Commissioner Of Internal Revenue v. Sunnen

333 U.S. 591 (1948)


Sunnen (D) licensed his corporation to use his patents in exchange for a royalty. D then assigned 10% of the rights of this agreement to his wife who reported the income on her tax returns. The assignment was without consideration. The Commissioner of Internal Revenue (P) sued D, contending that the income was taxable to D. D prevailed in 1935 in that suit. P brought another action against D for the royalties paid in 1937-1941. D sought res judicata from the first judgment because of the complete identity of facts, issues, and parties even though it was a different year. That was denied, and P prevailed and assessed the taxes against D. The Court of Appeals affirmed the application of res judicata to 1937 but reversed for 1938-1941 based on the grounds that the royalty payments were not income to D. The Supreme Court granted certiorari.