Accrual of managing agency commission depends on when it becomes due, not on each individual sale.

The managing agency commission under the agreement accrued only when it became due and payable at the end of the financial year; the clause fixing 3 1/2% on sales governed only computation of the amount. Reading the remuneration clause with the accrual clause, the Court held that no enforceable right or debt arose on each individual sale during the year. The income therefore accrued to the assessee company at year-end and not to the retiring managing agents on each sale.

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Issues: Whether the managing agency commission of 3 1/2% on sales made during the period April 1, 1944, to December 31, 1944, accrued to the retiring managing agents or to the assessee company.

Analysis: The relevant agreement was construed by reading the remuneration clause with the clause governing when the commission became due and payable. The clause fixing the rate of commission only governed computation of the amount, while the clause stating that the commission became due at the end of each financial year determined the time of accrual. On that construction, no debt or enforceable right to receive the commission arose on each individual sale; the income accrued only at the end of the financial year.

Conclusion: The commission accrued to the assessee company at the end of the financial year and not to the retiring managing agents on each sale.

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