Opinion of the Court 92 C. Cls. tiff bids and price quotations for work and material withdrew their bids and quotations, and plaintiff was compelled to obtain new bids and quotations which resulted in plaintiff having to pay additional or larger sums for certain work and material on this contract with defendant. 13. On October 5, 1937, plaintiff wrote the Comptroller General as follows: I am in receipt of your letter of September 18, 1937, with reference to the above certificate and claim number and also a check on the Treasurer of the United States dated September 29, 1937, in the amount of $233.37, which check is numbered 124,133. I now request permission from you to endorse and cash the above-named check, with the understanding on my part and acquiescence therein by you that in thus accepting this check I waive no rights to make further claim against the Government under this contract. In reply the Comptroller advised that "The acceptance and cashing of the check referred to will not be regarded by this office as precluding further consideration here of your claim for the item of $11,482.49 which was disallowed in the said settlement of September 18, 1937, as representing the difference between the amount agreed to be paid as wages in the performance of the contract and the amount of wages actually paid in such performance in the event there should be submitted to this office sufficient basis for further consideration of said item." 14. The defendant did not cancel the contract for failure of the contractor to comply with the Reemployment Agreement nor with the Codes of Fair Competition to which he was subject at the time the contract was executed, nor failure to make open-market purchases; nor did the defendant have any work called for by the contract otherwise performed, nor did it by written notice or otherwise terminate the contractor's right to proceed with the work or any part thereof. The court decided that the plaintiff was entitled to recover. LITTLETON, Judge, delivered the opinion of the court: Before plaintiff was required to commence work under its contract of April 30, 1935, the National Industrial Re 32 Opinion of the Court covery Act was held invalid on May 27, 1935, in Schechter v. United States, 295 U. S. 495. Senate Joint Resolution #113, approved June 14, 1935, repealed the law relating to the codes, and on June 15 the President of the United States issued Executive Order 7076 forbidding "any person or agency acting under authority conferred by the President to approve or prescribe codes or to provide for the enforcement of such codes." Plaintiff commenced work under the contract on June 17, 1935, and completed the same, acceptable to defendant, on November 4, 1936. There was no provision in the contract or specifications authorizing any reduction from the lump-sum contract price of $253,920 for failure to pay the minimum code wages or the prevailing wages in the locality. The only penalty provided in the contract for failure to comply with such code, made and issued under the National Industrial Recovery Act, or to pay the prevailing wages, was that the United States should have the right to cancel the contract and make open market purchases or have the work called for performed at the expense of the contractor. No attempt was made or right claimed to cancel the contract because plaintiff, after it commenced work, paid the prevailing rate of wages rather than the invalidated code rate. Plaintiff is entitled to recover. Hood & Gross v. United States, 90 C. Cls. 258. In that case, which involved the failure of the contractor to pay the prevailing wage rate for certain employees during a portion of the time in performance of the contract, the court said: The defendant did not cancel the contract. Plaintiff completed the contract, complying with the decision of the Secretary of Labor from the time it was rendered. After the contract was completed the Comptroller General arbitrarily deducted from the final statement $766.05 on the ground the plaintiff could not benefit by his own wrongful act. There is no provision in the law nor is there a provision in plaintiff's contract permitting a deduction from the contract price by reason of failure to pay the prevailing wages in a locality. The action of the Comptroller General was unwarranted. Reporter's Statement of the Case 92 C. Cls. ington Pyne, Mary Pyne Filley, and Percy R. Pyne, Jr., Executors of the Estate of Percy R. Pyne, who died on August 22, 1929, a taxpayer residing at, or having its principal office or place of business at Bernardsville, New Jersey, and the Commissioner of Internal Revenue. WHEREAS, it has been determined that the tax liability of said taxpayer in respect of Federal estate tax for the Estate of Percy R. Pyne, Deceased, exclusive of any penalty or interest properly applicable thereto as provided by law, is in the principal sum of five million, seven hundred sixty-seven, two hundred fifty-five and 70/100 dollars ($5,767,255.70), said tax to be subject to a credit of not to exceed 80 per centum for State estate, inheritance, legacy, or succession taxes paid, provided satisfactory evidence as to payment is furnished within the statutory period; and WHEREAS, said taxpayer hereby agrees to this determination, except as to so much of the said tax as results from the inclusion in the gross estate of $4,902,402.89 covering property transferred by decedent within two years prior to death, and with the reservation that this agreement shall not preclude the executors or estate from obtaining such relief, if any, as may be accorded either by legislative or administrative action to such estates as were affected by the decrease in the value of market securities which occurred during the latter part of the year 1929, provided this estate is affected by such action. Now, THIS AGREEMENT WITNESSETH, that said taxpayer and said Commissioner of Internal Revenue hereby mutually agree that the said tax of $5,767,255.70, subject as provided in the first "Whereas" clause hereof, to a credit of not to exceed 80 per centum for State estate, inheritance, legacy, or succession taxes, so determined shall, subject to the exception and reservation contained in the second "Whereas" clause hereof, be final and conclusive if this agreement is approved by the Secretary of the Treasury, or the Undersecretary, within six months from the date this agreement is signed by the taxpayer. 4. March 15, 1935, plaintiffs filed an income-tax return for the calendar year 1934 for the estate of the decedent. That return showed gross income of $154,966.23, consisting for the most part of dividends, interest, and rent. During the year the estate sustained a net loss from the disposition of securities of $677,272.18, but was limited by statute to a 44 Reporter's Statement of the Case deduction of only $2,000. Deductions were claimed in the amount of $104,304.11, which consisted of interest in the amount of $19,903.45; taxes, $8,930.46; and other expenses in the sum of $75,470.20. The last-named item included salaries of office employes amounting to $15,909.96; office rent, $4,931.32; office expenses, $3,474.11; and attorney's fees and expenses, $40,155.60-the item in controversy in this suit. The tax liability shown on that return in the amount of $7,589.97 was paid as follows: March 18, 1935, $2,339.97, and $1,750 on June 15, September 14, and December 16, 1935. The estate kept its books and rendered its returns on the cash receipts and disbursements basis. 5. November 30, 1936, the Commissioner notified plaintiffs of his determination of a deficiency in income tax for 1934 of $15,309.20, which arose by reason of the disallowance of a deduction of $40,155.60 for attorney's fees and expenses on the ground that such amount was not deductible as a business expense but was a charge upon the corpus of the estate. March 29, 1937, plaintiffs paid that deficiency, together with interest in the amount of $1,823.47, a total of $17,132.67. 6. May 8, 1937, plaintiffs filed a claim for refund for 1934 of $17,132.67 on the principal ground that the attorney's fees and expenses paid in 1934 in the sum of $40,155.60 are an allowable deduction from gross income for that year as an expense incurred in connection with the conduct of the business affairs of the estate. As an alternative the contention was made that had the federal estate tax matter not been closed in 1931, the estate would have been entitled to deduct the amount of the attorney's fees paid in 1934 from the gross value of the estate subject to estate tax, and therefore if the amount of the attorney's fees was not allowable as a deduction from gross income of the estate for 1934 for income tax purposes, the Government would have been unjustly enriched by having collected an estate tax on the value of the estate without having allowed a deduction for the attorney's fees and expenses of $40,155.60. The Commissioner rejected that claim by registered letter dated May 12, 1938. Reporter's Statement of the Case 92 C. Cls. 7. Prior to and at the time of his death the decedent was engaged in business as a financier and investor, maintaining an office where he employed an office manager and an average of six clerks. After his death substantially the same office set-up was maintained by the executors and is maintained at the present time by the trustees under the will. At his death decedent's estate of approximately $35,000,000 included 129 different issues of stock totaling 160,396 shares, 118 different issues of bonds of a total par value of $5,048,400, and certain real estate. A substantial part of the stock held by him was in the National City Bank and in the Woodward Iron Company of Birmingham, Alabama. 8. The decedent's death occurred in 1929 just prior to the economic depression beginning in that year. The four executors of the estate were the three sons and a daughter of the decedent, all of whom had had but little business experience. The attorney employed by the executors was called upon to advise them with reference to matters both legal and economic that arose in the business activities of the estate, with reference to federal estate and state inheritance taxes, and also in regard to the acquisition and disposal of the estate's securities and in regard to various matters pertaining to companies in which the estate held investments. 9. Final payments of the Federal estate and State inheritance taxes were not made until sometime in 1935, and during the period from 1931 to 1935, including 1934, it was necessary for the attorney of the executors to perform some service in securing extensions of time for the payment of these taxes and other matters relating thereto, though such services were of a relatively minor character as compared with the attorney's other services in advising the executors with respect to the general operation of the business affairs of the estate. The administration of the estate had not been completed at the end of 1934. In general the operations of the estate continued in substantially the same manner after the decedent's death as before that time up until the time the trusts were set up. 10. The executors did not have any contract with the attorney for his services but he was paid from time to time |