Bruno Michel v. Minister of National Revenue, [1982] CTC 2488, 82 DTC 1473

Guy Tremblay [TRANSLATION]:—This case was heard on June 19, 1980 at Sherbrooke, Quebec. Following the submission of pleadings, the case was taken under advisement on November 21, 1980.

1. Point at issue

As the appellant’s notice of appeal and the respondent’s reply to the notice of appeal indicate, the question is whether the appellant, an insurance agent, was justified in not including in his 1975 income the sum of $21,131.32 resulting from the sale of his goodwill to Léandre Lachance & Associés Inc. In return, the appellant would receive 30% of the commissions and a position in the purchaser’s firm. According to the respondent, the sales contract is in fact a partnership agreement to which the appellant contributed his goodwill, and under which profits are shared with 30% for the appellant and 70% for Léandre Lachance & Associés Inc.

2. Burden of proof

2.01 The appellant has the burden of showing that the assessment of the respondent is incorrect. This burden of proof results not from any single section of the Income Tax Act, but from several judicial decisions, including the judgment of the Supreme Court of Canada in Johnston v MNR, [1948] CTC 195; 3 DTC 1182.

2.02 This judgment further stipulates that the assumptions of fact on which the respondent relied in making the assessment are also presumed to be true.

The facts presumed by the respondent are set out in subparagraphs (a) to (i) of paragraph 2 of the reply to the notice of appeal. They read as follows:

(a) the appellant was an independent insurance agent during the taxation year;

(b) on or about April 1, 1975, the appellant signed a contract with Léandre Lachance & Associés Inc (hereinafter called Léandre);

(c) the contract provided that, in return for 30% of the annual commission established at the end of each year ending on March 31, and beginning on April 1, 1975, the appellant assigned, transferred and relinquished to the purchaser his entire stock of goodwill:

(d) however, the appellant retained his accounts receivable;

(e) the contract also provided that the appellant would receive $15,000 on proof of payment of the accounts owed by the appellant to his creditors;

(f) the appellant also undertook to join the purchaser’s firm;

(g) the contract also included a non-competition clause;

(h) in fact, the appellant and the purchaser made a partnership agreement according to which they would share in the profits on the basis described above, and under which the appellant would contribute his goodwill;

(i) in the 1975 taxation year, the appellant received $21,131.32, or $15,000, as an advance against his share of the profits, and $6,161.32 representing his share of the profits realized by the firm during the year. These amounts were duly included in his income for the 1975 taxation year.

3. Facts

3.01 The appellant, who was born in 1926, entered the insurance business in 1959. With two other persons, he acquired the shares of J A Goulet Inc, an insurance broker. Under a contract entered into on October 19, 1970 (Exhibit A-1), he sold the shares of J A Goulet Inc, but reserved the right to continue to work in insurance.

3.02 He continued to work as an insurance broker under the name “Agence Bruno Michel”.

Under a contract entered into on September 30, 1971 (Exhibit A-2), and with the assistance of a loan from the Caisse Populaire of Sherbrooke, he acquired the goodwill of Goulet, Marengo & Associés Inc for $15,000.

He did not earn enough income to pay off the entire debt until the beginning of 1975. It was a difficult period.

3.03 He sought better working conditions. He wanted to work on a commission basis for a company in which he was a shareholder. He also knew that the insurance business was in a slump because of a Quebec government plan to apply the no-fault concept to automobile insurance, which would then be administered by a government agency. Half his income came from car insurance and the other half from fire insurance.

3.04 The appellant was acquainted with Mr Léandre Lachance, who was also in the insurance business and operated under the name Léandre Lachance & Associés Inc. The appellant entered into an agreement with the latter (Exhibit A-3) on March 21, 1975 under which he sold him his goodwill. The contract reads as follows:

CONTRACT FOR THE SALE OF GOODWILL

AGREEMENT CONCLUDED THIS DAY BETWEEN:

Bruno Michel, licensed insurance broker, residing at 522 rue London, in Sherbrooke;

(hereinafter called the vendor);

AND

Léandre Lachance & Associés Inc, a legally constituted corporation having its main office at 238 rue King ouest, Sherbrooke, here acting and represented herein by Léandre Lachance, its president, having been duly sworn as stated by him:

(hereinafter called the purchaser);

The vendor hereby sells, assigns, transfers and relinquishes to the purchaser all the goodwill of which he is now possessed in general insurance and all the goodwill that he shall have in addition to his present goodwill on April 1, 1975. The vendor shall retain his accounts receivable as well as those that shall become receivable by April 1, 1975, and shall also be responsible for his accounts payable until the same date.

CONSIDERATION

This sale is made for the following consideration:

1. Sale Price

(A) The purchaser undertakes to pay the vendor an amount equal to 30% of the annual commission established at the end of each year, ending on March 31 and beginning on April 1, 1975 (excluding contingent commissions), that the purchaser shall receive from business written by the vendor during the next four years, beginning on April 1, 1975, or a total of 120%, spread out over a four-year period.

(B) In the event of the vendor’s death or total and permanent disability, the purchaser shall pay the vendor the balance of the purchase price, by calculating the 30% amount(s) unpaid on the volume still outstanding at the time of death or disability by deducting from these amounts an amount corresponding to a 10% annual interest on the payments made earlier than specified in clause 1-A.

2. (A) Upon receipt of proof of payment of the accounts owed by the purchaser to insurance companies or on presentation of a final accounting to the companies, the purchaser shall pay the vendor the sum of $15,000. In this case, the purchaser shall issue cheques jointly made out to the vendor and the companies.

(B) The amount established in clause 1 shall be payable at the end of every year beginning on April 1, 1975, whenever this amount shall exceed the $15,000 advance.

3. Undertaking by the vendor:

The vendor undertakes to join the purchaser’s firm pursuant to an employment contract signed herewith. He shall co-operate to the best of his ability in carrying on the general business currently existing. He further undertakes not to carry on any general insurance business, either directly or indirectly, except through the purchaser for a period of ten years, beginning on the date he ceases to work for the purchaser, in the city of Sherbrooke and within a twenty-five mile radius, subject to a $100 penalty per client.

4. Withdrawal of the vendor:

In the event the vendor leaves the purchaser to return to his own business within four years of this date, he may be exempted from the above-mentioned penalty by repurchasing his goodwill at the following price:

1. the value of the annual commissions resulting from the business transacted by the vendor at the date of the repurchase, which the purchaser could receive without taking into account contingent commissions;

2. plus an amount representing 10% annual interest on the amounts spent by the purchaser;

3. less the amounts owed by the purchaser, by calculating the 30% unpaid amount(s) of the annual commissions generated by business transacted by the vendor at the time of his departure, and by deducting from these amounts a sum representing 10% annual interest if the payments had been made as specified in clause 1-A of the contract;

4. The purchase price shall be increased by 30% of the total annual commissions generated by business transacted by the vendor, in the event the vendor leaves the purchaser of his own accord or in the event the purchaser has to end the job contract because of:

(A) a breach of one or more stipulations, conditions or clauses in the employment contract;

(B) dishonest and reprehensible conduct in regard to his professional activities (failure to remit or not remitting within a reasonable time money received by the vendor, without valid cause or excuse shall be considered dishonest and reprehensible conduct);

(C) Conditions of payment shall be cash within sixty days after the withdrawal

or dismissal, less the amounts payable by the purchaser.

EFFECTIVE DATE OF THIS CONTRACT

This contract shall become effective on April 1, 1975 between the parties in question.

IN WITNESS WHEREOF the contracting parties have signed two copies of this agreement on March 2, 1975.

(Signed)	(Signed)
Witness	Vendor
	LEANDRE LACHANCE
	ASSOCIES INC
(Signed)	(Signed)
Witness	Purchaser

3.05 According to the witnesses, the value of the goodwill was approximately $30,000, or one and one-half to two times the increase in income attributable to goodwill. The average annual turnover was about $18,000 to $20,000 from 1972 to 1974 ($18,773; $20,857; and $18,749).

The evidence also indicated that between 1976 and 1979, the appellant received the following payments from the said goodwill:

Léandre Lachance et Associés Inc did not actually make the payments for 1976 and 1977, but applied them against the $15,000 advanced by the company to the appellant. This transaction is described in paragraph 3.08 below.

3.06 On the same day, March 21, 1975, the appellant also entered into a contract (Exhibit A-4), under which he bought 47 company shares for $5,000. A certificate for 47 shares of Léandre Lachance & Associés Inc was issued in the appellant’s name (Exhibit A-6). The material clause reads as follows:

This is to certify that Bruno Michel is the registered holder of —47— fully paid-up shares of the capital stock of LEANDRE LACHANCE & ASSOCIES INC, transferable in the company books only the said holder or his attorney upon remittance of this certificate, duly endorsed.

IN WITNESS WHEREOF, the Company has caused this certificate to be signed by its duly authorized officers, and has caused its seal to be affixed on this third day of March, 1976.

3.07 Also on the same day, March 21, 1975, an employment contract was signed between the company and the appellant (Exhibit A-5). Paragraphs 3(A) and 3(B) read as follows:

3. (A) 1. For new business and renewals, the broker shall receive 50% of the commissions collected by the company, excluding contingent commissions.

2. For the next four years, a drawing account of $300 per week against the commissions earned shall be paid to the broker.

B. There shall be a 1% monthly decrease if the accounts receivable, including under 30 day accounts exceed the equivalent of one twelfth of the annual turnover generated by the agent. (The annual turnover shall be established between the two parties on the basis of business from January 1 to December 31 of the previous year.) Not included are whatever postdated checks the agent may have obtained from premiums paid on the basis of one-third cash down, one-third in thirty days and one-third in sixty days, and budget plans.

The appellant explained that the goodwill could not be transferred as long as he still owed any money to the insurance companies he was representing. He owed them approximately $17,000, an amount which he had received for premiums without reporting the amounts to the companies immediately. Mr Léandre Lachance advanced him $15,000 to pay the insurance companies. According to the appellant, he did not receive any money upon signing these contracts, with the exception of the $15,000 advance from Mr Léandre Lachance.

According to the appellant, this was a loan which would be repaid from what the company paid him for the sale of his goodwill in 1976, 1977, 1978 and 1979. As evidence of the $15,000 advance from Léandre Lachance & Associés Inc to Bruno Michel, copies of nine cheques drawn between May 13, 1975 and June 26, 1975 and totalling $14,999.99 were filed. The fact that the cheques were made out jointly to the appellant and the insurance companies was in keeping with clause 2A of Exhibit A3 (see para 3.04).

According to the appellant, he had accounts receivable between $13,000 and $15,000 in March 1975. He said he lost between $5,000 and $6,000 of this.

3.09 Moreover, during the 1975 taxation year, the appellant received an advance overpayment of $6,131.32 from Léandre Lachance & Associés Inc on the commissions he was to receive under his employment contract (Exhibit A-5). This was due to the $300 weekly advance (see para 3.07).

3.10 The appellant filed a photocopy of an amended supplementary T-4 form issued by Léandre Lachance & Associés in the name of Bruno Michel, marked Exhibit A-7. Total earnings before deductions amounted to $6,323.58. This amount was allegedly declared as part of the appellant’s income.

3.11 Exhibits A-8 and 1-1 also established that on September 30, 1979 the appellant owed Léandre Lachance & Associés Inc the sum of $13,522.09. Calculation of this amount was extremely complicated due to the fact that the company changed accountants and various entries which had been made by one were changed by the other. This amount is secured, however, by the value of the appellant’s shares.

The cost of these shares, amounting to $4,946.75 plus 10% interest, or $494.67, had allegedly not yet been paid. The evidence, however, does not make clear whether this debt is owed to the Léandre Lachance company or to Mr Léandre personally.

According to two documents prepared by the first accountant, Mr Fréchette, the account is owed to Mr Léandre Lachance personally (Exhibit 1-1) and to Léandre Lachance & Associés Inc (document filed pursuant to a consent given at the hearing, but not filed until the hearing had been completed, and marked by the Board as Exhibit A-10). This document is entitled “Statement of Monies owed to L Lachance & Ass by Bruno Michel”. It is dated September 13, 1978, and is therefore subsequent to the date of the notice of assessment for 1975, which was issued on March 3, 1978.

3.12 After filing a notice of objection and receiving a notification from the respondent, dated January 8, 1979, confirming the March 3, 1978 assessment, the taxpayer lodged an appeal to the Tax Review Board on March 1979.

4. Act — Case law — Analysis

4.01 Act

The principal sections of the Income Tax Act relating to this case are sections 3, 9, 12, paragraph 12(1 )(g), sections 96 and 248. They will be cited below if necessary.

4.02 Case law

The principal decisions to which the parties referred the Board are the following:

1. MNR v Wain-Town Gas and Oil Company, Limited, [1952] CTC 147; 52 DTC 1138;

2. Robert P Ouellette and John E Brett v MNR, [1975] CTC 111; 75 DTC 5075;

3. MNR v Robert P Ouellette and John E Brett, [1971] CTC 121; 71 DTC 5094;

4. Front & Simcoe Limited v MNR, [1960] CTC 123; 60 DTC 1081;

5. Henri Gingras v MNR, [1963] CTC 194; 63 DTC 1142;

6. MNR v Randol H Gault, [1965] CTC 261; 65 DTC 5157;

7. MNR v Duncan Morrison, [1966] CTC 558; 66 DTC 5368;

8. HMQ v Michèle Hardy de Loppinot, Jean-Georges Péloquin v HMQ, [1978] CTC 705; 78 DTC 6477;

9. Consolidated Properties Limited v MNR, [1952] Tax ABC 310; 53 DTC 4;

10. Mr Rv MNR, 2 Tax ABC 364; 50 DTC 398;

11. MNR v Ian G Wahn, [1969] CTC 61; 69 DTC 5075.

4.03 Consent and analysis

4.03.1 In the written pleadings, the respondent consented “that judgment be rendered allowing the appellant’s appeal . . . so that the sum of $6,131.32 is exempted in computing the appellant’s income” for the 1975 taxation year. Particulars concerning this amount are provided in paragraph 3.09 of the facts.

4.03.2 The only point at issue: $15,000

The only thing left to be discussed, therefore, is the sum of $15,000 received by the appellant from Léandre Lachance & Associés Inc as an advance to pay what he owed the insurance companies. The appellant claimed that this amount was repaid in 1976 and 1977 through the application of the compensation principle provided for in Article 1187 of the Civil Code of the province of Quebec (see paragraph 3.08 of the facts).

4.03.3 Examination of clauses 1(A), 2(A) and 2(B) of the contract for the sale of goodwill (Exhibit A-3) entered into on March 21, 1975, indicates that the sum of $15,000 was a payment on the amount owed for goodwill by Léandre Lachance & Associés Inc.

The appellant and Léandre Lachance & Associés Inc regarded this payment as a loan, but according to the contract it was in fact an initial payment owed under the contract. Clauses 2(A) and 2(B) leave no doubt on this score.

The Board believes that the compensation claimed by the appellant for 1976 and 1977 is not really compensation, but merely the application of Clause 2(B).

Had the appellant had sufficient cash on hand (if he had been able to collect his accounts receivable in good time, in March-April 1975, for example), he would have paid the insurance companies himself. Léandre Lachance & Associés Inc would then have been obligated under the first part of clause 2(A) to pay him the $15,000 anyway. Since the appellant had no cash on hand, Léandre Lachance & Associés Inc paid the insurance companies; this payment was the first instalment payable by the purchaser of the goodwill under the terms of the contract.

According to Mr Lachance’s testimony, the words used clearly indicate the intent of the parties (himself and the appellant):

BY MR DAIGLE

Q How did you arrive at this $15,000 figure?

R Well, it was seeing the obligations he had to meet, he is the one who brought me those figures, seeing what he had to pay, he needed $15,000. Since I! knew that the goodwill was worth more than that, well, I saw no objection to helping him meet this fifteen thousand dollars that he had to pay.

So at the outset, when we were looking at the contract, I read it over and, well, sure, we were saying just a while ago that there was some ambiguity there, it says:

“Upon receipt of proof of payment of the accounts owed by the purchaser to insurance companies or on presentation of a final accounting to the companies, the purchaser shall pay the vendor the sum of $15,000”.

So you Can see, here it perhaps should read:

“Whenever payment of the accounts owed by the vendor to the insurance companies”,

that’s one thing.

So at that time, if he gave us a final proof, I agreed to advance him $15,000 immediately to allow him to honour his commitments, or upon presentation of a final accounting to the insurance companies, and at that time, in the last case, that’s the point that isn't where it belongs:

“The purchaser shall issue cheques jointly made out to the vendor and the companies”.

So then we say:

“Either you give me the final proof that you paid the companies, and I’ll pay you the $15,000, and if you can’t bring me the final proof, bring me the final accounts for the $15,000 and then I will make out the cheques jointly to you and the insurance companies”

and that’s just what happened: the cheques were made out to Bruno Michel and a certain insurance company, which gave us the satisfaction of knowing that the insurance companies had been paid. We had to be careful, because we were going to continue doing business with these insurers.

Q What was your understanding of clause 2(B)?

A Clause 2(B) was where we mentioned the possibility of death.

BY THE CHAIRMAN

Q Who drafted the contract?

A You know, I am somewhat at a loss; we did it together. I couldn’t tell you whether . . . I must have done one part and Bruno may have done another part, and then we corrected them together. I think that, I think there is one part. . . there must be one part that was drafted by me, and well, we are not lawyers and we can make mistakes in drafting, that’s for sure. Now here it says:

“In the event of the vendor’s death or total and permanent disability, the purchaser shall pay . .

A .. . but for us the outlay was really an amount which was paid out like a purchase . . . an advance on a purchase, an advance.

BY THE CHAIRMAN

Q There was no interest on that $15,000 amount?

A No, that was part of the agreement — of the purchase as such. (Transcript, pages 12 and 13).

4.03.4 Since it has been established that the $15,000 payment made in 1975 is indeed part of the payment for what the appellant claims is goodwill, or what the respondent claims is an advance against his share of the profits, it must now be determined whether this is a payment for goodwill or a share of the profits.

4.03.5 In MNR v Ian G Wahn, [supra], the Supreme Court of Canada upheld the principle that a contract should be interpreted as it is written. On the basis of this principle, it dismissed the appeal of the taxpayer. The latter, a lawyer and member of a law firm, upon his withdrawal from the firm in 1962 received the sum of $39,589, or $9,897 for each of the years 1963, 1964, 1965 and 1966. Mr Wahn maintained that this amount had been paid for goodwill. According to the law firm’s partnership agreement, however, it represented a share of the profits earned when Mr Wahn was a partner of the firm, but which would be received only after he left the firm. The contract spoke of a “portion of the profits”. The Court said it was in fact an allocation of profit. In the case at bar, the parties speak of the “sale and purchase of goodwill”

— why should the contract not be interpreted as it is written, and the amount received be regarded as having been received for the sale of the goodwill?

When the Supreme Court of Canada said that the contract should be interpreted as written, it was careful to explain that the contract in question had clearly been written with great care by the parties, who were lawyers and who had even anticipated the tax aspects. Thus, in the view of the Supreme Court of Canada, the contract was an adequate description of the Situation and had to be interpreted as it was written.

In the case at bar, the evidence is that the appellant and Mr Léandre Lachance wrote the contracts (Exhibits A-3, A-4 and A-5). Although they have great experience in their field, they do not possess the legal training of Mr Wahn.

It remains to be decided, therefore, whether the term “goodwill” is an accurate description of the purpose for which the money was paid and received.

One fact that seems clear and that legitimately distinguishes this case from Wahn, however, is that in Wahn the profits received by the taxpayer materially corresponded to the amounts earned, but not received by the firm prior to Mr Wahn’s departure. In the case at bar, the appellant’s accounts receivable remain the appellant’s and are in no way part of the amount paid to the appellant.

This is an initial consideration in the appellant’s favour, but it does not settle the basic problem, for it merely provides a point of comparison with something else. Every case should be examined on its own merits.

4.03.6 According to the evidence in the case at bar, the overall amount of approximately $30,000 for the price of the goodwill was calculated on the basis of one and one-half to two times the profit of the last three years.

In Wahn, the sum of $39,589 was determined on the basis of “.. . the average of his percentage rates of profit participation for the three (3) preceding financial years . .

4.03.7 In Wahn, the price was set at $39,589. It was invariable. In the case at bar, the contract for the sale of the goodwill (Exhibit A-3) first provided that the amount paid would be a percentage of the annual commission received from the appellant’s goodwill for four years. The total amount could actually have been less than $30,000. The parties’ experience led them to feel that the four-year total would amount to approximately $30,000. In the end, it amounted to $33,927.62 (para 3.05).

There is one fact, however, that the Board must bear in mind: in the final analysis, the amount paid and received was calculated on the basis of future income.

Is this just a way of calculating what goodwill really amounts to, as the appellant claimed?

Or is goodwill, as the respondent claimed, only a word to hide the reality — a partnership between the parties based on a sharing of profits?

4.03.8 In resolving this impasse, the Board cannot ignore the decision of the Federal Court, Trial Division, in HMQ v Michele Hardy de Loppinot, Jean- Georges Péloquin v HMQ, [supra], Mr Justice Marceau of this Court wrote:

My finding is contained in the two following propositions. On the one hand, I do not believe that we have here a contract made to transact a sale of goodwill, pure and simple. A sale implies a transfer of property for a money consideration. It would be difficult to speak of a complete transfer in this case, when it is noted that Peloquin undertook to continue serving his clients, if asked, that he became at least nominally a member of the firm, that he specified that the services to his clients would be provided in his name, and especially that he reserved the right for two years to terminate the agreement at will and resume complete control of his practice, if he considered it advisable to do so. Nor is there any provision establishing a price, because a price is an amount of money that the purchaser undertakes to give in exchange for the thing of which he becomes the owner, and if the price is only an amount to be determined, it must be capable of being determined from reference factors which are independent of the will of one or other of the parties (of Mazeaud, Leçons de droit civil, Vol 3 p 729, Nos 865 et seq): it cannot simply consist of participation in the uncertain benefits which may arise from the object transferred (of Planiol and Ripert, Traité de droit civil, Vol III, No 1333 et seq). On the other hand, it seems to me that the agreement contains the characteristic features of a partnership contract. Each party makes a contribution, Pelo- quin’s being his name, reputation and present and future clients, not counting the actual services that he agrees to render (meeting the present and future clients and soliciting future clients) and the services he may possibly be called on to provide (work on cases if asked). Each party intends to share in the profits that their partnership may produce, Péloquin's share being established at 25% for five years of the fees received by the firm for services rendered to his present and future clients, as well as a salary if he is called on to work on the cases himself.

Must the principles concerning the price, set forth by the authors Max- eaud and Planiol and Ripert, be applied so strictly in the case at bar?

On the one hand, the evidence presented in the case at bar seems at first sight somewhat different from that of HMQ v Michele Hardy de Loppinot et al. In the earlier case, no set price was established for the value of the supposed goodwill, while in the case at bar, it was put at approximately $30,000.

To be more realistic, it would be more correct to say that the price was estimated at $30,000, but in the last analysis, the final price depended on the amount of income.

Inasmuch as the price depends on future income, a certain percentage of which the appellant will receive, the Board, based on the judgment cited above, is strongly inclined to consider it more a partnership agreement than a contract for the sale of goodwill.

Matters would have been very different had the price been set at $33,000 and a percentage of the income turned over to the vendor every year until the sum of $33,000 had been paid. It seems to the Board that the fact the payment depends on the receipt of funds over the four years following the signing of the contract describes the substance of the contract namely that it is a partnership agreement.

However, closer scrutiny of the evidence shows that a distinction must be made: neither contract A-3 nor contracts A-4 or A-5 speak of approximately $30,000, only of a percentage of the goodwill. Can the written contract be amended by the oral testimony of the contracting parties? In sum, to return to the basic issue, it is the substance and not the form of the contract that must be established. Does the form of contract A-3 contract, where the price is based on a percentage of the commissions, express the substance or does the oral testimony more truly reflect the reality?

It is clear that a court would generally prefer to rely on the written contract; and it is the written contract which speaks of “goodwill”.

Can examination of the other aspects of contracts A-3, A-4 and A-5 enlighten the Board with regard to the substance of contract A-3?

4.03.9 The contract for the “sale of goodwill” (Exhibit A-3) includes a clause (clause 4) providing for the withdrawal of the appellant from the agency and repurchase of the goodwill by the appellant. Roughtly speaking, the price of repurchase is established on the basis of the price actually paid by the company plus 10% interest per year, in addition to a 30% increase if certain conditions are realized (such as termination of the contract for cause). Does this factor confirm or contradict the previous conclusions of the Board?

At first, it seems to contradict them. A sale of goodwill took place, and then there is provision for repurchasing the same goodwill. There is a certain logic at work which seems to indicate the nature of the whole. If it were a partnership in the first place, could the original purchaser sell to the original vendor what they agreed to call goodwill? In fact, there would be no real objection, because he would be leaving with some of the partnership’s clients, namely those he had originally brought into it.

After careful consideration, however, the Board does not believe that this factor either contradicts or supports the previous conclusion; the problem remains the same.

4.03.10 It is essentially whether the sale or transfer by the appellant to Lean- dre Lachance is a contract for the sale of goodwill or a partnership agreement. The Board concludes that it is a partnership agreement. The determining factor on which it bases its conclusion is the circumstance that the price is in fact based on future receipts.

5. Conclusion

The appeal is allowed in part in accordance with the consent to judgment filed, and in all other respects the appeal is dismissed in accordance with the reasons for judgment stated above.

Appeal allowed in part.