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OAK MFG. CO. v. UNITED STATES

January 13, 1961

OAK MFG. CO., A CORPORATION, PLAINTIFF,
v.
UNITED STATES OF AMERICA, DEFENDANT.



The opinion of the court was delivered by: Miner, District Judge.

This matter having been submitted to the Court on a stipulation of facts entered into by the parties, and the Court having read and considered the said stipulation, the pleadings filed herein, and the documents and exhibits presented by the parties, and the Court having read, heard and considered the briefs, memoranda and oral arguments submitted by counsel in support of their respective positions, and the Court being fully advised, the Court hereby enters its Findings of Fact and Conclusions of Law as follows:

Findings of Fact

1. The plaintiff, Oak Mfg. Co. (hereinafter called "Oak"), is an Illinois corporation with offices at Chicago, Illinois.

At the time of the adoption of the Bonus Plan on January 8, 1951, Oak kept its accounts and filed its federal income tax returns on the basis of a fiscal year ended May 31, so that its first fiscal year ending after January 8, 1951, the date of the adoption of the Plan, was May 31, 1951. Thereafter Oak, by appropriate action of the Commissioner of Internal Revenue, changed its fiscal year to coincide with the calendar year, effective June 1, 1951. Thus there was a short taxable period of seven months ending December 31, 1951 which was also the subject matter of review by the National Enforcement Commission.

3. During the periods here involved there were 7 employees of the plaintiff who were entitled to and did share under Part A of the Bonus Plan. During 1950 and prior to end of the plaintiff's fiscal year ending May 31, 1950, these 7 employees had received bonuses totaling $39,600. The highest single bonus of this group was in the amount of $11,800. No bonuses other than these were paid by Oak to these 7 employees during the calendar year 1950.

On May 31, 1951 and December 31, 1951, Oak paid bonuses to these 7 employees under Part A of the Bonus Plan. The bonuses paid on May 31, 1951 totaled $59,463.76 and the bonuses paid on December 31, 1951 totaled $31,165.

4. In December of 1949, the President of Oak died. His death resulted in a shifting of responsibilities within the executive staff of Oak. Due to this shifting of responsibilities and other factors resulting from the death of Oak's President, certain salary increases were approved on February 24, 1950 to be effective on January 1, 1950. The salary structure relating to plaintiff's executives immediately prior to and as of January 1, 1950 was as follows:

                                                         Annual Salary
                                                         Fixed Feb. 24, 1950
                 Classification Prior    Annual Salary   Effective
  Name           to January 1, 1950      Dec. 31, 1949   January 1, 1950
  E. Sandstrom   Vice President (made      $33,200            $38,200
                 Chairman of Board of
                 Directors Feb. 11,
                 1950)
  Robert A.      Vice President (made       32,500             38,200
  O'Reilly       President Feb. 11,
                 1950)
Edward J.      Vice President             21,950             21,950

Mastney

  Harry J.       Asst. Sales Manager        18,150             20,650
  Veitch         (made Vice President
                 in Charge of Sales
                 February 11, 1950)
  John A.        Treasurer                  17,500             17,500
  Rovelstad
  William        Secretary                  12,500             15,000
  Bessey

5. On December 11, 1950 salary increases were approved for Oak's executive staff; these increases were made effective on June 1, 1950 and raised the January 1, 1950 salaries referred to in paragraph ...


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