Case Name: ELLIS P. EARLE v. THE UNITED STATES
Court: United States Court of Claims
Jurisdiction: United States
Decision Date: 1933-06-05
Citations: 78 Ct. Cl. 161
Docket Number: No. L-291
Parties: ELLIS P. EARLE v. THE UNITED STATES
Judges: Whaley, Judge, and Williams, Judge, concur.
Reporter: United States Court of Claims Reports
Volume: 78
Pages: 161–170

Head Matter:
ELLIS P. EARLE v. THE UNITED STATES
[No. L-291.
Decided June 5, 1933]
Mr. A. E. James for the plaintiff.
Mr. John A. Rees, with whom was Mr. Assistant Attorney General Charles B. Rugg, for the defendant.

Opinion:
Green, Judge,
delivered the opinion of the court:
Plaintiff brings this action to recover an overpayment of income tax for 1916, and the case turns on the question of whether the suit has been brought in time. The facts are not in dispute.
The plaintiff duly filed his income-tax return for 1916 and paid the amount shown to be due thereby. Thereafter, the Commissioner of Internal Eevenue assessed a deficiency for that year of $7,658.85, which was paid July 30, 1920. November 25, 1921, the plaintiff filed a claim for refund in the sum of $5,975.23, and July 18, 1922, the Commissioner wrote plaintiff setting out the result of the audit of his tax for the years 1913 to 1919, inclusive. December 19, 1922, the Commissioner, after further consideration and audit of the returns for 1916 and 1917 together with other years, made a statement to plaintiff which showed an overassessment for 1916 of $5,322.25, and an additional tax for 1917 of $93,713.26. Both of these audits included consideration of the claim for refund filed November 25, 1921. March 28, 1923, the Commissioner assessed the additional tax for 1917 of $93,713.26, and a few days later signed a formal statement for the collector in which appeared an overas-sessment in favor of plaintiff for 1916 of $5,322.25, and therein instructed the collector to apply the overpayment as a credit against the tax owing (if any) on the taxpayer's account for subsequent periods. The collector complied with the Commissioner's instructions by applying the 1916 overpayment as a credit against the 1917 additional assessment and forwarded to the Commissioner a schedule of refunds and credits duly signed, on which appeared the credit above referred to and an item of interest on the overpayment of $852.43. July 19, 1923, the Commissioner mailed a certificate of overassessment to the plaintiff showing an overassessment for 1916 of $5,322.25 which had been credited to the 1917 additional assessment. This certificate contained the following statement:
" The balance (if any) of the overpayment is refunded to you by check of the Treasury Department, forwarded herewith.
" Included in the accompanying check is interest in the amount stated below, allowed on the credit, from the date of payment of the additional tax to the date of allowance of the claim."
A check for the amount of interest was accordingly enclosed and the amount thereof paid to plaintiff.
Plaintiff, however, did not accept this conclusion of the Commissioner, and on April 16, 1926, filed a petition with the Board of Tax Appeals with reference to his taxes for 1917, alleging that the additional tax which had been assessed for that year was barred from collection since collection was not made within five years from May 1, 1918, when the return was filed. May 24,1928, the plaintiff's contention was sustained by the Board of Tax Appeals and a decision was entered that there was no deficiency for 1917.
June 21, 1928, plaintiff filed a claim for credit of the overpayment for 1916 which had been applied against the tax for 1917, asking that it be credited against an outstanding assessment due for 1927. The claim for credit was based on the fact that the overpayment for 1916 had been applied on a tax which was barred. Subsequently, the Commissioner advised the collector that his claim would not be accepted as a claim for credit but would be considered as a refund claim for 1916, and on November 22, 1928, the Commissioner rejected the claim. July 17, 1930, the plaintiff began this suit.
The plaintiff's petition sets out the facts upon which the suit is predicated, but there is nothing in it to indicate whether the suit is brought upon the claim for refund, or the claim for credit, or upon an account stated, in which event the statutory period of limitations for making refunds would not apply. All three of these matters are discussed in the briefs of the respective counsel. We think it quite clear that the suit can not be maintained upon either the claim for refund or upon the claim for credit. Manifestly, the suit upon the claim for refund is barred, and we think that this is equally true with reference to a suit upon the claim for credit unless, as is contended, the statutory provisions with reference to claims for refund and credit are abrogated by reason of the creation of an account stated. We think there was no account stated. In the case of David Daube v. United States, decided by the Supreme Court May 8, 1933, 289 U.S. 367, the Supreme Court said, as a reason why there was no account stated between the Government and the taxpayer, that " no balance was arrived at as a result of computation and agreement ", that is, no balance arrived at by agreement between the Govermnent and the taxpayer. In the case at bar, it would seem clear that no balance was agreed upon between the plaintiff and defendant as a result of the certificate of overassessment that was sent the plaintiff, for the certificate stated in substance that if any balance was due the plaintiff it would be refunded by check. The defendant did not agree to pay the amount for which suit is now brought, nor can any promise to pay it be implied. A blank was put opposite the words "Amount refunded ", and opposite the word " Interest ", " $852.43 ", for which a check was enclosed. In fact the attorney for plaintiff in his brief concedes that no agreement was reached as to the balance due by this certificate of overassessment, but argues that on the other hand the plaintiff repudiated it by commencing a suit before the Board of Tax Appeals to have the additional assessment for 1917 set aside as barred. But he contends that when the Board of Tax Appeals rendered its decision and plaintiff accepted it, thereafter, at some indefinite date an account stated arose. To this we can not agree. There was no account presented at that time, and while the decision of the Board of Tax Appeals showed that the account presented to the plaintiff by the Commissioner was erroneous and this decision was binding upon the defendant in further court proceedings it did not make a new account or bring the parties into agreement. We therefore hold that there was no account stated between the parties.
But even if there had been an account stated, we do not think it would avail the plaintiff. If there was any such account it was presented at the time the plaintiff received the certificate of overassessment, but this suit was not brought until more than six years after that date, and a suit upon an account stated is therefore barred. Nor does the fact that the claim for credit was filed within the period of limitations under the account stated (if the certificate of overassessment is to be considered an account stated) enable plaintiff to maintain a suit on the claim for credit. This fact would not alter the statutory provisions with reference to the effect of fifing a claim for credit, for a suit upon a claim for credit and one upon an account stated would be based upon altogether different and unrelated matters. Under the statutory provisions applicable to the claim for credit filed in the case at bar (section 284 (b) (1), Revenue Act of 1926), no claim for credit could be allowed after four years from the time the tax was paid. This period had long expired when the claim for credit was filed, consequently even if it should be held that there was an account stated the claim for credit was not presented in time. Our conclusion is that the plaintiff's suit is barred whether it be considered as based on the claim for refund, or an account stated, or upon the claim for credit. It follows that the petition must be dismissed and it is so ordered.
Whaley, Judge, and Williams, Judge, concur.
Booth, Olvief Justice, did not hear this case, on account of illness, and took no part in its decision.