'r of Internal Revenue, v. EUBANK
• Court: U.S. Supreme Court

311 U.S. 122

61 S.Ct. 149

85 L.Ed. 81

HELVERING, Com'r of Internal Revenue,

v EUBANK.

No. 205.

Argued Oct. 25, 1940.

Decided Nov. 25, 1940.

Rehearing Denied Feb. 3, 1941.

See 312 U.S. 713, 61 S.Ct. 609, 85 L.Ed. —-.

Messrs. Robert H. Jackson, Atty. Gen., and Arnold Raum, of Washington, D.C., for petitioner.

Mr. Harry J. Rudick, of New York City, for respondent.

[Argument of Counsel from pages 122-124 intentionally omitted] Mr. Justice STONE delivered the opinion of the Court.

This is a companion case to Helvering v. Horst, 311 U.S. 112, 61 S.Ct. 144, 85 L.Ed. 75, decided this day, and presents issues not distinguishable from those in that case.

Respondent, a general life insurance agent, after the termination of his agency contracts and services as agent, made assignments in 1924 and 1928 respectively of renewal commissions to become payable to him for services which had been rendered in writing policies of insurance under two of his agency contracts. The Commissioner assessed the renewal commissions paid by the companies to the assignees in 1933 as income taxable to the assignor in that year under the provisions of the 1932 Revenue Act, 47 Stat. 169, § 22, 26 U.S.C.A. Int.Rev.Acts, page 487, of which does not differ in any respect now material from § 22 of the 1934 Revenue Act, 26 U.S.C.A. Int.Rev.Acts, page 669, involved in the Horst case. The Court of Appeals for the Second Circuit reversed the order of the Board of Tax Appeals sustaining the assessment. 110 F.2d 737; 39 B.T.A. 583. We granted certiorari October 14, 1940. 311 U.S. 630, 61 S.Ct. 27, 85 L.Ed. —-.

No purpose of the assignments appears other than to confer on the assignees the power to collect the commis- sions, which they did in the taxable year. The Government and respondent have briefed and argued the case here on the assumption that the assignments were voluntary transfers to the assignees of the right to collect the commissions as and when they became payable, and the record affords no basis for any other.

For the reasons stated at length in the opinion in the Horst case, we hold that the commissions were taxable as income of the assignor in the year when paid. The judgment below is

Reversed.

The separate opinion of Mr. Justice McREYNOLDS.

The cause was decided upon stipulated facts. The following statement taken from the court's opinion discloses the issues:

'The question presented is whether renewal commissions payable to a general agent of a life insurance company after the termination of his agency and by him assigned prior to the taxable year must be included in his income despite the assignment.

'During part of the year 1924 the petitioner was employed by The Canada Life Assurance Company as its branch manager for the state of Michigan. His compensation consisted of a salary plus certain commissions. His employment terminated on September 1, 1924. Under the terms of his contract he was entitled to renewal commissions on premiums thereafter collected by the company on policies written prior to the termination of his agency, without the obligation to perform any further services. In November 1924 he assigned his right, title and interest in the contract as well as the renewal commissions to a corporate trustee. From September 1, 1924 to June 30, 1927, the petitioner and another, constituting the firm of Hart & Eubank, were general agents in New York City for the Aetna Life Assurance Com- pany, and from July 1, 1927, to August 31, 1927, the petitioner individually was general agent for said Aetna Company. The Aetna contracts likewise contained terms entitling the agent to commissions on renewal premiums paid after termination of the agency, without the performance of any further services. On March 28, 1928 the petitioner assigned to the corporate trustee all commissions to become due him under the Aetna contracts. During the year 1933 the trustee collected by virtue of the...