*754 The petitioner, who had served as city attorney of Highland Park for seventeen years, declined reappointment but agreed to act in an advisory capacity, or as "Counsel to the City Attorney", if his assistant should be appointed. During the taxable year he served as "Counsel to the City Attorney", giving advice upon request. He received a fixed amount as retainer, which was paid in semimonthly installments. Held, that petitioner was neither an officer nor employee of Highland Park and his compensation is not exempt from Federal income tax.
*1314 This proceeding was brought to redetermine a deficiency in income tax in the amount of $180 for the year 1934. The only issue presented is whether the compensation received by the petitioner as counsel to the city attorney for the city of Highland Park, Michigan, is exempt from Federal income tax.
FINDINGS OF FACT.
Petitioner is a lawyer residing in Detroit, Michigan, and is engaged in the general practice of law. In 1934 he was a resident of Highland Park, a municipal corporation of Wayne County, Michigan. *755 He was appointed city attorney of Highland Park in 1916 and continued in that position until 1933. Beginning in 1918 Earl B. Young served as assistant city attorney and in that capacity handled all ordinary cases. In January 1933 petitioner was offered a reappointment as city attorney, but at his suggestion his assistant, Young, *1315 was named instead. In that connection, however, petitioner agreed to a request of the mayor that he act as counsel to the city attorney.
On January 3, 1933, the council of the city of Highland Park adopted the following resolution:
MOVED BY COMMISSIONER KNOWLES
Supported by Commissioner Hackett
That Claude H. Stevens be retained as Counsel to the City Attorney and the Charter Commission for one year for a compensation of $2500.00. * * *
On January 2, 1934, a similar resolution was adopted reading as follows:
MOVED BY MAYOR MARKLAND
Supported by Commissioner Hackett
That Claude H. Stevens be retained as Counsel to the City Attorney for one year for a compensation of $1500.00. * * *
The compensation thus provided for was received by petitioner in semimonthly installments during the calendar year. He had no arrangement of*756 any kind with the city of Highland Park whereby he was to receive any compensation other than that mentioned above and during the year 1934 he did not receive other compensation for his services as counsel to the city attorney.
The city of Highland Park maintained a suite of offices at the city hall for the mayor and legal staff, consisting of a reception room, private office for the mayor, private office for the city attorney, private office for the assistant city attorney, and one office for the law library. When the petitioner had occasion to use an office at the city hall during his service as counsel to the city attorney, he used the office provided for the assistant city attorney. During the same period that office was also used for other purposes such as committee meetings.
During 1933 and 1934 no assistant city attorney was appointed and Young, in addition to his new duties as city attorney, continued to handle all ordinary cases as he had during his service as assistant city attorney. The petitioner, as counsel to the city attorney, did not attend council meetings unless requested to do so. He did not act under the supervision of the city attorney, but never refused*757 assistance to Young if his assistance was requested. During 1934 he attended some six to ten meetings of the council and approximately a like number of committee meetings. He was not required to and did not keep office hours at the city hall and the duties performed by him for the city council and the city attorney required only a fractional part of his time. He did not take an oath of office.
The petitioner was not supervised or controlled in the performance of any services rendered to the city or its officers. He was hired to give advice and could not recall any occasion when he refused or *1316 failed to respond to a call from the city council or the city attorney. The services rendered by him were entirely in relation to governmental matters of the city of Highland Park.
From 1919 and during the period petitioner served as counsel to the city attorney he maintained a separate office for the general practice of law in the city of Detroit. During 1934 he received gross fees from his practice as an attorney amounting to $22,516.54. He paid salaries to a secretary and a lawyer employed in his office aggregating $2,709.75 and office rent in the amount of $1,767.90. *758 Most of his time was devoted to his general practice.
The compensation received by petitioner in 1934 from the city of Highland Park in the sum of $1,500 was not reported as taxable income in his return for that year.
OPINION.
TURNER: The petitioner contends that this compensation from the city of Highland Park was exempt from Federal income tax by reason of the constitutional limitation upon the power of the Federal Government to tax state instrumentalities. The respondent contends that the petitioner was not an "officer" or an "employee" of the city of Highland Park and for that reason the limitation referred to has no application. Regulations 86, art. 116-2.
The Michigan statutes relating to appointment of officers of municipal corporations 1 provide that the mayor, by and with the consent of the council, shall appoint a city attorney, city marshal, city commissioner, city surveyor, city assessor, and a chief engineer. There is no provision for the appointment of counsel to the city attorney. There is a provision, however, that the council may be ordinance provide for the appointment of other officers whose election or appointment is not by the statutes specifically*759 provided, all such appointments to be made by the mayor by and with the consent of the council. The statute further provides that the powers and duties of such officers shall be prescribed by ordinance and that all officers appointed or elected shall within ten days take and subscribe to the oath of office prescribed by the state constitution. In the instant case the council passed no formal ordinance creating the office or position of counsel to the city attorney, neither is there any ordinance prescribing the duties to be performed. At the most there is a resolution providing that the petitioner "be retained as Counsel to the City Attorney." Furthermore petitioner did not subscribe to the oath required of all municipal officers by the statute and prescribed by the state constitution. , relied on by the petitioner, is clearly distinguishable. We conclude that petitioner was not *1317 an officer of the city of Highland Park. .
*760 We think it is equally clear that the petitioner was not an employee of the city of Highland Park. His services were not continuous, but were occasional and were not subject to the direction or control of the council or any city official. He was not required to keep regular office hours and had no regular duties. He was free to engage and did engage in general practice of the law and most of his time was devoted to the business of other clients, which business also produced the major portion of his income. It is true that his compensation was fixed and limited and he received it semimonthly, but that fact alone is not sufficient to determine that the relationship between the city of Highland Park and the petitioner was that of employer and employee. In our opinion the facts of record clearly show that the relationship between the petitioner and the city of Highland Park was that of an attorney on retainer from a client and not that of an employee of the city on a salary. ;*761 ; ; certiorari denied, ; ; ; and .
The petitioner being neither an officer nor an employee of the city of Highland Park, we conclude and hold that the compensation in question was not exempt from tax. ; ; ; . Cf. .
Decision will be entered for the respondent.
Footnotes
1. Michigan Statutes Annotated, vol. 4 (1936), ch. 48, title 5 (Municipalities), secs. 5.1623, 5.1629, and 5.1632, pp. 30, 31, 32, 33, 35. ↩