Thе plaintiff sued to recover sums paid by him as additional ineome taxes for the years 1917 and 1919 in the amounts of $6,042.77 and $3,072.09, respectively. The additional assessments resulted from the inclusion by the Commissioner of Internal Revenue in the taxpayer’s gross ineome, of $33,333.33 received by him in thе former year, and $16,-666.66 in the latter year, from Ma.rconi Wireless Company of America, by whom he was employed. The taxpayer contends that these payments were gifts; the defendant that they were taxable ineome within the meaning of the Revenue Acts of 1917 and 1918 (40 Stat. 300, 1057). A jury having been waived by *680 written stipulation, the ease was tried to the court, who made findings o£ faet upon which he held that the plaintiff was entitled to recover. Judgment was entered accordingly.
This case was formerly before us in Weagant v. Bowers,
The next contention of appellant is that the court’s findings that the instrument of October 3, 1917, was a memorial of a gift, that the plaintiff gave no consideration for it, and that the payments in questiоn were gifts instead of taxable income are wholly without support in the evidence. But before turning to the evidence we will consider the plaintiff’s argument that in any event the 1917 tax was illegally collected because barred by the statute of limitations set up in section 250 (d) of the Revenue Act of 1921 (42 Stat. 227, 264, 265). The taxpayer’s 1917 return was filed March 29> 1918; the additional tax for that year was assessed February 26,1923, and was paid to the collector on April 26, 1923. Thus, although the assessment was made within five years after the datewhen the return was filed, the payment was made nearly thirty days after the expiration of the five-year period. This was too late for the government to begin a suit or “proceeding” for collection of the 1917 tax. Bowers v. N. Y.
&
Albany Co.,
We now return to appellant’s contention that the proof will not support the court’s finding of a gift. Weagant was employed by the Marconi Company as an assistant engineer, his duties including work of research and experiment. On February 5, 1914, in consideration of the continuance of his employment he signed a contract by which he agreed that on making any discovery or invention relating to his employer’s business, he would disclose the same to his employer, “which said discovery or invention (even should the'employee fail to disclose the same) shall become and be the property of the Company at the time of such discovery or invention, for which patent or pаtents may be taken’ out by it or not and in the name of the employee or its own name at the option of the company.” The contract also provided that he should execute all such papers, without remuneration other than his regular salary, as may be deemed necessary “to absolutely and fully vest the discovery or invention and the patent in the Company.” In 1917 Weagant made new and useful improvements in the art of wireless telegraphy and telephony, and applied for two United States patents covering thе same. By two assignments referring respectively to his patent applications, he assigned to the Mareoni Company “the full and exclusive right to the said invention, as fully set forth and described in the specification *681 accompanying the a£ores<aid application,” and requested that the patent be issued to the company. Subsequently, the instrument of October 3, 1917, was executed by Weagant and the company. The execution of this instrument was authorized at a meeting of the executive committee, held on the same date, by a resolution reading as follows:
“Contract drawn and prepared by Messrs. Sheffield and Betts regarding' patents of Mr. Weagant was submitted and read to the meeting. After due consideration thereof, on motion duly made and seconded it was
“Resolved, that the contract with Roy A. Weagant regarding patеnt on his most recent invention as presented to the meeting is hereby ratified, approved and confirmed and the officers of the Company are hereby authorized and empowered to execute with the seal of tlie Company said contract.”
The instrumеnt executed pursuant to this resolution is headed “Agreement made and entered into this 3rd day of October 1917.” It recites Weagant’s two 1917 applications for United States letters patent and his assignment of his interest in said applications. It also recites that “the Comрany is desirous of acquiring from the said Weagant the whole right, title and interest in and to the said inventions for all countries foreign to the United States, and in and to all inventions which tho said Weagant has made or may hereafter make as improvements upon the same in all countries foreign to the United States.” Then follow the mutual promises: Weagant sells, assigns, and transfers to the company the whole right, title, and interest in said inventions and in and to all improvements which he has now made or which he may hereafter make on the same, and in and to all letters patent in all countries foreign to the United States for the said inventions or any improvements thereon; also he agrees that he will without further compensation do everything necessary to apply for patents in all foreign countries, the fees and incidental expenses being borne by the company. And the company agrees to pay to Weagant one-third of tho net receipts or profits which it may thereafter obtain from the sale of any patents or applications for patents or рatents granted in foreign countries for said inventions or any improvements thereon made by tho said Weagant. Later in the year 1917' the company sold the patent rights in South American countries for $1.50,000, and paid to Weagant one-third thereof, $33,333.33 being paid in 1917 and $16,666.66 in 1919.
On its face the instrument of October 3, 1917, was a contract entered into by the company for the purpose of acquiring the patent rights in foreign countries on Weagant’s said inventions. It certainly taxes credulity to believe that this formal document drawn up by the corporation’s аttorneys was all a sham, intended merely to evidence a benevolent intent to make Weagant a gift in the event that the foreign patent rights (assumed to have been already owned by the company under the contract of February 5,1914) should subsequently be sold. This becomes all the more incredible when we look at the two subsequent contracts introduced as Defendant’s Exhibits 1 and 2. The former is an agreement of July 25, 1919, which recites that the parties have heretofore entered into an agreement dated October 3,1917, relating to thе disposition of certain inventions made by Weagant, and that the company desires to acquire a,n option to purchase from Weagant all Ms rights under said contract. Weagant agrees to release his rights if on or before January 1, 1920, he shall be paid $100,000 cash, another $100,-000 of preferred stock in a prospective radie corporation, and a royalty agreement by the latter providing royalties running up to $300,-000. This option was not exercised. It was superseded by Defendant’s Exhibit 2, dated January 2, 1920. This provided for the terminatiоn of Weagant’s employment by the Marconi Company and his employment by the Radio Corporation of America, and for the release of all Weagant’s contracts with tho Marconi Company, specifying the contract of February 5,1914, the contract оf October 3, 1917, the contract of July 25, 1919, to all which we have already referred, and also another of April 3, 1913, which, is not in the record. Weagant then, “with the consent of the Marconi Company,” assigned to the Radio Corporation all inventions which he had made or which ho may make while in the Radio Corporation’s employ, and under the terms of the agreement was to receive $50,000 cash, and conditionally $200,000 more. To say that the parties meant the contract of October 3, 1917, to create no rights and understood that it did not, whеn they were subsequently offering Weagant snob sums as these to get rid of it, is really unbelievable.
The only evidence which tends to support the findings below is a deposition of Weagant. In response to questions of his counsel, he expressed the opinion that the contract of February 5, 1914, obligated him to turn over to his employer his inventions, thus giving the Marconi Company foreign patent rights as well as patent rights in
*682
the United States. Hence he always considered the contract of October 3, 1917, as expressing only a “moral obligation” of the company to carry out its benevolent intention to make him a gift on account of the value of his anti-static inventions. He also says that the vice president of the company, when handing him the instrument, declared that it was intended to be an “expression of appreciation’-’ for his work and to constitute a memorandum which would be “morally binding” on future directors of the company. -Such evidence, if competent at all, certainly cannot be allowed to outweigh the documentary proof. To us it seems clear that thе parties thought the 1914 contract did not give the Marconi Company patent rights in foreign countries. It did not expressly mention foreign countries, and its language that Weagant’s inventions shall become the company’s is so tied up with references to obtaining patents that if the latter refer only to domestic patents, that limitation might reasonably be extended to cover the whole agreement. The parties have construed it that way. When there is ambiguity in the terms of a contract the practical construction which the parties have put upon it is entitled to great if not controlling influence. Topliff v. Topliff,
But even were it to be conceded that the company’s promises contained in the writing of October 3, 1917, were without consideration because Weagant was already bound by the 1914 contract to turn over foreign as well as domestic patent rights, it need not follow that the payments made in 1917 and 1919-were proved to be nontaxable gifts. There is authority for the proposition that it is not enough to show that a payer was under no legal duty to pay and that “additional compensation” paid for past services riray constitute taxable income. Noel v. Parrott,
Judgment reversed.