And further Judge Tietjens concluded:
'Here, petitioner was employed as attorney by the executors in 1939 and continued in that capacity at least through April 4, 1944. He handled whatever legal matters arose during that period involving the estate. On October 7, 1940, he petitioned the Surrogate for an allowance of fees for the aggregate of his services rendered to that date. His employment as attorney for the executors continued, however, and on April 7, 1944, he again petitioned the Surrogate for an allowance of fees, this time for the aggregate of services performed between October 7, 1940, and April 4, 1944. We are of the opinion that in deciding whether section 107 is applicable we must treat his services as extending over the entire period of his employment as attorney for the executors. For this purpose we do not think the period of service is to be broken up by the simple expedient of filing a petition for fees. Accordingly, the amount of $ 3,500 received in 1944 did not amount to 80 per cent of the total compensation which he received as such attorney and petitioner is not entitled to the benefits of section 107.'
This decision of the Tax Court was affirmed by the Court of Appeals, 2 Cir., January 29, 1953, per curiam, 201 F.2d 368. See also, Lum v. Commissioner of Internal Revenue, 12 T.C. 375.
And in Spears v. Commissioner, 3 Cir., 1947, 164 F.2d 486 this Circuit held in a per curiam opinion that the total compensation received by the taxpayer for engineering services performed by him in connection with a series of construction projects for a single employer under a single employment contract must be taken into account to determine whether the taxpayer was entitled to the benefits of Section 107. And if the amount received in the year in question did not constitute the statutory ratio (here 80%) of the entire sum received, that the taxpayer was not entitled to the benefits of the section.
And further speaking of fees to trustees in estate matters under Section 107, Judge Learned Hand said in Civiletti v. Commissioner, 2 Cir., 1945, 152 F.2d 332, at page 333:
'It seems to us clear that, for example, installment payments while a job was in progress were not covered merely because they were payable only for work already done.'
And again upon the same question, Judge Hand said further in Smart v. Commissioner, 2 Cir., 1945, 152 F.2d 333, at page 335:
'Furthermore, although it is true that a trustee does not earn his commissions de die in diem, but only after he has succeeded in satisfying the court upon an accounting as to his stewardship, yet it is natural to think of what he then receives as having been earned progressively.'
See also, Englar's Estate v. Commissioner, 2 Cir., 1948, 166 F.2d 540; and also an opinion by Judge Hartshorne of this District in Kingsford v. Manning, D.C. 1952, 109 F.Supp. 949.
For the reasons and upon the authorities hereinbefore stated those sums received as fees from the estates during the years in question, not meeting the 80% test as to the entire fee received are not covered by Section 107, supra, and the complaint as to that portion of the claim will be dismissed.
The facts concerning the item making up the other general classification in the claim is as follows:
In January, 1936, a Petition for Reorganization under Section 77B
was filed in this Court in the matter of The Guanajuato Reduction and Mines Company, Debtor, and such reorganization ensued in litigation for several years. During the course of this litigation, plaintiff law firm was engaged to represent the American Finance and Securities Company, a Delaware Corporation, in connection with the reorganization of the Debtor company. In that matter, the plaintiff law firm was, on November 3, 1937, made an allowance of $ 3500 in fees by this Court, and by order of December 17, 1937 the trustees therein were directed to pay such allowance.
Subsequently, and around January 1st, 1938, the plaintiff law firm was engaged to bring about the dissolution of the American Finance and Securities Company, which services were concluded by July, 1942 and for which the plaintiffs were paid a fee of $ 2500, which sum is the item originally in dispute here. A copy of plaintiffs' bill to their client for such services is set forth in the footnote.
The government in its brief says (page 10):
'As to the fee received from American Finance & Securities Company, the Government must concede that the taxpayer has presented sufficient evidence, if believed, to allow the fee to be covered by Section 107(a).'
Thus, this phase of the case rests entirely upon the creditability of plaintiff, Frank S. Norcross, that he began his services in the dissolution matter about January 1st, 1938, subsequent to the receipt of the fee in the reorganization matter. Of this there should be no question for the Court finds that they were two separated, unrelated matters and separate hirings by the client of the lawyer. But further, if plaintiff Norcross, was completely unknown to the writer, what is there in the record to rebut or even throw a shadow of doubt upon his sworn testimony? Contrary to this, however, plaintiff is a highly respected member of the bar, a practitioner held in high regard in this Court and the Bar of this State. What more need to be said as to his creditability?
For the foregoing reasons, plaintiffs will have judgment covering the appropriate refunds upon the receipt of the $ 2500 fee here in question. I will rely upon counsel to compute the figures.
Prepare an order.