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DESIGNATION OF A RETIRED ASSOCIATE JUS

TICE OF THE SUPREME COURT OF THE UNITED STATES FOR SERVICE ON THE UNITED STATES COURT OF CLAIMS.

The Chief Judge of the United States Court of Claims having certified that there is a necessity for the designation and assignment of a Retired Associate Justice of the Supreme Court of the United States to perform the duties of a judge of the United States Court of Claims during the period beginning June 5, 1957, and continuing thereafter for such time as may be necessary to hear and consider the case of New York Mail and Newspaper Transportation Company v. The United States; and the Honorable Stanley F. Reed, an Associate Justice of the Supreme Court of the United States, Retired, having expressed his willingness to undertake the performance of such judicial duties as may arise incident to such designation and assignment;

Now, THEREFORE, pursuant to the authority vested in me by Title 28, United States Code, & 294 (a), I do hereby designate and assign the Honorable Stanley F. Reed to perform the duties of a judge of the United States Court of Claims during the period aforesaid.

(S) EARL WARREN,

Chief Justice of the United States. Dated: JUNE 4, 1957.

XXI

LEGISLATION RELATING TO THE COURT OF

CLAIMS
PUBLIC LAW 85–60–85TH CONGRESS, H. J. Res. 185

June 27, 1957
JOINT RESOLUTION

To implement the convention between the United States of America and Norway, which entered into force on November 9, 1948, for disposition of the claim against the Government of the United States of America asserted by the Government of Norway on behalf of

Christoffer Hannevig. Whereas on March 28, 1940, a convention was entered into

by the Government of the United States of America and the Government of Norway for the disposition of the claim of the Government of Norway on behalf of Christoffer Hannevig against the Government of the United States of America, the validity of which claim is denied

by the Government of the United States of America; and Whereas the convention was duly ratified and the respective

instruments of ratification were duly exchanged on November 9, 1948, on which date the convention entered into

force; and Whereas, by said convention, provision was made for the

exchange between the respective agents for the two Governments of certain pleadings and briefs as therein de

scribed and defined; and Whereas, by said convention, it is provided that in the event

that, after the exchange of such pleadings and briefs, the two Governments should be unable to agree upon a disposition of the claim, or any portions thereof, through diplomatic discussion, the claim shall be referred to the Court of Claims of the United States of America, for adjudication of said claim, or any unsettled portions thereof, by the said Court of Claims, and for appeal to and review by the Supreme Court of the United States of America, under and pursuant to the terms and conditions of said

convention; and Whereas the two Governments have been unable through

such diplomatic discussion to agree upon a disposition of the claim: Therefore be it

Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That the United States Court of Claims shall hear and adjudicate the said claim under and pursuant to the terms and conditions of the said convention. The proceedings in the said court shall be initiated within six months after the approval of this resolution.

SEC. 2. Upon appeal by either the Government of the United States of America or the Government of Norway, or both, the Supreme Court of the United States of America shall, under and pursuant to the terms and conditions of the convention, review the decision of the United States Court of Claims. Approved June 27, 1957.

(71 Stat. 191)

CASES DECIDED

IN

THE UNITED STATES COURT OF CLAIMS

April 1, 1957, to June 30, 1957, and other cases not heretofore pub

lished. Opinions are not ordinarily published until final judgment is rendered. Cases in which motions have been filed are not published until disposition of such motions.

R. J. REYNOLDS TOBACCO COMPANY v. THE

UNITED STATES

[No. 254–54. Decided April 3, 1957. Plaintiff's motion for rehearing

overruled July 12, 1957]*

On the Proofs

Income and excess profits taxes; payments representing preferential

dividends and not compensation.—Plaintiff, in an effort to add to the incentive of its employees, made available in 1912 a liberal stock purchase plan which made it possible for its employees to participate in the earnings of the company. The company prospered and in some instances the income from the investment was considerably out of proportion to the employee's salary. The question presented is whether the additional income was compensation and thus deductible for tax purposes under section 23 (a) (1) (A) of the Internal Revenue Code of 1939 as reasonable business expenses, or distribution of capital in the nature of preferential dividends. It is held that the payments made by plaintiff during the period 1940 to 1948, inclusive, were not additional compensation and were based on an employee's investment in the company rather than on the value of his services as an employee. They were therefore preferential dividends. Plaintiff is not entitled to recover and its

petition is dismissed. Internal Revenue - 550 Same; proof as to reasonablene88.-The payments, if held to be com

pensatory, would be deductible only to the extent that they were reasonable and, although the evidence offered by plain

•Plaintiff's petition for writ of certiorari denied by the Supreme Court December 9, 1957.

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