Opinion
No. L-107.
February 5, 1934.
Lowndes C. Connally, of Washington, D.C. (Schuyler C. Mowrer, of Indianapolis, Ind., and Maurice Kay and William A. Neacey, both of Washington, D.C., on the brief), for plaintiff.
Charles B. Rugg, of Boston, Mass. (Charles R. Pollard and D. Louis Bergeron, both of Washington, D.C., on the brief), for the United States.
Before BOOTH, Chief Justice, and GREEN, LITTLETON, WILLIAMS, and WHALEY, Judges.
Action by the Clinton Coal Company against the United States.
Petition dismissed.
This case having been heard by the Court of Claims, the court, upon the evidence adduced, makes the following special findings of fact:
1. Clinton Coal Company, plaintiff, is a corporation organized under the laws of the state of Indiana. Plaintiff, at the time of the filing of this suit, was and now is operating and doing business in its corporate capacity, under the corporate name of Clinton Coal Company.
2. On May 21, 1918, plaintiff and the affiliated and subsidiary company, Crown Hill Realty Company, filed corporation income and excess profits tax returns for the calendar year 1917, from which it appeared that the consolidated net income of itself and subsidiary and affiliated company was $411,893.96, and that the total income and excess profits taxes due thereon were $115,607.03, which taxes were paid to the collector of internal revenue for the district of Indiana.
3. On June 16, 1919, plaintiff and the affiliated and subsidiary company, Crown Hill Realty Company, filed a corporation income and profits tax return for the calendar year 1918, from which it appeared that the consolidated net income of itself and subsidiary and affiliated company was $213,803.42, and that the income and profits taxes due thereon were $85,882.96, which taxes were paid to the collector of internal revenue for the district of Indiana.
4. On or about May 31, 1921, plaintiff and the affiliated and subsidiary company filed amended corporation income and excess profits tax returns for the calendar year 1917, from which it appeared that the consolidated net income of itself and subsidiary and affiliated company was $387,332.27, and that the correct tax liability was $122,249.75. The amount shown on the amended returns was neither assessed nor paid.
5. At the same time plaintiff and the affiliated and subsidiary company filed an amended corporation income and profits tax return for the calendar year 1918, from which it appeared that the consolidated net income of itself and subsidiary and affiliated company was $158,538.43, and that the correct tax liability was $10,473.89. Inasmuch as $85,882.97 had been paid at the time and in the manner prescribed by law, the amount shown on the amended return was neither assessed nor paid.
6. On or about September 12, 1921, plaintiff and Crown Hill Realty Company, Consolidated, filed a claim for the credit of $17,831.56, and requested that such amount be applied as a credit to the year 1920. At the same time, plaintiff and Crown Hill Realty Company, Consolidated, filed a claim for the refund of $50,892.56, for the calendar years 1916, 1917, 1918, 1919, and 1920. On or about January 6, 1923, plaintiff filed a waiver for the years 1917 to 1920, inclusive, extending the time for the collection of the taxes for those years to April 1, 1924.
7. After an examination and audit of the returns of the plaintiff, Crown Hill Realty Company, and West Clinton Realty Company, for the calendar years 1917 and 1918, among other years, the Commissioner of Internal Revenue, in a letter dated November 14, 1923, signed by J.G. Bright, deputy commissioner, notified Clinton Coal Company of his determination with reference to the taxes for said years, which is as follows:
------------------------------------------------- Year | Deficiency | Overassessment ------------------------------------------------- 1917 ........ | $53,973.35 | ................ 1918 ........ | .............. | $73,925.53 -------------------------------------------------
The same letter of November 14, 1923, apprised the plaintiff that it had made an adjustment of its taxes for the years 1913 to 1918, inclusive, and the year 1920, and stated that the additional tax assessed for those years was $56,857.68 and the overassessment $75,113.20, leaving a difference of $18,255.52 due the taxpayer.
On December 14, 1923, the plaintiff by a letter advised the collector of internal revenue at Indianapolis, Ind., that it had received a notice claiming $14,591.26 due on the 1920 taxes and stating that the Department at Washington had on a prior date issued a certificate of credit and adjustment of the plaintiff's taxes from 1913 to 1920, inclusive, showing that there was due the plaintiff $18,255.55, and, in substance, that it was calling the attention of its attorney, Mr. Crawford, to the situation.
Charles A. Crawford, of Terre Haute, Ind., at all times herein mentioned was the attorney in fact of the Clinton Coal Company, and acted as such in the adjustment of this taxpayer's accounts for the years 1913 to 1920, inclusive.
On or about December 17, 1923, the said Charles A. Crawford called at the office of the collector of internal revenue at Indianapolis, Ind., and there had a conference with William F. Kiley, deputy revenue collector, and then requested that the deficiency for 1913, 1914, and 1917 be held in abeyance until further adjustments were made covering the years 1913 to 1920, inclusive, and that all of the adjustments contemplated for these years be handled at one time; and, in accordance with this request of the taxpayer, the adjustments of the account were so handled.
On December 18, 1923, Charles A. Crawford as attorney in fact, by letter confirmed the conference of December 17, 1923, and therein stated:
"You will note that the additional tax assessed is $56,857.68, while the overassessment is $75,113.20, leaving a difference of $18,255.52 overassessed against the companies during the years 1913-1920, both inclusive.
"This letter also confirms my understanding had with you that it will not be necessary for the companies to make the payment of the amount demanded on the 23rd inst., until you have received from the Commissioner of Internal Revenue, Washington, the certificate showing the additional tax and the overassessments for the years in question, at which time you will advise us further, and that no additional interest or penalty will accrue in the meantime."
On December 10, 1923, the collector of internal revenue informed the taxpayer, through its attorney, that the collection of its 1920 corporation income tax then due would be suspended for the period awaiting further adjustment of other years' taxes, and that notation had been made on the collector's records to stop further effort to collect the taxes at this time.
On December 21, 1925, plaintiff's attorney acknowledged the letter of the collector of internal revenue dated December 19, 1923, in which he stated:
"We very much appreciate your courtesy in this respect, as well as the prompt consideration which you gave our request, in view of the last communication received by the companies from the Department at Washington, showing a total overassessment of $18,255.52 for the years 1913-1920, inclusive."
By letter, dated December 21, 1923, by plaintiff's attorney, the taxpayer requested that certain small additional taxes for 1913, 1914, and 1917 be also held in abeyance, and stated:
"In view of the fact that the additional assessment of $12,855.74 for 1920 recently made by your office has been held up by you pending receipt of the certificates from the Department at Washington covering the final result determined by it for the years above mentioned, will you not be kind enough to hold up action upon the above items, also, until the certificates are received from Washington and the whole matter closed?
"As a matter of choice, the companies no doubt would very much prefer to pay the assessment of $285.63 for 1917, above referred to, but the decision of the tax unit previously mentioned determines an additional assessment of $53,973.35 for 1917 with an overassessment and refund of $73,973.53 for 1918.
"If it is not imposing upon you too much, we will very much appreciate a reply by return mail so that we may know that the matter is being held up pending final adjustment of the tax for all years.
"For convenience in handling the matter, we are returning the three demands recently received and which are above mentioned."
On December 24, 1923, the collector of internal revenue, by letter, acknowledged the letter of the plaintiff's attorney dated December 21, 1923, and therein stated:
"Please be advised that collection of these amounts will be held in abeyance to be adjusted in keeping with overassessment certificate referred to in your letter of December 18, 1923."
All through these transactions the collector had full charge of the collection of plaintiff's taxes subject to special directions from the Commissioner of Internal Revenue.
8. February 19, 1924, the Commissioner of Internal Revenue made an additional assessment against plaintiff for the calendar year 1917, in the amount of $53,973.35. On February 25, 1924, the Commissioner of Internal Revenue approved a schedule of overassessments, on form 7805, known and designated as "Schedule IT:A-8663." This schedule embraced, among other overassessments, an overassessment in favor of plaintiff for the year 1918, in the amount of $73,925.53, and was transmitted to the collector of internal revenue for the district of Indiana for his action in accordance with the directions appearing thereon.
At the time of the signing of the schedule of overassessment there was attached thereto a Treasury Department form No. 368-M. This certificate of overassessment covered the years 1913, 1914, 1915, 1916, and 1918. Both the certificate of overassessment and form 368-M attached thereto were received by the collector of internal revenue at Indianapolis, Ind. Form 368-M read as follows:
"Collector of Internal Revenue:
"No part of this overassessment will be certified on form 7777A for refund pending the receipt of the next assessment list for your district which will carry additional taxes against this taxpayer, as follows:
1917 ............................... $53,973.35 1920 ............................... 2,424.94 19__ ............................... ------ 19__ ............................... ------ ___________ Total .......................... ------
"Upon receipt of that assessment list the amount of this certificate of overassessment must be offset against the additional tax shown thereon, in accordance with section 252 of the Revenue Act of 1921 and as prescribed in paragraph 3 of T.D. 3620.
"(368-M.)"
9. The collector complied with the directions appearing on Schedule IT: A-8663, and on April 3, 1924, signed and returned said schedule to the Commissioner, together with a schedule of refunds and credits which showed that of the overassessment of $73,925.53, $43,927.65 was applied as a credit to the additional assessment of 1917 taxes, Commissioner's February, 1924, list, No. 95, and the balance of $29,997.88 was credited to an original 1920 tax due March 15, 1921, account No. 403259.
On or about March 28, 1924, the collector of internal revenue at Indianapolis, Ind., mailed to the plaintiff notice and demand for the balance of the additional 1917 taxes, amounting to $10,045.70 after the credit of $43,927.65.
10. On May 2, 1924, plaintiff paid to the collector of internal revenue for the district of Indiana $10,045.70, representing the balance of the additional assessment of tax for the year 1917 after the application as a credit of $43,927.65, a portion of the overpayment for the year 1918.
11. On June 4, 1924, the Commissioner of Internal Revenue signed the schedule of refunds and credits authorizing the disbursing clerk of the Treasury Department to issue checks for the amounts found by him to be refundable to the several taxpayers whose names appeared thereon.
12. On August 22, 1924, the Commissioner of Internal Revenue notified plaintiff of his computation of interest in the amount of $5,145.55 on the portion of the overpayment for the year 1918 credited to a portion of the additional assessment for the year 1917 from six months after the filing of the claim, or from March 12, 1922, to February 25, 1924, the date of the signing of the schedule of overassessments by the Commissioner.
13. On or about November 7, 1929, the plaintiff filed a claim for the refund of $10,045.70 for the calendar year 1917 and a claim for the refund of $43,927.65 for the calendar year 1918. The claim for the calendar year 1917 was rejected on December 30, 1929, and the claim for the calendar year 1918 was rejected on February 15, 1930.
14. On or about March 20, 1930, plaintiff filed a further claim for the refund of $43,927.65 for the calendar year 1918.
All of the claims for refund above referred to were based upon the allegation that the additional tax assessed for the year 1917 was barred by the statute of limitations at the time when the credits were made thereon from the overassessment of the year 1918 and payment was made by plaintiff of the balance.
15. A certificate of overassessment was issued by the Deputy Commissioner of Internal Revenue to plaintiff, showing the adjustment of plaintiff's taxes for the year 1918. Said certificate of overassessment was mailed to plaintiff not earlier than April 3, 1924.
There is nothing in the evidence showing or tending to show any agreement or promise on the part of the defendant made by its officials to make any payment to plaintiff other than was made by the credit which is on its taxes of 1917 as hereinabove shown. The certificate of overassessment, instead of showing anything due plaintiff, showed that $10,045.70 was due defendant, which plaintiff on demand paid.
The plaintiff brings this suit to recover $43,927.65, being a portion of the overassessment of its income and profits tax for the year 1918 which was applied against an additional assessment timely made of tax for the year 1917, with interest.
The case before the court is one in which, the Bureau of Internal Revenue having had under consideration the amount of plaintiff's taxes for the years 1916 to 1920, inclusive, the Commissioner notified plaintiff by letter that he had determined that $53,973.35 additional taxes were due for 1917 and that there was an overassessment for 1918 of $73,925.53. In the same letter plaintiff was advised of other adjustments on its taxes which are not necessary to be considered here. The plaintiff then referred the matter to its duly authorized attorney, Charles A. Crawford. Crawford had a conference with the collector in charge of the collection of these taxes and certain communications passed between them. In this conference and by letters to the collector the attorney for plaintiff requested the collector "to hold up action upon the above items [meaning plaintiff's taxes under consideration], until the certificates are received from Washington and the whole matter closed." This same request was repeated in different communications and different forms, and the collector answered that the collection of these amounts would be held in abeyance in accordance with the request. Later, and on February 19, 1924, the Commissioner made an additional assessment for 1917 in the amount of which the plaintiff had been before notified ($53,973.35), and also a small additional assessment for the year 1920, and directed the collector to withhold demand pending comparison with the schedule of overassessments. This assessment was in time, and there was nothing to prevent its collection except the agreement above shown. On February 25, 1924, the Commissioner approved the schedule of overassessments showing an overassessment of plaintiff's taxes for the year 1918 in the amount of $73,925.53, and sent the same to the collector with instructions to apply the overpayment as a credit against taxes due, if any, which was accordingly returned to the Commissioner by the collector showing that of the said overassessment in the amount of $73,925.53, $29,997.88 had been applied as a credit against the unpaid original tax for 1920 and the balance of $43,927.65 against additional assessment for the year 1917 in the amount of $53,973.35, leaving $10,045.70 still due thereon. Before the schedule was signed, the collector had sent to plaintiff a notice and demand for the balance of the 1917 taxes as above stated which the plaintiff shortly after paid, and thereafter and on June 4, 1924, the Commissioner signed the schedule of refunds and credits transmitted to him by the collector.
The record as a whole shows that the plaintiff for its own convenience all through these transactions was requesting that the collection of its taxes be held up and that all of them be adjusted in one final transaction, and that the matter was carried to a conclusion in accordance with its request. At the time, the plaintiff expressed its appreciation and paid the amount still remaining on its 1917 taxes. After having thus confirmed the transaction no further objections were made until more than five years afterwards when it filed the claim for refund of $43,927.65 for the year 1918 upon which the suit is now brought.
It is urged on behalf of plaintiff that these communications and agreements were had and made with the collector and not with the Commissioner. It is not necessary to here lay down any general rule with reference to the effect of communications made to a United States collector of taxes or agreements made with him. It is sufficient to say that in this particular case we find that the collector had full charge of the matter of collecting these taxes subject to special directions from the Commissioner of Internal Revenue. By the negotiations and agreement entered into with the collector made at a time when the tax could be collected, the plaintiff succeeded in having the collection postponed, and, the arrangement which it had requested having been carried out by the defendant, it cannot now be heard to complain thereof.
In view of the recent decisions of this court, it will not be necessary to state herein further reasons why the plaintiff cannot maintain its action. If any be sought, reference is made to the cases of Naumkeag Steam Cotton Co. v. United States, 2 F. Supp. 126, 76 Ct. Cl. 687, certiorari denied 289 U.S. 749, 53 S. Ct. 694, 77 L. Ed. 1495, R.H. Stearns Co. v. United States, 290 U.S. ___, 54 S. Ct. 325, 78 L. Ed. ___, decided Jan. 8, 1934, affirming the decision of this court, 2 F. Supp. 773, and the opinion in the case of Samuel Daube v. United States (Ct.Cl.) 5 F. Supp. 769, this day rendered, all of which show that the plaintiff is estopped under the circumstances from maintaining its action. We might also add that under the rule laid down in the last-named decision the plaintiff's action is barred, no claim for refund having been filed in time in view of the fact that the evidence shows there was no account stated.
Defendant also bases a defense on the fact that what is called "Form 368-M" was attached to the schedule of overassessments, but we do not find it necessary to consider this matter.
Plaintiff's petition must be dismissed. It is so ordered.
BOOTH, Chief Justice, and WHALEY and WILLIAMS, Judges, concur.
LITTLETON, Judge, concurs in the result.