Opinion
William A. Neacey, of Washington, D.C. (William Cogger, of Washington, D.C., on the brief), for plaintiff.
John W. Hussey, of Washington, D.C., and Frank J. Wideman, Asst. Atty. Gen., for the United States.
This case having been heard by the Court of Claims, the court, upon the stipulation of the parties and the evidence adduced, makes the following special findings of fact:
1. Plaintiff is a corporation and on February 25, 1916, paid its income tax for 1915, as shown by its return. On February 5, 1917, plaintiff paid its income tax for 1916, as shown by its return.
2. On February 9, 1924, the Commissioner of Internal Revenue notified plaintiff by letter of his revisions of plaintiff's tax liability for the years 1917, 1918, and 1919, disclosing a deficiency of $147,858.81 for 1917, and overassessments of $70,554.42 and $79,824.96 for the years 1918 and 1919, respectively, based on inventory adjustments covered in a revenue agent's report and in amended returns theretofore filed for said years by the plaintiff. In said letter, however, the Commissioner advised plaintiff that the inventory increase requested for the beginning of the year 1917 was not allowable because plaintiff had not filed amended returns or submitted to additional assessments for the years 1915 and 1916. The letter informed plaintiff of its rights to appeal from the determinations.
On February 28, 1924, plaintiff filed amended returns for the years 1915 and 1916, showing its inventory adjustments for said years, and on March 8, 1924, it filed an appeal from the determination for 1917, set forth in the Commissioner's letter of February 9, 1924. Plaintiff's letter of appeal quoted the conditions of the Commissioner's letter and stated in part:
'That since we have not filed return or submitted to an assessment of tax for such prior years in which excessive deductions were taken because of the understatement of inventory, the bureau cannot concede an increase in our surplus as at January 1st, 1917. 'In reply to this, we are submitting herewith an amended return for 1916, duly executed and showing a total tax for that year of $12,705.42, due to adjustment of inventory as per corrected balance sheet at beginning of the year 1916. 'We are also submitting an amended return for 1915 with adjustment of inventory covering that year, and are ready to submit any further returns required or requested by the department. 'We hereby claim that the $149,407.21 should be deducted from the income of the year 1917 as it is already shown as included in the income of the year 1916 through this inventory adjustment. * * * '
3. On January 24, 1925, the Commissioner of Internal Revenue transmitted to plaintiff a letter indicating his revisions of plaintiff's income and profits tax liabilities for the years 1915 to 1920, inclusive.
4. On February 4, 1925, and February 24, 1925, plaintiff submitted sworn statements showing inventory adjustments and reconciliations for the years 1915, 1916, and 1917.
5. On June 24, 1925, the Commissioner of Internal Revenue transmitted to plaintiff a letter indicating his final determinations of plaintiff's tax matters for the years 1915 to 1920, inclusive, in which he allowed the inventory adjustments for 1917 which had been previously disallowed, and approved plaintiff's amended returns which had been submitted for 1915 and 1916. These determinations showed deficiencies for 1915 and 1916 of $1,447.46 and $153.49, respectively and overassessments of $97,691.10, $6,033.62, $4,748.94, and $8,030.39, for the years 1917, 1918, 1919, and 1920, respectively. In the same letter, the Commissioner advised plaintiff of the adjudication which he had made of claims for refund filed by plaintiff for the years 1917, 1918, and 1919, in conformity with the final determination. 6. On August 10, 1925, the Commissioner of Internal Revenue assessed additional taxes for the year 1915 of $4,447.46 and for the year 1916 assessed additional taxes of $153.49. On May 27, 1924, he timely assessed an additional tax against plaintiff of $147,858.81 for the year 1917.
7. On August 13, 1925, the Commissioner approved a schedule of overassessments showing, among other things, an overassessment in favor of plaintiff for the year 1917 in the amount of $97,691.10. In the usual course of procedure this schedule was sent to the collector with directions to ascertain the condition of the account against plaintiff for taxes, apply the overassessment upon any taxes found to be due for other years, and complete the schedule and return it. The collector accordingly certified back the schedule showing the credits which had been made on his books as hereinafter stated, and that the net amount refundable to plaintiff was $86,204.99. The Commissioner approved this schedule so certified to him by the collector and authorized the disbursing clerk of the Treasury to make payment of the amount shown to be refundable to plaintiff, and about November 11, 1925, transmitted to plaintiff a 'certificate of overassessment' together with the check of the Treasury Department for the amount refundable with interest. This certificate showed that there was an overassessment for 1917 of $97,691.10 and of this amount $1,447.46 was credited against taxes for 1915 and $9,885.16 against taxes for 1921, leaving a balance refundable of $86,204.99 together with interest thereon in the sum of $896.94 for which a check was issued as stated above, which check was received and cashed by plaintiff.
8. There is nothing in the evidence that shows or tends to show that there was at any time any agreement or promise, express or implied, on the part of the defendant through its officials to refund or pay to the taxpayer the sum for which this action is brought, or any other sum beyond the amount to be refunded as specified in the certificate of overassessment for the year 1919, which showed credits of a portion of the overassessment against the taxes of 1915, 1916, and 1921.
Before BOOTH, Chief Justice, and GREEN, LITTLETON, WILLIAMS, and WHALEY, Judges.
GREEN, Judge.
This suit is begun to recover $1,609.95, representing part of an overpayment of income and profits taxes for 1917 which had been credited to deficiencies in the taxes for the years 1915 and 1916, more than five years after the original returns for those years had been filed. The petition in the case was not filed within the period prescribed for the commencement of suits to obtain a refund of taxes, but plaintiff bases its case upon the theory that the so-called 'certificate of overassessment' which it received about November 11, 1925, constituted an account stated, or at least was such as to the item of overassessment contained therein. This certificate showed the amount of the overassessment and that disposition had been made of it by crediting it upon certain deficiencies in taxes for other years, and the balance refundable after such credits had been made. A check was inclosed for this balance, which was received and cashed by plaintiff. In other words, it was a statement of the account between the plaintiff and defendant with reference to taxes which had been assessed against plaintiff showing that a balance was due the plaintiff thereon which was accordingly refunded. The findings show that there was no agreement express or implied that any other sums would be refunded beyond the amount which was paid.
It is quite obvious there was no account stated in favor of plaintiff except for the balance shown. The amount of this balance was paid leaving nothing due as the account was stated. Plaintiff seeks to take the one item of the account which showed the amount of the overassessment and ignore the credits and the refund made on the other side of the account. We have repeatedly held that this cannot be done, and, without citing all of the many cases that support our holding would call attention particularly to R. H. Stearns Co. v. United States, 291 U.S. 54, 54 S.Ct. 325, 78 L.Ed.--, Leisenring v. United States, 3 F.Supp, 853, 77 Ct.Cl.--, certiorari denied 54 S.Ct. 558, 78 L.Ed.--, and Samuel Daube v. United States (Ct.Cl.) 5 F.Supp. 769, decided February 5, 1934.
The plaintiff received the check for the balance shown to be due by the account, and cashed it without making any objection thereto until almost six years later when this suit was commenced. Instead of being an account stated in favor of the plaintiff, it was really an account settled. Cf. Stearns Co. v. United States, supra.
Plaintiff's action is without merit, and it is ordered that its petition be dismissed.
BOOTH, Chief Justice, and WHALEY, WILLIAMS, and LITTLETON, Judges, concur.