Lord Macmillan.-

The respondent, Mrs. Spooner, in the year 1927 received a sum of $9,570'41 in circumstances set out in an agreed statement of facts. The question is whether this sum was “income” of the respondent within the meaning of the Income War Tax Act (Revised Statutes of Canada, 1927, Chap. 97). It appears that the respondent, who was the owner in freehold of a ranch in Alberta, entered into an agreement on 15th April 1925, with Vulcan Oils Ltd., a company incorporated under the laws of the Province of Alberta, and having for its objects “drilling for and procuring the production and vending of oil.” By this agreement the respondent sold to the company all her right, title and interest in and to twenty acres of her land, subject to the provisos, conditions and royalties hereinafter reserved.” In consideration of the said sale” the company agreed to pay to the respondent the sum of $5,000 in cash on the execution of the agreement, to issue to her 25,000 full paid shares of $1 each in the company, and further to deliver to her order :

“the royalty hereby reserved .... namely, 10 per cent of all the petroleum, natural gas and oil produced and saved from the said lands free of co