Case Name: FRANK A. VANDERLIP v. THE UNITED STATES
Court: United States Court of Claims
Jurisdiction: United States
Decision Date: 1934-05-07
Citations: 79 Ct. Cl. 489
Docket Number: No. 41993
Parties: FRANK A. VANDERLIP v. THE UNITED STATES.
Judges: Whaley, Judge; Williams, Judge; and Green, Judge, concur.
Reporter: United States Court of Claims Reports
Volume: 79
Pages: 489–504

Head Matter:
FRANK A. VANDERLIP v. THE UNITED STATES.
[No. 41993.
Decided May 7, 1934]
Mr. Ellsworth G. Air ord for the plaintiff. Messrs. Rail-stone R. Irrme and Garbery O'Shea were on the brief.
Mr. George H. Foster, with whom was Mr. Assistant Attorney General Frank J. Wideman, for the defendant.

Opinion:
Booth, Chief Justice,
delivered the opinion of the court:
The pertinent facts of this case are stated in the findings and the opinion of the court. The record is not open to serious controversy, for it is made up as to vital issues in- upon documentary evidence. If the unlimited waiver of the statute of limitations executed in accord with section 250 (d) of the Revenue Act of 1921, 42 Stat. 265, is a valid and binding one, it is then apparent that the collection of the tax for which a refund is herein claimed was timely. To this issue the opinion of the court is addressed.
On October 2, 1921, the plantiff's attorney in fact, acting-under a written and duly executed power of attorney so to do, signed an unlimited waiver of the statute of limitations as to the assessment and collection of the tax herein sought to be recovered. This waiver was lawfully signed by the Commissioner and duly filed in the Bureau. On March 10, 1923, the Commissioner notified the plaintiff that the waiver was invalid and that a jeopardy assessment of an additional tax of $77,836.11 would be made immediately. The five-year period for the assessment and collection of the tax expired on April 1, 1923, and the jeopardy assessment was made by the Commissioner on March 31, 1923. On April 26,1923, the plaintiff filed a claim for abatement of the additional tax, and thereafter on January 30, 1926, the Commissioner abated $13,920.09 of the tax. The collector on March 10, 1926, collected from the plaintiff $63,916.08, together with $10,478.73 interest. Thus it appears that the assessment of the additional tax was timely. The collection of the same is challenged, among other grounds, on the asserted invalidity of the waiver. The power of attorney conferred upon plaintiff's attorney in fact the unrestricted right and authority to do all things essential to be done concerning plaintiff's business and financial affairs, except sign deeds for real property. This instrument is comprehensive in its provisions; the plaintiff was abroad and intentionally made it so. He was a person of large means and large estate involving a multiplicity of business transactions which inevitably included the item of taxation, a fact which, if the plaintiff did not actually know, he must be charged with knowing.
The plaintiff's argument is addressed to a contention that the power of attorney did not authorize the waiver of any of plaintiff's rights. To sustain the same a great number of State and Federal cases are cited. We will not review them because they simply exemplify the fundamental rule that the authority to act under such a written instrument must be ascertained from the terms of the same. In other words, its scope is limited to its provisions.
Tested by this familiar rule of law, the power of attorney in this case, after specifying certain subjects included within its scope, recites as follows:
" to settle, compound, compromise, and adjust by payment or otherwise any claims or demands which may be made against me.; and, in general, to have the full and complete charge and management of my property and interests, and to do any act or thing in relation thereto which may to him seem advisable, in the same manner and to as great an extent as if the same belonged to him personally (except to sell real estate )."
It is hardly necessary to emphasize the scope of conferred authority to "settle, compound, compromise", and adjust claims. In each instance the surrender, as well as the acquisition, of legal rights, is distinctly involved if the transaction becomes effective. The collection of an income tax unpaid is generally preceded by a demand for payment, and assuredly it is an enforceable claim which under certain circumstances may be summarily enforced. This plaintiff, in the name of his attorney in fact and under the precise power of attorney now challenged, filed a refund claim on August 19, 1921, for $512.67 for an alleged overassessment of 1916 taxes, and the same was allowed, the refund made and accepted. Aside from other rules of law deemed invulnerable, the plaintiff may not recognize the validity of the power of attorney when it is to his interest so to do, and subsequently repudiate it when adjustment of his later taxes demonstrates that by so doing he may secure an additional and substantial refund thereof. Naumkeag Steam Cotton Co. v. United States, 76 C.Cls. 687, 289 U.S. 749.
After the execution of the waiver under discussion the plaintiff filed a claim in abatement of the additional tax for 1917. The Commissioner, acting upon the abatement claim, abated $13,920.09 of the additional tax on January 30, 1926, reducing the amount of the tax from $77,836.17 to $63,916.08. Therefore, it is apparent that at the time of the execution of the waiver, the plaintiff, acting through his attorney in fact, gained a substantial benefit by waiving the statute of limitations for the collection of the additional tax. A lawful waiver of the statute of limitations for the collection of a tax may not be said to be indubitably a waiver of a right, for the provision of law granting such a procedure comprehended the difficulties inherent in the ascertainment of the correct tax in involved and great estates and business transactions, and the right of waiver is of mutual benefit to both the taxpayer and the Government. Its filing stays immediate collection of the tax and results not infrequently in substantial refunds and credits which a time limit would otherwise prohibit. Aldridge v. United States, 64 C.Cls. 424; Colonial Trust Co. v. United States, 73 C.Cls. 549, certiorari denied, 286 U.S. 560. The instant case demonstrates exactly what is meant, for as late as 1926 the plaintiff received an abatement of his tax liability as herein pointed out.
The Commissioner approved the waiver, and the statute in this respect was fully complied with. Later, he advised the plaintiff that a waiver executed by an attorney " is held to be invalid ", and proceéded to resort to a jeopardy assessment of the additional tax. No reason appears of record why the Commissioner determined the waiver to be invalid except that it was executed by an attorney. In this instance it .was executed by an attorney in fact and unless some legal impediment existed which in and of itself precluded the possibility of an attorney in fact acting for another under a letter of authority sufficient in terms to authorize the act, it would seem as though the Commissioner exceeded his authority in holding the same invalid. To hold otherwise would be to repose in the Commissioner the right to construe instruments of this character, in view of the statute, and thereby prejudice the express rights which the statute gives to both the taxpayer and the Government.
While it was optional with the Commissioner under the statute to accept the waiver, once having signed it, it was a valid waiver and continued in effect until terminated under the law or legal regulations of the Commissioner.
The plaintiff in his own name ratified and confirmed the action of his attorney in fact in filing the waiver, and received substantial benefits from so doing. On April 26, 1923, the plaintiff individually filed the claim in abatement and his tax liability was decreased thereby to the extent of $13,920.09. The plaintiff must have known, at least knowledge is by law imputed to him, that the statute of limitations for the collection of the tax had expired more than twenty days prior to the filing of his claim, and notwithstanding the jeopardy assessment of the tax, if the plaintiff intended to rely upon the expiration of the statute of limitations for collection, then was the time to assert the right. The waiver being valid, the collection of the tax was timely.
Much is said with respect to the practice of the Bureau obtaining at the time the facts set forth in the findings transpired. It is sufficient to observe that the practice stated was found by the Supreme Court to be contrary to law (Bowers v. New York & Albany Lighterage Co., 273 U.S. 346). The petition is dismissed. It is so ordered.
Whaley, Judge; Williams, Judge; and Green, Judge, concur.