Opinion of the Court

Section 1336 of the Revised Statutes, a part of the act of February 28, 1873 (sec. 1133, chap. 27, title 10, U. S. C.), pertains to the pay of professors and instructors in the United States Military Academy and provides that—

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the instructors of ordnance and science of gunnery and of practical engineering shall have the pay and allowances of major."

It is said that although the plural of the word "instructor" is used in the statute, it was not intended to authorize additional pay for more than one instructor and that this is shown by the fact that appropriations were thereafter made for only one instructor of ordnance and also that appropriations were made for the pay of one professor of ordnance and science of gunnery and for a certain number of assistant professors. The acts of Congress cited are numerous, the last one in point of time being the act of March 4, 1913.

It has many times been held by this court and the holding has been approved by the Supreme Court that the failure to make an appropriation to pay compensation provided for by statute did not affect the right to recover the compensation so provided. It is true that in none of these cases, so far as we have observed, was the point made that the failure to make the appropriation should be considered as showing the intention of Congress in enacting the law under which the compensation was claimed, but as in many of these cases the question arose as to whether the statute upon which the claim was based could be construed to provide for the compensation claimed, it would seem clear that it was not considered by anyone that the failure to make an appropriation had any bearing upon the construction of the act under consideration. Moreover, unless the act is ambiguous no question of construction arises. We think it is not ambiguous but direct and plain in its provisions. But if it be conceded for the sake of the argument that the statute is ambiguous and that we should consider what was intended by Congress, we think the construction contended for cannot be sustained.

The failure to make an appropriation so often arises because Congress is not fully informed in relation to the mat

Opinion of the Court

ter or is not in possession of the facts which would determine its propriety that we do not think such failure tends to show the construction to be placed upon a statute, but even if this failure may be considered for that purpose we are satisfied that any such tendency is fully rebutted and overcome by other matters.

In considering the construction of a statute (if ambiguous), the courts always have regard to the situation to which the statute was intended to apply and the purpose of its enactment. In determining which of two constructions shall be adopted, it is always proper and generally necessary to consider which is the more reasonable and likely to have been intended.

There is nothing in the record to show that there was in fact more than one instructor of ordnance and gunnery appointed, although the contentions now made on behalf of defendant assume that there was more than one. If, however, for the purposes of the argument only we accept this assumption and apply the rule now contended for on behalf of defendant, the statute becomes indefinite, inconsistent, and confusing. One of the instructors would then be entitled to the additional pay, but there would be no way of telling which one, and if two were appointed and both were denied the additional pay it would be doubtful whether either could recover in court, for the reason that there would be no way of determining which one had a superior claim. Would it be the one who had the highest rank, the one who had had the longest term of service, or the one who was first appointed? The statute is silent on these points and even if one of these tests could be applied it would generally be unavailing. Usually the appointments are of officers of the same rank and made at the same time. The statute under such a construction would be incomplete and unintelligible.

It is not and cannot be contended that Congress intended to limit the number of instructors of ordnance and gunnery to one for it is a matter of common knowledge that the practice of appointing more than one has been long continued and there is no limitation in the statutes. If Congress intended either that only one instructor of ordnance and gun

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Reporter's Statement of the Case

nery should be appointed, or that if there was more than one that only one should receive the additional pay, it certainly would have had the statute so drawn as not to leave the matter of their pay in such a nebulous state. We are therefore of the opinion that the only reasonable construction of the statute is the one that has heretofore been given it by this court.

In this connection it might be noted that it appears that when the Wilson case, supra, was decided the Attorney General sent a copy of the decision therein to the Comptroller General with the request for recommendations as to further proceedings in the case and was advised that no further proceedings were recommended.

From what has been said above, it follows that the motion for new trial must be overruled. It is so ordered.

WHALEY, Judge; WILLIAMS, Judge; LITTLETON, Judge; and BOOTH, Chief Justice, concur.

J. W. SCARBROUGH AND LEMUEL SCARBROUGH, TRUSTEES OF THE ESTATE OF E. M. SCARBROUGH, DECEASED, v. THE UNITED STATES

[No. 41906. Decided November 5, 1934]

On the Proofs

Income tax; deduction from gross income; contribution to benefit fund for sick employees.-Where the facts and circumstances connected with the creation and operation of a benefit fund for sick employees show it to be a trust, a contribution to the fund by the taxpayer is deductible from gross income for the year as an ordinary and necessary expense of carrying on his business. See Scarbrough v. Commissioner of Internal Revenue, 17 B. T. A. 317.

The Reporter's statement of the case:

Mr. A. Harding Paul for the plaintiffs.

Mr. Assistant Attorney General Frank J. Wideman for the defendant. Mrs. Elizabeth B. Davis and Mr. George H. Foster were on the brief.

Reporter's Statement of the Case

This is a claim for refund of $472.92, with interest, representing a proportionate part of an amount paid to a sickbenefit fund for employees of decedent's company, alleged to have been erroneously included in decedent's income for the year 1921.

The court, having made the foregoing introductory statement, entered special findings of fact as follows:

I. E. M. Scarbrough & Sons is a partnership owning and operating a department store at Austin, Texas. In 1921 the members of the partnership consisted of father and two sons, namely: E. M. Scarbrough, J. W. Scarbrough, and Lemuel Scarbrough.

II. On July 13, 1914, the partnership created an executive board consisting of the three partners and three of their employees who were head men in their divisions. This board had regular meetings to discuss the affairs of the business of the partnership and to advise upon and to direct the general policies and practical things which were put into effect.

III. For some months previous to the meeting of the executive board on December 30, 1921, the partners had discussed the different kinds of insurance funds which could be created in favor of their employees. On December 30, 1921, the board held a meeting and passed a resolution for a deposit out of the partnership money of $3,500 to the Scarbrough employees' benefit fund in the State National Bank of Austin, Texas. The plan agreed upon to administer this fund followed the plan outlined in one of the policies of the Aetna Life Insurance Company and provided that any employee who had been absent from the store through sickness or accident, should fill out upon his or her return a sick-benefit blank, giving the facts of the illness or accident. This blank was signed by the employee, and thereupon the treasurer of the fund issued a check for two-thirds of the salary for any absence over three days.

The deposit of $3,500 directed by the executive board as aforesaid was made on Deecember 31, 1921, and by special arrangement with the bank it was placed in the savings account of the bank to draw interest and subject to withdrawal by check signed by the treasurer of the fund. D. M. Moffat,

Reporter's Statement of the Case

an employee of the partnership, was appointed treasurer of the fund by the board on the date last named and he had complete charge of said fund until March 21, 1922, when he resigned from the employ of the partnership. Following this resignation, the board appointed J. R. Allen, another employee, as treasurer of the fund. From the time of its inception until the commencement of this suit the plan was always administered in the same manner.

IV. The employees of the partnership were notified of the establishment of the fund and new employees were informed thereof at the time of their employment.

V. Books of accounting with reference to the fund were kept separate and apart from the partnership business. The interest received on the fund was credited to the fund. The fund has never been carried as an asset of E. M. Scarbrough & Sons and no part thereof was ever used by the partnership or any of its members. No income-tax return was ever made of the fund, as the income from the fund was insufficient to require an income tax to be paid.

VI. The State National Bank in which the fund was deposited failed in 1926. An eighty-five percent dividend on the fund in the failed bank was paid to the treasurer, which was deposited in the American National Bank of the same city under similar arrangements as with the first bank.

From time to time, in accordance with the plan adopted, payments were made to employees entitled thereto, and additional deposits were made by the partnership as follows: