SOME RECENT INCOME TAX DECISIONS OF THE TREASURY DEPARTMENT.

Office Decision 644. Sale of Interests in Mineral Rights.-"Land was purchased in 1914. At the time of the purchase the mineral rights in the land had no market value, that is, no part of the purchase price of the land was paid as consideration for the mineral rights therein, Subsequently the land was leased on a royalty basis for oil and gas development, and in 1919 amounts were received from the sale of interests in such royalty."

"Held, that inasmuch as the oil and gas rights had no market value at the time the land was purchased, the entire amount received from the sale of the royalty interests is income for the year of its receipt, subject, however, to proper adjustment on account of depletion sustained."

Office Decision 668. Sale of Good Will."Where a corporation sells its assets, including good will, to a competing corporation, one condition to the sale being an agreement by the president of the vendor corporation not to engage in similar business, for which he is paid a money consideration, the amount so received by the president does not represent a conversion of capital, but is income for the year of its receipt."

Office Decision 672. Returns at Dissolution of Corporation.-"Under the law of the State of Illinois, a corporation cannot be dissolved until a formal showing is made that all its liabilities have been satisfied. Under income tax regulations a corporation going into liquidation is permitted to file its return for the fractional part of the year during which it was engaged in business only upon completion of such liquidation."

"Held, under the circumstances, that the Bureau will waive the filing of evidence of the completion of liquidation, and will accept a final return from the corporation, if accompanied by a certificate of the court showing that all requirements of the law with regard to dissolution of the corporation and distribution of its assets have been satisfied, except as to evidence of payment of federal income taxes, and that actual winding up of the corporation merely awaits formal court action. Upon payment of all federal income tax shown to be due from the corporation, the collector will issue the necessary receipt."

Office Decision 659, Corporation Insurance.— "Where a corporation insures the life of its

"The premiums paid on such a policy are a charge against surplus and represent dividends to the stockholders, subject to surtax to the extent that such premiums are paid out of earnings or surplus accumulated since February 28, 1913. This applies as well to the officer upon whose life the insurance is carried."

Office Decision 645, Use and Occupancy Insurance Received Considered Income.-"The M Company in 1919 had a fire in its plant which necessitated shutting down for a day. The company has recovered under a use and occupancy policy of insurance the sum of x dollars as compensation for the loss of use of its factory."

"Held, that sums recovered under such a policy are nothing more than compensation for the loss of anticipated profits, and whether such sums are less than, equal to, or in excess of such anticipated profits for the period of nonuse, they, nevertheless, represent income within the meaning of that term as used in the Revenue Act of 1918."

"The amount of premiums paid on insurance of this character is properly deductible as a business expense."

Office Decision 647, Interest on State Obligations. "Profit derived from non-interest-bearing state and municipal securities purchased at a discount and held until maturity is not taxable where it clearly appears that the return from the investment in the hands of the taxpayer is due solely to the compensation received from the state or municipality in lieu of interest for the use of the taxpayer's money. In no case may such exemption exceed the total discount at which the securities were originally sold by the state or municipality."

Office Decision 664, Bonus for Prompt Delivery Considered Expense.-"A bonus was paid for the delivery of a steamship at a date earlier than that stipulated in the contract for its construction, and the question is presented whether the amount is properly chargeable as a business expense or as a capital expenditure."

"Held, that as the bonus paid for delivery at a date earlier than that contracted for added nothing to the value of the vessel after the contract date of delivery, the amount so paid is

properly chargeable as a business expense and is deductible from income received between the date of delivery of the vessel and the date it would have been delivered had no bonus been paid."

Office Decision 665, Personal Exemptions of Head of Family.-"A daughter who actually supports and maintains her dependent mother elsewhere than in her own home, by reason of the fact that she is unable to earn enough to support them both in the mother's place of abode or to defray their joint expenses in the daughter's place of employment is properly classifiable for income tax purposes as the head of a family."

THE DOMICILE OF SEPARATED

SPOUSES.

The question argued in the recent House of Lords case1 was whether a wife could, notwithstanding the marriage, acquire a domicile independent from that of the husband. In this case the husband, whose domicile of origin was Scotland, acquired a domicile in Queensland. He contracted, it was alleged, a bigamous marriage there. The wife remained in Scotland till her death. She had raised an action of divorce for adultery and desertion, but died before the summons was served. The argument put forward was that in these circumstances she could and did acquire an independent domicile in Scotland, where she died, and that consequently the right to succeed to her movable estate and the liability to legacy duty depended on the law, not of Queensland, but of Scotland.

In support of this contention the appellants relied on a certain dictum of Lord Cranworth in the case of Dolphin v. Robins. In that case, Mrs. Dolphin, the wife of a domiciled Englishman, had obtained a decree of divorce in the Scottish courts on the

ground of adultery against her husband, who at that time was temporarily resident in Scotland. She had then gone to France, where she had gone through the ceremony of marriage with a Frenchman. The question in the case was whether Mrs. Dolphin, on her death, was by domicile an Englishwoman or a French woman. This House first decided that the Scottish decree of divorce was null for want of jurisdiction, no court having power to divorce a vinculo except the court of the country of the domiciled husband-and then put the question for argument "whether the circumstances are such as to render the wife capable of gaining for herself a domicile, and if so, did she do it?" The learned Lords unanimously held that the null decree of divorce being in no sense equivalent to a decree of separation, Mrs. Dolphin remained a married woman not separated from her husband by judicial decree, and therefore incapable of acquiring a different domicile from that of her husband.

Lord Cranworth, in that case, indicated a doubt as to whether, if there had been a decree of judicial separation, the wife might not have acquired a domicile different from that of her husband, and, having almost expressed his preference for the view that she might, he proceeds as follows: "On this question it is unnecessary and it would be improper to pronounce an opinion, for here there was no judicial sentence of divorce a mensa et thoro no decree enabling the wife to quit her husband's home and live separate from him. I have adverted to the point only for the purpose of pointing out that the conclusion at which I have arrived in the case now under discussion would af ford no precedent in the case of a wife judicially separated from her husband. For, whatever might have been the case if such a decree had been pronounced, I am clearly of opinion that without such a decree it must be considered that the marital rights remain unimpaired."

He then went on to say, and it was on these words that the appellants in MacKin

non's Trustees v. The Lord Advocate founded: "Before quitting the subject I should add that there may be exceptional cases to which, even without judicial separation, the general rule would not apply, as, for instance, where the husband has abjured the realm, has deserted his wife and established himself permanently in a foreign country, or has committed felony and been transported."

In regard to the application of these dicta to MacKinnon's case, Lord Shaw said: "Any doubts that there are in the case have arisen in the legal sphere, but even there they have not arisen on account of the application of any well-known doctrines in law, but substantially upon a conjecture by way

of reserve, for I call it so-a conjecture by way of reserve expressed by Lord Cranworth in the case of Dolphin v. Robins. That conjecture has been repeated and repeated in text-books and succeeding cases. No case which crystallizes it in fact has ever yet arisen in which any exception to or aversion from the general doctrine of domicile has been given effect to. I am clearly of opinion that the present case is certainly not one to which any such conjectural exception could apply." The other judges were unanimously of the same opin

ion.

The following concluding observations by Lord Shaw should be noted, as they are bound to become of practical interest sooner or later: "It appears to me, my lords, to be a question which has certainly never been settled in the affirmative whether even a judicial decree of separation can affect the domicile of the spouses permitting thereafter separate domiciles to be acquired. The ordinary rule has not yet been so invaded. It works conveniently. It prevents confusion. It regulates succession by one set of rules. instead of possibly by two, and it preserves that unity of idea and fact with regard to

the domicile of married parties which has hitherto always been upheld by law.

"I should desire further to observe that I should have the greatest doubt in any event whether, if one of the spouses fails during the continuance of the marriage to obtain a divorce a vinculo matrimonii, it is legitimate to raise the question after the death of the other. A fortiori, I think this is to be also the case when the question is raised after the death of the spouse, as in the present case, in order to promote or regulate ulterior interests."

It is of interest to note that little if any appeal was made in argument to the theory of "the matrimonial domicile," which may now be taken as extinct. In the leading case of Le Mesurier (1895), A. C. 531), Lord Watson quoted with manifest approval the judgment of Lord Deas in the Scotch case of Jack v. Jack, where that distinguished judge characteristically said: "Neither can I solve this case by what has been sometimes called the domicile of marriage. The phraseology appears to me to be calculated to mislead. It is figurative and wants judicial precision. There is no third domicile involved apart from the domicile. of the husband and the domicile of the wife. Domicile belongs exclusively to persons. Having ascertained the domicile of the husband and the domicile of the wife, the inquiry into domicile is exhausted." After an exhaustive summary of the cases both in England and in Scotland, Lord Watson in Le Mesurier concluded: "When carefully examined, neither the English nor the Scottish decisions are, in their lordships' opinion, sufficient to establish the proposition that in either of these countries there exists a recognized rule of general law to the effect that a so-called matrimonial domicile gives jurisdiction to dissolve marriage." DONALD MACKAY.

Glasgow, Scotland.

(3) 1862, 24 D. 467.

FROM BLUE LAWS TO BLUE SKY LAWS THE PILGRIM TERCENTENARY.

Recently I received two publications in the same mail, one entitled, "Liberty," the other, a monthly review of financial conditions issued by the National City Bank of New York. The first pamphlet was a reminder that on December 21, 1920, would occur the tercentenary of the Pilgrim's landing at Plymouth Rock, and incidentally, that they proposed that each member of the colony should worship God according to his own conscience and compel everybody else to do the same. To that end many rigid laws were enacted by the New England pioneers for the proper worship of the established religion. These enactments have become known as "The Blue

Laws." Many reasons have been given why these laws were designated "blue," but the humorist who said they were called "Blue Laws" because their rigid, fanatical enforcement made the people feel “blue” is about as correct as any.

In glancing over the other periodical, sponsored by the greatest bank in the world, I observed a lengthy discussion of the necessity for "Blue Sky Laws." Naturally the title to this article suggested itself, which projects into view the changes in this country's laws for three hundred years.

Since the landing of the Pilgrims a great nation has evolved with more than a hun

dred million people, holding sway from the frozen North to the Gulf of Mexico, and from ocean to ocean, exercising dominion over the islands of the sea. Then legislators concerned themselves with matters of conscience and the established religion, while now law-makers are busy in solving economic and social problems and in regulating affairs of business. Our Constitution wisely provides that "Congress shall make no law respecting the establishment of religion or prohibiting the free exercise thereof."

The progress made in three centuries in the arts and sciences has surpassed the most

extravagant speculations of a Jules Verne. In the acquisition of wealth, in the extraor dinary volume of commerce and in the vast daily financial transactions this nation has so far surpassed all the ancient empires and republics that there is no basis for compari

son.

However, there existed the Puritan "Blue Laws," in "ye olden time," which are now regarded as a curiosity in misguided legislation. For instance, whoever did profane the Lord's Day by doing unnecessary work or traveling or by sporting was to be fined forty shillings or publicly whipped, but if the offender did violate the law "proudly and presumptuously” he was to be put to death or grievously punished at the judgment of the court. As witchcraft was believed in by learned menCotton Mather, Sir Edward Hale then Lord Chief Justice of England, and many others --it was provided: "If any man or woman be a witch, or consulteth with a familiar spirit they shall be put to death." The Salem witchcraft persecutions were based on this statute. Nor were the accusations

confined to people of little influence, for in 1656 Ann Hibbins, sister of Governor Bellingham of Massachusetts, was convicted by a jury of witchcraft and hanged. These freak laws were enacted by the Plymouth Colony and in Connecticut beginning with

1636.

Charity seems to have been wholly lacking towards dissenters and Quakers. It was enjoined that "no food or lodging shall be afforded to a Quaker, Adamite or other heretic." Again, "if any person turns Quaker, he shall be banished and not suf fered to return, upon pain of death." Apparently love and affection were condemned by their laws, for "no woman shall kiss her child on the Sabbath day," and the same applied to husband and wife. Gathering sticks on the Sabbath when unnecessary was punished by death, but if gathered privily or in need, a lesser punishment might be administered by whipping the

offender. This followed the Mosaic Law literally, thus: "Whosoever doeth any work in the Sabbath day, he shall surely be put to death.”1

The Colonists founded a theocratic government, and, therefore, blasphemy, that is, the denial of the Holy Trinity, was punished like seditious utterances in a secular state. Consequently, whoever was found. guilty of blasphemy the third time was put to death "so that he might find out the truth of certain matters to his own satisfaction."

It may be said in extenuation that these Blue Laws were not always literally enforced; the same may be said of many absurd present-day laws. Yet, it is recorded that in 1692 nineteen were hanged for witchcraft, and others tortured to death. Among them was the Rev. George Burroughs, a pious clergyman of excellent attainments.2

Three centuries have elapsed since the Pilgrims landed. One would suppose that the futility to enforce laws compelling religious worship had been fully demonstrated. It is a fact, however, that Blue Laws exist today. It is current news that in Virginia a deputy sheriff was convicted of shooting

Roland Parks, while sitting in his own house on Tangier Island, because Parks failed to attend church as required by a local ordinance. Recently the Seattle press contained this statement: "On complaint of the president of the W. C. T. U. the prohibition director of the State of Washington has issued orders for the seizure of twenty gallons of homemade blackberry wine at the home for aged and indigent widows of Civil War Veterans, maintained by the ladies of the G. A. R. and other patriotic organizations," which reminds one of King Lear:

"Through tattered clothes small vices do ap

And the strong lance of justice hurtling breaks;

Arm it in rags, a pigmy's straw doth pierce it."

According to the daily press a new set of Blue Laws are to be urged upon Congress by the Lord's Day Alliance. It is proposed to prohibit all work and activity in the postal department and interstate commerce on Sunday. The climax of absurdity is reached in providing that "any corporation that does, or aids in doing, these forbidden things shall be fined not less than $1,000 nor more than $100,000 for each offense, and for a second conviction shall forfeit its charter and franchise and shall be

enjoined from operating in interstate commerce." If this should become the law, Torquemada, the first and vilest inquisitorgeneral of Spain, may yet be outdone.

Taking a retrospective view of three centuries, it is apparent that wonderful progress has been made, even in the most laggard and conservative of all sciences-the law. The Declaration of Independence and the Constitution are shining milestones. along the pathway of enlightenment and humanitarianism. In spite of constitutions and liberalizing tendencies for centuries, we yet have Blue Laws of some kind. The enforcement of the Eighteenth Amendment is a reminder of Blue Law methods. Homes have been ransacked, property destroyed, and even human life sacrificed in an effort to locate a bottle of "booze." No doubt the purpose of this amendment is laudable and for the best interest of the nation it is the arbitrary enforcement and disregard of personal rights that is deplorable. This, of course is justified by saying, "The end sanctifies the means," after the

manner of the Puritans.

The same spirit has pervaded some of the courts in relation to the espionage laws. For instance, Pastor Russell published a religious book called" The Finished Mystery," which did not approve of war. After his death, a Mr. Rutherford and others circulated this book for sectarian propaganda.