the articles as gifts or prizes to their customers or employees as incentive awards. The Government contended that since the purchases from the taxpayer were not for the purpose of resale, the transactions were sales at retail. In each case, however, it was held that the sales were not at retail, because the purchasers acquired the items for distribution for business purposes. In the language of the Torti case: 'The customers of taxpayers did not purchase the merchandise for their personal wants or for family use. They made their purchases for business reasons. They had a profit motive.' (249 F.2d p. 626).
In the Worrell case, the Gellman and Torti cases are distinguished and the view is taken that by the phrase 'sold at retail' Congress intended to indicate when in the course of its marketing cycle the jewelry would be taxed, and that this point of final sale is reached when it is sold, not for resale.
We are not required in the present case to make a choice between these two views. For considering the transaction in its entirety, as we must in order to determine the intention of the parties, the question whether there was a 'sale at retail' is readily determined on either view.
The children whom the plaintiff recruited served two business purposes. They constituted a corps of juvenile salesmen for the plaintiff's salve, and as such were entitled to compensation. From the very beginning, plaintiff offered for sale to them its catalogue items at a price measured by the value of the child's services in selling one order of 14 cans of salve.
We cannot say, therefore, as plaintiff urges us to do, that the catalogue items were awarded to the children as prizes or gifts. If they were, then indeed the children would have been enticed to work for nothing in selling the salve. On the contrary, the catalogue items represented compensation to the children, -- payment for their services. The child, and not the plaintiff, had the option to receive compensation in cash or in kind by selecting a catalogue item. The child exchanged his accumulated compensation for an item in the catalogue whenever he selected that item instead of retaining cash. It was, in such cases, the redemption of an account receivable for services for the catalogue item of jewelry. It is a clearer case of a retail sale than the redemption of trading stamps. Southern Premium Stamp Company v. United States, 191 F.Supp. 158 (M.D.Ga.1960), aff'd., 289 F.2d 319 (5th Cir., 1961). See also United Profit Sharing Corporation v. United States, 43 F.2d 266 (Ct.Cl.1930), cert. den., 282 U.S. 881, 51 S. Ct. 84, 75 L. Ed. 777; United Cigar Stores Co. v. United States, 50 F.2d 466 (Ct.Cl.1931), cert. den., 284 U.S. 666, 52 S. Ct. 39, 76 L. Ed. 564.
The imprint of a retail sale is indelibly stamped on these transactions. The quantities were individual. The items were received at the personal selection of each child. The children's business purpose in selling the salve did not apply to the selection of jewelry. On the contrary, by attracting the children's interest in the jewelry, plaintiff was able to have them assume the burden of selling the salve. It is true the children passed the salve on to others. But the jewelry was chosen and received by the children for themselves. The contrast between the child's relationship to the jewelry, which he retained, and the salve, which he received from the plaintiff to pass on to the ultimate purchaser, demonstrates that the jewelry was the subject matter of a retail sale to the child, paid for by his selling effort.
AND NOW, May 15, 1963, plaintiff's motion for summary judgment is denied and defendant's motion for summary judgment is granted.