Case Name: EDWARD B. LEISENRING, DANIEL B. WENTZ, JR., AND FIDELITY-PHILADELPHIA TRUST COMPANY (FORMERLY FIDELITY TRUST COMPANY, EXECUTORS OF THE ESTATE OF DANIEL B. WENTZ, DECEASED, v. THE UNITED STATES
Court: United States Court of Claims
Jurisdiction: United States
Decision Date: 1933-06-05
Citations: 78 Ct. Cl. 171
Docket Number: No. L-221
Parties: EDWARD B. LEISENRING, DANIEL B. WENTZ, JR., AND FIDELITY-PHILADELPHIA TRUST COMPANY (FORMERLY FIDELITY TRUST COMPANY, EXECUTORS OF THE ESTATE OF DANIEL B. WENTZ, DECEASED, v. THE UNITED STATES
Judges: Whalet, Judge, and Williams, Judge, concur.
Reporter: United States Court of Claims Reports
Volume: 78
Pages: 171–194

Head Matter:
EDWARD B. LEISENRING, DANIEL B. WENTZ, JR., AND FIDELITY-PHILADELPHIA TRUST COMPANY (FORMERLY FIDELITY TRUST COMPANY, EXECUTORS OF THE ESTATE OF DANIEL B. WENTZ, DECEASED, v. THE UNITED STATES
[No. L-221.
Decided June 5, 1933.
Motion for new trial overruled, with opinion, November 6, 1933]
Mr. Spencer Gordon and Mr. Marion P. Wormhoudt for the plaintiffs. Covington, Bv/rling <& Rublee were on the briefs.
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:
The plaintiffs are executors of the estate of Daniel B. Wentz, deceased, who died February 8, 1926.
This suit is brought upon what the plaintiffs claim to be an account stated for $34,814.04 due the deceased. The evidence shows that the Commissioner, on May 15, 1924, signed a schedule of refunds and credits which showed an overpayment of $77,338.94 on the taxes of the deceased for 1919, of which $34,814.04 was credited in the same schedule against that amount of an additional assessment for 1917. The additional tax for 1917 had been assessed in time, but collection was barred by the statute of limitation of five years provided in section 250 of the Revenue Act of 1921 at the time collection was made by the credit. In accordance with this schedule of refunds and credits, a certificate of mverassessment was later prepared by the Commissioner showing that the testator's tax for 1919 had been over-assessed in the amount of $77,338.94, and that " the report of the internal-revenue agent in charge, dated October 17, 1923, had been approved by this office as to the adjustment for this year." The certificate further went on to state, " The amount of the overassessment will be abated, credited, or refunded, as indicated below ", and also, " If an overpayment has been made and other taxes are due, credit will be made accordingly, and any amount refundable is covered by Treasury check transmitted herewith." Notations on the certificate made " below " showed that of the overassessment, '•'$34,814.04 had been credited on additional taxes for the year 1917 and that $42,524.90 was refunded. This certificate, together with a Treasury check for the amount of the refund of $42,524.90 was delivered to the testator about June 15, 1924. After the death of Daniel B. Wentz and on May 13, 1930, the executors of his estate made application to the Commissioner of Internal Revenue for interest on the overpayment for the year 1919 and for a refund of $34,814.04 of the 1919 overpayment which had been credited against taxes -of 1917. In this claim they set out a copy of the certificate of overassessment for 1919 and alleged that the interest was due thereon and that the credit above referred to was void, not having been made within the statutory period applicable thereto. This claim was denied. The petition was filed and the suit begun June 10, 1930.
This case, like many others, turns on the question of whether the suit was brought in time, and the parties agree that unless the suit can be based on an " account stated " the period of limitations for its commencement has expired. It is contended on behalf of the plaintiffs that the certificate of overassessment referred to above constituted an account stated in favor of the taxpayer for $34,814.04 and that consequently the plaintiffs had six years from the time it was delivered to the taxpayer in which to bring suit and that, the suit having been instituted June 10, 1930, it was begun in time. The defendant contends that the acts of the Com.missioner, including the delivery of the certificate of over- assessment, did not constitute an account stated in showing anything due the taxpayer, and that if there was any account stated through the certificate of overassessment it showed that nothing was due the taxpayer after receipt of the refund allowed therein. It is also insisted on behalf of the defendant that interest on the amount claimed cannot in any event be recovered, but as we view the case it will not be necessary to consider the point thus raised.
A number of transactions between the deceased and the Commissioner with reference to the taxes in suit and other taxes are shown by the findings of fact in addition to what we have set out above in the opinion, but we do not think it is necessary to refer to them as, in our opinion, they do not affect the determination of the case.
In our view, the decision herein is controlled by the case of David Daube v. United States, 75 C.Cls. 633, 59 Fed. (2d) 842, and the opinion of the Supreme Court affirming the decision of this court in David Daube v. United States, 289 U.S. 367. In the opinion rendered by this court in the Daube ease, supra, it is stated that there are certain well-settled principles from which no court has ever varied which apply to an account stated. Among them is the rule that the parties must agree upon the balance struck, that there must be a promise, express or implied, for the payment of such balance, and that where there are mutual or cross demands the parties must come to an agreement as to the allowance or disallowance of the items composing the account, but especially "there must be an adjustment, a balance struck, and an assent to the correctness of the balance." Further, that " the parties cannot state an account by agreeing to part of the items, and leaving the others open for future adjustment or litigation ", and that " the test of an account stated is that the minds of the parties met as to the amount due." Nor does it make any difference that a claim made in the account may be groundless, although if any part of the claim is disputed so that the balance stated is not admitted it does not become an " account stated." This last is particularly applicable to the case now before us for the reason that the defendant in the account charged the taxpayer with a credit on the taxes of 1917, although the time bad expired within which they could legally be collected. In the same case we also said: " The admission of one item in the account of the transactions between the parties offset -by another item will not support an action on an account stated as to the item admitted, although it may constitute evidence of the correctness thereof in an action otherwise commenced." The authorities supporting these rules are too numerous for citation.
Applying these principles to the certificate of overassess.ment which was delivered to the taxpayer and the schedule of refunds and credits which evidently in some way came to ' the knowledge of the executors, we are clear that there was no account stated to which both parties gave assent. The -sheet entitled "Certificate of overassessment" did indeed show the overassessment, but this was only one item of the account which was also- shown by the same paper. The document showed that in defendant's statement of the ac- • count the item of $34,814.04 was credited upon the testator's taxes for 1917 and that the balance due the taxpayer was ' $42,524.90, which was accordingly refunded to him by check. This amount was the balance struck in the account as stated by the Commissioner, but the evidence shows that the taxpayer did not agree to this balance, and that the defendant did not agree that $34,814.04 was due the taxpayer. Consequently there was no " account stated.". See Ellis P. Earle v. United States, ante, p. 161.
We find nothing in the decision of the Supreme. Court affirming the Daube ease, supra, which is in conflict with what we have set out above. On the contrary, we think that the opinion therein shows that the Supreme Court had no intention by the decision in the case of Bonwit Teller & Co. v. United States, 283 U.S. 258, to overturn principles which have been agreed upon by all the courts of this country and remained settled for nearly a century, as seems to be contended on behalf of plaintiffs. In the Danube case, supra, the Supreme Court cited with approval the case of Newburger-Morris Co. v. Talcott, 219 N.Y. 505, 512, in which the Court of Appeals said:
" But the very meaning of an account stated is that the parties have come together and agreed upon the balance of indebtedness, insvmul computassent, so an recover the balance as upon an implied promise of payment-may thenceforth be maintained."
In the next to the last paragraph of the opinion in the Daube ease the Supreme Court stated in substance that the decision in the Bormit Teller case, supra, was limited in its application to cases where the evidence is such that " it sustains the inference of an agreement that the tax shall be repaid." In this case, instead of sustaining any such inference, the evidence clearly shows the contrary. Previous to the issuance of the certificate of overassessment upon which suit is brought the taxpayer had filed claims for credit of the 1918 overpayment against the 1917 additional tax. Instead of making this credit, the certificate upon which plaintiffs now rely was issued showing an overassessment for the year 1919 in the amount of $77,338.94, and a balance was struck therein between the taxpayer and defendant by crediting $34,814.04 (the amount for which suit is now brought) upon additional taxes for the year 1917 and refunding to the taxpayer by check $42,524.90. The check and the certificate of overassessment were issued June 13, 1924, and delivered to Daniel B. Wentz about June 15th of the same year. The petition herein was filed a few days before the expiration of six years from the time the certificate was delivered. Daniel B. Wentz, so far as the record shows, accepted the check which had been sent him without making any protest or objection thereto, but nearly six years after-wards the executors of the estate filed a claim for interest on the overpayments allowed for 1918 and 1919 and for the refund of the $34,814.04 of the 1919 overpayment credited against the 1917 tax. If any inference at all could be drawn from these facts, it would be that Daniel B. Wentz agreed to the balance struck by the Government, but we are inclined to think that the mere fact that he accepted the check does not show that he agreed that the balance struck by the-Government was correct. The certificate of overassessment showed clearly how the Government computed the amount due the taxpayer and the remission of the check to him for-that amount was in effect a statement that $42,524.90 was the amount due him and payment was being made thereof. We- are at a loss to understand how it can be argued from this state of facts that the Government agreed that $34,814.04 more was due the taxpayer.
It is contended on behalf of the plaintiffs that the facts established in Bonwit Teller & Co., supra, make the same kind of a case as that which is now before this court. There may be much similarity between the actual facts in the two cases but there is a great difference in the facts submitted to the court. When the Bonwit Teller ease was submitted to this court there was not a line or even a word said in the brief of counsel for either party with reference to an account stated. There was an allegation in the petition to the effect that the Commissioner of Internal Revenue " rendered a statement " to the plaintiff in which statement the amount for which suit was brought " was actually found and agreed to be due " to the plaintiff, and a statement in argument that the action was for the recovery of this amount " upon an allowed claim." Apparently there was no> contention over these allegations, but it was contended on behalf of the Government that a refund could not be made because the provisions of the statute were not complied with. The Supreme Court therefore had no occasion to consider whether the facts in the case supported an account stated and we do not think it intended to determine that question. In view of the facts as found in the case now before this court and the language of the Supreme Court in the Daube case, supra, which we have quoted above, we are clear that the decision in the Bonwit Teller case, sufra, is not controlling in the case at bar.
The case of Parks & Woolson Machine Co. v. United States, 75 C.Cls. 204, 58 Fed. (2d) 868, is also cited in support of plaintiffs' theory but the closing sentence of the opinion therein which reads, " Recovery of the overpayment was barred when the suit was instituted, even if it had been grounded upon an account stated ", we think shows that it was not intended to hold that an account stated had been established.
Nor do we find anything in Naumkeag Steam Cotton Co. v. United States, 76 C.Cls. 687, that conflicts with what we have said above. That case involved a very different state of facts from the one now before tbe court and an altogether different issue was raised by the defendant. Consequently nothing was said in the majority opinion which might even remotely refer to an account stated, or to the question of whether the suit was brought in time, which would have involved the discussion of matters not appearing in the case at bar. Having decided the case on the issues presented, obviously it was not necessary for the court to go further and decide some issue that had not been raised.
Our conclusion is that there is no evidence showing or tending to show an agreement, express or implied, to pay this sum to the taxpayer, and we have entered a finding of fact accordingly. As we find in effect and hold that there was no account stated, it follows that plaintiffs' action to recover the amount of the credit is barred. The credit was definitely granted on May 15, 1924, when the Commissioner approved and signed the schedule of refunds and credits. Any cause of action for interest accrued at that date, and is therefore also barred.
It follows from what has been stated above that plaintiffs' petition should be dismissed, and it is so ordered.
Whalet, Judge, and Williams, Judge, concur.
Booth, Chief Justice, did not hear this case, on account of illness, and took no part in its decision.