*404OPINION.
Ivins:The minute book of the directors’ meetings and the testimony of the taxpayer’s president and treasurer convince us that there was no liability on the taxpayer to pay its officers and employees any amount as compensation beyond what was actually and currently paid them. The testimony by the president and treasurer who also was the largest individual stockholder and had been with the company since 1895 was:
*405Q. Was there any more than a general understanding among the officers that probably, if circumstances warranted, you would declare extra compensation? — A. No.
Q. Would you say that there was any legal liability on the part of the corporation to pay extra compensation to employees as distinguished from officers? — A. No.
Q. If you had died say in January, 1921, will you say that your estate would have had any legal claim against the corporation? — A. No.
Q. For extra compensation for 1920? — A. No. We did not know whether we had made any money.
Yet, after it was known that money had been made, and the vote purported to compensate for services rendered during 1919 and 1920, no action was taken to pay over to the estates of those who had left the company by reason of death any amount as compensation for their loyalty and service in the production of profits up to the date of their departure. That omission is conclusive, to our minds, that the 1921 vote contemplated recognition for past service only in the expectation of realizing future devotion and loyalty by employees in the production of the future success of the taxpayer.
Beading through the minutes of meetings prior to 1921, we find references to similar actions expressed as “bonus in lieu of an increase of salary,” “ as a reward for unusual service for the year and in lieu of an increase of salary,” “ as a reward for unusual services,” etc.
In the vote of February 25, 1920, “the board determined to award bonuses to the employees, payable at the discretion of the treasurer,” and in that of March 14, 1921, “bonuses were therefore granted to * * * all payable at the discretion of the treasurer.”
The treasurer was also the president and owned 612 of the 1,500 shares of stock outstanding during 1920. Fixing merely the amounts, designating them as “ bonuses,” and vesting in the treasurer full discretion as to when the amounts might become payable could not vest any right in a person named to demand payment. No right accrued; no liability was incurred. The vote was executed and the payments made during 1921. The 1921 vote could not be retroactive so as to incur a liability in 1920 when no liability actually then existed. This is not a case where persons were employed under a contract Avhereby they were assured additional compensation as part of their remuneration for services rendered if the value of their services became reflected in a showing of profits; it was not a case of their being entitled to greater compensation as a matter of right if the event occurred of the company making profits. Additional payments were solely dependent upon the will of the three directors who owned the majority of the stock. In 1921 they benefited through these payments to the extent of $45,000, which was accordingly withdrawn from a possible dividend distribution available for *406all stockholders. They were thereby put in a position to subscribe for the new $50,000 of stock issued after May 14,1921. What should have been a stock dividend accruing to all stockholders was attempted to be made into a tax-saver for the corporation with the possibility of increasing the percentage stockholdings of the three directors and officers.
There is a marked distinction between a voluntary payment by a corporation to its employees because the surplus will permit the extra payment, such as existed in this appeal, and an additional remuneration to employees who were employed under a contract by which they were entitled to share in the profits if the company had profits.
On reference to the Board, Arundell took no part in the consideration.