Rudolph v. United States

RESPONDENT: United States
LOCATION: Labor Union Protest

DECIDED BY: Warren Court (1962)
LOWER COURT: United States Court of Appeals for the Fifth Circuit

CITATION: 370 US 269 (1962)
ARGUED: Apr 03, 1962
DECIDED: Jun 18, 1962

Facts of the case


Media for Rudolph v. United States

Audio Transcription for Oral Argument - April 03, 1962 in Rudolph v. United States

Earl Warren:

Number 396, C.J.D. Rudolph, et al., Petitioner, versus United States.

Mr. Freling.

Richard A. Freling:

Mr. Chief Justice, may it please the Court.

This case arises out of a suit for refund of federal income taxes.

Petitioner C.J.D. Rudolph works in Dallas as an ordinary life insurance agent for Southland Life Insurance Company, a major insurance company whose offices are also in Dallas.

In 1956, he and his wife attended a convention of Southland agents and officers in New York.

And their transportation, accommodations and their meals were arranged and paid for by Southland.

The basic issues involved in this case are first, whether or not the amount of convention expense allocable to petitioners which has been stipulated by the parties to be $560 is to be includable in their gross income and if that question be answered in the affirmative whether petitioners are to be allowed an ordinary and necessary business expense deduction for an equivalent amount.

Respondent contends that the convention trip was a bonus to petitioners and therefore his income and that their expenses were primarily personal and therefore not deductible.

We contend that petitioners were taken to New York by Southland for business reasons without regard to compensation and that the cost attributable to their trip are not income to them.

Alternatively, we contend that if they are charged with income, the expenditures thereby imputed to them were incurred for ordinary and necessary business reasons and are therefore deductible.

Once every year and a half for the past 20 years or more, Southland has sponsored a convention of the type involved here to which it invites certain of its agents and their wives and the top officers of the company and their wives.

Potter Stewart:

You say this is not annual.

It's every year and a half?

Richard A. Freling:

That's correct, sir.

Once every 18 months.

Potter Stewart:

Two every three years or so?

Richard A. Freling:

Yes, Mr. Justice Stewart.

The agents invited to attend are selected on the basis of their having sold or prescribed minimum amount of insurance, which the company believes as the most appropriate standard for determining who has an aptitude for the business and who had benefit from the convention.

When an agent is invited to attend, both the agent and the company believes that it is part of his responsibility and a part of his job to do so.

If he fails to attend for any reason, he receives nothing in lieu of the convention.

The 1956 convention activities lasted approximately one week of which about four days were spent traveling on trains, chartered trains to and from New York City.

They spent about two days in New York, Friday and Saturday.

Friday morning was devoted to a formal program of speeches by the top officers of Southland to a panel discussion of agents and several lecturers on the agency program.

John M. Harlan II:


Richard A. Freling:

Yes, sir.

John M. Harlan II:


Richard A. Freling:

No, Mr. Justice Harlan, they do not.

John M. Harlan II:


Richard A. Freling:

They do not get a check for anything.