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recently adopted by the Court of Appeals for the Sixth Circuit in
Estate of Clarks v. United States, supra. The primary point made
by Judges Rives and Brown was that in a practical sense the
taxpayer never had control over the portion of the recovery that
was retained by her attorneys. In my view, this broader ground
disposes of the case at hand in petitioners’ favor, independently
of the narrow ground.
Judge Wisdom’s dissent was very much in the vein that the
transaction was governed by the classic assignment of income
cases that he cited and relied upon: Helvering v. Eubank, 311
U.S. 122 (1940); Helvering v. Horst, 311 U.S. 112 (1940); and
Lucas v. Earl, 281 U.S. 111 (1930). After quoting at length from
Helvering v. Horst, supra, Judge Wisdom concluded:
This case is stronger than Horst or Eubank, since
Mrs. Cotnam assigned the right to income already
earned. She controlled the disposition of the entire
amount and diverted part of the payment from herself to
the attorneys. By virtue of the assignment Mrs. Cotnam
enjoyed the economic benefit of being able to fight her
case through the courts and discharged her obligation
to her attorneys (in itself equivalent to receipt of
income, under Old Colony Trust Co. v. Commissioner,
1929, 279 U.S. 716 * * *. [Cotnam v. Commissioner, 263
F.2d at 127.]
The majority in Cotnam also rejected the Commissioner’s and
Judge Wisdom’s reliance on Old Colony Trust Co. v. Commissioner,
279 U.S. 716 (1929), because a contingent fee agreement creates
no personal obligation. The only source of payment is the
recovery; if there is no recovery, the client pays nothing and
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