#### RICHARD C. RIDGWAY v. THE UNITED STATES.

No. 12349

June 4, 1883.

The claimant purchased "barrels of distilled spirits stored in a bonded warehouse, at a time when the practice of the Internal Revenue Bureau was to assess the tax only on the quantity of spirits in barrels at the time of removal and payment of tax.

The practice of the Bureau was changed so as to assess the tax on the quantity in the barrels when first stored, making no allowance for subsequent leakage.

The claimant withdrew his spirits soon after the change in practice, and paid the tax on the quantity first stored, which was $7,929.29 more than it would have been had it been assessed on the actual quantity withdrawn.

*708On appeal for refund of the amount paid on spirits which had leaked out, the Commissioner certified to an allowance, sent it to the Fifth-Auditor, who passed the account and forwarded the same to the First Comptroller, by whom it was returned-to the Commissioner for reconsideration.

The Commissioner entered of record that he reconsidered his action.

The claimant then instituted this suit upon the allowance.

Subsequently the Commissioner rejected the appeal to him made for refund..

Held :

I.The Commissioner may reconsider and revoke an allowance by him certified to for the refund of taxes under the provisions of Revised Statutes, § 3220, at any time before the allowance is paid, where suit-is not previously brought and there has been no change in the head of the Bureau.

II.Whether or not a Commissioner may revoke and annul the order of his-predecessors, and whether or not a claimant for refund gains a vested right by bringing suit upon an allowance duly certified to, so that a subsequent reconsideration and revocation does not affect it, the» court expresses no opinion.

III.The action of an Auditor on such an allowance is immaterial.

It is no part of the duties of the Auditors (except the Sixth Auditor) to-make decisions binding in any way upon anybody, and their opinions and decisions upon controverted questions, if they choose to give them, have no official determining force. They are only to examine accounts, certify balances, and transmit them to the proper-Comptroller for his decision thereon. (Rev. Stat., §§ 276-300.)

This action was commenced June 16, 1880, upon a certified allowance made by tbe Commissioner of Internal Revenue for the refund of a tax alleged to have been wrongfully collected,, &c.

' The following are the facts found by the court:

I. After the passage of the *Act of July 13, 1866,*ch. 184 (14 Stat. L., 98), a large number of barrels of distilled spirits were manufactured and deposited by the distillers in a Government bonded warehouse, Class B, in the first district of Pennsylvania, under the provisions of that act. Of these, the claimant purchased in February, 1867, or previously, 1,777 barrels,, and they remained in said warehouse until withdrawn by him in May, 1869.

II. Upon the withdrawal of said spirits the claimant was-required to pay, and did pay under protest, the internal-revenue tax upon the whole quantity of spirits in said barrels when deposited in said warehouse, without allowance for leakage *709while on deposit, amounting in all to $46,344.81. Had he been taxed only for the quantity of spirits in said barrels when withdrawn, making allowance for leakage while in the warehouse, the tax would have been $7,929.29 less than the amount’ paid by him.

III. Previously to April 14, 1869, under instructions from the Commissioner of Internal Bevénue, the practice had been uniform to deduct the quantity of leakage of spirits while in bonded warehouses from the quantity deposited, and to assess the tax only upon the quantity remaining when withdrawn. Such was the practice when the claimant made his purchases aforesaid.

The Commissioner changed the practice by the following ■circular, issued to the several collectors at the time of its date:

Tkeasuby Department,

Office of Internal Revenue,

*Washington, April*14, 1869.

Sir : la all withdrawals of distilled spirits from any old Class A or Class B warehouses you will collect the tax of 60 cents per gallon upon the quantity as shown hy the gauge at the time said spirits were deposited in or transferred to the warehouse in which they now are.

The above rule will apply to all spirits produced prior to July 20th, 1868. Very respectfully,

J. W. Douglass,

*Dep’y Commissioner.*

IV. On the 3d of August, 1871, ,the claimant presented to the Commissioner an application for the refund of said $7,929.29, paid by him under protest upon spirits which had leaked from said barrels while in said warehouse.

On the 17th of February, 1879, the Commissioner, proposing to allow the claim, transmitted the case, with the evidence in support of it, to the Secretary of the Treasury for his consideration and advisement, in accordance with the following standing regulation prescribed by the Secretary in relation to the refund of taxes by the Commissioner upon appeal to him made therefor:

Where the case of an appeal involves an amount exceeding ¡J250, and before it is finally decided, the Commissioner of Internal Revenue will transmit the case, with the evidence in support of it, to the Secretary of the Treasury for his consideration and advisement.

On the 20th of March, 1879, the Secretary returned the papers to the Commissioner, with a letter declining to advise *710tbe refunding of the taxes claimed, and stating his reasons therefor in full.

The- Commissioner therefore considered the matter anew. After reviewing the reasons given by the Secretary for declining to advise a refund, in which he did not concur, he made the following allowance, and transmitted the same to the Fifth Auditor:

*A schedule of claims for the refunding of taxes erroneously assessed and paid which have been examined a%d allowed.*

I hereby certify that the foregoing claims for the refunding of taxes erroneously assessed and paid hare been examined and allowed.

Green B. Baum,

*Commissioner.*

Office of Internal Kbvenub,

*March*25, 1879.

On the 28th of March, 1879, the Fifth Auditor examined and certified, and transmitted the same to the First Comptroller, in the regular course of business of accounting in the Treasury.

• On the 21st of November, 1879, the First Comptroller returned the allowance, unpaid, to the Commissioner, with a request that he reconsider the claim; and on the 24th of Novém-ber, 1879, the Commissioner, having decided to do so, entered of record in his office that the same “is hereby reconsidered.’*

Y. Thereafter, on the 16th day of February, 1883, the Commissioner rejected the claim, and gave notice thereof to the collector to whom the tax was paid, as follows:

Treasury Department,

Office of Internal Revenue.,

*Washington, February*16, 1883.

W. J. Pollock, Esq.,

*Collector 1st District, Philadelphia, Pa.:*

Sir : The claim of Richard C. Ridgway for the refunding of $7,929.29 tax paid on spirits alleged to have been lost by leakage while in warehouse is hereby rejected, in conformity to the opinion of the Attorney-General dated May 5, 1880 (Opinions, vol. 16, 667), which holds that no allowance for leakage of spirits in warehouse was authorized under the act of July 13, 1866.

Respectfully,

Green B. Raum,

*Commissioner.*

*711' *Mr. V. B. Edwards*(with whom was *Mr. Thomas W. Neill) ior*the claimant:

1. Revised Statutes, § 3220, and the'acts consoldiated therein, authorized the Commissioner of Internal Revenue to refund any internal-revenue tax which might appear to him to have been wrongfully collected. The sole responsibility and jurisdiction are vested in the Commissioner. *[Kaufman's Oase,*11 C. Cls. R., 659; *Woolner’s Oase,*13 ibid., 355.)

2. The Commissioner examined and allowed the claimant’s application for refund, and the Fifth Auditor certified the same to the First Comptroller for payment. The Commissioner thereupon exhausted his powers over the matter, and the jurisdiction to enforce the allowance vested in this court.

3. The allowance was right and proper on its merits. The claimant purchased the spirits in bond at a time when the practice was to allow it to be withdrawn upon payment of tax on the amount then in the casks, making an allowance for previous leakage. The change in the rule of computing the tax after the spirits were stored ought not to affect the claimant’s spirits then in warehouse. To apply a new rule to his spirits, was a wrong application of it, and the Commissioner was right in allowing a refund of the amount paid on spirits that were not in existence.

*Mr. A. D. Robinson*(with whom was *Mr. Thomas Simons,*Assistant Attorney-General) for the defendants:

Claimant cannot recover for the tax assessed and paid upon the amount of leakage, because—

1. The allowance by the Commissioner of March 25,1879, was not approved by the Secretary, but actually disapproved. It was the duty of the Commissioner to transmit the case to the Secretary for “ consideration and advisement.” *(Savings Banlc Oase,*16 O. Cls. R., 335.) It was so done, and the Secretary disapproved. Why require the reference unless his decision is to have some force?

If the claim shall be disallowed by'Mm, the claimant is not without remedy, for he may sue the'collector. *(Nelson*v. *Oon-*man, 5 Blatch., 511.)

This court said in *Eavis's Oase*(17 C. Cls. R., 300) that this power of summary allowance was “the exercise of an extraor*712dinary power, ” and therefore the grounds for recovery should be olear and unanswerable.

2. This court held in Davis's Case, aboVe cited, that the allowance of the Commissioner was *prima facie*evidence as to all the facts necessary for his decision, except as to his jurisdiction, and that “the facts which give him jurisdiction must affirmatively appear.” It is a new question and well worthy the consideration of the court.

3. There was no.allowance at the time of the commencement of the suit. This court has often decided that an allowance must exist at the time of the suit to confer jurisdiction.

The allowance was made Marcb 25,1879. That decision was reconsidered by the Commissioner, November 24, 1879. Suit was not commenced till June 16, 1880. Such decision may be reconsidered.

4. But if it shall be held that the allowance could not be revoked, then we say that the tax was legally assessed and collected.

This court and the Supreme Court have held that the allowance may be impeached for fraud or mistake both of law and fact.

The Commissioner has power only to refund taxes “illegally assessed or collected.”

At the time of withdrawal and payment of the tax, both law and regulation required the tax to be paid on the amount deposited. *Acts of July*13, 1866 (14 Stat. L., 157), *March*2, 1867 (14 Stat. L., 480), *January*11, 1868 (15.Stat. L., 125), *April*20,1868 (15 Stat. L., 125), *April*10, 1869 (16 Stat, L., 42.)

Again, this court has so held on this question in a similar case. *[Thayer’s Case,*4 C. Cls. R., 95; *Gregg’s Case,*ibid., *Meredith*v. *United States,*13 Pet., 486.) See also upon the question of estoppel and other equitable questions in the case *Fabin*v. *Murphy,*95 U. S. R., 199; *Jones*v. *Sasser,*1 Dev. & Battle, N. O., 464; *Candler*v. *Lunsford,*ibid., 407; *Johnson*v. *United States,*5 Mass., 425; *Carr*v. *United States,*98 U. S. R., 433; *Brewster*v. *Striker,*2 Comstock, 19; 3 Pars, on Gout., 5th ed., 341, note.

*713OPINION.

Richardson, J.,

delivered the opinion of the court:

This suit is brought upon an alleged allowance of the Commissioner of Internal Revenue under the provisions of Revised Statutes, § 3220, for the remission, refund, and payment back of “all taxes erroneously or illegally assessed or collected, all penalties collected without authority, and all taxes that appear to be unjustly assessed or excessive in amount, or in any manner wrongfully collected.”

It appears by the findings that the Commissioner certified to an allowance to be paid to the claimant, and transmitted the same to the Fifth Auditor, who, having examined and certified it, transmitted it to the First Comptroller, in the regular course of business of accounting in the Treasury.

Thereafter, the papers having been returned by the First Comptroller unpaid, the Commissioner decided to reconsider the matter, and he entered of record in his office that it was reconsidered.

Subsequently, after having taken the matter into consideration anew, the Commissioner formally rejected the claim.

The claimant brought this action after the Commissioner had -entered of record his order that the allowance was reconsidered and before his final rejection of the claim.

The defendants raise several objections in law to the claimant’s right of recovery, but we have found it necessary to consider only one of them, as that is sufficient for the decision of the case.

If the Commissioner had authority to revoke his certification of allowance after its transmission to the accounting officer, as he did, then there is no foundation for this action, since this court has no primary jurisdiction over claims for the recovery back of taxes illegally assessed or wrongfully paid, and secondary jurisdiction of such claims only to enforce the allowance by the Commissioner made under Revised Statutes, § 3220. /

The power to revoke orders and decrees by courts and public officers under certain circumstances has frequently been recognized and upheld. The only question is as to when that power expires by the consummation of the first acts beyond *714recall. It was said by the Supreme Court in *Bronson*v. *Schulton*(104 U. S. R., 415):

> It. is a general rule of the law that all the judgments, decrees, or other orders of the courts, however conclusive in their character, are under the control of the court which pronounces them during the term at which they are rendered or entered of record, and they may then he set aside, vacated, modified, or annulled hy that court. But it is a rule equally well established that after the term has ended all final judgments and decrees of the court pass beyond its control, unless steps be taken during that term, by motion or otherwise, to set aside, modify, or correct them.

There are' uo terms for the transaction of business in the Internal Revenue Bureau. There are terms of service of the official head of the Bureau, and frequent changes therein. But the question'whether or not a Commissioner is without authority to revoke the decisions and orders of any of his predecessors does not arise in this case, since the allowance sued upon and its revocation were both made by the same Commissioner during his official term of service.

Several cases have heretofore arisen as to the power of the President to revoke a dismissal of a military officer. In *Corson*v. *United States*(17 C. Cls. R., 349), where that subject was under consideration, it was said, referring to the decided cases:

> The purport of all these decisions is that the President, having once dismissed a military officer or accepted his resignation and given notice thereof, *so that nothing remains to he done to make the severance complete,*cannot again restore him to office except by a new appointment in pursuance of a nomination to and confirmation by the Senate.

The statute under which the Commissioner first certified to ah allowance in this case provides that “the Commissioner * * * *may refund and pay back*all taxes erroneously or illegally assessed or collected,” &c.

Until, therefore, the taxes were paid back the action of the Commissioner authorized by the statute was not consummated. The sending of his order to the accounting officers iu the course of departmental business did not place it beyond his power of recall. They are officers of the same Department as the Commissioner, and under the same official head. Their duties are to examine accounts and place them in a condition for payment. The processes of the Treasury Department are all *ex*parte, and not finally consummated beyond recall until a check has been issued upon a warrant duly signed by the Secretary *715of the Treasury, as we have pointed, out in former eases. *(McKnight’s*Case, 13 C. Cls. R., 292; *Buffalo Bayou R. R. Case,*16 ibid., 245.)

The action of the Fifth Auditor in passing the allowance in this case is immaterial, since it is no part of the duty of Auditors (except the Sixth Auditor) to make decisions binding in any way upon anybody; and their opinions and decisions upon controverted questions, if they choose to give them, have no official determining force. They are only to examine accounts;, certify balances, and transmit them to the proper Comptroller for his decision thereon. (Eev. Stat., § 276-300.)

It'is true that an allowance authorized by the Commissioner of Internal Revenue cannot be reversed, annulled, or reviewed by any other executive officer, and a suit may be maintained upon it in this court if the accounting officers refuse or delay to pass it for payment, as we have repeatedly held, following the decision in *Kaufman’s Case*(11 C. Cls. R., 659), which the Supreme Court affirmed on appeal.' But we have no doubt that it is as much under the Commissioner’s control wh le passing through the hands of the accounting officers as if it were in his. own office and in his own hands, and that he may revoke it at any time before consummation by payment, or at least before action brought thereon. It is *payment*that the statute authorizes him to make, and until payment is made his authority over the matter is not exhausted, unless, perhaps, the claimant should acquire a vested right by bringing suit before revocation, as to which we express no opinion.

In that leading case of Kaufman, where we gave judgment for the claimant, we founded our decision upon the fact there stated, that “the claimant stands credited in the records of the Internal Revenue Bureau with an allowance *which has never been revolted”*

In the present case the claimant has no such credit on the records of the Internal Revenue Bureau, since the allowance first certified to had been reconsidered when this action was commenced, and his claim has been rejected.

He has therefore no cause of action, and his petition must be dismissed, and judgment will be so entered.