118 C. Cls.

SUIT FOR SALARY-Continued

the question of satisfactory performance after a full
and fair trial on the job. Id.

XI. A certain amount of discretion must be lodged in an
appointing official to make spot personnel decisions
in the interest of efficiency but, on the other hand,
a public servant who has actually been wronged by
a decision has no other remedy than to appeal to
the courts. Id.

Officers 71.

XII. Following the decision in Frederick G. Kaufman v.
United States, ante page 91, in which the facts are
almost identical with the facts in the instant case,
where it is shown that during the period intervening
between plaintiff's concededly illegal dismissal on
January 16, 1942, and the offer of reinstatement
made to him on May 12, 1945, plaintiff would have
earned at the salary which he was then receiving
the sum of $10,003.17, and that during the same
period he earned from outside sources the sum of
$6,938.11, it is held that the plaintiff is entitled to
recover the difference, $3,065.60, for which amount
judgment is given. Goldstein, 147.

XIII. In a suit for salary by a World War I veteran, employed
by the Government and dismissed in 1947, the
defendant's demurrer to plaintiff's petition, which
contains 6 counts, is sustained and the petition dis-
missed. Martilla, 177.

XIV. Under the provisions of the Veterans' Preference Act
(5 U. S. C. 860, 861) and the Civil Service Regula-
tions issued in accordance therewith, plaintiff, who
was separated from his employment on the ground
that appropriated funds were not available to pay
his salary, had the right of appeal to the Civil
Service Commission. Having failed to follow the
prescribed administrative procedure, the Govern-
ment's demurrer to the first count of plaintiff's peti-
tion is sustained. See Johnson v. War Assets Admin-
istration, 171 F. (2d) 556.

Id.

118 C. Cls.

SUIT FOR SALARY-Continued

XV. Where in the second count of his petition plaintiff

alleges that his arm was permanently crippled
because he was ordered back to work before a frac-
ture had healed; and where in the sixth count he
alleges that he was forbidden to write on any subject
to the Washington office of his agency; it is held
that any cause of action which each of these two
counts may state is a cause sounding in tort, of which
the Court of Claims does not have original juris-
diction, and the defendant's demurrer to the second
and sixth counts is sustained. Id.

XVI. Where in both the third and fourth counts of his
petition the plaintiff is claiming a bonus from the
Government for having performed services which
were over and above the accepted responsibilities
of his employment; it is held that under the Act of
August 2, 1946 (5 U. S. C. 116a), and the rules and
regulations issued by the President thereunder, the
payment of cash awards to civilian officers and
employees who make meritorious suggestions result-
ing in improvement or economy in the operation of
the departments, is within the discretion of the
respective department heads; and where it appears
that the officer's claim was fairly considered, though
denied; it is held there is no ground for suit, and the
Government's demurrer to the third and fourth
counts is sustained. Id.

United States 39 (1, 4).

XVII. Where in the fifth count of plaintiff's petition claim is
made for a lump sum cash payment for accumulated
sick leave; it is held that under the applicable statute
(5 U. S. C. 30) and regulations issued thereunder,
there is no basis in law for a cash payment for
unused sick leave, and the Government's demurrer
to the fifth count of the petition is sustained. Id.
United States 39 (1).

SURPLUS PROPERTY ACTS.

See Contracts XXI, XXII, XXIII, XXIV.
TAXES.

DOCUMENTARY STAMP TAX.

I. (1) In a suit to recover the cost of documentary stamps
which the Government required the plaintiff cor-
poration to purchase and cancel when it issued

118 C. Cls.

TAXES-Continued

DOCUMENTARY STAMP TAX-Continued

certain shares of stock; it is held that plaintiff is
entitled to recover. Crown Cork & Seal Company,
Inc., 156.

Internal Revenue 2014.

II. (2) Under the applicable decisions, if shares have been
issued evidencing the ownership of corporate capital,
the issuance of other shares representing the same
amount of capital, to the same stockholders, in ex-
change for the shares formerly issued, is not an
"original issue" within the meaning of the tax
statute (26 U. S. C., 1800, 1802). Id.

III. (3) Where in 1945 the plaintiff corporation issued 147,533
shares of no par preferred stock of a stated value of
$45 per share in exchange for similar stock with a
stated value of $42.50 per share, on a share-for-
share basis, the documentary stamp tax is based
upon the increased value of $2.50 per share and not
on the total value of the new shares issued. Id.

Internal Revenue 1291.

IV. (4) In the instant case, the tax is assessed on the increase
in value of the stock represented by a transfer on
the books of the corporation of $2.50 per share out
of the surplus account into the capital account.
Internal Revenue 1291.

Id.

V. (5) The same corporate capital in the hands of an indi-
vidual taxpayer should be taxed only once even
though the evidence of ownership is changed. Id.
Internal Revenue

1184.

EXCISE TAX.

VI. (1) Where a club, the membership of which is not re-
stricted to any particular line of business, maintains
for its members and their guests not only a dining
room for luncheon but also a bar, which is operated
at a profit, offsetting losses on other operations; and
also a ladies' dining room for the use of the wives of
members and other guests; it is held that the club is
a social club within the meaning of Section 1710 of
the Internal Revenue Code and applicable Treasury
Regulations and is not entitled to recover taxes
levied and collected on membership dues and initi-

118 C. Cls.

TAXES-Continued

EXCISE TAX-Continued

ation fees under Section 1710 for the period from
December 1, 1942, to October 31, 1946. Railroad-
Machinery Club of New York, 542.

VII. (2) The Court finds no substantial distinction between
the relevant facts in the instant case and the Uptown
Club of Manhattan v. United States, 113 C. Cls. 422,
338 U. S. 823; Bankers Club of America v. United
States, 115 C. Cls. 50; and Drug and Chemical Club
v. United States, 115 C. Cls. 66, certiorari denied,
340 U. S. 810. The case of Merchants Club v.
United States, 106 C. Cls. 562, is distinguised in that
the Merchants Club was maintained primarily for
a business purpose, the promotion of the textile
industry. Id.

Internal Revenue 818.

INCOME TAX.

VIII. (1) Under Section 3772 of the Internal Revenue Code
(26 U. S. C. 3772) the failure to file with the Collector
of Internal Revenue a claim for refund of taxes or
penalty assessments paid under protest bars any
right of recovery in the United States Court of
Claims. Ertle, etc., 57.

IX. (2) The filing with the Collector of Internal Revenue of
claims for abatement of tax paid under protest,
which claims for abatement were denied prior to the
payment of the penalty, cannot be construed as
being a compliance with the statute which requires
the filing of a claim for refund within a stated period
after payment. Id.

Internal Revenue 2026.

X. (3) Where, in 1941, the plaintiff company entered into an
agreement with T. C. Stephens to take charge of
its business as general manager and sales engineer
on the basis of a salary of about $8,000 plus a bonus
of one-half of the net profits of the business before
deduction of taxes; and where the profits for 1941
far exceeded expectations so that T. C. Stephens,
who was not a stockholder in the company, received
under his contract a bonus of $169,031.42, which,
together with his fixed salary, made the total
compensation received by him for 1941 the sum of

118 C. Cls.

TAXES-Continued
INCOME TAX-Continued

$176,984.99; and where plaintiff in its tax return
claimed a deduction of the full compensation paid
to T. C. Stephens, which deduction was disallowed
by the Commissioner of Internal Revenue to the
extent of $61,984.99; it is held that the Commissioner
was in error in disallowing any part of the compensa-
tion paid to T. C. Stephens and plaintiff is entitled
to recover. Rogers, 126.

Internal Revenue 933.

XI. (4) The test of the reasonableness of compensation agreed
upon is the situation existing at the time the agree-
ment is entered into; it is not to be determined by
subsequent events not foreseen by the contracting
parties. This is explicitly recognized by the Treas-
ury Regulations applicable to the instant case.
Internal Revenue 933.

Id.

XII. (5) Plaintiff had to pay, and did pay, T. C. Stephens the
amount of the compensation agreed upon for 1941,
and it is unjust for plaintiff to be required to pay
taxes as if this amount has not been paid. T. C.
Stephens paid taxes on the amount of compensation
received by him. The Government should not
demand from Stephens taxes on what he received
and then charge the corporation with taxes as if it
had not paid him what he actually received and
paid taxes on. Id.

Internal Revenue 933.

XIII. (6) Where plaintiff, an oil producer, sustained a net oper-
ating loss for the calendar year 1939, computed by
making the necessary adjustments for percentage
depletion, capital gains and nonbusiness deductions;
and where, in 1940, a year in which plaintiff realized
a net income, the Commissioner of Internal Reve-
nue refused to allow a carry-over deduction in the
amount of the 1939 operating loss, since the excess
of percentage depletion for 1940 more than absorbed
the carry-over deduction that otherwise would have
been allowed; it is held that the Regulations under
which the Commissioner acted were in accord with
the statute (26 U. S. C. 23, 122) and that the Com-
missioner's action was in accord with the Regula-
tions. Recovery denied. Magale, 183.