An insurance company paid the expenses of a group of its agents
and their wives, including petitioners, to New York City to attend
an annual convention, and the Commissioner assessed the value of
the trip to petitioners as taxable income. In a suit for refund,
the District Court found that the trip was provided by the company
primarily for the purpose of affording a pleasure trip in the
nature of a bonus, reward, and compensation for a job well done and
that, from the point of view of petitioners, it was primarily a
pleasure trip and that, therefore, the value of the trip was income
and the costs were personal and nondeductible. The Court of Appeals
approved these findings. Held: Since the ultimate facts are subject
to the "clearly erroneous" rule and their review would be of no
importance save to the litigants themselves, the writ of certiorari
is dismissed as improvidently granted. Pp. 269-270.
Reported below:
291 F.2d
841.
Richard A. Freling argued the cause for petitioners. With him on
the briefs was Felix Atwood.
John B. Jones, Jr. argued the cause for the United States. With
him on the briefs were Solicitor General Cox, Assistant Attorney
General Oberdorfer, Wayne G. Barnett, I. Henry Kutz and Norman H.
Wolfe.
Charles W. Merritt filed a brief for the American Hotel
Association, as amicus curiae, urging reversal.
PER CURIAM.
The petition for certiorari in this case was granted because it
was thought to present important questions involving the definition
of "income" and "ordinary and necessary" business expenses under
the Internal Revenue Code. 368 U.S. 913. An insurance company
provided
Page 370
U.S. 269, 270
a trip from its home office in Dallas, Texas, to New York City
for a group of its agents and their wives. Rudolph and his wife
were among the beneficiaries of this trip, and the Commissioner
assessed its value to them as taxable income.
* It appears to be agreed between the parties that the
tax consequences of the trip turn upon the Rudolphs' "dominant
motive and purpose" in taking the trip and the company's in
offering it. In this regard the District Court, on a suit for a
refund, found that the trip was provided by the company for "the
primary purpose of affording a pleasure trip . . . in the nature of
a bonus, reward, and compensation for a job well done" and that
from the point of view of the Rudolphs it "was primarily a pleasure
trip in the nature of a vacation . . . ."
189 F. Supp.
2, 4-5. The Court of Appeals approved these findings.
291 F.2d
841. Such ultimate facts are subject to the "clearly erroneous"
rule, cf. Commissioner v. Duberstein,
363 U.S.
278, 289-291 (1960), and their review would be of no importance
save to the litigants themselves. The appropriate disposition in
such a situation is to dismiss the writ as improvidently granted.
See Rice v. Sioux City Memorial Park Cemetery,
349 U.S.
70, 78 n. 2 (1955).
MR. JUSTICE FRANKFURTER took no part in the decision of this
case.
MR. JUSTICE WHITE took no part in the consideration or decision
of this case.
[
Footnote *] A joint return had been
filed.
Separate opinion of MR. JUSTICE HARLAN.
Although the reasons given by the Court for dismissing the writ
as improvidently granted should have been persuasive against
granting certiorari, now that the case is here I think it better to
decide it, two members of the Court having dissented on the
merits.
Page 370
U.S. 269, 271
The courts below concluded (1) that the value of this "all
expense" trip to the company-sponsored insurance convention
constituted "gross income" to the petitioners within the meaning of
61 of the Internal Revenue Code of 1954, and (2) that the amount
reflected was not deductible as an "ordinary and necessary"
business expense under 162 of the Code.[
Footnote 1] Both conclusions are, in my opinion,
unassailable unless the findings of fact on which they rested are
to be impeached by us as clearly erroneous. I do not think they can
be on this record, especially in light of the "seasoned and wise
rule of this Court" which "makes concurrent findings of two courts
below final here in the absence of very exceptional showing of
error." Comstock v. Group of Institutional Investors,
335 U.S.
211, 214.
The basic facts, found by the District Court, are as follows.
Petitioners, husband and wife, reside in Dallas, Texas, where the
home office of the husband's employer, the Southland Life Insurance
Company, is located. By having sold a predetermined amount of
insurance, the husband qualified to attend the company's convention
in New York City in 1956 and, in line with company policy, to bring
his wife with him. The petitioners, together with 150 other
employees and officers of the insurance company and 141 wives,
traveled to and from New York City on special trains, and were
housed in a single hotel during their two-and-one-half-day visit.
One morning was devoted to a "business meeting" and group luncheon,
the rest of the time in New York City to "travel, sight-seeing,
entertainment, fellowship or free time." The entire trip lasted one
week.
Page 370
U.S. 269, 272
The company paid all the expenses of the convention-trip which
amounted to $80,000; petitioners' allocable share being $560. When
petitioners did not include the latter amount in their joint income
tax return, the Commissioner assessed a deficiency which was
sustained by the District Court,
189 F. Supp.
2, and also by the Court of Appeals, one judge dissenting, in a
per curiam opinion,
291 F.2d
841, citing its recent decision in Patterson v. Thomas,
289 F.2d
108, where the same result had been reached. The District Court
held that the value of the trip being "in the nature of a bonus,
reward, and compensation for a job well done," was income to
Rudolph, but being "primarily a pleasure trip in the nature of a
vacation," the costs were personal and nondeductible.
I.
Under 61 of the 1954 Code was the value of the trip to the
taxpayer-husband properly includible in gross income? That section
defines gross income as "all income from whatever source derived,"
including, among other items, "compensation for services." Certain
sections of the 1954 Code enumerate particular receipts which are
included in the concept of "gross income,"[
Footnote 2] including prizes and awards (with certain
exceptions);[
Footnote 3]
Page 370
U.S. 269, 273
while other sections, 101-121, specifically exclude certain
receipts from "gross income," including, for example, gifts and
inheritances[
Footnote 4] (see
Commissioner v. Duberstein,
363 U.S. 278), and meals
or lodgings furnished for the convenience of the employer.[
Footnote 5] The Treasury Regulations
emphasize the inclusiveness of the concept of "gross
income."[
Footnote 6]
In light of the sweeping scope of 61 taxing "all gains except
those specifically exempted," Commissioner v. Glenshaw Glass Co.,
348 U.S.
426, 430; see Commissioner v. LoBue,
351 U.S.
243, 246; James v. United States,
366 U.S.
213, 219, and its purpose to include as taxable income "any
economic or financial benefit conferred on the employee as
compensation, whatever the form or mode by which it is effected,"
Commissioner v. Smith,
324 U.S.
177, 181, it seems clear that the District Court's findings, if
sustainable, bring the value of the trip within the reach of the
statute.
Petitioners do not claim that the value of the trip is within
one of the statutory exclusions from "gross income" (see notes 4
and 5, supra) as did the taxpayer in Patterson v. Thomas,
289 F.2d
108, 111-112; rather they characterize the amount as a "fringe
benefit" not specifically
Page 370
U.S. 269, 274
excluded from 61 by other sections of the statute, yet not
intended to be encompassed by its reach. Conceding that the
statutory exclusions from "gross income" are not exhaustive, as the
Government seems to recognize is so under Glenshaw, it is not now
necessary to explore the extent of any such nonstatutory
exclusions.[
Footnote 7] For it
was surely within the Commissioner's competence to consider as
"gross income" a "reward, or a bonus given to . . . employees for
excellence in service," which the District Court found was the
employer's primary purpose in arranging this trip. I cannot say
that this finding, confirmed as it has been by the Court of
Appeals, is inadequately supported by this record.[
Footnote 8]
Page 370
U.S. 269, 275
II.
There remains the question whether, though income, this outlay
for transportation, meals, and lodging was deductible by
petitioners as an "ordinary and necessary" business expense under
162.[
Footnote 9] The relevant
factors on this branch of the case are found in Treas. Reg.
1.162-2.[
Footnote 10] In
summary, the regulation in pertinent part provides:
Traveling expenses, including meals,
lodgings and other incidentals, reasonable and necessary in the
conduct of the taxpayer's business and directly attributable to it
are deductible, but expenses of a trip
Page 370
U.S. 269, 276
"undertaken for other than business purposes" are "personal
expenses" and the meals and lodgings are "living expenses." Treas.
Reg. 1.162-2 (a).
If a taxpayer who travels to a
destination engages in both "business and personal activities," the
traveling expenses are deductible only if the trip is "related
primarily" to the taxpayer's business; if "primarily personal," the
traveling expenses are not deductible even though the taxpayer
engages in some business there; yet expenses allocable to the
taxpayer's trade or business there are deductible even though the
travel expenses to and fro are not.[
Footnote 11] Id., 1.162-2 (b) (1).
Whether a trip is related primarily
to the taxpayer's business or is primarily personal in nature
"depends on the facts and circumstances in each case." Id., 1.162-2
(b) (2); so too with expenses paid or incurred in attending a
convention. Id., 1.162-2 (d).
Finally, the deductibility of the
expenses of a taxpayer's wife who accompanies her husband depends,
first, on whether his trip is a "business trip." Id., 1.162-2 (c);
if so, it must further be shown that the wife's presence on the
trip also had a bona fide business purpose. Ibid.
Where, as here, it may be arguable that the trip was both for
business and personal reasons, the crucial question is whether,
under all the facts and circumstances of the case, the purpose of
the trip was "related primarily to business" or was, rather,
"primarily personal in nature."
Page 370
U.S. 269, 277
That other trips to other conventions or meetings by other
taxpayers were held to be primarily related to business is of no
relevance here; that certain doctors, lawyers, clergymen, insurance
agents or others[
Footnote
12] have or have not been permitted similar deductions only
shows that in the circumstances of those cases, the courts thought
that the expenses were or were not deductible as "related primarily
to business."
The husband places great emphasis on the fact that he is an
entrapped "organization man," required to attend such conventions,
and that his future promotions depend on his presence. Suffice it
to say that the District Court did not find any element of
compulsion; to the contrary, it found that the petitioners regarded
the convention in New York City as a pleasure trip in the nature of
a vacation. Again, I cannot say that these findings are without
adequate evidentiary support. Supra, pp. 273-274.
The trip not having been primarily a business trip, the wife's
expenses are not deductible. It is not necessary, therefore, to
examine whether they would or would not be deductible if, to the
contrary, the husband's trip was related primarily to business.
Where, as here, two courts below have resolved the determinative
factual issues against the taxpayers, according to the rules of law
set forth in the statute and regulations,
Page 370
U.S. 269, 278
it is not for this Court to re-examine the evidence, and disturb
their findings, unless "clearly erroneous." That is not the
situation here.
I would affirm.
Footnotes
Footnote 1 As I see this case,
there is no need to explore whether the proper reporting procedure
for a deductible expense is not to include it in income in the
first place, cf. Treas. Reg. 1.162-17 (b), or to "run it through"
the taxpayer's income with an offsetting deduction in the same
amount.
Footnote 2 E. g., 71
(Alimony and separate maintenance payments), 72 (Annuities; certain
proceeds of endowment and life insurance contracts), 73 (Services
of child).
Footnote 3 74: "(a)
GENERAL RULE. - Except as provided in subsection (b) and in section
117 (relating to scholarships and fellowship grants), gross income
includes amounts received as prizes and awards.
"(b) EXCEPTION. - Gross income does
not include amounts received as prizes and awards made primarily in
recognition of religious, charitable, scientific, educational,
artistic, literary, or civic achievement, but only if -
"(1) the recipient was selected
without any action on his part to enter the contest or proceeding;
and
"(2) the recipient is not required to
render substantial future services as a condition to receiving the
prize or award."
Footnote 4 102.
Footnote 5 119. Some
of the other exclusions are 101 (Certain death payments), 103
(Interest on certain governmental obligations), 104 (Compensation
for injuries or sickness), 105 (Amounts received under accident and
health plans), 113 (Mustering-out payments for members of the Armed
Forces), 117 (Scholarship and fellowship grants).
Footnote 6 Treas. Reg.
1.61-1 (a) provides:
"Gross income means all income from
whatever source derived, unless excluded by law. Gross income
includes income realized in any form, whether in money, property,
or services. Income may be realized, therefore, in the form of
services, meals, accommodations, stock, or other property, as well
as in cash." See also Treas. Reg. 1.61-2 (a) (1), (d) and 1.74-1
(a).
Footnote 7 Petitioners
rely on 3401 of the 1954 Code, relating to withholding taxes, and
more especially on Treas. Reg. 31.3401 (a)-1 (b) (10) providing
that certain fringe benefits are not considered "wages" subject to
withholding. The Government admits that not all "fringe benefits"
have been taxed as income, but it is enough to point out here that
the withholding tax analogy is not perfect, for payments to
laid-off employees from company-financed supplemental unemployment
benefit plans are "taxable income" to the employees although not
"wages" subject to withholding. Rev. Rul. 56-249, 1956-1 Cum. Bull.
488, as amplified by Rev. Rul. 60-330, 1960-2 Cum. Bull. 46.
Footnote 8 The
District Court said (189 F. Supp., at 4-5):
"All of the evidence considered, we
think it irrefutably leads to this conclusion: That the insurance
company was just doing a gracious magnanimous thing of awarding
those leading agents a trip just as much as if it had awarded them
an automobile, or suit of clothes . . . .
. . . . .
". . . [W]e conclude, that the trip
was earned by . . . Rudolph, and was in the nature of a bonus,
reward, and compensation for a job well done."
It is pertinent to note that in addition to the facts referred to
on p. 271, supra, the record shows that company-sponsored
conventions of the same kind have in recent years been held in
Canada, Mexico City, Havana, Colorado and California, places well
known for their appeal to tourists, and far removed from the home
office in Dallas. While this factor alone does not render the
expenses nondeductible, see I. R. S. News Rel. No. IR-394, August
3, 1961, it certainly was a relevant circumstance for the District
Court to consider.
Footnote 9 "(a) IN
GENERAL. - There shall be allowed as a deduction all the ordinary
and necessary expenses paid or incurred during the taxable year in
carrying on any trade or business, including -
. . . . .
"(2) traveling expenses (including
the entire amount expended for meals and lodging) while away from
home in the pursuit of a trade or business . . . ."
No question is raised in this case as to whether the $80,000 paid
by the company for the total convention expense is deductible by
the corporation.
There is no need to explore the lack of symmetry in certain
"income" and "deductibility" areas in the 1954 Code permitting
employers to provide certain "fringe benefits" to employees - such
as parking facilities, swimming pools, medical services - which
have not generally been considered income to the employee, but
which, if paid for by the employee with his own funds, would not be
a deductible expense. The practicalities of a tax system do not
demand hypothetical or theoretical perfection, and these workaday
problems are properly the concern of the Commissioner, not of the
Courts.
Footnote 10
Although this Regulation is part of those promulgated on April 3,
1958, it is applicable to this 1956 transaction. The power to make
the Regulations prospective only, Int. Rev. Code of 1954, 7805 (b),
was not exercised, and they were made applicable to taxable years
beginning after December 31, 1953. T. D. 6291, 1958-1 Cum. Bull.
63. Moreover, the result here would not be different under the
prior comparable Regulation. Treas. Reg. 118, 39.23 (a)-2 (a).
Footnote 11 No
claim has been made by the husband in this case that specific
business expenses which may have been incurred at the convention in
New York are deductible. The only issue is the deductibility of the
entire trip expense. Compare Patterson v. Thomas,
289 F.2d
108, 114 and n. 13.
Footnote 12
Deductions allowed: Coffey v. Commissioner, 21 B. T. A. 1242
(doctor); Coughlin v. Commissioner,
203 F.2d
307 (lawyer); Shutter v. Commissioner, 2 B. T. A. 23
(clergyman); Callinan v. Commissioner, 12 T. C. M. 170 (legal
secretary); see Rev. Rul. 59-316, 1959-2 Cum. Bull. 57; Rev. Rul.
60-16, 1960-1 Cum. Bull. 58.
Deductions not allowed: Duncan v. Commissioner, 30 T.C. 386
(doctor); Ellis v. Burnet, 60 App. D.C. 193, 50 F.2d 343 (lawyer);
Reed v. Commissioner, 35 T.C. 199 (lawyer); Patterson v. Thomas,
289 F.2d
108 (insurance agent); Russell v. Commissioner, 11 T. C. M. 334
(railroad fireman).
MR. JUSTICE DOUGLAS, with whom MR. JUSTICE BLACK joins,
dissenting.
I.
It could not, I think, be seriously contended that a
professional man, say a Senator or a Congressman, who attends a
convention to read a paper or conduct a seminar with all expenses
paid has received "income" within the meaning of the Internal
Revenue Code. Nor would it matter, I assume, that he took his wife
and that her expenses were also paid. Income has the connotation of
something other than the mere payment of expenses. The statute, 26
U.S.C. 61, speaks in terms of financial gain, of compensation for
services, "including fees, commissions, and similar items." The
form of payment for services covers a wide range. Treasury
Regulations 1.61-1 provide:
"Gross income includes income
realized in any form, whether in money, property, or services.
Income may be realized, therefore, in the form of services, meals,
accommodations, stock, or other property, as well as in
cash."
The formula "all expenses paid" might be the disguise whereby
compensation "for services" is paid. Yet it would be a rare case
indeed where one could conclude that a person who gets only his
expenses for attendance at one convention gets "income" in the
statutory sense. If this arrangement were regular and frequent or
if it had the earmarks of a sham device as a cloak for
remuneration, there would be room for fact-finders to conclude that
Page 370
U.S. 269, 279
it was evasive. But isolated engagements of the kind here in
question have no rational connection with compensation "for
services" rendered.
It is true that petitioner was an employee and that the expenses
for attending the convention were paid by his employer. He
qualified to attend the convention by selling an amount of
insurance that met a quota set by the company. Other salesmen also
qualified, some attending and some not attending. They went from
Dallas, Texas, to New York City, where they stayed two and a half
days. One day was given to a business session and a luncheon; the
rest of the time was left for social events.
On this record there is no room for a finding of fact that the
"expenses paid" were "for services" rendered. They were apparently
a proper income tax deduction for the employer. The record is
replete with evidence that from management's point of view it was
good business to spend money on a convention for its leading agents
- a convention that not only kept the group together in New York
City, but in transit as well, giving ample time for group
discussions, exchanges of experience, and educational training. It
was the exigencies of the employment that gave rise to the
convention. There was nothing dishonest, illegitimate, or unethical
about this transaction. No services were rendered. New York City
may or may not have been attractive to the agents and their wives.
Whether a person enjoys or dislikes the trip that he makes "with
all expenses paid" has no more to do with whether the expenses paid
were compensation "for services" rendered than does his attitude
toward his job.
In popular understanding a trip to a convention "with all
expenses paid" may be an award. Yet the tax laws are filled with
exemptions for "awards" which are not considered to be income. The
exemption of gifts is one example. Others are the exemptions of the
proceeds
Page 370
U.S. 269, 280
of life insurance payable at death, disability benefits, the
rental values of parsonages, scholarship and fellowship grants,
allowances of U.S. employees abroad, mustering-out payments to
members of the Armed Forces, etc. Employees may receive from their
employers many fringe benefits that are not income. Treasury
Regulations 31.3401 (a)-1 (b) (10) provide:
"Ordinarily, facilities or privileges
(such as entertainment, medical services, or so-called `courtesy'
discounts on purchases), furnished or offered by an employer to his
employees generally, are not considered as wages subject to
withholding if such facilities or privileges are of relatively
small value and are offered or furnished by the employer merely as
a means of promoting the health, good will, contentment, or
efficiency of his employees."
The fringe benefits of this one convention trip are less obviously
income than the fringe benefits listed in the Regulations. For the
latter are constantly recurring - day after day, week after week.
Moreover, on this record the convention promotes the "efficiency"
of the agents as much as the other fringe benefits enumerated in
the Regulations.
II.
The expenses, if "income," are plainly deductible. The
Government, however, says that our problem is to determine "whether
it is consistent with the ends of an equitable and workable tax
system" to make them such. The problem of designing an "equitable"
tax system is, however, for Congress, not for the Court.
The test of deductibility to be applied here is whether the
expenses are "ordinary and necessary" in the carrying on of
petitioner's business. The Act is explicit in permitting the
deduction of traveling expenses (including the
Page 370
U.S. 269, 281
entire amount expended for meals and lodging) while away from
home in the "pursuit of a trade or business," 26 U.S.C. 162 (a)
(2).
The Regulations are even more explicit. Section 1.162-2 (b) (1)
provides:
"If a taxpayer travels to a
destination and while at such destination engages in both business
and personal activities, traveling expenses to and from such
destination are deductible only if the trip is related primarily to
the taxpayer's trade or business. If the trip is primarily personal
in nature, the traveling expenses to and from the destination are
not deductible even though the taxpayer engages in business
activities while at such destination." (Italics added.)
Thus, by the very terms of the Regulations a taxpayer who combines
business and pleasure may deduct all "traveling expenses," provided
the business purpose is dominant.
Section 1.162-2 (b) (2) of the Regulations states:
"Whether a trip is related primarily
to the taxpayer's trade or business or is primarily personal in
nature depends on the facts and circumstances in each case. The
amount of time during the period of the trip which is spent on
personal activity compared to the amount of time spent on
activities directly relating to the taxpayer's trade or business is
an important factor in determining whether the trip is primarily
personal. If, for example, a taxpayer spends one week while at a
destination on activities which are directly related to his trade
or business and subsequently spends an additional five weeks for
vacation or other personal activities, the trip will be considered
primarily personal in nature in the absence of a clear showing to
the contrary."
Page 370
U.S. 269, 282
Where, as here, at least one-half of the time is spent on mundane
"business" activities,
1 the
case is nowhere near the colorable transaction described in 1.162-2
(b) (2).
I see no reason to take this case out of the main stream of
precedents and establish a special rule for insurance conventions.
Judge Brown, dissenting in the Court of Appeals, shows how
discriminatory this decision is:
"Deductions have been allowed as
`ordinary and necessary' to clergymen attending a church
convention; to expenses of an employee attending conventions of a
related business group; to a lawyer attending a meeting of the
American Bar Association; to a legal secretary attending the
national convention of the National Association; to physicians
attending medical conventions; to certified public accountants
attending conventions; to university teachers in attending
conventions or scientific meetings; to professional cartoonists
attending political conventions; to persons attending the Red Cross
Convention; to school teachers attending summer school; to
attorneys attending an institute on Federal taxation; to employees
sent to refresher courses to become more acquainted with new
processes in the industry; to a furniture store sending its buyers
to the annual furniture mart; to representatives to annual
conventions of trade associations; and to an insurance agent away
from home on business."
291 F.2d
841, 844-845.
Insurance conventions go back at least to 1924 (Report No. 15, Life
Insurance Sales Research Bureau, Nov. 1924) and are premised on the
idea that agents and companies
Page 370
U.S. 269, 283
benefit from the knowledge and increase in morale which result
from them.
2 Why they should
be treated differently from other conventions is a mystery. It
cannot be, as the district judge thought and as the Government
seems to argue, because going to New York City is, as a matter of
law, a "pleasure trip." If we are in the field of judicial notice,
I would think that some might conclude that the weekend in New York
City was a chore and that those who went sacrificed valuable time
that might better have
Page 370
U.S. 269, 284
been spent on the farm, in the woods, or along the seashore.
Moreover, federal revenue agents attending their convention are
given a deduction for the expenses they incur. We are advised
that
". . . the Commissioner has recently
withdrawn his objections in two Tax Court cases to the deduction of
convention expenses incurred by two IRS employees in attending
conventions of the National Association of Internal Revenue
Employees.
"No explanation has been given
publicly for the Tax Court action of the Commissioner, it being
generally presumed that the IRS employees met the tests of Reg.
1.162-2 (d) by showing a sufficient relationship between the trade
or business of being an IRS employee and attendance at conventions
of the NAIRE. The National Association of Internal Revenue
Employees has hailed the Commissioner's actions as setting a
precedent which can be cited by IRS employees when taking
deductions for expenses incurred in attending NAIRE conventions."
CCH Standard Federal Tax Reports No. 23, April 19, 1961, pt. 1, p.
2.
It is odd, indeed, that revenue agents need make no accounting of
the movies they saw or the nightclubs they attended, in order to
get the deduction, while insurance agents must.
III.
The wife's expenses
3 are,
on this record, also deductible. The Treasury Regulations state in
1.162-2 (c):
"Where a taxpayer's wife accompanies
him on a business trip, expenses attributable to her travel are
Page 370
U.S. 269, 285
not deductible unless it can be adequately shown that the wife's
presence on the trip has a bona fide business purpose. The wife's
performance of some incidental service does not cause her expenses
to qualify as deductible business expenses. The same rules apply to
any other members of the taxpayer's family who accompany him on
such a trip."
The civil law philosophy, expressed in the community property
concept, attributes half of the husband's earnings to the wife - an
equitable idea that at long last was reflected in the idea of
income splitting under the federal income tax law.
4 The wife's contribution to the business
productivity of the husband in at least some activities is well
known. It was specially recognized in the insurance field long
before the issue of deductibility of her expenses arose under the
federal income tax.
5
Business reasons
Page 370
U.S. 269, 286
motivated the inclusion of wives in this particular insurance
convention. An insurance executive testified at this trial:
"Q. I hand you Plaintiff's Exhibit
15, and you will notice it is a letter addressed to `John Doe';
also a bulletin entitled `A New Partner Has Been Formed.'
"Will you tell us what that consists
of?
"A. This is a letter addressed to the
wife of an agent, a new agent, as we make the contract with him.
This letter is sent to his wife within a few days after the
contract, enclosing this booklet explaining to her how she can help
her husband in the life insurance business.
. . . . .
"Q. Please tell us, as briefly as you
can and yet in detail, how you as agency director for Southland
attempt to integrate the wives' performance with the performance of
agents in the life insurance business.
"A. One of the important functions we
have in mind is the attendance at these conventions. In addition to
that communication, occasionally there are letters that will be
written to the wife concerning any special sales effort that might
be desired or promoted. The company has a monthly publication for
the agents and employees that is mailed to their homes so the wife
will have a convenient opportunity to see the magazine and read
it.
"At most of our convention
program[s], we have some specific reference to the wife's work, and
in quite a few of the convention programs we have had wives appear
on the program.
"Q. Suppose you didn't have the wives
and didn't seek to require their attendance at a convention, would
there be some danger that your meetings
Page 370
U.S. 269, 287
and conventions would kind of degenerate into stag affairs,
where the whole purpose of the meeting would be lost?
"A. I think that would definitely be
a tendency."
I would reverse the judgments below and leave insurance conventions
in the same category as conventions of revenue agents, lawyers,
doctors, business men, accountants, nurses, clergymen and all
others, until and unless Congress decides otherwise.
[
Footnote 1] The travel
to and from the convention was in a group, so arranged as to
develop solidarity among the agents, and to provide a continuing
seminar.
[
Footnote 2] "One of the
chief things to be accomplished by a convention is to secure
unanimous understanding of the principle underlying the company's
sales operations and the rules which experience has proved to be
essential in carrying out those principles. There is no sales
organization anywhere which has a complete and unanimous grasp of
these matters but a convention can do more to give the men that
grasp than anything else. Home Offices are constantly under the
necessity of formulating principles and rules, and they are
similarly in a constant state of disappointment because they are
not understood. The convention is the place above all others where
this can be accomplished.
. . . . .
"The extent to which the Home Office
arranges for transportation depends largely upon the situation of
the convention city. If it is centrally located with many lines of
approach, it would be impracticable to arrange for many men to meet
on their way to the convention. But if the convention is to be held
in an isolated spot, or one at considerable distance from the home
of the majority of the members attending, then specific plans may
be made for assembling at some nearer location and proceeding
together to the destination. If this latter is at all feasible, it
is desirable for several reasons. It gives the men a peculiar
feeling of satisfaction to travel on a `special' train or on
`special' cars, it encourages a friendlier feeling than is
generally present at conventions at which the men arrive as
strangers, it makes the men more anxious to get down to the real
work of the convention when they arrive at their destination, and,
above all, it has a decided educational value in its contacts and
ever present business discussions." Report No. 15, Life Insurance
Sales Research Bureau, Nov. 1924, pp. 13, 17-18.
[
Footnote 3] For reasons
not germane to the problems of the federal income tax, the New York
Superintendent of Insurance has ruled that the payment of a wife's
expenses in attending an insurance convention is not permissible.
N. Y. Ins. Dept. Rulings (1953), Oct. 6, 1953.
Page 370
U.S. 269, 285
And see 27 McKinney's Con. Laws of N. Y., 213, subdivisions 7
and 8, regulating insurance agents' competitions.
[
Footnote 4] See H. R.
Rep. No. 1274, 80th Cong., 2d Sess., pp. 1, 47.
[
Footnote 5] "Today an
ever increasing number of wives take a real interest in what their
husbands do, and this interest is frequently referred to by men as
being of very great value to them. In fact, it has been said that a
wife can not usually be so wholly lacking in contact with her
husband's work as to have no influence at all upon it.
"In many cases, this influence is
negative rather than positive, and this is particularly true in the
careers of many life insurance agents because their work frequently
involves evening appointments - a condition usually resented by a
wife. Many a wife has thoroughly discouraged her husband because
the only thing which she ever knew about his work was that he had
to go out at night or that he had failed to `write that ten' which
would give her a new dress. She knew nothing about the bigger
things which life insurance accomplishes and of which her husband
was or could be a part. The recognition of the very great
desirability of `selling' the wife on her husband's job has spread
rapidly in recent years, and today many husbands are helped over
the rough spots of their career by the enthusiasm and vision of
their wives, much of which can be aroused or increased at a
convention." Report No. 15, supra note 2, pp. 25-26.
Page 370
U.S. 269, 288