148 C. Cls.

MILITARY PAY-Continued

RETIRED PAY (NONDISABILITY)—Continued

Rank for retirement purposes.

Satisfactory service-determination of.

The Secretary of the Air Force has discretionary power to determine
whether or not an officer about to be retired has performed satis-
factory service in his highest temporary rank and if that determi-
nation is supported by substantial evidence and is not shown to
have been arbitrary, it will not be set aside by this court despite the
fact that the officer proves that his performance ratings were su-
perior or outstanding during his period of service in such temporary
grade. (10 U.S.C. § 8963 (a)). Brownfield, 411.
Armed Services

13.5 (4)

OFFICIAL ACTIONS OF GOVERNMENT OFFICIALS. See Presumptions.
ORDINARY INCOME. See Taxes.

PATENTS. See also Taxes.

VALIDITY.

Combination of old elements.

Where the combination of old elements is not obvious and the
result of the particular combination is novel and useful, the patent
is valid even though the idea is a simple one. Thus, an invention
comprising a canopy for the cockpit of an aircraft which canopy
was slidable back and forth and could be completely and instantane-
ously detached, was a novel invention even though previously there
had been canopies which would slide back and forth in flight and
also other canopies which were detachable. Saulnier, 507.
Patents

26(14)

Presumption of validity.

Burden of proof.

Where a patent has been granted, the burden is on the infringer to
show that the patent was improvidently granted. Saulnier, 507.
Patents 312(1%)

PATENT VALIDITY. See Evidence.

PERSONAL HOLDING COMPANY TAX. See Taxes.

PLEADING AND PRACTICE.

SPECIAL MATTERS.

Allegation of arbitrariness.

Particularity.

A bare allegation of arbitrary action is not sufficient to sustain a
petition against a motion by the Government for summary judg-
ment dismissing the petition. Volentine and Littleton v. United
States, 136 C. Cls. 638, 643. National Electronic Laboratories, 308.
Courts 470

148 C. Cls.

PLEADING AND PRACTICE-Continued

THIRD PARTY PRACTICE.

Third party defendant.

Judgment against third party defendant.

Where the Government has erroneously paid money to third party
defendants instead of to the plaintiff who is entitled to the money,
the Government may have judgment against the third party for the
money it must now pay out in the judgment against it in favor
of the plaintiff. Stamer, 482.

Federal Civil Procedure 296

PREJUDICE. See Laches.

PRESIDENTIAL ACTION. See Military Pay.

PRESUMPTIONS. See also Evidence; Military Pay; Patents; Taxes.
OFFICIAL ACTIONS OF GOVERNMENT OFFICIALS.

Presumption of regularity.

Presidential act performed by department heads.

It will be presumed that the act of the head of an executive depart-
ment is the act of the President where the President is the official
authorized by Congress to perform the act. Brownfield, 411.
Evidence 83 (1)

PATENTS.

Presumption of validity.

When a patent is granted it is presumed to be valid. Saulnier, 507.

Patents 118.21

PROPERTY.

FUTURE INTERESTS.

Subsequent to present legal life interest.

Life tenant and remainderman.

Where the legal life tenant and the trustee of a life interest only
have the same fiduciary obligation toward the owners of succeeding
future interests, they cannot appropriate the principal to themselves
nor intentionally injure the remainderman by the way in which they
use the property. A court of equity may require the life tenant
to safeguard the remainderman's interest by giving security for
property in his possession. Restatement, Property, § 202, com-
ment d. Weil, 681.

Life Estates 6

REFORMATION. See Contracts.

REGULAR OFFICER. See Military Pay.

REGULATIONS FOR BENEFIT OF GOVERNMENT. See Contracts.
REMAINDERMAN. See Property.

RENEGOTIATION ACT. See Contracts.

148 C. Cls

RENEGOTIATION AGREEMENT. See Contracts.

REPUDIATION OF CONTRACTS.

See Contracts.

RESPONDEAT SUPERIOR. See Torts.

ROYALTY PAYMENTS. See Taxes.

SATISFACTORY SERVICE. See Military Pay.

SPECIAL MATTERS. See Pleading and Practice.

SUITS AGAINST UNITED STATES. See Levees and Flood Control.
SUMMARY JUDGMENT. See Contracts.

TAKING. See Eminent Domain.

TAXES.

EMPLOYMENT TAX.

EMPLOYER-EMPLOYEE RELATIONSHIP.

What constitutes.

Whether a person is an "employee" or an independent contractor
depends upon all the factors involved in the particular relationship,
and control over the method of rendering a service is more indica-
tive of the employer-employee relationship than is control over the
service to be rendered. Cutler, 537.

A band leader who furnished music under contract with hotels,
clubs, etc., and who supplied the musicians, was the employer of
the musicians hired by him. The only control exerted by the hotels,
etc., for whom the band leader furnished the music, was the selection
of the music and the physical location of the musicians playing in
the band. In his relationship with the hotels, etc., the bandleader
was an independent contractor and the musicians were his em-
ployees. Cutler, 537.

Master and Servant 5

ESTATE TAX.

DEDUCTIONS.

Expenses.

Attorney fees.

Attorneys' fees and costs incurred in litigation concerning the gift
tax liabilities of the decedent's children, are not deductible from
the decendent's gross estate because they were not incurred in con-
nection with claims enforceable against the decendent's estate. Sec-
tion 812(b) (3) of the Internal Revenue Code of 1939, as amended,
26 U.S.C. § 812(b) (3) (1952), 26 C.F.R. § 81.36. Hoover, et al.,
Executors, 645.

Internal Revenue 1010

148 C. Cls.

TAXES-Continued

ESTATE TAX-Continued

DEDUCTIONS-Continued

Expenses-Continued

Attorney fees-Continued

Reasonable attorneys' fees incurred by the executors of a decedent's
estate in prosecuting the estate's suit in the Court of Claims, are
deductible from the gross estate. Hoover, et al., Executors, 645.
Internal Revenue

1010

Public, charitable and religious uses-transfers for.

Lobbying activities.

Time spent by an organization's members in deliberating and dis-
cussing what position, if any, the organization should take on
questions of public interest, is time spent in preparation for the
influencing of legislation, i.e., time spent for the purpose of pre-
senting a united front to legislative bodies in order to induce legis-
lative action or inaction; and contributions or transfers to such
an organization are not contributions to public, charitable or relig-
ious organizations, no substantial part of which activities is attempt-
ing to influence legislation within the meaning of 26 U.S.C. § 812
(1952). League of Women Voters, 561.

Transfers in contemplation of death.

Presumption regarding transfers-how rebutted.

Under section 811 (1) of the Internal Revenue Code of 1939, as
amended, 26 U.S.C. (1952), there is a prima facie presumption that
gifts made by a decedent within three years of his death are made
in contemplation of death and must be included in his gross estate
for estate tax purposes. One of the principal ways of overcoming
such presumption is by showing that the motive of the decedent
in making the gifts was not the thought of impending death. Thus,
where the facts and circumstances of the case show that the decedent
was motivated to make gifts to her children because of her desire to
discharge a long standing moral obligation undertaken many years
previously by her husband and never fulfilled by him, which failure
on his part was a matter of deep disappointment and concern to
the decedent who, shortly after her husband's death, went about
making the long promised gifts, the court concludes that the gifts
were not made in contemplation of death. Hoover, et al., Executors.
645.

Internal Revenue 1471

148 C. Cls.

TAXES-Continued

EXCESS PROFITS TAX.

EXCESS PROFITS CREDIT.

Regulated public utility.

Adjusted invested capital-how computed.

Where the books of account of a regulated public utility are re-
quired to and do include current earnings within its earned surplus,
the taxpayer is entitled to include such earnings in its adjusted
invested capital for the purpose of computing the 6 percent excess
profits credit allowed in section 448 of the Internal Revenue Code
of 1939, 26 U.S.C. § 448 (1952). Louisville Gas and Electric Co., 671.
Internal Revenue 895

Treasury Regulations 130, § 40.448-2, as amended by T.D. 5983,
1953-1 Cum. Bull. 352, which provides that the determination of
adjusted invested capital for any taxable year shall be made without
regard to the profits or loss of the taxpayer for such year, computed
in accordance with the prescribed system of accounts employed, is
contrary to section 448 of the Internal Revenue Code of 1939, 26
U.S.C. § 448 (1952), which prescribes computation as recorded in
the corporate books of account, and as an amendment of the statute,
the regulation is invalid. Louisville Gas and Electric Co., 671.
Internal Revenue 157

INCOME TAX.

DEDUCTIONS.

Business expenses.

Premium paid to retire outstanding debentures.

Under Treasury Regulations 118, § 39.22(a)–17, a premium paid by
a corporation to buy back its own bonds is, to the extent that the
purchase price exceeds the issuing price or face value, a deductible
expense for the taxable year and this is so even though the payment
is made to a director or to a controlling stockholder. Baltimore
Steam Packet Co., 699.

Internal Revenue 553

An expense is an ordinary and necessary business expense if it is
appropriate and helpful to the taxpayer's business; and the tax-
payer's judgment as to what is appropriate and helpful should not
be overruled by the tax authorities without good reason. Mertens,
Law of Federal Income Taxation § 25.81. Thus, where a corpora-
tion buys back its bonds at a premium to effect a saving in interest,
the premium represents a necessary business expense deductible
under section 23 (a)(1)(A) of the Internal Revenue Code of 1939.
Baltimore Steam Packet Co., 699.

Internal Revenue 553