Zelkin v. Caruso Discount Corp.

FOX, P. J.

Defendants appeal from a judgment in favor of plaintiff in the amount of $19,500 for services rendered pursuant to the terms of a written agreement. The agreement was executed by defendant Caruso Discount Corporation on November 9, 1957, and provided that plaintiff was employed “to represent

this Company and its affiliated Companies

in connection with their current Federal tax examination.” Compensation for these services was stated to be $32,500, a retainer of $3,000 having already been paid “leaving a balance of $29,500.00

payable when signed agreements with the Federal Government have been executed.”

(Emphasis added.) Plaintiff is a certified public accountant who maintains no office but works out of his home. He is a graduate of a law school and is a certified public accountant in both California and New York. His primary business is representing taxpayers in negotiating with the Internal Revenue Service concerning tax liabilities. In September or October, 1957, he was introduced to defendant H. J. Caruso, who told him that the Treasury Department was conducting an audit of the various Caruso enterprises and had proposed large deficiency assessments, principally upon monies held by Commercial Credit Corporation as reserves on conditional sales contracts sold to Commercial Credit Corporation by Caruso Discount Corporation. Other deficiency assessments were proposed which related to the amounts paid certain officers as salaries and to certain amounts deducted as travel and entertainment expenses. At a later meeting with defendant H. J. Caruso, plaintiff indicated that he would undertake further consideration of the matter for a retainer of $3,000, which Caruso paid him. Following discussions with the revenue agent, representatives of Commercial Credit Corporation and the auditor for Caruso Discount Corporation, plaintiff, on November 9, 1957, met with defendant H. J. Caruso and submitted a pro

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posed contract calling for the payment of $45,000 for his services in representing the various Caruso enterprises in an attempt to reach an equitable settlement of the proposed deficiency assessments. In so far as here material, the parties finally agreed upon a fee of $32,500. Prior to the execution of this latter agreement, all of the defendants had executed powers of attorney by which plaintiff was appointed their lawful representative before the Treasury Department. Following the signing of the November 9 agreement, plaintiff had several meetings with representatives of Commercial Credit Corporation, and also met with the Treasury agent 8 or 10 times. As a result of plaintiff’s efforts a tentative agreement was reached with the Treasury Department that the amount of the deficiency assessment against Caruso Discount Corporation, which involved the reserves held by Commercial Credit Corporation, would be set at about $240,000. In January 1958, the Treasury Department sent certain documents entitled “Waiver of Restrictions on Assessments and Collection of Deficiencies in Tax and Acceptance of Over-assessment” (Treasury Form 870) to plaintiff, who transferred them to defendants, and these forms were subsequently executed by defendants. Following the signing of the “Waivers” plaintiff sought payment of Ms fee and was subsequently paid a total of $10,000, reducing the outstanding balance to $19,500. The judgment herein awards plaintiff the amount of $19,500, the outstanding balance, and defendants have appealed.