The contract here in question required petitioner to perform services which are highly personal in nature. Under the contract petitioner was required to make recommendations to the dealers and to the manufacturer as to the promotion and enlargement of sales in the territory; arrange sales clinics and provide and distribute sales information and literature; act as a liaison between the dealers and the manufacturer; supervise, adjust and arbitrate relations between dealers; allocate sales territories; terminate dealerships; arrange and negotiate new dealerships; make recommendations to the manufacturer concerning advertising within its area; and make recommendations to the manufacturer for the establishment of dealer quotas. As Don Zajicek described petitioner's function under the contract:

"A. Well, it was a matter of going between these dealers and assisting them in1959 U.S. Tax Ct. LEXIS 97">*107 any way, suggesting, possibly taking one the idea from another dealer to another, such as advertising, helping them break in new salesmen, or installation problems, or from a warranty effect, such as John Q. Public thinks is a defect in the awning. The dealer is in the middle. The factory has a representative there to decide whether it is defective awning or not, and they settle any complaints."

Services such as these require both intimate knowledge and long experience in the business of merchandising awnings. Petitioner being a newly organized corporation did not and could not have had such experience and knowledge. However, George and Don Zajicek individually did have such knowledge and experience. For many years prior to the formation of petitioner they have served as salesmen and retail distributors of the manufacturer's product and had acquired an intimate knowledge of the product and its merchandising. These facts were expressly recited in the preamble to the contract and formed the inducement to the execution of the contract by Kool Vent.

Not only did Kool Vent have the right to designate the individuals who were to perform the services under the contract, it actually1959 U.S. Tax Ct. LEXIS 97">*108 did name Don and George Zajicek as those individuals. In paragraph 6, the contract provided:

"6. It is understood by the parties hereto, that the Representative is a corporation and that the principal stockholders and officers are George A. Zajicek, Jr. and Don R. Zajicek; that the Manufacturer enters into this agreement with the Representative by reason of the former's relationship with the said individuals; that the said George and Don Zajicek shall personally supervise the services to be rendered Manufacturer under this contract, devoting as much of their own time and services as they in their sole discretion shall deem necessary and using such other personnel as they in their sole discretion shall deem necessary and expedient. Should said George and Don Zajicek terminate their interests or their employment with said Representative during the period of this agreement, that this agreement may be immediately terminated at the option of the Manufacturer."

In addition to supervising the performance of the agreement as required by the contract, Don and George Zajicek personally did all the work. They were 32 T.C. 1149">*1154 the only employees of petitioner, and as such they performed substantially1959 U.S. Tax Ct. LEXIS 97">*109 all of petitioner's services. In view of these facts there can be no doubt that the contract was intended to and did require that Don and George Zajicek perform the services in question.

Further evidence, if any is needed, of the intention of the parties to the contract is provided by the fact that the contract was expressly made not assignable to anyone except the Zajiceks individually and that if the Zajiceks severed their connection with petitioner Kool Vent had the right to terminate the contract immediately. If, as petitioner contends, the personal services of Don and George Zajicek were not essential to the contract, Kool Vent would not have found it necessary to insert these provisions in the contract for its protection.

In General Management Corporation (1942) 46 B.T.A. 738">46 B.T.A. 738, aff'd. (C.C.A. 7th 1943) 135 F. 2d 882, 31 A.F.T.R. (RIA) 80, cert. den. (1943) 320 U.S. 757">320 U.S. 757, the taxpayer corporation was engaged in the business of rendering financial advice and rehabilitation services to other corporations. More than 50 per cent of the stock was owned by one Grant Gillam, who was an expert1959 U.S. Tax Ct. LEXIS 97">*110 in this field. The taxpayer corporation entered into two contracts with other corporations, both of which contracts were in issue in that case. In one contract the taxpayer agreed that it would make a study of the operation, management and sales problems of its client and submit recommendations for improvement. No individual was named in the contract and the client was not given the right to designate the individual to perform the services. The Board held that this contract was not a personal service contract. The second contract in question in that case was similar to the first, except that Gillam was specifically named and the taxpayer was required to provide his services to the client. Further, the contract provided that in the event that Gillam should die or become incapacitated, and if an acceptable substitute were not provided, the client could terminate the contract. This contract was held to be a personal service contract, even though many of the services rendered by the taxpayer corporation were performed by persons other than Gillam.

The analogy between the contract in question in this case and the second of the two contracts in question in the General Management1959 U.S. Tax Ct. LEXIS 97">*111 case is very strong. In each contract the controlling stockholder or stockholders was specifically named as the person to perform services. Further, in each contract the client was given the option to terminate the contract should the services of the named individual or individuals become unavailable.

The recent case of Allen Machinery Corporation (1958) 31 T.C.    (No. 45) (A., I.R.B. 1959-17, 8) is also squarely in point here. In that case, as in General Management, two contracts were involved. ¹ In the first contract the taxpayer corporation agreed to service a contract between its client and the client's customer. The contract in question did not specifically name or otherwise designate the persons to perform the services and did not give the client the right to so name or designate. This Court accordingly held that this contract was not a personal service contract. The second contract in question in that case had originally been made between the taxpayer's controlling stockholder individually and the client. The contract provided that the stockholder would act as exclusive sales agent in a designated area for the client's products. It further provided that the1959 U.S. Tax Ct. LEXIS 97">*112 stockholder was to provide fully competent and qualified service engineers to meet the needs of the purchasers of the product and that the stockholder would use his best efforts to introduce and sell such products throughout the designated territory. The contract further provided that the stockholder should have the right to assign his interest in the contract to the Allen Machinery Corporation. However, the client reserved the right to terminate the contract 32 T.C. 1149">*1155 in the event the stockholder should cease to render substantial technical services to Allen Machinery Corporation. The contract was shortly thereafter assigned by the stockholder to the taxpayer corporation. Thereafter the stockholder devoted only a small portion of his time to the affairs of the taxpayer. His services were limited solely to the supervision, direction and coordination of the operations of the taxpayer's staff, the bulk of the sales and engineering services provided by the taxpayer being actually performed by the taxpayer's staff of salesmen and engineers. In addition to the stockholder in question, the taxpayer corporation had six other employees on its staff. This Court held that this contract1959 U.S. Tax Ct. LEXIS 97">*113 was a personal service contract. It said in part as follows:

"Although F. J. Allen only visited the United States for a period of 3 months during each of the years in issue and despite the fact that the bulk of the work performed pursuant to the contract was actually performed by petitioner's staff of salesmen and engineers rather than by Allen, it is nevertheless apparent that Hepburn looked to Allen personally to provide the managerial and supervisory services which were required for the satisfactory services which were required for the satisfactory conduct of petitioner's employees. It is clear from the record herein that Allen alone possessed the authority to control the policies and activities of petitioner. Allen's actual participation consisted primarily of the supervision and coordination of sales and engineering service.

"Hepburn's reliance upon F. J. Allen obviously was founded upon the successful business relationship existing between them which had extended over a period of many years and as a result of which Allen had promoted and sold Hepburn products in Europe. By contractually requiring that Allen either control petitioner or that he provide the petitioner with1959 U.S. Tax Ct. LEXIS 97">*114 technical advice on a substantial basis, Hepburn was assured that Allen would assume personal responsibility with respect to the promotion and sale of its products in the United States. Consequently, the contract was made expressly contingent upon either the corporate control or the technical advice of F. J. Allen."

It should be noted that in the Allen Machinery case as in the case here under consideration, the contract required only that the controlling stockholder supervise the services to be rendered by the taxpayer. If the contract in question in the Allen Machinery case was a personal service contract, then a fortiori the contract here in question must also be a personal service contract. For here all of the supervision, plus all of the services, with inconsequential exceptions, were performed by the Zajiceks. Petitioner, unlike Allen Machinery Corporation, had no other employees and its services were solely those of its controlling stockholders Don and George Zajicek.

It must follow in the light of the above authorities that during the taxable years 1954 and 1955 petitioner was a personal holding company.

1959 U.S. Tax Ct. LEXIS 97">*115 Petitioner argues further that section 543(a)(5) and its predecessor sections in prior revenue acts cover only personal service contracts involving not more than one individual; hence, that since the contract in this case covers two individuals income received thereunder is not covered by the Code. We think the argument has no merit. As the Commissioner points out, section 7701(d)(1) of the 1954 Code refers to section 1 of Title 1 of the United States Code for the definition of singular words as used in the Internal Revenue Code. Section 1 of Title 1 of the United States Code provides in part as follows:

32 T.C. 1149">*1156 1. Words denoting number, gender, and so forth.

In determining the meaning of any Act of Congress, unless the context indicates otherwise --

words importing the singular include and apply to several persons, parties, or things;

words importing the plural include the singular;

We think the Commissioner is correct in his determination and his action is approved.

Decision will be entered for the respondent.