Net profits in commission contracts mean divisible profits, so nondistributable taxes are deducted before calculating remuneration.

Under a managing agency agreement, excess profits tax was deductible before calculating the agents' commission because the contract used "net profits" as the base for remuneration. The expression "working expenses" did not exhaust the deductions, and the parties were taken to mean divisible profits, that is, profits available for division between the company and the managing agents. Amounts not available for division had to be excluded in ascertaining the commission base. The construction depended on the language and context of the particular agreement, so authorities on different contracts were not controlling.

---

---

Issues: Whether, under the managing agency agreement, excess profits tax was deductible in computing the annual net profits on which the managing agents' commission was calculated.

Analysis: The agreement fixed a percentage commission on the company's net profits after specified deductions. The expression "working expenses" did not exhaust all deductible items, and the parties were taken to have intended "net profits" in the sense of profits capable of division between the company and the managing agents. On that construction, amounts not available for division, including excess profits tax, had to be excluded before ascertaining the commission base. Authorities on different agreements were not controlling, since the question turned on the language and context of the particular contract.

Conclusion: Excess profits tax was deductible in arriving at the net profits for the purpose of computing the managing agents' commission.

Ratio Decidendi: In a profit-sharing contract, "net profits" means divisible profits, and all sums not available for division must be deducted before calculating the contractual percentage remuneration.

---