Miller v. Commissioner, No. 71569 (U.S.T.C. 1961)

Docket No. 71569.

1961-01-26

HELEN D. MILLER, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Jacob Rabkin, Esq., and Robert M. Cipes, Esq., for the petitioner. James J. Quinn, Esq., for the respondent.

RAUM

Petitioner is the widow of a well-known band leader, who died in 1944. In 1952 she executed an agreement with Universal Pictures relating to the production of one or more motion pictures based upon his life, in which she and other members of the family would also be portrayed. She agreed to use her best efforts to obtain certain consents or releases from other members of the family. Pursuant to Universal's undertaking to pay petitioner certain percentages of the gross proceeds from any such motion picture, petitioner in 1954 received $409,336.34. Held: The consideration thus received was ordinary income, in part as compensation for a right-of-privacy release, in part for personal services, and in part for the release of any other claims that petitioner might possibly make in regard to a motion picture about her deceased husband. Although the potential assertion of ownership of a right to produce the motion picture was included among such other claims, petitioner has not shown that she in fact owned any such property right, and the consideration received by her did not represent the proceeds of sale of a capital asset. Jacob Rabkin, Esq., and Robert M. Cipes, Esq., for the petitioner. James J. Quinn, Esq., for the respondent.

The respondent determined a deficiency in petitioner's income tax for the taxable year 1954 in the amount of $283,660.86.

The only question remaining for decision is whether $409,336.34 received by the petitioner during 1954 pursuant to the terms of an agreement with Universal Pictures Company, Inc., represents capital gain, as contended by her, or is ordinary income, as determined by the Commissioner. The amount originally in issue has been substantially reduced by the Commissioner's concession of an adjustment concerning the deduction by petitioner of fees paid to her attorney in connection with the agreement with Universal. A third adjustment involving the availability of a medical expense deduction is dependent on the resolution of the litigated issue and will be resolved in the Rule 50 computation.

FINDINGS OF FACT.

Some of the facts have been stipulated and are incorporated herein by this reference.

Petitioner filed her individual income tax return for the calendar year 1954 in the office of the district director of internal revenue, Upper Manhattan District, New York, New York.

Petitioner is the widow of the late Glenn Miller, who was a highly popular and eminently successful band leader. They were married in 1928 and had two children who were infants at the time of Glenn Miller's death in 1944.

Glenn Miller entered the Armed Forces of the United States on October 7, 1942, attained the rank of major and, while in the Armed Forces, organized and conducted the Glenn Miller Army Air Force Band, both in the United States and Europe. He lost his life while a member of the Armed Forces on a military flight from England to France on December 15, 1944. He was 40 years old at the time of his death.

Glenn Miller executed his will on December 1, 1939, naming petitioner as sole executrix and sole beneficiary. The will was probated at Bergen County, New Jersey, and letters testamentary issued to petitioner on March 18, 1946.

During his lifetime Glenn Miller as an arranger and band leader originated and developed a unique style of musical arrangement and performance. The achievement of this unique style, known in the trade as the 'Miller sound,' in or around the year 1939 brought great popularity and commercial success to Miller.

During the period from 1939 to 1944, Glenn Miller's commercial activities included the following: Theatrical band engagements, so- called one-night stands, phonograph recordings, electrical transcription recordings, two motion-picture appearances, nationwide sponsored radio broadcasts, international radio broadcasts, composing and arranging musical compositions, and writing a book on musical arranging.

The popularity of Glenn Miller's music and great public interest in the Glenn Miller name and personality have survived his death.

In 1950, for instance, some 6 years after Glenn Miller's death, an organization of Glenn Miller enthusiasts known as the Glenn Miller Appreciation Society was founded with offices in London, England. The society, which is worldwide in its operations, published a bi-monthly Glenn Miller magazine, 'The Moonlight Serenader,' and in 1955 it published a unique compilation entitled 'A Glenn Miller Discography and Biography.’

During the 1950's numerous Glenn Miller records were re-released and some new records were made from recorded radio broadcasts of the old Miller band. In 1959 Glenn Miller was posthumously given the National Academy of Recording Arts and Sciences' award for the best performance by a dance band in the year 1959 based on an album released in 1959 of Glenn Miller radio broadcasts dating sometime from 1938 to 1942.

Since her husband's death, petitioner has engaged in a number of commercial activities involving the use of Glenn Miller's name and picture, the story of his life, the use of his library of music and orchestrations, and the recording of his library reference records, i.e., records which Glenn Miller made at his own expense primarily for self-criticism purposes of radio broadcasts in which his band performed.

On October 1, 1945, petitioner entered into an agreement with respect to the exclusive use of the name and picture of Glenn Miller and the exclusive use of his library of music and orchestrations in connection with the reestablishment of the former Glenn Miller orchestra. Pursuant to this agreement the 'Glenn Miller Band,' directed by Tex Beneke, was organized in 1946 and continued until the agreement was terminated in 1949. Petitioner received 25 per cent of the band's net profits under the terms of the agreement.

During his lifetime, Glenn Miller was an exclusive recording artist for Radio Corporation of America, hereinafter referred to as R.C.A., and he undertook to give that organization the exclusive right to use Glenn Miller's name and photograph in the phonograph record field. Following her husband's death, petitioner periodically received substantial phonograph record royalties from R.C.A. On August 8, 1951, an agreement was entered into between R.C.A. and the Glenn Miller Estate, with petitioner signing for the estate as executrix, whereby R.C.A. was authorized the use of approximately 250 reference library records held by the estate of selections broadcast over the radio by Glenn Miller and his orchestra during the period 1938 through 1942. For the use of these records and the right to re-record selections from them for release in album form, R.C.A. agreed to pay the estate a prescribed royalty based on the sale of the resulting albums. The estate not only granted R.C.A. the exclusive right to use its records for re-recording, release, and sale so long as the agreement continued but also undertook to give the exclusive right 'to use Glenn Miller's name and likeness in connection with the making, advertising or marketing of phonograph records' generally.

Beginning in 1946, David Mackay, who had been Glenn Miller's general counsel and later served as the Miller Estate's counsel and petitioner's counsel, began negotiating with several film companies concerning a proposed motion picture based on the life of Glenn Miller. Between 1946 and 1951, Mackay talked to representatives of six different film companies about this matter without reaching any satisfactory agreement. In these negotiations, Mackay in petitioner's behalf was insisting upon two primary conditions: The right to approve the screenplay and the right to receive a percentage of the proceeds of the motion picture. Finally, in the latter part of 1951, Mackay was approached by Universal Pictures Company, Inc., herein sometimes referred to as Universal, about the possibility of its making a motion picture on the life story of Glenn Miller. Universal already had in its possession the nucleus of a screenplay in the form of a series of vignettes prepared from memory by Colonel Edward Kirby who had known Glenn Miller during the war. Colonel Kirby had given his document a tentative role of 'The Moonlight Serenader.’

Mackay negotiated with Universal from January of 1952 until July of 1952 when an agreement was finally reached. This agreement, dated July 24, 1952, was between Universal and petitioner personally, not as executrix of the Glenn Miller Estate.

Pertinent portions of this agreement, which was in the form of a letter from Universal to petitioner, are as follows:

We are contemplating the production of one (1) or more photoplays to be based upon the life and activities of your late husband, Glenn Miller. In connection with the production * * *, it is anticipated that in addition to Glenn Miller, you, your children and other members of your family may be portrayed or represented * * *. Accordingly, this will confirm the following agreement between us:

1. You hereby grant to us the exclusive right to produce, release, distribute and exhibit * * * one or more photoplays based upon the life and activities of Glenn Miller throughout the world. Included in the foregoing rights herein granted to us is the perpetual and exclusive right to reissue and/or remake said photoplay or photoplays * * *. You agree that in the absence of any vesting of rights in you, as hereinafter provided, you will not at any time hereafter authorize, permit, consent to or license the production, release, distribution, exhibition or performance of any photoplay * * * exclusively permitted us hereunder based upon or using any incidents from the life and activities of Glenn Miller or from your life or any fictionizing thereof * * *.

2. You agree that we may portray or represent you and/or said Glenn Miller and/or your children and/or any or all other members of your family in said photoplay * * * and/or the names of your children and/or any other members of your family and/or the likeness of Glenn Miller, you and/or them in said photoplay * * * and in any and all advertising and publicity in connection therewith, in such manner as we may desire. You understand that said photoplay * * * may be fictional to a great extent and you hereby consent to such portrayal in such manner as we may desire, both in the representation of actual occurrences and in fictional circumstances. The provisions of this paragraph 2 are subject, of course, to the express provisions of paragraphs 7 and 13 hereof.

3. You agree to cooperate with us in every way reasonably possible in making available to us all information and material, whether written, musical or otherwise, that you may have relating to said Glenn Miller and his life and activities, professional or otherwise * * *. We shall have the right to use such material * * *. The foregoing right shall be deemed to include but not be limited to our right to use the name or names by which said Glenn Miller's orchestra was known, all of Glenn Miller's musical compositions, arrangements and orchestrations now owned by you, as well as the right to use or simulate the style, manner and manner of playing of Glenn Miller and/or his orchestra.

4. You represent and warrant to us that you are the sole and exclusive owner of all of the rights herein granted by you to us * * *.

5. You hereby release and relieve us of and from any and all claims, demands, causes of action, obligations and/or liabilities of any kind or character whatsoever including, but without being limited to, claims, demands, causes of action, obligations and/or liabilities based upon any alleged violation of the right of privacy, or on account of any other matter or thing in any way relating to the production, distribution, exploitation and/or advertising of said photoplay * * *.

6. You agree to cooperate with us and use your best efforts to assist us in obtaining all consents, permissions and/or clearances which we may determine are necessary or required from any person, firm or corporation in connection with said photoplay * * *. Notwithstanding anything herein contained, you shall not be under any obligation to obtain any such consent, permission or clearance from the mother of Glenn Miller. It is expressly understood and agreed between you and us, however, that we, at our option, shall have the right to terminate this entire agreement between you and us in the event that the mother of Glenn Miller should fail to execute and deliver to us a * * * (release) * * *.

7. (a) We agree on or before December 15, 1952 to submit to you a treatment (in a form usually prepared by us and suitable for use as the basis of a screenplay) or * * * a first draft screenplay * * *. (b) Within two (2) weeks following the submittal * * *, you agree to notify us in writing whether you approve or disapprove the treatment or first draft screenplay, as the case may be, so submitted * * *. In the event that you approve said treatment or first draft screenplay as the case may be, we agree to pay you the sum of Ten Thousand Dollars ($10,000.00) not later than ten (10) days following the expiration of said period of two weeks * * * (c) * * * we (shall) commence the preparation of * * * a final draft screenplay * * * within ninety (90) days after such approval * * * (d) * * * we shall * * * commence photography of the first photoplay * * * on or before the expiration of the period of two years next following the expiration of the period of ninety (90) days * * * (e) * * * we agree to pay you the sum of Twenty-Five Thousand Dollars ($25,000.00) not later than ten (10) days following the commencement of principal photography of said first photoplay * * *. Payment of the sums provided to be paid to you under subdivisions (b) and (e) of this paragraph 7 shall constitute an advance by us to you of percentage consideration, if any, payable to you hereunder and no such percentage consideration shall be payable to you until we have recouped therefrom and deducted and retained for our own account the aggregate of said payments * * *.

8. In the event rights shall vest in you hereunder * * * (for specified failures to comply with times or payments) * * *.

9. This agreement shall bind and inure to the benefit of you and us and our respective heirs, legal representatives, administrators, licensees, successors and assigns * * *.

10. All notices and submittals * * *.

11. You agree at your own expense to indemnify, defend and hold us harmless * * *.

12. (Photoplay defined and its various uses explained.)

13. (Provisions for subsequent photoplays.)

14. In full consideration for the rights and privileges herein granted to us by you and the agreements, representatives and warranties herein made by you, we agree to pay you a sum equivalent to four percent (4%) of the gross proceeds, if any, derived from each photoplay * * * until said gross proceeds have reached the 'break even point’ * * *; thereafter * * * we agree to pay you a sum equivalent to seven percent (7%) of such gross proceeds, if any, in excess of the break even point * * * (break even point defined) * * *.

15. It is agreed that the approval of submittals set forth in subdivisions (a) and (b) of paragraph 7 hereof * * * shall be exercised by you; or, in the event of your death or incapacity, by your child or children who may then be living; * * * it being agreed that no such approvals shall be required hereunder in the event of the death of you and your children.

Exhibit A to the agreement defines the term 'gross proceeds.’ A brief supplemental agreement, amending one section not pertinent to this case, was also signed on July 24, 1952. Petitioner's signature appears on both the basic agreement and the supplement, and in addition she signed the basic agreement separately in behalf of her two children as 'parent and guardian’ to indicate their consent to the 'foregoing agreement and the rights and privileges granted therein.’

Pursuant to paragraph 6 of the agreement, petitioner obtained 'consents' from Glenn Miller's two brothers and sister; she also obtained the necessary consent from his mother. She turned these consents over to Universal. She did not pay any of these persons for these consents.

Pursuant to paragraph 7 of the agreement, petitioner read and rejected the treatment or first-draft screenplay prepared by Universal's writers. She read and approved the second treatment or draft screenplay.

Petitioner did not supply Universal with any written material relating to the life of Glenn Miller nor did she furnish his life story to Universal. The facts about Glenn Miller's life were generally known to the public prior to the execution of the motion-picture contract.

Petitioner owned none of the copyrights to the musical compositions incorporated in the resulting motion picture.

Other than reading and approving the screenplay, petitioner did not actively take part in the writing and production of the motion picture. However, before the script was started, she met some of the people from Universal at her home and had a conversation with them. After this, she visited the Universal studio and met the men who were going to produce and direct the picture. After petitioner rejected the first proposed script, she again visited the studio to meet the new script writer who had been selected to prepare another draft. Just prior to the actual production of the motion picture, petitioner was asked to come to the studio to meet and have lunch with film star June Allyson who portrayed the petitioner in the motion picture. One purpose of this luncheon meeting was to enable June Allyson to observe petitioner's mannerisms to assist in portraying her more realistically on the screen. Petitioner's children were invited to accompany her on this visit. Finally, petitioner visited the studio to see the finished motion picture before it was released to the public.

Petitioner was very pleased with the finished motion picture. The portrayals of herself and the rest of the members of her family were not in any way offensive to her.

The motion picture was entitled 'The Glenn Miller Story.’ Universal's advertising department rejected the title of 'The Moonlight Serenader’ originally suggested by Colonel Kirby, preferring to capitalize on the popularity of the Glenn Miller name. Universal's advance publicity for the motion picture also capitalized on the concurrent R.C.A. publicity campaign associated with the latter's release of new Glenn Miller albums.

'The Glenn Miller Story’ was released by Universal for screening across the country in February 1954. The picture was advertised as, among other things, 'the story of a love that made wonderful music.’ Pursuant to her contract with Universal, petitioner received $409,336.34 in 1954, and paid one-third of $136,445.45 of this amount to her attorney David Mackay in accordance with an agreement between them. She retained the remaining two-thirds.

Since the motion-picture project, which is of central concern to the instant case, petitioner has continued to benefit financially from the fame of her late husband.

On February 25, 1954, David Mackay in behalf of the estate of Glenn Miller signed an agreement with Charles H. Hansen Music Corporation, granting to the latter 'a non-exclusive license to use the name and likeness of the late Glenn Miller and the title 'A tribute to Glenn Miller“ in connection with the publication of a concert band arrangement of musical compositions which were played by Glenn Miller and his orchestra. It was agreed the estate would be paid a royalty of 5 per cent of the retail selling price of the publication.

In April of 1956 Glenn Miller Productions, Inc., was organized as a New York corporation. David Mackay owns 50 per cent of the outstanding stock and is president of the corporation; petitioner owns the remaining 50 per cent of the stock and serves as vice president. The corporation was formed for the purpose of insulating the Glenn Miller Estate from potential liability in the operation of the Glenn Miller Orchestra. On April 25, 1956, for the sum of $1 'and other good and valuable consideration,' petitioner individually and as executrix 'granted’ to Glenn Miller Productions, Inc., 'the right and license to use the name and likeness of Glenn Miller and the library of music belonging to the Estate of Glenn Miller and/or the undersigned in connection with the business activities of Glenn Miller Productions, Inc.’ This corporation organized, owns, and manages the Glenn Miller Orchestra under the direction of Ray McKinley. Ray McKinley was a member of the original Glenn Miller Band. After the war he organized his own orchestra but the orchestra failed. The members of the new orchestra and Ray McKinley, its director, are all employees of the corporation. The Glenn Miller Orchestra under the direction of Ray McKinley has been well received and is a financial success. On December 18, 1959, the corporation signed a contract with Songmasters, Inc., providing for a weekly television show for the Glenn Miller Orchestra. Under this contract, Glenn Miller Productions, Inc., received a special $2,000 weekly payment allocated for the right to use the Glenn Miller name on the broadcast.

Petitioner has also entered into an agreement with Miller Transcriptions, Inc., a separate corporation which handles the manufacture and use by radio stations of transcriptions of recorded original Glenn Miller broadcasts.

In addition to the many positive ways already mentioned by which the petitioner has benefited by the continued popularity of her deceased husband's name and music, petitioner through her counsel, David Mackay, has frequently taken action to prevent the 'unauthorized’ use of the Glenn Miller name or picture.

Tex Beneke, who led the reorganized Glenn Miller Band from 1946 until 1949 with petitioner's approval, requested in 1951 or 1952 to use the Glenn Miller name again in place of his own name when his new orchestra toured Europe. Petitioner refused such a request and refused similar requests by Beneke in 1954 and 1956.

Similarly, when Ray Eberle who had been a singer with the old Glenn Miller Band formed his own band and requested permission to call it a Glenn Miller band, permission was refused. Jerry Gray, who had been an arranger for Glenn Miller, was likewise denied permission to use the Glenn Miller name when he later formed his own orchestra.

The United States Air Force Band requested the right to use Glenn Miller's theme song, 'Moonlight Serenade,' as its theme song, but its request was denied. Later, when a small Air Force dance band started on tour calling itself the USAF Glenn Miller Dance Band, David Mackay corresponded with a Colonel Howard of the Air Force objecting to this 'unauthorized’ use of the Miller name and it was discontinued.

Petitioner has likewise refused to allow several record companies to utilize the Miller name without her authority. Bel Canto Records was asked to change the title of an album called 'Glenn Miller Moods.’ It agreed and changed the album to 'A Tribute to Glenn.’ Premier Albums, Inc., issued an album with a picture of Glenn Miller on its cover with the name Glenn Miller in large type next to the picture. None of the records inside were made by Glenn Miller. Petitioner sought an injunction in September 1959, in the Supreme Court, New York County, to enjoin this unauthorized use of the Miller name and picture and was granted relief. Twentieth Century-Fox Record Corporation planned to issue some records by using the soundtrack of the two motion pictures in which the original Glenn Miller Band appeared. David Mackay objected to this use without first taking a license from the Glenn Miller Estate. The corporation took such a license after considering the matter and paid the Miller Estate a royalty on the resulting records.

Petitioner has been approached by the YWCA in connection with a membership drive campaign and by a 'Go to Church Campaign’ requesting permission to use the Glenn Miller name in connection with the publicity of the campaigns. Both requests were denied.

In her 1954 individual income tax return, petitioner declared $90,963.63 of the $409,336.34 she received from Universal as ordinary income. She attached the following explanation of the transaction and of her position in regard to its tax consequences:

Taxpayer received in 1954 $409,336.34 from Universal Pictures Company, Inc., out of which she paid her attorney $136,445.45 pursuant to agreement with him. $181,927.26 of the remaining balance constitutes, as taxpayer is advised, a non-taxable receipt being paid to her in exchange for a waiver and release of her statutory right of privacy (See, e.g., Solicitor's Opinion 132, Cum. Bull, I-1, 92; and Eisner v. Macomber, 252 U.S. 189). The balance of said payment, namely, $90,963.63 constitutes the taxable portion of said payment, as set forth in Schedule G, Item 2, of this return.

Respondent in his deficiency notice determined the entire $409,336.34 should have been included in gross income. Petitioner in her amended petition to this Court has changed her theory as to the taxability of the payments in 1954 from Universal. She now contends that the $409,336.34 constituted gain from the sale of a capital asset. This capital asset she asserts is 'the exclusive, worldwide right in perpetuity to produce, distribute, and exhibit’ motion pictures based on the life of her deceased husband Glenn Miller.

Petitioner and respondent have stipulated that the originally contested deduction of $136,445.45 for fees paid to petitioner's counsel, David Mackay, in 1954 is a properly allowable deduction for that year.

OPINION. RAUM, Judge:

Petitioner received $409,336.34 from Universal Pictures Company, Inc., in 1954. That amount was based upon certain percentages of gross proceeds from a motion picture entitled 'the Glenn Miller Story’ which Universal had produced pursuant to an agreement entered into between Universal and petitioner in 1952. Petitioner is the widow of a popular band leader named Glenn Miller who died in 1944, and the motion picture deals with his life story. Under the 1952 agreement it appears that petitioner became entitled to certain amounts prior to 1954 and would continue to receive further amounts after 1954 measured by the gross proceeds of the motion picture. However, only the amount received in 1954 is here in controversy, and the issue before us relates to its proper tax treatment. The Government's position throughout has been that this amount represents ordinary income, taxable in full in petitioner's hands. Petitioner's position, on the other hand, has undergone radical changes during this litigation. We think that those changes involve not only a modification of legal theory but represent a new view of the facts that is sharply at variance with her initial position. Petitioner, of course, was entitled to revise her contentions in her amended petition, but to the extent that they represent a new and inconsistent presentation of basic facts, it is appropriate to examine her present allegations with particular caution.

In the original petition it was alleged as fact that the proceeds to be received by petitioner from Universal under the contract were allocable to the extent of two-thirds thereof to the release of her right of privacy and to the extent of one-third thereof for her services; that she paid David Mackay, her attorney, $136,445.45 of the amount received from Universal (being one-third thereof)

and that she 'reported the balance to the extent of $90,963.63 as taxable income to petitioner, that being the amount allocable for services, and $181,927.26 as a non-taxable receipt being damages received by petitioner for release of her right of privacy, that being the amount allocable thereto.’ Thus petitioner's initial position was that Universal's payment to her in fact consisted of two distinct and separable components, one of which represented compensation for her services which she admitted was taxable and the other being damages for release of her right of privacy which she contended was nontaxable. Had the case remained in this posture, there is no doubt that the total amount received from Universal (after allowance of deduction for attorney's fees) would be taxable as ordinary income. Petitioner admitted so much as to that portion allocable to her services under the contract, and the remaining portion allocable to compensation for waiver of possible invasion of her right of privacy would plainly be taxable as ordinary income in accordance with the following cases: Damon Runyon, Jr. v. United States, 281 F.2d 590 (C.A. 5); Meyer v. United States, 173 F. Supp. 920 (E.D. Tenn.); Ehrlich v. Higgins, 52 F. Supp. 805 (S.D.N.Y.).

Although the Commissioner originally disallowed a deduction for the amount of this payment, it is now stipulated that this payment is deductible.

An appreciation of the unhappy consequences of petitioner's original position undoubtedly led to the filing of the amended petition in which an entirely different version of the transaction is set forth. Petitioner now urges that no part of Universal's payment to her was allocable either to services or to compensation in relation to her right of privacy. Instead, she now contends that she sold a capital asset to Universal, having a basis of zero, and that the entire payment is therefore taxable to her, but only as long-term capital gain. And she identifies the alleged capital asset as 'the exclusive worldwide right in perpetuity to produce, distribute and exhibit: photoplays based upon the life and career of Glenn Miller. We do not agree that the new look can successfully change the old result.

The starting point for determining the nature of the payments is the contract itself. It begins with a recitation of Universal's plans to make a photoplay based on the life of Glenn Miller which would include portrayals of petitioner, her children, and other members of her family. Thus, from the beginning, the agreement is framed in terms of more than just the name and memory of Glenn Miller; it immediately directs attention to the fact that petitioner and her family, living persons, will be portrayed. To be sure, the first numbered paragraph speaks of granting 'the exclusive right to produce * * * one or more photoplays based upon the life and activities of Glenn Miller.’ But the agreement deals with much more than such purported 'grant.’ In paragraph 2 she agrees to allow Universal to portray first herself, then her deceased husband, her children, and other members of her family, with the understanding that the photoplay might be 'fictional to a great extent.’ Paragraph 3 includes an undertaking by petitioner to cooperate in making available information and materials relating to Glenn Miller. Although the evidence indicates that Universal made but little use of her services in this connection, this does not mean that such potential services were valueless at the time the contract was executed.

Paragraph 4 is a general warranty. Paragraph 5 is a specific release by petitioner of any claims based upon possible violations of the right of privacy. We think it meaningful that an entire paragraph is devoted directly to this matter and that it cannot be casually dismissed as 'boiler-plate,' as petitioner presently seeks to do. We do not believe that Universal took lightly its potential liability for possible violations of rights of privacy. In our judgment payments made by Universal under the contract reflected to a substantial degree consideration in relation to the right of privacy.

Petitioner's argument that there could be no violation of a right of privacy in view of her veto power under paragraph 7 is fallacious. In the first place she had a veto power only over a 'treatment’ or first draft of a screenplay, and changes in details in the final version, although minor from the point of view of the photoplay as a whole, could seriously affect possible claims based upon violations of the right of privacy. And secondly, a failure to exercise the veto power together with paragraph 5 would simply represent petitioner's consent to any potential violation for which she was being compensated.

In paragraph 6 petitioner agrees to use her best efforts to assist in obtaining 'consents, permissions and/or clearances' which Universal deemed necessary from any person, except Glenn Miller's mother. Acting under this paragraph petitioner obtained releases from her husband's two brothers and a sister. And although she was not required to obtain the release of Glenn Miller's mother, the contract was terminable by Universal in the event that such release was not obtained, and petitioner did in fact obtain it for Universal. We are of the opinion that Universal regarded the services rendered pursuant to paragraph 6 to be of considerable value and that a substantial portion of the consideration payable to petitioner under the contract reflected compensation for such services.

We conclude therefore that substantial and important components of the consideration paid by Universal to petitioner were for release of claims for potential invasion of the right of privacy and for services of petitioner. There nevertheless remains the question whether the consideration paid by Universal did include in addition, an element for the 'right’ to make a photoplay or photoplays based upon Glenn Miller's life, and whether the transaction to that extent constituted the sale of a capital asset to Universal.

An analysis of the contract persuades us that in dealing with petitioner Universal was seeking to be relieved of liability of any kind in relation to Glenn Miller's family by reason of making a motion picture based upon his life, whether such liability be for invasion of rights of privacy of one or more persons in the family, or violation of any other personal rights of such members of the family, or for 'unfair competition’ in using names, likenesses, etc., of such persons, including the decedent, or for the illegal appropriation of any possible property rights inhering in the names, likenesses, or reputations of any such persons, including those of the decedent. In short, Universal was paying the stipulated consideration primarily for having a free hand in producing a motion picture based upon the life of Glenn Miller (the facts of which were in the public domain) without any threat of interference by any member of his family and without incurring any liability therefor. And to the extent that petitioner might claim that she 'owned’ the right to produce such a motion picture, Universal wanted to make sure that such claim would be included among all other possible claims that would be released. We therefore agree with petitioner to the limited extent that the contract did formally contain a 'grant’ of a purported right to produce the motion picture, but we think that such 'grant’ was in substance no more than a release of any claim that petitioner might assert in relation to an alleged exclusive right to produce a photoplay dealing with Glenn Miller's life. Moreover, we do not agree that such 'grant’ was responsible for all of the consideration contracted for, and we do not agree that petitioner in fact had any recognized property to convey that would form the basis for the sale of a capital asset. The mere fact that she may have released a claim to an alleged property right does not mean that she sold such property, particularly where, as will be indicated shortly, it does not appear that she owned any such property.

Plainly, Glenn Miller having been a celebrity, and the facts relating to his life being in the public domain, neither he, if alive, nor anyone purporting to represent him thereafter could prevent the publication of a biography about him. Koussevitzky v. Allen, Towne & Heath, Inc., 188 Misc. 479, 68 N.Y.S.2d 779 (Sup. Ct.), affirmed 272 App.Div. 759, 69 N.Y.S.2d 432; Sidis v. F-R Publishing Corporation, 113 F.2d 806 (C.A. 2), affirming 34 F. Supp. 19 (S.D.N.Y.), certiorari denied 311 U.S. 711; cf. Corliss v. E. W. Walker Co., 64 F. 280 (D. Mass.); Jeffries v. New York Evening Journal Publishing Co., 67 Misc. 570, 124 N.Y.S. 780 (Sup. Ct.). How a biographical motion picture differs legally from a written biography in this respect is something that has not been made clear to us.

Perhaps it may be significantly different, but petitioner has not suggested even a possible difference. And if Glenn Miller had any such property right (as distinguished from other rights in relation to tortious use of his name, likeness, reputation, etc.), it has not been shown to us that it was a right that survived him or that it was petitioner who succeeded to it as his death. If he owned such 'property’ and she succeeded to it, under what law did it arise, and under what law and how did she acquire it at his death in 1944?

Cf. Donahue v. Warner Bros. Picture Distributing Corp., 2 Utah 2d 256, 272 P.2d 177, where a partially biographical motion picture was held not to violate the Utah privacy statute.

Petitioner's brief, which was otherwise strong and careful, failed to indicate by a citation of any supporting case law how and where petitioner inherited the particular 'property right’ which she contends that her husband, Glenn Miller, may have been domiciled in New Jersey at the time of his death in 1944 and it was stipulated his will was probated in New Jersey. Presumably, if such a 'property right’ passed to petitioner, it would have done so under New Jersey law. Yet, petitioner has cited no New Jersey authority, nor for that matter authority in any other jurisdiction, to support the proposition that if such right otherwise existed, it would have survived his death and that she would have succeeded to it. And we are satisfied that under New York or California law, which might perhaps be regarded as applicable on this record, no such right would in any event be recognized after death. In addition, it is a matter of some interest, though by no means conclusive, that the estate tax return for the estate of Glenn Miller included no valuation of an 'asset’ connected with the motion-picture rights to the deceased's life story.Cf. Damon Runyan, Jr. v. United States, 281 F.2d 590 (C.A. 5), where the Court of Appeals said (p. 592):'We think it is clear that the trial court correctly determined that there was here no sale or assignment of a capital asset. While the matter is not discussed in the briefs, a reading of the record makes us question seriously whether the taxpayer had any legal right in his father's name or life story. Taxpayer's brief blandly assumes that since he was one of two children of Damon Runyon, Sr., it thus became apparent for the purposes of this litigation that he had either inherited or acquired by descent and distribution some right to protect his father's name and thus some right to consent to the use of it. No authority of any kind is cited for this proposition.’

Petitioner's attempt to classify the right as a 'right of publicity’ hardly answers the question. To be sure, there is some reference to a 'right of publicity’ among a few decided cases, Haelan Laboratories, Inc. v. Topps Chewing Gum, Inc., 202 F.2d 866 (C.A. 2), certiorari denied 346 U.S. 816; Hogan v. A. S. Barnes & Co., Inc., 114 U.S.P.Q. 314 (Pa. C.P.); cf. Manger v. Kree Institute of Electrolysis, Inc., 233 F.2d 5, 10, fn. 5 (C.A. 2); Chaplin v. National Broadcasting Co., 15 F.R.D. 134, 139-140 (S.D.N.Y.); Russell v. Marboro Books, 18 Misc.2d 166, 182, 183 N.Y.S.2d 8, 27; Nimmer, 'The Right of Publicity,' 19 L. & Contemp. Prob. 203 (1954), but it seems plain from a reading of the decisions in this area that no such property right was generally recognized at the time of Glenn Miller's death in 1944, and it certainly has not been established that any such 'property right’ if it did exist under the law of any particular jurisdiction pertinent to this case would survive after the death of the celebrity. The Nimmer article, supra, upon which petitioner relies heavily, and which was published about 10 years after Glenn Miller's death, stated that (p. 218): 'It would be premature to state that the right of publicity has as yet received any substantial degree of judicial recognition.’ Moreover, it has been said as recently as 1958, that no such property right exists in California, Strickler v. National Broadcasting Co., 167 F. Supp. 68, 70 (S.D. Cal.), and we have not been directed to the law of any State pertinent to this case that would justify us in concluding that petitioner succeeded to a property right in 1944 to produce a motion picture based upon Glenn Miller's life. The situation before us is unlike Rose Marie Reid, 26 T.C. 622, where a trade name, identified with a particular product, was registered in the United States Patent Office and held to be a property right that could give rise to capital gain.

The question in this case is not whether a person's name, image, reputation, attainments, life story, or other manifestations of personality may be entitled to legal protection as against a possible tort-feasor who seeks to obtain commercial advantage by using one or more of the indicia of the celebrity's personality— a question on which there is a wide variety of authority in different jurisdictions under varying conditions.

E.g., O'Brien v. Pabst Sales Co., 124 F.2d 167 (C.A. 5), certiorari denied 315 U.S. 823; Uproar v. National Broadcasting Co., 8 F. Supp. 358 (D. Mass.), modified 81 F.2d 373 (C.A. 1), certiorari denied 298 U.S. 670; Waring v. WDAS Broadcasting Station, Inc., 327 Pa. 433, 194 Atl. 631; Waring v. Dunlea, 26 F. Supp. 338 (E.D.N.C.); RCA Mfg. Co. v. Whiteman, 114 F.2d 86 (C.A. 2), certiorari denied 311 U.S. 712; Miller v. Madison Square Garden Corp., 176 Misc. 714, 28 N.Y.S.2d 811 (Sup. Ct.); Gautier v. Pro-Football Inc., 304 N.Y. 354, 107 N.E.2d 485; Ettore v. Philco Television Broadcasting Corp., 229 F.2d 481 (C.A. 3), reversing 126 F. Supp. 143 (E.D. Pa.), certiorari denied 351 U.S. 926. The pivotal issues here are whether such right, if it exists, is a property interest, whether it extends to the making of a biographical motion picture with possible fictional episodes, and whether such right, if it otherwise exists under some applicable law in relation to a living person, passes to a surviving spouse.

'The state of the law is still that of a haystack in a hurricane.’ So wrote Judge Biggs in 1956 in Ettore v. Philco Television Broadcasting Corp., 229 F.2d 481, 485 (C.A. 3), to describe the confusion in the cases which have protected the right of privacy and related personal or property rights.

The answers to all these questions must be in the affirmative as applied to petitioner before we can hold that even a part of the consideration received by her from Universal represents capital gain. We are unable to reach any such result. That such consideration may have been intended in part to remove forever any possible claims that petitioner might have asserted against Universal growing out of its production and distribution of a motion picture based upon Glenn Miller's life cannot convert the transaction into the sale of a capital asset. We hold that petitioner has not shown any error in the Commissioner's treatment of the consideration received by her from Universal as ordinary income.

Petitioner presented a considerable amount of evidence describing efforts on her behalf to prevent the 'unauthorized’ use of the Glenn Miller name. However, it has not been shown that the acquiescence of others in this connection was motivated by any clear recognition of such alleged property right rather than by a determination to avoid possible litigation that could be initiated on a variety of grounds. Nor has it been revealed to us upon what ground relief was granted in the only case shown to have been litigated.

Decision will be entered under Rule 50.