
    No. 498
    COTTON v. YOUNGSTOWN STEEL CAR CO.
    Ohio Appeals, Seventh District, Mahoning County
    Decided March 8, 1923
    This opinion has not been published except in Abstract
    ACCOUNTING — (1) Finding of referee supported by sufficient evidence — (2) Time that contract for bonus became operative — (3) Right to deduct income tax from profits as element of expense.
   ROBERTS, J.

Epitomized Opinion

This was an action for an accounting filed by one Cotton in the Common Pleas Court of Youngstown, Ohio, against the Youngstown Steel Car Co. The plaintiff claimed that he enterel the employ of the defendant as chief engineer on Feb. 15, 1916, and that during November of that year he entered into an oral agreement with the defendant whereby he was to receive, as part of his compensation, a bonus of $25 per month on each $5,000 profit after $15,000 had been deducted from the total expenses on all business but without any deduction for improvements, depreciations, or other contingencies. Plaintiff claimed that there was a large sum due him under this arrangement, which continued from November, 1916, to January, 1918, the exact amount of which he was unable to ascertain, as he did not have access to the company’s books. The defendant claimed that under the agreement it was to pay the plaintiff $25 per month from November 1, 1916, on each $5,000 net profits of the business after making the usual and customary deductions from the gross profits of the business, for maintenance, depreciation, operation, factory and general expense, and after making a deduction of 15 per cent profit to stockholders on all outstanding capital stock. The defendant claimed that under this agreement it only owed the plaintiff $650 00. The case was referred to a referee who found there was due the plaintiff the sum of $945.00. The defendant filed exceptions to this report. Later it appealed the case to the Court of Appeals. Held:

1. That the findings of the referee were correct as to the terms of the contract, said findings being in favor of the plaintiff.

2. That under the terms of the contract the plaintiff was entitled to a bonus from the 1st of October, 1916, rather than the 1st of November of that year.

3. That under the terms of the agreement, the defendant was entited to deduct from its profits the sum paid for income tax during the year 1917, as the bonus as based on the net profits after all the expenses had been deducted.

Findings of referee modified.  