Paxson v. Commissioner

Murdock, J.,

dissenting: I feel that the majority opinion in this case will bring about a miscarriage of justice and, therefore, I respectfully dissent. It ignores the substance and exalts the legal form of what took place.

Concededly, all of the writings recognized the petitioner as the contracting party. But the fact is he did not perform the contract or earn any commissions under it. He bore none of the expenses and had no facilities with which to carry on the work. The contract was performed by Albany, using its own equipment, and bearing all of the expenses. One of those expenses was the payment of a regular salary to the petitioner. Albany reported the benefits from the contract by a reduction in its cost of goods sold.

The Amoco business was the principal business of Albany during these years, without which its operations would have ceased. The petitioner frankly disclosed all of the documentary evidence against him, but testified, nevertheless, that all parties understood throughout that Albany, rather than he, would perform under the contract. But however that may be, it did do the work and the petitioner did not. The injustice of taxing him with commissions which he did not earn, own, or benefit from, while Albany deducts all expenses, and while the petitioner also reports the salary from Albany for managing this very work, would seem to be obvious.

Van Foss AN and Harron, JJ., agree with this dissent.