Case Name: WOODWARD v. UNITED STATES
Court: United States Court of Claims
Jurisdiction: United States
Decision Date: 1953-01-13
Citations: 109 F. Supp. 414
Docket Number: No. 49366
Parties: WOODWARD v. UNITED STATES.
Judges: 
Reporter: Federal Supplement
Volume: 109
Pages: 414–422

Head Matter:
WOODWARD v. UNITED STATES.
No. 49366.
United States Court of Claims.
Jan. 13, 1953.
Richmond D. Thomason, Chicago, Ill., for plaintiff. Wilton H. Wallace, Washington, D. C., was on the brief.
H. S. Fessenden, Washington, D. C., with whom was Acting Asst. Atty. Gen. Ellis N. Slack, for defendant. Andrew D. Sharpe and Elizabeth B. Davis, Washington, D. C, were on the brief.
Before JONES, Chief Judge, and LITTLETON, WHITAKER, MADDEN and HOWELL, Judges.

Opinion:
LITTLETON, Judge.
In this case the plaintiff, as administrator of the estate of James Hugh Oliver, seeks to recover an admitted overpayment of income tax by the plaintiff for the year 1943 in the amount of $28,167.21, together with interest thereon as provided by law less the amount of $6,628.35 paid in September 1948 on said overpayment. James Hugh Oliver filed a tax return for 1943 and, as shown in finding 4, paid the total tax due thereon in the amount of $28,167.21. James Hugh Oliver was in the military service of the United States and was killed in action on June 14, 1944. Theretofore, on January 2, 1942, Grinnell F. Oliver and James Hugh Oliver, the decedent in this proceeding, formed a partnership under the name of Oliver Machine Tool Co., in which each of the partners had a one-half interest. This partnership continued until the date of decedent's death on June 14, 1944. The partnership was terminated on the death of James Hugh Oliver. Andrews v. Stinson, 254 Ill. 111, 123-124, 98 N.E. 222. No new partnership was formed between Grinnell F. Oliver and the estate of James Hugh Oliver after June 14, 1944.
On July 27, 1944, Grinnell F. Oliver was appointed executor of the estate of James Hugh Oliver. On May 28, 1945, the executor resigned and his final report and account as executor of the estate was approved. On May 31, 1945, John S. Woodward was duly appointed administrator with the will annexed of the estate of James Hugh Oliver, and such letters of administration are still in full force and effect. On September 22, 1947, Woodward, as administrator, filed a claim for refund of the tax paid by James Hugh Oliver for 1943 under § 421, U.S.Code, Title 26, amended by the Act of August 5, 1947, 61 Stat. 778. This claim was allowed by the Commissioner of Internal Revenue and an overpayment of $28,167.21 was determined and allowed. The total overpayment plus $18.73 of the interest allowed thereon was not paid but was withheld and set off by the Comptroller General against an alleged indebtedness to the United States in the amount of $28,185.94, under a renegotiation agreement concerning excessive profits of the Oliver Machine Tool Co. for the calendar year 1944, signed by Grinnell F. Oliver, individually, and Grinnell F. Oliver as administrator of the estate of James Hugh Oliver. See findings 9-13. As hereinbefore stated, Grinnell F. Oliver was not executor or administrator of the estate of James Hugh Oliver on June 13, 1946, or when said renegotiation agreement was executed .by him and the Navy Department, effective June 24, 1946, as shown in finding 12. The Comptroller Gen eral of the United States set off the entire amount of the overpayment plus interest of $18.73, totaling $28,185.94 (finding 14), under and pursuant to the agreement between Grinnell F. Oliver and the Navy Department, and issued a certificate of such settlement in the name of John S. Woodward, as administrator of the estate of James Hugh Oliver.
The plaintiff sues to recover the admitted overpayment of tax plus interest. The Government argues that the amount of $28,185.94 alleged to be due the United States under the renegotiation agreement, set forth in finding 12, was a proper offset against the tax overpayment. This was a set off of a separate and distinct indebtedness alleged to be due the United States and not an offset or credit arising out of the same transaction as the term "offsets and credits," as used in the statute relating to suits in the Court of Claims. The burden is, therefore, upon the defendant to establish that the set off made by the Comptroller General against the overpayment of tax and interest admittedly due from the United States, was proper and legal. The defendant has not sustained this burden.
The indebtedness alleged to be due the United States which the Comptroller General set off against the overpayment of tax was founded entirely upon the agreement between Grinnell F. Oliver and the Navy Department. In the execution of that agreement, Grinnell F. Oliver was without authority to bind the estate of James Hugh Oliver as to the amount of excessive profits or to bind the estate to pay this alleged indebtedness. No partnership arrangement had existed between Grinnell F. Oliver and the estate of James Hugh Oliver since June 14, 1944, and Grinnell F. Oliver was neither the executor nor administrator of the estate at the time of the conferences and negotiations between him and the Navy Department in August 1945, finding 9, or at the time the renegotiation agreement was signed by Grinnell F. Oliver, on June 13, 1946. We, therefore, hold that the offset made by the Comptroller General against the plaintiff under purported agreement between Grinnell F. Oliver and the Navy Department was improper and illegal.
Counsel for the defendant argues that even if the set off made by the Comptroller General was not proper under the alleged renegotiation agreement, it should be allowed to stand under the inherent power of the Government to offset an indebtedness due from it against an indebtedness due to it because the Secretary of the Navy could have made a unilateral determination of excessive profits due the United States under its contract with the Oliver Machine Tool Co. The difficulty with this argument is that no such determination was made, and if such determination had been made other considerations as to the extent, if any, of the liability of the estate of James Hugh Oliver would have been involved and such liability and the correctness of the determination could have been litigated by the estate in the proper tribunal.
The plaintiff is entitled to recover $28,-167.21, together with interest thereon as provided by law from the dates shown in finding 4, less the amount of $6,628.35 paid, as shown in finding 6. It is so ordered.