Source: http://www.chanrobles.com/usa/us_supremecourt/291/386/case.php
Timestamp: 2019-11-12 21:58:44
Document Index: 131389182

Matched Legal Cases: ['§ 900', '§ 600', '§ 424', '§ 424', '§ 424', '§ 301', '§ 327', '§ 424', '§ 424', '§ 149', '§ 41', '§ 225', '§ 29', '§ 28', '§ 773', '§ 879']

UNITED STATES V. JEFFERSON ELECTRIC MFG. CO., 291 U. S. 386 (1934) - US SUPREME COURT DECISIONS ON-LINE
US Supreme Court Decisions On-Line> Volume 291 > UNITED STATES V. JEFFERSON ELECTRIC MFG. CO., 291 U. S. 386 (1934)
Subscribe to Cases that cite 291 U. S. 386
4. The provision that this additional element is to be "established to the satisfaction of the Commissioner" does not mean that his chanroblesvirtualawlibrary
12. If a manufacturing company, by its invoice, represented to its purchaser that the amount shown thereon included the sales tax as well as the selling price, and if it returned that amount less the tax as the selling price, and caused the tax to be computed on that basis, it cannot be heard to say, in the absence of other chanroblesvirtualawlibrary
Certiorari, 290 U.S. 607, 612, to review a judgment of the Court of Claims sustaining a claim of the Jefferson Electric Manufacturing Company and dismissing a counterclaim; a judgment of the Circuit Court of Appeals for chanroblesvirtualawlibrary
These are actions at law brought, in one instance against the United States and in two against a revenue collector, to recover in each instance money alleged to have been erroneously and illegally exacted as an excise tax under subdivision 3 of § 900 of the Revenue Acts of 1918 [Footnote 1] and 1921 [Footnote 2] and subdivision 3 of § 600 of the chanroblesvirtualawlibrary
Revenue Act of 1924 [Footnote 3], from the plaintiff, a corporate manufacturer, on sales by it of articles which the revenue officers regarded as automobile parts or accessories.
In No. 171, [Footnote 4] the Court of Claims awarded the plaintiff $20,017.58 with interest and denied a counterclaim interposed by the United States. In No. 196, [Footnote 5] the District Court for the District of Connecticut gave the plaintiff judgments on three claims [Footnote 6] for $329,250.00, $170,470.36, and $98,416.41 with interest on each sum, and the judgments were reversed by the Circuit Court of Appeals. [Footnote 7] In No. 329, [Footnote 8] the District Court for the Northern District of Ohio rendered judgments for the plaintiff on five claims [Footnote 9] for $89,195.36, $249,275.32, $189,853.88, $173,934.45, and $41,764.57 with interest on each sum, and the judgments were affirmed by the Circuit Court of Appeals. [Footnote 10] The cases are here on certiorari.
After the taxes were collected, timely applications for refund were duly made by the plaintiffs, and the applications were denied. The actions were brought within the time generally limited therefor, [Footnote 11] but not prior to April 30, 1928.
The applications for refund and the actions proceeded on the theory that the sales were not taxable under the Revenue Acts because the articles sold were not automobile parts or accessories within the meaning of those acts, chanroblesvirtualawlibrary
In each case, the court's authority to entertain the action and the plaintiff's right to recover were challenged in various ways as precluded by § 424 of the Revenue Act of 1928, [Footnote 12] which provides:
The decisions in the first line regard subdivision (a)(2) as committing all claims for the refunding of taxes of the class in question here to the Commissioner of Internal Revenue for final determination and precluding any examination of such claims in the courts. This view has been taken by District Judges in two cases [Footnote 13] and by a Circuit Judge in a dissenting opinion in another case. [Footnote 14]
The decisions in the second line are to the effect that the subdivision relates to administrative action by the Commissioner, but not to proceedings in the courts, and leaves a taxpayer who has applied to the Commissioner unsuccessfully free to sue on his claim and the courts free to entertain the suit and adjudicate the claim -- as could be and commonly was done before § 424 was enacted -- save that, under that section, a judgment for the taxpayer in a suit brought on or after April 30, 1928, does not become obligatory or entitle him to the refund chanroblesvirtualawlibrary
awarded by the judgment, unless and until (y) he satisfies the Commissioner that the tax was not collected directly or indirectly from the purchasers of the articles sold, or if so collected has been returned to the purchasers, or (z) gives the bond described in subdivision (a)(3). Such has been the ruling in two cases. In one, the ruling was by the District Court for the Eastern District of Pennsylvania, [Footnote 15] and the Circuit Court of Appeals for that circuit substantially sustained it, and in that connection said, [Footnote 16]
The other case is No. 329, now under review, where the ruling was by the District Court for the Northern District of Ohio, [Footnote 17] and was fully sustained by the chanroblesvirtualawlibrary
Circuit Court of Appeals for that circuit, as is shown by the following excerpts from its opinion. [Footnote 18]
The decisions in the third line, like those in the second, regard the subdivision as neither cutting off the right of chanroblesvirtualawlibrary
a taxpayer to sue for a refund after applying unsuccessfully to the Commissioner nor abrogating the authority of the courts to entertain the suit. But, unlike those in the second, they regard the subdivision as substantively limiting the right to a refund of taxes of the designated class to instances where the taxpayer either has not directly or indirectly collected the tax from the purchaser or, after so collecting it, has returned it to him. In other words, they regard the subdivision as making this substantive limitation and element of the right to a refund of such taxes, and therefore as requiring that this element, like others, be satisfactorily established in any proceedings where an asserted right to a refund is presented for examination and determination, whether the proceeding be before the Commissioner or be a suit brought after an application to him has been unavailing. The Court of Claims has so ruled in two cases, [Footnote 19] one being No. 171, now under review, and the District Court for the District of Connecticut came to a like conclusion in No.196, [Footnote 20] also now under review.
When § 424 was enacted, the internal revenue laws contained many related provisions constituting what this Court has termed a comprehensive "system of corrective justice" in respect of the assessment and collection of erroneous or illegal taxes. [Footnote 21] A summary of this system -- it still is part of the internal revenue laws -- will portray it sufficiently for present purposes. Anterior to collection, the Commissioner possesses exclusive authority to revise, correct, or reject assessments, and the courts are forbidden chanroblesvirtualawlibrary
to entertain suits "to restrain the assessment or collection." After collection, aggrieved taxpayers are accorded a limited time within which to apply for refunds, and the Commissioner is authorized to grant the applications where the taxes are shown to have been erroneous or illegal, but a denial by him is not final. If the application is either denied or not acted on by the Commissioner, the taxpayer is accorded a fixed period within which to bring suit for a refund against the United States or the Collector who received the tax, and if, in the suit, he establishes that the tax was erroneous or invalid, that it was paid by him, and that his claim has been duly and seasonably presented and prosecuted, he is entitled to judgment for a refund of the amount paid with interest. [Footnote 22]
As a general rule, where the legislation dealing with a particular subject consists of a system of related general provisions indicative of a settled policy, new enactments of a fragmentary nature on that subject are to be taken as intended to fit into the existing system and to be carried into effect conformably to it, excepting as a different purpose is plainly shown. [Footnote 23]
That rule is applicable here. The existing system, developed through long years of experience, comprehends the entire subject, including all claims for refund. Section 424 is a new enactment, and relates to a designated class of such claims, concededly within the scope of the existing chanroblesvirtualawlibrary
The clause in that subdivision saying the additional element to which it relates is to be "established to the satisfaction of the Commissioner" is much relied on; but we think it does not require a different conclusion. Only chanroblesvirtualawlibrary
by inadmissible straining could it be held to invest the Commissioner with absolute authority or discretion in respect of such refunds. A more rational view is that it is largely admonitive, and means that the additional element is not lightly to be inferred, but to be established by proof which convinces in the sense of inducing belief. Such words often are so construed where applied to one who, like the Commissioner, is charged with the duty of ascertaining a matter of fact as a basis for further action. [Footnote 24]
This view of the words "established to the satisfaction of the Commissioner" has support in a long continued practice under a similar provision in a customs law of 1864 [Footnote 25] under which certain customs duties, if paid under protest, were to be refunded to the importer when "shown to the satisfaction of the Secretary of the Treasury" chanroblesvirtualawlibrary
to have been excessive. That provision remained in force many years, [Footnote 26] and during that period was uniformly treated as neither investing the Secretary with final authority nor putting aside general provisions permitting suits for refunds, but as leaving the importer free, after an unavailing appeal to the Secretary, to sue under the general provisions and obtain a judicial reexamination of his claim. [Footnote 27]
Some reliance is placed on Williamsport Wire Rope Co. v. United States, 277 U. S. 551, but that case is not in point. It was a suit for the refunding of excess profits and war profits taxes assessed under § 301 of the Revenue Act of 1918, and the question presented was whether, in such a suit, a refusal by the Commissioner to make a special assessment under §§ 327(a) and (d) and 328 was open to reexamination. In answering the question in the negative, this Court referred to the purpose with which those sections provide for a special assessment, the language employed in expressing the conditions under which it is to be made, and the prescribed procedure; pointed out that the task involved is one requiring technical or special knowledge and experience in respect of such tax problems and ready access to data in the Bureau of Internal Revenue relating to a large group of taxpayers, and held that these exceptional conditions enforce the conclusion that Congress intended to confide the task to the Commissioner, subject only to a review by the Board of Tax Appeals where a direct appeal to that body is permitted, and thereby to exclude a reexamination in the courts such as in other situations is had in suits for refunds. It is very plain that no such exceptional chanroblesvirtualawlibrary
As to effect to be given to that subdivision in suits for refunds, we are of opinion that, as it makes the right to a refund to depend on an additional element -- that the taxpayer has not collected the tax, directly or indirectly, from the purchaser, or, if it was so collected, has returned it to him -- the courts, in adjudicating claims of the designated class, are under a duty to give effect to the subdivision by regarding the additional element as a matter to be shown by suitable allegation and established by appropriate proof, like other elements of such a right or cause of action, and by determining the sufficiency of pleadings and evidence accordingly. [Footnote 28]
We cannot assent to the view that a court may give a judgment awarding the taxpayer a refund without inquiring whether he has borne the burden of the tax or has reimbursed himself by collecting it from the purchaser. That view rests on two untenable premises -- one that the question whether the burden of the tax has thus been borne by the taxpayer is solely for administrative solution, and the other that a judgment for a refund may be given subject to the condition that it is to become obligatory and be given effect only if and when the claimant proves to the Commissioner that he alone has borne the burden of the tax. Our reasons for rejecting the first premise already have been shown. Those for rejecting the other will be shortly stated. A judgment so conditioned is merely a finding that the tax paid by the claimant was invalid, coupled with a declaration that it should be refunded to him if he proves to the Commissioner that, in other respects, he is entitled to it. Decisions of this Court have long since established that it is not within the province of courts created by or under the judiciary article of chanroblesvirtualawlibrary
the Constitution to give or review judgments of that character, for they are not final or binding adjudications. [Footnote 29] The District Courts are created and exist under that article. While the Court of Claims is created under a different article, the statute defining its jurisdiction of suits for refunds and those defining the jurisdiction of the District Courts are alike in that both contemplate that the judgments in such suits shall fully and finally determine whether the claimants are entitled to the refunds for which they sue.
If the tax was erroneous and illegal, as is alleged, it must be conceded that, under the system then in force, there accrued to the taxpayer when he paid the tax a right to have it refunded without any showing as to whether he bore the burden of the tax or shifted it to the purchasers. And it must be conceded also that § 424 applies to rights accrued theretofore and still subsisting, but not sued on prior to April 30, 1928, and subjects them to the restriction that the taxpayer (a) must show that he alone has borne the burden of the tax, or (b), if he has shifted the burden to the purchasers, must give a bond promptly to use the refunded sum in reimbursing chanroblesvirtualawlibrary
The present contention is particularly faulty in that it overlooks the fact that the statutes providing for refunds and for suits on claims therefor proceed on the same equitable principles that underlie an action in assumpsit for money had and received. Of such an action it rightly has been said: [Footnote 30]
than any other form of action. It aims at the abstract justice of the case, and looks solely to the inquiry whether the defendant holds money which, ex aequo et bono, belongs to the plaintiff. It was encouraged and, to a great extent, brought into use by that great and just judge, Lord Mansfield, and, from his day to the present, has been constantly resorted to in all cases coming within its broad principles. It approaches nearer to a bill in equity than any other common law action."
As our conclusion respecting the operation of subdivision (a)(2) is applicable both where the suit for a refund is against the United States and where it is against the collector, there is no need for considering the arguments advanced concerning the power of Congress to condition or withdraw the consent of the United States to be sued. [Footnote 31]
In the petition, the plaintiff alleged that it absorbed the taxes in question and paid the same from its own funds; that no other person or persons paid the same either directly or indirectly, and that no other person or persons has any right, either at law or in equity, to the refund sought or any part of it. The defendant's answer was a general traverse accompanied by a counterclaim based on an alleged allowance and payment to the plaintiff, through error and mistake, of certain claims for the refunding chanroblesvirtualawlibrary
These findings, which are all that bear on the question of who paid the taxes and bore the burden thereof, are wanting in precision and apparently conflicting. If findings 7 and 9 were not otherwise qualified, they might be regarded as meaning that the sales were at catalogue prices, and that these prices did not include, and the purchasers did not pay, the tax or any part of it. But finding 8 makes it at least doubtful that findings 7 and 9 have that meaning, for it is plainly inferable from finding 8 that, during much of the taxing period the plaintiff sold on invoices bearing notations indicating that, when the tax was 5 percent of the selling price 1/21 of the amount shown on the invoice represented the tax and 20/21 represented the selling price, and that, when the tax was 2 1/2 percent of the selling price the fractions were changed to 1/41 and 40/41. The findings leave it uncertain whether the plaintiff, in making its returns to the revenue officers, gave the amount shown on the invoices or 20/21 (later 40/41) of that amount as the selling price, and they also leave it uncertain on which basis the tax was computed. If, by its invoices, the plaintiff represented to its purchasers that the amount shown thereon included the tax as well as the selling price, and if it returned that amount less the tax as the selling price, and caused the tax to be computed on that basis, it cannot be heard to say, in the absence of other controlling circumstances of which there is no chanroblesvirtualawlibrary
The questions presented for consideration here are those involved in the rulings of the District Court and that involved in the reversal by the Circuit Court of Appeals on chanroblesvirtualawlibrary
a reexamination of the evidence. The challenge of the plaintiff's right to sue for a refund and of the court's power to entertain such a suit was rightly overruled. This is sufficiently shown in the earlier part of this opinion. Whether the District Court erred in denying the defendant's motion at the conclusion of the evidence for judgments thereon in his favor must be determined by ascertaining whether there was substantial evidence fairly tending to establish every element of the plaintiff's causes of action. We think there was such evidence. There was conflict in it; parts of it admitted of diverging inferences, and, as to some matters, the preponderating weight was difficult of ascertainment. But these were all matters for the trial court to determine. It was exercising the functions of a jury, and its findings are on the same plane as if embodied in a jury's special verdict. [Footnote 32] We are accordingly of opinion that the motion was rightfully overruled, and that the Circuit Court of Appeals erred in not so holding. Even if there was some basis for thinking the weight of the evidence was with the defendant, as was strongly urged at our bar, it was not within the province of that court to reexamine the evidence and reverse the judgments because of what it regarded as error of fact. [Footnote 33]
Whether the special findings give the requisite support to the judgments rendered thereon is a different question, and is one which is open to consideration here. [Footnote 34] The findings are long, and the view which we take of one of them makes it unnecessary to state the others. The one relates to the matter made essential by subdivision (a)(2) of § 424, and is the only finding on the subject. It reads as follows: chanroblesvirtualawlibrary
Saying that the plaintiff has sustained the burden of proof as to the designated issue in suit No. 3371 is not an adequate finding of the matters of fact involved in that issue, particularly where, as here, the subject is new, and may admit of differing opinions. It is in the nature of a chanroblesvirtualawlibrary
That which follows relates to suits Nos. 3360 and 3421 and evidently means that the plaintiff by its invoices was indicating to the purchasers that 1/21 of the amount it was collecting from them represented the tax on the sales and 20/21 represented its "real sales price," and that the plaintiff itself computed the tax on the basis of this "real sales price" and thereafter paid the tax as so computed, thereby saving to itself the difference between the tax resulting from that computation and the tax which would have resulted had the full amount collected from the purchasers been used as the basis for the computation. If that be what is meant, the court rightly concluded that the tax was collected from the purchasers. It is of no importance that the prior sales price had been reduced by the amount of the tax, for under the taxing act, the tax was to be computed on the price for which the articles actually were sold, and not on some prior and discarded price. But the court's further conclusion that, as the price theretofore in vogue was reduced by the amount of the tax, the plaintiff in effect returned to the purchasers the tax it collected from them -- because they got the articles for a price which was that much less than it would have been had the prior sales price been still in vogue -- is shown by its mere statement to be not a finding of fact but unsatisfactory reasoning having little tendency to establish its objective. That conclusion must therefore be disregarded. It results that the finding, while showing that the plaintiff collected the tax from the purchasers, does not show whether it returned the tax to them. Thus, the finding does not adequately respond to the issue arising on the plaintiff's allegation that it absorbed the chanroblesvirtualawlibrary
This case comprises five separate suits which were tried together and, after judgments for the plaintiff, were consolidated for purposes of appeal. The trial was to the court under a written stipulation waiving a jury. The court made special findings and based its judgments on them. At the outset, the plaintiff's right to recover on the facts stated in the petitions was challenged by the defendant by motions to dismiss and the motions were overruled. There were also motions at the close of the evidence for judgments thereon in favor of the defendant which also were overruled. These rulings and the sufficiency of the facts found to support the judgments are the matters presented for consideration here. There was neither allegation nor proof that the plaintiff had not collected the tax from the purchasers, or after so collecting it, had returned it to them; and, of course, there was no finding on the subject. The suits proceeded throughout as if that question was one for administrative solution after judgment, if the plaintiff prevailed. What we have said in the earlier part of this opinion shows that this was a mistaken theory. The judgments in both courts chanroblesvirtualawlibrary
* Together with No.196, American Chain Co., Inc. v. Eaton, Collector, certiorari to the Circuit Court of Appeals for the Second Circuit, and No. 329, Routzahn, Collector v. Willard Storage Battery Co., certiorari to the Circuit Court of Appeals for the Sixth Circuit.
For opinion overruling motion to dismiss action, see 8 Am.Fed.Tax Rep. 11274.
McCaughn v. Electric Storage Battery Co., 63 F.2d 715, 718, 719.
Electric Storage Battery Co. v. McCaughn, 52 F.2d 205.
McCaughn v. Electric Storage Battery Co., 63 F.2d 715, 718.
For opinion overruling preliminary motion to dismiss, see Willard Storage Battery Co. v. Routzahn, Collector, 8 Am.Fed.Tax Rep. 11274. After the hearing on the merits the court, in rendering judgment for the plaintiff, said:
Routzahn v. Willard Storage Battery Co., 65 F.2d 89, 93.
Boyle Valve Co. v. United States, 38 F.2d 135, 69 Ct.Cls. 129; Jefferson Electric Mfg. Co. v. United States, 38 F.2d 139, 69 Ct.Cls. 150.
American Chain Co. v. Eaton, 58 F.2d 246, id., 248.
Dodge v. Osborn, 240 U. S. 118, 240 U. S. 120-121.
26 U.S.C. §§ 149, 154, 156-157; 28 U.S.C. §§ 41(5, 20), 250(1), 284, 285, 286, 842; 31 U.S.C. § 225; 72 U. S. 731-733; 74 U. S. 130-131; Cheatham v. Norvekl, 92 U. S. 85, 92 U. S. 88-90; United States v. Hvoslef, 237 U. S. 1, 237 U. S. 10; United States v. Emery, Bird, Thayer Realty Co., 237 U. S. 28, 237 U. S. 31-32; Sage v. United States, 250 U. S. 33, 250 U. S. 38-39; Moore Ice Cream Co. v. Rose, 289 U. S. 373.
United States v. Barnes, 222 U. S. 513, 222 U. S. 520, and cases cited; United States v. Sweet, 245 U. S. 563, 245 U. S. 572; Panama R. Co. v. Johnson, 264 U. S. 375, 264 U. S. 384.
Bryan v. Moore, 81 Ind. 9, 11-13; Kenyon v. City of Mondovi, 98 Wis. 50, 54, 73 N.W. 314; Callan v. Hanson, 86 Iowa, 420, 423, 53 N.W. 282; Sams Automatic Car Coupler Co. v. League, 25 Colo. 129, 135, 54 P. 642; Walker v. Collins, 59 F. 70, 74.
See c. 407, § 29, 26 Stat. 142; c. 6, § 28, 36 Stat. 104.
See Arnson v. Murphy, 109 U. S. 238; Hager v. Swayne, 149 U. S. 242; Schoenfeld v. Hendricks, 152 U. S. 691, 152 U. S. 693; White v. Arthur, 10 F. 80, 88.
Kings County Savings Institution v. Blair, 116 U. S. 200, 116 U. S. 205-206.
2 U. S. 456-457; Muskrat v. United States,@ 219 U. S. 346.
Claflin v. Godfrey, 21 Pick. 1, 6. To the same effect are Steuerwald v. Richter, 158 Wis. 597, 604, 149 N.W. 692; Sanford v. First National Bank, 238 F.2d 8, 301; Portsmouth Cotton Oil Ref. Corp. v. Fourth National Bank, 280 F.8d 9, 882.
See 54 U. S. 17; 61 U. S. 529; In re Ayers, 123 U. S. 443, 123 U. S. 505; Hans v. Louisiana, 134 U. S. 1, 134 U. S. 17-18; United States v. Heinszen & Co., 206 U. S. 370, 206 U. S. 391 (Harlan, J.); Graham & Foster v. Goodcell, 282 U. S. 409, 282 U. S. 430-431.
28 U.S.C. § 773; @ 76 U. S. 131.
28 U.S.C. § 879; Martinton v. Fairbanks, 112 U. S. 670, 112 U. S. 672; Davis v. Schwartz, 155 U. S. 631, 155 U. S. 636; Law v. United States, 266 U. S. 494, 266 U. S. 496.