
    364 F. 2d 431
    JOHN NADALIN AND MARY NADALIN v. THE UNITED STATES
    [No. 344-60.
    Decided July 15, 1966]
    
      
      Roger K. Powell, attorney of record, for plaintiff. W. S. Pooler, of counsel.
    
      8aylor L. Levitz, with, whom was Assistant Attorney General Mitchell Rogovin, for defendant. Richard M. Roberts, Lyle M. Turner and Philip R. Miller, of counsel.
    Before Cowen, Chief Judge, Whitaker, Senior Judge, Durfee, Davis, and ColliNS, Judges.
    
   Per Curiam:

This case was referred to Trial Commissioner Saul Bichard Gamer with directions to make findings of fact and recommendation for conclusions of law. The commissioner has done so in an opinion and report filed on March 25, 1965. Exceptions to the commissioner’s report and opinion were filed by plaintiffs and the case was submitted to the court on the briefs of the parties and oral argument of counsel. Since the court is in agreement with the opinion, findings and recommendation of the commissioner, it hereby adopts the same as the basis for its judgment in this case, as hereinafter set forth. The commissioner’s opinion is in accord with the recent decision of the Supreme Court in Malat v. Riddell, 383 U.S. 569 (1966), as well as with the decisions of this court in Browne v. United States, 174 Ct. Cl. 523, 356 F. 2d 546 (February 1966), and Tibbals v. United States, ante, p. 196. Plaintiff is therefore not entitled to recover and the petition is dismissed.

OPINION OF COMMISSIONER

Gamer, Commissioner:

The question here presented is whether the gain realized by plaintiff in 1956 from the sale of certain lots in two subdivisions constituted long-term capital gain resulting from the sale of a capital asset, or ordinary income resulting from the sale of “property held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business.” (26 U.S.C. § 1221 (1958 ed.))

In 1955, plaintiff, then a general contractor for some 35 years, was the owner of 33 acres of unimproved land in Upper Arlington, Ohio, a city located on the outskirts of Columbus, Ohio. This acreage had been assembled from 5 acres purchased as long ago as 1943,6 adjoining acres in 1944, and 22 also adjoining acres in 1955.

At least from the time plaintiff took title to the 22 acres in April 1955, it is plain that he intended to subdivide the entire 33 acres with a view to effecting a profitable disposition, at the earliest favorable opportunity, of the approximately 100 residential lots that would be contained therein. Indeed, some 6 months earlier, at a time when he owned only 11 acres, he already began appearing before the City Planning Commission to seek preliminary approval of a plat he proposed to develop. Appearances were made in October and November 1954. At that time only a small part of this 11-acre tract, consisting of six lots, had sewer connections, and it was the only part that could be profitably subdivided. Around that same time, however, plaintiff arrived at an understanding with one Spires, the neighbor-owner of the 22 acres, for the purchase of this tract at an agreed price ($2,000) per acre. The preliminary sketch which had been prepared by an engineer employed by plaintiff and submitted to the Planning Commission had already included the Spires’ tract. Although plaintiff was not at that time the record owner of the 22-acre tract, it was necessary, in order to obtain the requested preliminary approval for the development of the 11-acre tract, to show the effects of the proposed development on the area as a whole, including how the proposed streets would tie in with existing adjacent streets. At about this time, plaintiff gave a real estate development company an option to purchase the six more readily marketable lots with available sewer facilities.

Plaintiff took title to the Spires’ 22-acre tract on April 28, 1955, and the very next day employed an engineering firm to prepare another preliminary subdivision plat relating to the entire 33 acres, showing its boundaries, the adjoining lots and subdivisions, and a proposed layout of the streets to be built within the subdivision. By that time it had become obvious that the entire 33 acres could be profitably subdivided. A few months earlier, the city had acquired land for a new high school in the vicinity of the 33 acres and around 2 weeks earlier, the city had, on April 11, 1955, adopted a resolution for the construction of a sewerline that would effectively serve the entire 33 acres.

Two subdivisions were platted from the 33 acres. One, called “Windsor Place Addition,” consisted only of the six lots in the original 11-acre tract which already had access to sewage facilities and which were imder sale option. The other, called “Windsor Place Addition Extension No. 1,” consisted of the remainder of the property. In June 1955, the Planning Commission tentatively approved the plat and plaintiff thereupon authorized the engineering firm to proceed with the preparation of the final plats and the making of the necessary surveys. In October, plaintiff appeared before the Commission and obtained approval of the final plat for the six-lot Windsor Place Addition. The following month plaintiff dedicated property to the city for the improvement of a road on the northern boundary of the 22-acre tract and, in addition, granted an easement along the boundary for the sewer, which was in fact constructed shortly thereafter.

Up to this time, it would seem indisputable that plaintiff was fully intending and preparing to engage in a lot selling business activity in the two subdivisions he had created. The time was ripe therefor and all of his activities were certainly pointing in this direction.

However, plaintiff contends that at about this time he abandoned any such ideas that he might have had and instead decided to dispose of substantially the entire acreage in one transaction. This is essentially the basis for plaintiff’s capital gain contention. It is grounded upon the following-events :

Sometime around the middle of 1955 one Jones, a local realtor, learned of plaintiff’s recent acquisition of the 22-acre tract. Becognizing the potential for profitable development of plaintiff’s entire 33 acres, he approached plaintiff and discussed development plans of possible mutual benefit. Jones’ major problem was lack of capital. He himself, therefore, could neither purchase lots nor invest funds in their development. Without making any substantial investment himself, he could nevertheless participate in the development venture through commissions resulting from the sale of houses to be built on the lots. For this purpose, however, he Avould have to have sufficient control so as to effect an exclusive right to sell the houses. He convinced plaintiff that he would be able to find homebuilders who would be willing to purchase the lots at an attractive improved property price, provided plaintiff would take just a small downpayment and then wait for the balance until the improvements were all installed and the houses were built and sold. Plaintiff would have the builder’s note and mortgage to secure the balance. Since the entire area would have to be developed with the usual subdivision improvements, such as streets, waterlines, sewers, and sidewalks, and since the price of the lots would be fixed as for improved property, the cost of such improvements (or the payment of assessments therefor) would also have to be defrayed by plaintiff. However, this could be done in the form of a deduction from or adjustment to the sales price of the lot which would similarly be made when the house would be sold and the builder would pay the balance due on the lot. In the meantime, the builders, operating through construction loans, would advance the necessary funds therefor as part of their construction operations.

Plaintiff finally was persuaded to work out an arrangement with Jones along such lines. The advantage to plaintiff was that, without having to pay any commissions, he would not have to be concerned with seeking buyers for the lots and would be relieved of many of the details concerning the installation of the improvements. Jones and the builders would tend to these matters. He would still be able, however, to obtain a very satisfactory price for his lots on an improved property basis. All he would have to do would be to consent to defer the payment of the bulk of the sales price of the lots until the houses were erected and Jones was able to sell them. And the builder’s note and mortgage for such balance would be quite adequate security, even with the subordination, thereof to the first liens which the builder’s financing institutions would necessarily require on their construction loans. The advantage to J ones was, of course, that, provided he could find builders who would buy the lots, make initial outlays for improvements, and build the houses, and provided also that he could sell the houses, he would be able, on his exclusive agency basis, to earn substantial commissions and thus share in the fruits of the development with little investment.

To give Jones the control required to effect an exclusive sales agency, the lots would have to be conveyed to the builders through Jones as owner. It was therefore agreed that, as Jones found builder-buyers for the lots who would be willing to operate on the proposed basis, he would take a down-payment of $500 per lot. J ones would then turn such payment over to plaintiff, who would thereupon execute a deed to the lot to Jones, and receive from Jones a note and mortgage for the balance due. Jones would then convey the lot to the builder-buyer, receive the buyer’s note and mortgage for the balance, and assign the note and mortgage to plaintiff (in substitution for J ones’ note and mortgage).

The price of the lots was fixed at $55 per front foot less the costs of improvements. Since this represented the full market price, it was understood that, as a practical matter, there was little, if any, room for J ones to realize any profit on the resale to the builder and that he would, therefore, sell the lots to the builders at the identical price. As stated, his source of income from the venture would be the commissions on the ultimate sales of the houses.

As Jones had first to find builders who were willing to buy the lots before he himself could purchase them from plaintiff, it was agreed that their relationship would he in the form of options to be exercised by Jones. When he found a builder who would be willing to purchase a lot for $500 down, he would exercise an option, purchase the lot, sell the lot to the builder under an exclusive agency arrangement, turn the $500 over to plaintiff, and assign to plaintiff the builder’s note and mortgage for the balance of the lot price (the full price of the lots averaged around $4,100). However, even prior to arriving at their final agreement Jones already had commitments for 28 lots, which certainly was sufficient to set the venture off to a flying start.

On November 14, 1955, plaintiff and Jones entered into an agreement with respect to Windsor Place Addition Extension No. 1 which was designed to formalize the above-described arrangements. It recited and provided, among other things, that the subdivision “is in the course of being platted”; that it would “consist of approximately 97 lots”; that, when the proceedings for the platting of the lots would be completed, plaintiff agreed to sell to Jones 28 lots for $14,000 down (28 x $500 per lot), the balance (stated as $108,100) to be determined on the basis of $55 per front foot, but reduced by the cost of the improvements; that the balance due on each lot would be evidenced by a note and mortgage, “which mortgage shall contain a provision waiving any and all priority in favor of a lending institution granting loans for construction purposes upon the premises”; that plaintiff agreed to sign all papers necessary “for the'completion of the plotting and dedicating of the streets”; that the sale of the 28 lots would be closed 10 days after the completion by the city of the water, sanitary and storm sewer, street and curb improvements with respect to the lots, at which time plaintiff would furnish 28 abstracts of title; and further, that plaintiff gave Jones “the exclusive privilege and option to purchase all of the remaining premises” in the subdivision at the same price and on the same terms and conditions provided at least 20 lots per year were purchased. Thereafter, Jones organized a corporation, the Northwest Neal Estate Company, to carry out his part of the operations.

In March 1956, plaintiff appeared before the Planning Commission and obtained approval of the final plat for this subdivision.

In April 1956, plaintiff conveyed the six lots constituting the Windsor Place Addition to the development company which had the option thereon, and in June 1956, he conveyed to Jones’ corporation the 28 lots covered by their agreement. Prior thereto, Jones and five builders had worked out extensive plans to develop the subdivision, and had held many meetings in connection therewith. Plaintiff took no part in such activities.

During the following year of 1957,28 additional lots were conveyed by plaintiff to Jones’ corporation for reconveyance to the builders. However, although, the original builders thereafter (due principally to slower than expected sales) failed to take any further lots, J ones was nevertheless able to secure another local builder, Richard Slabaugh, to continue to develop the subdivision. In 1958, Slabaugh took 17 lots. Plaintiff conveyed the lots to Jones’ company, which in turn reconveyed them to Slabaugh. However, in 1959 J ones was able to dispose of only 11 lots, 10 to Slabaugh.

At about this time, Jones went out of business and assigned his contract with plaintiff to Slabaugh. Eight of the remaining nine lots in the subdivision were then conveyed directly by plaintiff to Slabaugh upon the same terms, i.e., $500 down, and the balance upon completion and sale of the house. As of 1963, one lot still remained unsold.

Under these facts, it is difficult indeed to accept plaintiff’s contention that his arrangement and contract with Jones effected a “sale” or disposition of all of his interests in the Windsor Place Addition Extension No. 1 Subdivision, thereby evidencing Ms intention of terminating any lot selling business activity. The reality of the situation w'as that Jones was simply finding buyers for plaintiff’s lots. Although Jones was the go-between, the transaction in essence was between plaintiff and the builders, as it had to be, because of Jones’ lack of capital. Jones simply turned the $500 downpayments over to plaintiff, and then assigned to plaintiff the buildex*’s notes and mortgages for the balance due, at plaintiff’s sales price. Jones was in effect nothing more than an agent on these lot sales transactions. The correctness of this analysis is emphasized by the fact that, when Jones did drop out of the picture, the sales continued to be made but directly to the builder then operating, upon the same terms and prices, and with the builder’s note and mortgage going-straight to plaintiff.

Although the agreement with Jones spoke in terms of a “sale” of 28 lots, it did so only because, at the time of the agreement, Jones already had commitments for such number of lots. Jones did not have sufficient funds to buy a number of lots, let alone 28. As to the balance of the lots for which Jones then had no buyers, the agreement spoke only of “options.” But the whole venture was, obviously, basically nothing more than an “option” one, as it had to be due to Jones’ lack of capital. As was said in Doll v. Commissioner, 149 F. 2d 239 (8th Cir. 1945), cert. denied, 326 U.S. 725: “Substance and not form controls in applying income tax statutes and ‘the realities of the taxpayer’s economic interest, rather than the niceties of the conveyancer’s art, should determine the power to tax.’ Helvering v. Safe Deposit & Trust Co. of Baltimore, 316 U.S. 56, 58 * * * ” (at 149 F. 2d 243.) The substance of the transaction indicated at most a bare transfer of legal title to Jones’ corporation upon the exercise of an option, with no intent that the corporation would itself exercise any of the real incidents of ownership. Eeal estate options in and of themselves do not, of course, constitute sales. “The difference between an option contract and a contract of sale is one of substance not form. ‘An option does not pass to the optionee any interest in the land.’ 5 Thompson, Real Property, sec. 4287h.” Gordy v. Commissioner, 36 T.C. 855, 860 (1961). Thus, plaintiff’s contention that, despite the substantial number of lot sales he made in the years subsequent thereto, he effectively disposed of all of his interests in the subdivision by the J ones’ 1955 contract, cannot be accepted.

It is true that after his agreement with Jones, plaintiff’s part in the development program became a relatively passive one. Jones — at least as long as he remained a part of the venture — found the builder-buyers for the lots, and J ones and the builders thereafter advertised, promoted, and built the development. But despite his physical passivity, plaintiff in fact had a substantial stake in this entire business speculation. By deferring the balance due on his lots until the sale of the houses, he not only made it possible for the development to proceed, but he also had a vital interest in its success. Further, by subordinating his mortgages to those of the financing institutions, he made it possible for the builders to obtain construction loans. And since it was plaintiff wlio was paying for the installation of the various street and utility improvements, he certainly had a real financial interest in at least this part of the enterprise.

Indeed, as to the improvements, plaintiff’s role was not so passive. After the Jones’ contract of November 14,1955, and the approval by the Planning Commission in March 1956 of the final plat for the subdivision, plaintiff in May 1956 authorized his engineers to proceed with certain improvements and conferred with them as to the various details of their installation. In July 1956, he authorized them to proceed with plans for additional street, water, curb, gutter and sewer improvements. He appeared, as necessary, before the City Council and the City Planning Commission concerning the improvements, and executed such papers as were required in connection with the performance of the work. In 1956, the tax year here in question, plaintiff’s tax return showed expenditures for improvements of approximately $50,000. For the entire subdivision, plaintiff, throughout the years, spent almost $190,000 for such improvements, and almost $6,000 for engineering costs.

In a similar situation, where an owner of unimproved property gave a real estate developer an option to sell all the lots in his acreage at a fixed price, the title passing from the owner to the purchaser as each lot was sold, the court, in sustaining an ordinary income assessment, characterized the transaction as either in the nature of a joint venture or an agency. Bauschard v. Commissioner, 279 F. 2d 115 (6th Cir. 1960). The joint venture characterization would appear to be even more appropriate in the instant case since in Bauschard it was the developer and not the owner who platted, subdivided and improved the property at his own expense. Here it was plaintiff who defrayed all of these expenses.

In emphasizing plaintiff’s passivity in the actual lot selling activity, as well as in the advertising, promotion, and house selling aspects of the venture, plaintiff points to certain cases in which owners of subdivision lots who continuously disposed of them in substantial numbers on an individual lot basis through an independent real estate broker handling all the details were nevertheless held to have realized capital gains. However, these cases are for the most part of the “liquidation” variety. For instance, one who inherits property and wishes to dispose of it bnt finds he cannot readily do so in one bulk transaction may give a real estate agent or developer broad authority to subdivide and improve it as the only practical way to effect a disposition. In such an instance, the mere execution by an owner of a series of deeds to individual lots as an incident to a sale of the entire tract will not alone necessarily serve to deprive him of capital gains treatment. Estate of Mundy v. Commissioner, 36 T.C. 703 (1961) ; Smith v. Dunn, 224 F. 2d 353 (5th Cir. 1955) ; Gordon v. United States, 141 Ct. Cl. 883, 159 F. Supp. 360 (1958) ; McConkey v. United States, 131 Ct. Cl. 690, 130 F. Supp. 621 (1955). And this result may follow even though the heirs liquidate their inheritance themselves, without the aid of a real estate broker or developer. Garrett v. United States 128 Ct. Cl. 100, 120 F. Supp. 193 (1954). The same capital gain treatment may also result from the sale of subdivided realty in other similar “liquidation” situations, such as those arising out of the necessity to raise funds to satisfy other business needs (Lazarus v. United States, 145 Ct. Cl. 541, 172 F. Supp. 421 (1959)), or as an incident of a reorganization (Western & Southern Life Ins. Co. v. United States, 143 Ct. Cl. 460, 163 F. Supp. 827 (1958) ), insolvency (Cebrian v. United States, 149 Ct. Cl. 357, 181 F. Supp. 412 (1960)), the normal winding up of a phase of a business operation (Chandler v. United States, 226 F. 2d 403 (7th Cir. 1955) ; Curtis Co. v. Commissioner, 232 F. 2d 167 (3rd Cir. 1956) ; Oahu Sugar Co. v. United States, 156 Ct. Cl. 546, 300 F. 2d 773 (1962)), or the inability, despite repeated efforts, to dispose of investment property en bloc (Fahs v. Crawford, 161 F. 2d 315 (5th Cir. 1947) ; Voss v. United States, 329 F. 2d 164 (7th Cir. 1964)).

But this is not our situation. Plaintiff was not liquidating inherited or unwanted property which he found he could not dispose of in the form of unimproved acreage. Clearly, plaintiff, as a good business proposition, intended to subdivide his 33 acres, improve it, and realize the large profits that would result therefrom, as is shown by his subdivision activities even before his purchase of the Spires’ tract, and his action the day immediately after such purchase, after the city just 2 weeks earlier had decided to put in a sewerline which would serve the entire property, of setting the machinery in motion to subdivide it. Despite the intervention of the Jones’ 1955 contract, plaintiff’s intentions were fully carried out by his sales in the years 1956-59 of 90 lots.

While in the “liquidation” situations, emphasis has, in considering whether the owner is to be treated as conducting a business activity, frequently been placed upon the owner’s inactivity and the fact that all of the subdivision promotion and sales activities were handled by an independent broker with broad delegations of authority, nevertheless in the non-liquidation situation it has been repeatedly recognized that “A taxpayer may engage in business through an agent, and the sales activities of an agent for the benefit of the principal will be imputed to the principal.” Bauschard v. Commissioner, supra, p. 118. In Achong v. Commissioner, 246 F. 2d 445 (9th Cir. 1957), too, the taxpayer entered into an agreement with a real estate broker whereby the broker would subdivide and sell the property, the taxpayer would reimburse the broker for the cost of the improvements and the surveying, and the broker would have an exclusive agency to sell the lots to homeseekers. Overruling the contention that the taxpayer should be entitled to capital gains treatment on the sales of the lots because he was not active in promoting the sales and because the broker allegedly acted as an independent contractor, the court held “* * * a person may be engaged in business within the meaning of this section [of the Internal Revenue Code] through agents.” (p. 447.) To the same effect are Gamble v. Commissioner, 242 F. 2d 586 (5th Cir. 1957) ; Snell v. Commissioner, 97 F. 2d 891 (5th Cir. 1938) ; Boeing v. United States, 144 Ct. Cl. 75, 168 F. Supp. 762 (1958) ; and Miller v. United States, 168 Ct. Cl. 498, 339 F. 2d 661 (1964).

Indeed, even in an inheritance-liquidation situation, with sales conducted through a broker, continuing, substantial and frequent sales of property that is subdivided and improved to attract purchasers, has been held to result in gain taxable as ordinary income. Brown v. Commissioner, 143 F. 2d 468 (5th Cir. 1944). And the same result followed in a business liquidation where an attempt to sell large acreage en bloc failed and the owners found they had to subdivide in order to dispose of their holdings. The court held that although they were not in the real estate business by choice, nevertheless their continuous, substantial and frequent sales necessarily resulted in their disposing of their property in the ordinary course of trade or business. Palos Verdes Corp. v. United States, 201 F. 2d 256 (9th Cir. 1952). To the same effect are Boeing v. United States, supra, and Rollingwood Corp. v. Commissioner, 190 F. 2d 263 (9th Cir. 1951), where the frequency and continuity of the sales transactions were again stressed.

To support his contention that he was merely buying and selling investment property and not engaging in a business, plaintiff points to his long tenure of the 11 acres, which he had used as an orchard and vineyard, his desire over the years to acquire the Spires’ tract, which was simply planted in corn, and his commitment to purchase the tract months before the city made the important decision to build the sewerline to the area. However, while in such cases the purpose for which the property was originally acquired is certainly a relevant factor for consideration, Fahs v. Crawford, supra; Voss v. United States, supra, it is, nevertheless, recognized that of far greater weight is the purpose for which the property was held at the time the decision to subdivide was made. Miller v. United States, supra; Bauschard v. Commissioner, supra; Mauldin v. Commissioner, 195 F. 2d 714 (10th Cir. 1952) ; Rollingwood Corp. v. Commissioner, supra. “The statute uses the express words ‘property held by the taxpayer’.” Bauschard v. Commissioner, supra, p. 118. The purpose of holding may well change over the years. Cohn v. Commissioner, 226 F. 2d 22 (9th Cir. 1955). Certainly, regardless of what plaintiff originally had in mind when he first became interested in his tracts, his holding purpose became quite clear when he began taking active steps looking to a profitable subdivision when the city did decide to build the sewerline.

Plaintiff further emphasizes the fact that his “business” over the years was that of a general contractor specializing in the construction of schools and. hospitals. He was not, he says, in the real estate business as such and was simply an investor in real property, as certain earlier isolated transactions indicated. While it is, of course, relevant on the “investment” aspect of real estate holdings to inquire into a person’s normal business or professional activity, Lazarus v. United States, supra; Voss v. United States, supra, it is, nevertheless, well recognized that one may be in more than one business at the same time. Gamble v. Commissioner, supra; Mauldin v. Commissioner, supra; Snell v. Commissioner, supra. For instance, the activity of selling subdivided realty, where the sales are not isolated but are continuing, substantial, and frequent, has been held to constitute a “business” even though the owner was a lawyer (Gamble v. Commissioner, supra), a priest (Bauschard v. Commissioner, supra), a golf course operator (Snell v. Commissioner, supra), a county commissioner (Thompson v. United States, 136 Ct. Cl. 671, 145 F. Supp. 534 (1956)), or a cashier {Aehong v. Commissioner, supra). “The fact that petitioner had other full time employment does not prevent him from being in the real estate business.” Achong v. Commissioner, supra, p. 447. In any event, it is noted that during the 1956 tax year in question, plaintiff’s net profit from his general contracting business was only around $3,000, while his net profit from the lot sales herein involved was over $58,000. This substantial income from his 34 sales of lots that year as compared with his other income is strong evidence that it resulted from a business activity. Thompson v. United States, supra; cf. Recordak Corp. v. United States, 163 Ct. Cl. 294, 325 F. 2d 460 (1963). And as the court stated in Snell v. Commissioner, supra, of the taxpayer therein involved : “He was not reselling land in the condition in which he bought it, but was subdividing and platting it and sometimes improving it * * *. All was done with such purpose, system and continuity as well to constitute it a business.” (p. 893)

Especially in this field of determining the tax aspects of sales of subdivided realty has it been repeatedly stressed that it is the overall, factual situation involved in tbe particular case that must govern. The isolation of and emphasis upon certain individual factors which constitute only threads in a complex situation should be guarded against, for it is the “total background of the transactions” and “the entire factual pattern of the case” that must govern. Gamble v. Commissioner, supra, p. 592.

Considering all the facts and circumstances of this case, and particularly the background, the purpose, and the actual operation of the plaintiff-Jones agreement, it seems clear that plaintiff’s continuous, frequent and substantial sales of lots from his acreage which he subdivided and improved constituted a business activity. Consequently, the gain therefrom should be taxed as ordinary income. It is accordingly recommended that the petition be dismissed.

FINDINGS on Fact

1. Plaintiff John Nadalin is an individual taxpayer who filed a joint Federal income tax return with his wife Mary for the calendar year 1956. Since Mrs. Nadalin is a party plaintiff only by virtue of having filed such a joint return, the term “plaintiff” will be used herein as referring to John Nadalin.

2. From 1920 through 1959 plaintiff was in the general contracting business with his office in Columbus, Ohio. He was principally engaged in the construction, throughout the State of Ohio, of public buildings, mainly hospitals and schools.

3. (a) In 1919 or 1920 the State Construction Company, a partnership of which plaintiff was a member until 1924, built two houses in Columbus. One of the houses was sold at the time. The other was held as rental property until 1925, then occupied by plaintiff as his own residence from 1925 until 1931, and then rented again until 1948, when it was sold.

(b) In 1930 plaintiff built his own residence, in which he still resides.

4. In 1927 plaintiff, personally as J. Nadalin & Co., built a five-family apartment house which was rented until 1928, at which time it was sold. This property was taken back in 1932 or 1933 and again rented until 1948 when it was sold as five separate units to the five tenants living there at the time.

5. In 1926 or 1927 plaintiff acquired eight unimproved lots in Columbus, five of which he sold over the years and three of which he still owns.

6. In 1954 Norton & Nadalin, a firm of which plaintiff was a partner from 1935 to 1959 and which was primarily engaged in constructing public buildings, mainly hospitals and schools, built two houses on lots owned by plaintiff. These houses were built in order to keep the firm’s key employees working during a slow season. They were sold in 1956 and 1957.

7. In 1943 plaintiff purchased 5 acres of unimproved land in the City of Upper Arlington, Ohio, and in 1944 he purchased an adjoining 6-acre tract in said city. Upper Arlington is located on the outskirts of Columbus. The entire 11 acres were purchased for approximately $5,500. Plaintiff used the 11 acres as an orchard and vineyard until 1955.

8. Adjacent to the 11-acre tract on the north was situated a 22-acre tract of unimproved property, planted with corn, owned by one Harry Spires.

9. For a period of years prior to 1954 plaintiff had indicated to Spires, who was in declining health, his interest in purchasing the adjoining 22-acre tract. Spires assured plaintiff that when the time arrived that he would decide to sell, plaintiff would be the first to be given the opportunity to purchase.

10. In 1954 plaintiff wished to ascertain whether his own 11-acre tract, only a small part of which had sewer connections, could be profitably subdivided. On October 4 and November 1, 1954, he appeared before the Planning Commission of the City of Upper Arlington and requested preliminary approval of a plat he proposed to develop in the area of this 11-acre tract. He submitted a preliminary sketch prepared by an engineer showing the area to be developed, the lots to be drawn, and how the streets would tie in with adjacent streets already in the area. The sketch also showed the proposed subdivision of certain property adjoining plaintiff’s property, including the Spires’ tract, because, in order to obtain preliminary approval for the development of his own 11-acre tract, it was necessary to show the city the effects on the ultimate development of the area as a whole, including the adjoining 22 acres. The matter was referred to the City Council for examination by the City Engineer and recommendations as to such matters as lot sizes and the necessity for septic tanks.

11. (a) In November or December 1954, Spires told plaintiff he was ready to sell his 22-acre tract, whereupon plaintiff made an offer of $2,000 per acre, which Spires stated was acceptable. Nothing further was immediately done to bind this oral understanding, however, until February 18, 1955, when a check for $1,000 was given by plaintiff to Spires as earnest money and to cover the costs of a survey of the property. At that time, Spires’ attorneys had drafted a proposed contract of sale. After further negotiations between plaintiff’s and Spires’ attorneys, the contract was prepared in final form and executed on April 28, 1955.

(b) The executed sales contract with Spires specified a total purchase price of $44,476, payable in four yearly installments beginning with the date of the contract. The property was to be conveyed to plaintiff when fully paid for, except that plaintiff had the right to receive conveyances of a portion of the property upon payment of 150 percent of the agreed price of $2,000 per acre for the property to be conveyed. Such conveyances were to be in strips from the north to the south boundaries of the property. The sums paid for such conveyances were to be credited against the total purchase price. Plaintiff received actual conveyances of the property on June 8, 1956, December 8, 1956, February 23, 1957, April 30, 1957, May 24, 1957, and May 19, 1958. The purchase price was paid in yearly installments as called for in the contract.

12. In late 1954 or early 1955 the City of Upper Arlington acquired land for a new high school in the vicinity of plaintiff’s 11-acre tract and the adjacent Spires’ tract.

13. On April 11,1955, the City of Upper Arlington adopted a resolution for the construction of a sewerline that would effectively serve both the 11-acre and the 22-acre tracts. Up to this time only six lots, in the westernmost portion of the 11-acre tract, bad a sewer available. These lots were more readily marketable, and plaintiff had some time previously given a real estate development company, the Northwestern Development Company, an option to purchase them. The rest of the land lacked such proper facilities and had been considered unsuitable for development.

14. On April 29, 1955, the day after the Spires’ contract was executed, plaintiff employed Burgess & Niple, a local engineering firm, to prepare a preliminary subdivision plat of the two tracts. This preliminary plat consisted of the entire 33 acres, showing the boundaries of tire area, adjoining lots and subdivisions, and a proposed layout of the streets to be built within the property itself.

15. Ultimately two subdivisions were platted from the combined two tracts, i.e., “Windsor Place Addition,” consisting of the six lots in the original 11-acre tract already having access to sewage facilities and subject to the option previously mentioned, and “Windsor Place Addition Extension No. 1,” consisting of the remainder of the 11-acre tract, the entire 22-acre Spires’ tract, and some adjoining lots acquired in September 1955 through a trade with neighboring property owners.

16. On June 6, 1955, the preliminary plat was presented to and tentatively approved by the Planning Commission. At the meeting plaintiff stated that he would not record the final plat until such time as the water and sewage facilities were made available.

17. On June 21, 1955, plaintiff authorized the engineering firm to proceed with final plats of Windsor Place Addition and Windsor Place Addition Extension No. 1. At that time he authorized the firm to survey the original 11-acre tract, and some time later authorized the survey of the Spires’ tract.

18. On October 3, 1955, plaintiff appeared before the Planning Commission and obtained approval of the final plat for the six-lot Windsor Place Addition. In April 1956, pursuant to the above-mentioned option, plaintiff conveyed the lots in this subdivision to the Northwestern Development Company.

19. In May or June 1955 plaintiff was approached by one J. Newton Jones, a realtor, who had learned of plaintiff’s purchase of the Spires’ tract and was interested in its development. Over a period of months, until November, he discussed with plaintiff plans for the development of the property and arrangements whereby plaintiff would be able to dispose of the property profitably and with little effort and with Jones undertaking all the details of the development and of the actual disposition of the lots. Jones himself did not have sufficient capital to purchase the property outright from plaintiff or to develop the property in any way. He envisioned instead a plan whereby his profits would come essentially from his usual activity as a realtor, i.e., commissions from the sale of houses. To obtain such commissions, however, he would have to have control over the property so that he could make appropriate arrangements with builders for his having the exclusive right to sell the houses which would be erected upon the lots in the subdivision. During this period plaintiff himself made no effort to contact any real estate brokers and initiated no efforts to dispose of his property. Finally, after long negotiations, a written contract pertaining to the lots in Windsor Place Addition Extension No. 1 was entered into between plaintiff and Jones on November 14,1955. The actual transactions with Jones were carried out through a corporation, the Northwest Eeal Estate Company, an Ohio corporation, founded by Jones for the purpose of this transaction. As far as plaintiff was concerned, J ones and Northwest were one and the same.

20. The text of the agreement between plaintiff and Jones was as follows:

This AgReement made and concluded at Columbus, Ohio, this 14th day of November, 1955, by and between John Nadalin, hereinafter referred to as Nadalin, and J. Newton Jones, hereinafter referred to as Jones, WITNESSETH:
The subject matter of this contract is real property situated in the City of Upper Arlington, Ohio, and is in the course of being platted and will be known as Windsor Place Addition Extension No. 1, and when said platting is completed, will consist of approximately 97 lots; and,
Whereas, Nadalin has instituted proceedings to have tbe entire tract of land plotted into lots to be known as Windsor Place Addition Extension No. 1; and,
Whereas, Jones is proposing to supervise the procedure of having the instituted proceedings for plotting the premises completed; and.
Whereas, it is the desire of Nadalin to sell to Jones all that portion of the premises which abut on Mt. Hol-yoke Eoad and Northam Road, extending westward from Mt. Holyoke Road, which streets eventually are to be improved, and to be bounded on the east by a line extending from Ridgeview Road to Westminister approximately 140 feet east of Mt. Holyoke Road, as evidenced by a survey plot made by Burgess and Niple which is to be attached to this agreement; and,
It is therefore mutually agreed by and between the parties hereto as follows, to-wit:
1. The consideration Jones agrees to pay to Nadalin is the sum of $122,100.00 for that portion of the premises which will contain twenty-eight lots when the proceedings for plotting is completed, as shown by the survey plot attached hereto, which premises are to be free and clear of any and all assessments for costs for water, sanitary and storm sewers, and streets and curbs, except the water taps which may be put in to service the contemplated lots into which said premises may be divided, which are to be paid by Jones. In the event that the aforesaid assessments^ etc. are not paid at the completion of the aforesaid utilities, which are in process of construction, and the cost thereof should be paid on a ten-year payment plan, Jones is to pay all interest accumulation on the plan over and above the original base cost of the construction of said utilities.
2. At the time the construction of said utilities is completed on Mt. Holyoke Road, the purchase price shall be paid as follows: $14,000.00 cash at the closing. The balance of $108,100.00 shall be paid in installments to be determined as to the time and amount as follows: At the time a dwelling house is completed and sold on each lot, the price for that lot at the rate of $55.00 per front foot shall be determined. Then $500.00 shall be deducted from that lot’s price as being that proportion of the $14,000.00 already paid which is applicable to that lot. Then if the assessments, etc. are not paid by the time of the closing on that lot, then that lot’s price shall further be reduced by the base amount of assessments applicable to that lot, excluding therefrom the costs of water taps and any interest chargeable, as provided in “1” of this agreement. Then the unpaid balance of that lot’s price determined according to the above shall be paid and credited against the balance due on the mortgage provided herein, it being expressly understood that the six corner lots are to be considered as being ninety-five feet in width.
The unpaid balance of the purchase price of $122,-100.00, to-wit: $108,100.00, shall be evidenced by a note secured by a mortgage on the premises comprising twenty-eight lots as evidenced by the plat attached hereto, which mortgage shall contain a provision waiving any and all priority in favor of a lending institution granting loans for construction purposes upon the premises, or any part thereof.
3. Nadalin agrees to sign or cause to be signed all necessary papers which may be necessary for the completion of the plotting and dedicating of the streets which will be necessary for the purpose of having the plot properly recorded.
4. The closing of this transaction shall take place within ten (10) days after the completion of the construction of utilities described in paragraph 2 above, at which time Nadalin shall convey to Jones the said property by general warranty deed in form satisfactory to Jones or his attorneys. Nadalin shall furnish Jones twenty-eight abstracts of title showing a clear and marketable title in Nadalin continued to date.
5. Also for and in consideration of the sum of One Hundred Dollars ($100.00) paid not only as earnest money on the within contract, but for the option hereinafter described, Nadalin hereby gives and grants to Jones the exclusive privilege and option to purchase aE of the remaining premises in said Windsor Place Addition Extension No. 1 upon the same price per footage and terms and conditions of payment, delivery of title and security for unpaid balance as provided above, for a period of one (1) year from the date of the payment of the sum of Fourteen Thousand Dollars ($14,-000.00) as hereinbefore provided. Said option may be exercised as to any part of the remaining portion of the premises not included in paragraph 1, to include twenty or more lots, at any time during the term of said option by giving to Nadalin thirty (30) days written notice of intention so to do. However, it is expressly provided that Jones shall exercise his option as to that portion of the premises which would comprise not less than twenty (20) lots, and upon the exercising of the option to the premises covering at least twenty (20) lots, this option shall automatically extend for an additional one year with the same privileges as provided herein, which extension shall be extended until the whole of said premises have been purchased, except enough of the premises to cover seventeen (17) lots to be selected by Nadalin.
6. Jones, as recited in 5 above, has deposited with Nadalin the sum of One Hundred Dollars ($100.00), which has been denominated as earnest money for the faithful execution of the purchase part of this agreement and as payment for the option also provided herein. In the event that Jones shall fail to carry out his agreement of purchase, Fifty Dollars ($50.00) of said One Hundred Dollars ($100.00) shall be forfeited as liquidated damages for his failure so to complete his purchase, and the remaining Fifty Dollars ($50.00) shall be considered as consideration for the granting of the option provided in 5 above.
And, I, Mary Nadalin, wife of said John Nadalin, in consideration of the making of the payments by Jones as herein provided for, and of One Dollar ($1.00) to me paid, the receipt whereof is hereby acknowledged, consent to the terms of the foregoing contract and bind myself to unite in the aforesaid and therein release all my right and expectancy of dower in the premises above described, to Jones, his heirs or assigns.
* * * * *

21. Since Jones did not have the capital to purchase the property outright or to install the necessary improvements, the parties to the agreement contemplated that their arrangement would be carried out in the following manner:

Jones would secure builders who would agree to purchase the lots and build houses on them. The agreement between plaintiff and Jones provided for a $500 downpayment on each lot sold under the agreement. Jones would obtain from the builders the $500 downpayments which would then be turned over to plaintiff. Plaintiff would then convey the lots thus sold to the builders to Jones’ company, the Northwest Real Estate Company, which would then execute a note or notes for the remainder of the purchase price (the lots were then worth approximately $4,100 each) and deliver to plaintiff said notes and a mortgage or mortgages executed by Northwest. (The notes and mortgages would also be executed by J ones as an individual.) Northwest then would re-convey the lots to the various builders and receive notes and mortgages from them which would in turn be assigned to plaintiff. Plaintiff would then release the mortgage given by Northwest and Jones, and would instead hold the note and mortgage from the builder to secure the balance of the purchase price. After the builder completed a house on a lot and such house and lot were sold, plaintiff would then receive the balance of the purchase price. Thus, plaintiff agreed to defer his compensation for the price of the lots fixed by the agreement until after the houses had been completed and sold.

Under the agreement, however, Jones obligated himself to purchase initially only 28 of the approximately 97 lots platted for the subdivision at a price of $55 per front foot less the cost of improvements to the subdivision. Jones had a commitment from one builder to purchase the lots even before the execution of the contract with plaintiff. As to the balance of the lots over 28, Jones merely had an option to purchase at the rate of 20 lots per year at the same price and on the same terms as the original 28. Under the agreement, plaintiff reserved 17 lots which he planned to sell himself to some of his friends, but actually these lots too were ultimately treated as coming under the agreement and were conveyed to Northwest.

22. The sale price of all the lots to Jones, including those subject to future option, was fixed by the contract and could not be increased by plaintiff or decreased by Jones to reflect any subsequent upward or downward changes in the market. Similarly there was no price restriction upon Jones as to his resales of the lots to the builders. Plaintiff exercised no control over Jones’ operations in this regard, and never in fact had any relations with the prospective purchasers prior to any sale to them. Nevertheless Jones actually conveyed the lots to the builders for the exact price that he paid to plaintiff under the contract. As a practical matter, the contract prices of the lots were their maximum market price at that time. The amounts Jones planned to realize through his prospective broker’s commissions on the sale of the houses for the builders to private owners exceeded any relatively small profit be might have been able to realize at that time through a bulk resale of all of the lots. To this end J ones secured an agreement with the builders who purchased lots and erected houses thereon granting him the exclusive listing of the properties for sale.

23. A further aspect of plaintiff’s arrangement with J ones was that plaintiff agreed that the mortgages of the builders, which were to be assigned to him to secure the remainder of the purchase price, would be subordinated to construction loan mortgages executed in favor of lending institutions. This provision was necessary because these institutions demanded priority of their instruments as a prerequisite to extending credit, and neither Jones nor the builders had sufficient capital to finance the improvements on their own.

24. On or about November 16, 1955, plaintiff dedicated 25 feet of his property along the northern boundary of the Spires’ tract to the City of Upper Arlington for the improvement of the adjoining road and also granted the city a 5-foot easement along the same boundary for the construction of a sanitary sewer. Such a sewer was thereafter constructed.

25. On March 5, 1956, plaintiff appeared before the Planning Commission of the City of Upper Arlington and requested approval of the final plat for the Windsor Place Addition Extension No. 1 Subdivision. The Commission approved the plat at such meeting (with certain minor corrections) and, after it had also been approved by the City Commission and the City Engineer, the plat was recorded on March 22,1956.

26. Immediately after the execution on November 14,1955, of the contract between Jones and plaintiff, Jones proceeded to negotiate with a group of Columbus builders and a Columbus utility concerning the development of the subdivision. Among other things, Jones and the builders met to discuss and determine the type, style, and price of the houses to be built. These activities were designed not only to secure the sales of the lots to the builders, which was a first prerequisite to successful promotion of the subdivision as a whole, but also to map the plans for the eventual sales of the houses and properties to customers, from which sales Jones hoped to realize his commission profits. Although Jones had a commitment from one builder to take the 28 lots even before the November 14 contract had been executed, it was subsequently deemed best to bring in a group of builders. Jones was able shortly thereafter to obtain commitments from four others, all of which commitments covered the purchase of the first 28 lots provided by the contract.

In furtherance of his plan to handle the sales of the completed houses, Jones arranged for a sales promotion with the local gas company, whereby certain of the houses would be equipped with gas appliances, and in return the company would advertise and promote the entire project as “Blue Flame Village.” Between January and March 1956, five or six meetings were held between Jones, the builders, and the gas company to discuss the arrangements for development of the property. Plaintiff was not present at these meetings and did not participate in any agreements reached thereat.

27. An extensive advertising campaign for promotion of the sales of the houses and the properties to customers interested in buying them as homes was carried out by J ones, but financed by the utility, the suppliers, and the builders. Plaintiff himself did no advertising of his own with respect to the subdivision, maintained no separate office for the handling of the sales of these or any other parcels of real estate, and participated personally in no other way in connection with any of these sales activities.

28. Under the Jones-plaintiff contract, Jones was to be reimbursed by plaintiff for, or credited with, the costs of all improvements to the subdivision through a downward adjustment of the contract price. The lot prices were on the basis of a formula of $55 per front foot less the cost of improvements. At the time the contract was entered into, it was not known what such costs would amount to. By this method plaintiff, in effect, ultimately bore the cost of all improvements, which included paving of streets, installation of waterlines, trunk storm sewers, trunk sanitary sewers, water taps and sidewalks. These costs amounted to $46,605.69 in 1956, $98,117.77 in 1957, and $45,115.06 in 1958.

In most cases, the improvements were initially installed by Northwest Real Estate Company, in others by the City of Upper Arlington on an assessment basis, and in still others by the builders. Usually the builders advanced funds to Jones to pay for the improvements, and plaintiff himself advanced enough to pay for some $5,000 in improvements. Northwest was able to defray the improvement costs only because plaintiff did not require the full price of the lots to be paid until after the houses had actually been constructed and sold to customers. Northwest was not out-of-pocket any amounts for improvements since it was reimbursed by plaintiff through the purchase price arrangement. In addition, plaintiff paid all the bills of the engineering firm in connection with the preparation and filing of the subdivision plats.

29. After the plaintiff-Jones contract of November 14, 1955, plaintiff took various steps in furthering the installation of the improvements. For instance, in May 1956, plaintiff visited the office of the engineering firm he had retained to inform them he was ready to proceed with certain improvements and to discuss the details of how such improvements would be accomplished. In July 1956, plaintiff gave the engineers written authorization to proceed with plans for additional improvements, including street, water, curbs, gutters, and storm and sanitary sewers, appeared before the City Council and Planning Commission as necessary, and signed certain papers in connection with the work to be done.

30. As shown (finding 18), plaintiff conveyed the sis lots in Windsor Place Addition to the Northwestern Development Company in April 1956. The first conveyance of lots in Windsor Place Addition Extension No. 1, under the contract with Jones, occurred on June 2,1956, when plaintiff conveyed 28 lots to Jones’ Northwest Real Estate Company. Two days later, i.e., June 4, 1956, 27 of these lots were reconveyed at the same price by Northwest to the various builders from whom Jones had secured commitments. Twenty-eight lots were similarly conveyed to Northwest and reconveyed to the builders in 1957.

31. On June 8,1956, plaintiff received the first actual conveyance from Spires of 23 lots in Windsor Place Addition Extension No. 1(6 days after he had conveyed all these lots to Northwest, and 4 days after that company had in turn re-conveyed the lots to the builders). The remaining lots were subsequently conveyed from plaintiff to Northwest in strips from north to south, in the same manner that they were acquired from Spires according to the installment agreement between plaintiff and Spires. The cash that plaintiff received in 1956 from the sale of lots was subsequently used for payments to Spires for the land, payments for improvements, and some other development expenses.

32. In 1957 disagreements arose between Jones and some of the original builders due essentially to the slow sales of the houses, and Jones found it necessary to obtain another builder or builders to continue with the development since the original builders refused to take any further lots. J ones was able to secure Richard Karl Slabaugh, another local builder, to continue to develop the subdivision. In 1958 plaintiff conveyed 17 lots to J ones who reconveyed them to one of Slabaugh’s companies, the R. K. Company, at the same price. In 1959, 11 lots were conveyed to Jones by plaintiff. Ten were reconveyed to Slabaugh’s companies and one to a private purchaser.

33. Some time in 1959 or 1960, when there were still nine lots unsold in Windsor Place Addition Extension No. 1, J ones’ Northwest Real Estate Company went out of business. Shortly prior thereto it assigned its contract with plaintiff to Slabaugh’s R. K. Company. The remaining lots in the subdivision, except one, were then conveyed by plaintiff directly to the R. K. Company (3 in 1960; 2 in 1961; 3 in 1962). R. K. was similarly required to pay plaintiff the $500 downpayment per lot and the balance of the purchase price upon completion and sale of the house, the same terms as afforded to J ones. The company executed a note and mortgage in favor of plaintiff for the balance of the purchase price. In 1963 one lot remained, having a market value of between $7,500 and $10,000. Under the terms of the contract between Jones and plaintiff, however, Slabaugh as assignee could still exercise the option to purchase this lot for the price agreed upon in 1955 of $55 per front foot (or $5,250) less improvements.

34. On his income tax return for 1956, plaintiff reported a net profit from his construction business of $3,181.36 and a net profit from the sale of the real estate herein involved of $58,178.20. ($147,450 sales prices at $55 per front foot less some $89,000 for costs of improvements and purchase installment payments to Spires.) Approximately $50,000 related to costs of improvements. For 1957, he reported a net profit from his construction business of $11,100.84 and a net profit from the sale of said realty of $8,385.70. Approximately $93,000 was shown as costs of improvements. For 1958, the figures were $5,568.17 and $12,564.64, respectively. In addition, plaintiff received interest on the notes of Jones and the builders which he held to secure the balance of the purchase price on the lots he sold in the amounts of $2,-594.04 in 1956, $4,927.38 in 1957, and $3,840.53 in 1958.

35. The acquisition cost to plaintiff of the real estate (including the one unsold lot) was approximately $50,000 to $55,000. Engineering costs expended in connection with the subdivision and improvement of the property amounted to $5,957.38. The gross sales prices of the lots from plaintiff’s original tract, including the six lots in Windsor Place Addition, and the Spires’ tract (excluding the one unsold lot), totaled approximately $439,000. The costs of the improvements to these properties amounted to $189,838.52, resulting in a net contract price, based on the formula of $55 per front foot less improvements, of $249,511.48.

36. Plaintiff filed a joint income tax return for the calendar year of 1956 in which he claimed capital gains treatment on the gain realized from the sale of lots in 1956. Upon examination, the Commissioner of Internal Eevenue determined that the gain realized on the sale of the property constituted ordinary income.

37. As a result of the Commissioner’s determination plaintiff was required to pay a deficiency in tax of $22,396.99, plus interest of $3,034.64, or a total of $25,431.63. This amount was paid on or about September 16, 1959. On October 19, 1959, plaintiff filed a claim for refund with respect to said deficiencies. The claim for refund was formally rejected by the Commissioner on December 18, 1959, and plaintiff timely filed his petition herein on September 3, 1960.

CONCLUSION OP LAW

Upon the foregoing findings of fact, which are made a part of the judgment herein, the court concludes as a matter of law that plaintiffs are not entitled to recover, and the petition is therefore dismissed. 
      
      The opinion, findings of fact and recommended conclusion of law are submitted under the order of reference and Rule 45(a), now Rule 57(a).
     
      
       Plaintiffs are husband and wife. Mrs. Nadalin is a party only because she filed a joint return with her husband. “Plaintiff” will be used herein to refer to John Nadalin.
     
      
       Manifestly, plaintiff did not insist on strict observance of the contract provision that at least 20 lots a year he purchased.
     
      
       In 1956, plaintiff sold tlie six Windsor Place Addition lots plus 28 lots from Windsor Place Addition Extension No. 1. In 1957, from the extension subdivision, plaintiff sold 28 more, in 1958, 17, and in 1959, 11, totaling 90 lots in the 4 years. There tvere then only 9 lots left in the extension, 3 of which were sold in 1960, 2 in 1961, and 3 in 1962, leaving one unsold.
     