Court Opinion

ID: 9691054
Source: CourtListenerOpinion
Date Created: 2023-08-24 20:06:09.10539+00
Date Added: 2024-06-11T18:19:09.744816
License: Public Domain

LITTLETON, Judge
(dissenting).
Plaintiffs sue to recover $34,814.04, being the unrefunded balance of the overpayment of $77,338.94 for 1919 allowed by the Commissioner of Internal Revenue on his schedule of refunds signed May 15, 1924. The amount sued for was credited by the Commissioner against an additional assessment for 1917 at a time when the 1917 tax was barred by the statute of limitation. A certificate of overassessment was duly prepared by the Commissioner and delivered to the taxpayer showing his allowance of the overpayment of $77,338.94 for 1919' and the division thereof to the amount refunded and the amount credited. After the receipt of the certificate of overassessment and the Treasury cheek for the portion of the 1919 overpayment in excess of the amount credited *859against the 1917 tax, Wentz died, and the executors of his estate made demand upon the Commissioner for payment of the balance of the 1919 overpayment. The Commissioner in his letter to the executors agreed that the 1917 tax was barred at the time the credit was made but refused to refund the balance of the 1919 overpayment on the ground that the statute of limitation of six years had barred a suit to recover the same. This conclusion of the Commissioner was based on the view that the cause of action for the overpayment for 1919 accrued on May 15, 1924.
Counsel for the defendant contend that plaintiffs’ cause of action to recover the unrefunded portion of the 1919 overpayment, amounting to $34,814.04, credited against the barred 1917 tax, accrued May 15, 1924, the daté on which the Commissioner signed the schedule of refunds and credits allowing the overpayment of $77,338.94, and that this suit was barred by the statute of limitation of six years at the time it was instituted on June 10,1930; second, that plaintiffs are not entitled to recover because (a) the petition was not filed within five years after the payment of the tax for 1919, nor within two years after the Commissioner allowed the overpayment, and (b) that the action of the Commissioner in allowing the 1919 overpayment crediting a portion thereof against the 1917 tax, the refunding of the balance, and the issuance and delivery of the certificate of overassessment showing the details thereof, did not give rise to a cause of action, that plaintiffs had “no cause of action in the nature of an account stated,” and that the six-year statute of limitation has no application.
It is also contended by the defendant that no interest on the unrefunded portion of the 1919 overpayment of $34,814.04 can be recovered because the cause of action therefor accrued May 15,1924.
The majority opinion holds that the Commissioner’s determination and allowance of the overpayment of $77,338.94 for 1919, the issuance and delivery of the certificate of overassessment, and his refusal to refund $34,814.04 of the overpayment when there was no tax legally collectible for any other taxable year did not give rise to an implied promise to pay the overpayment allowed, and that no cause of action with a new term of limitation arose upon the delivery of the certificate of overassessment; that, inasmuch as the suit was not instituted 'within five years after the 1919 tax was paid, nor within two years after the date of the Commissioner’s allowance of the overpayment, it is barred by the statute of limitation.
With these conclusions I eannot agree. I can see no difference in principle between this case and the case of Bonwit Teller & Co. v. United States, 283 U. S. 258, 51 S. Ct. 395, 396, 75 L. Ed. 1018, and I am of opinion that this suit was timely instituted and that plaintiffs are entitled to recover the balance of $34,814.04 of the overpayment allowed for 1919 which was credited against a barred 1917 tax. The dissents in this court in Bonwit Teller & Co. v. United States, 39 F.(2d) 730, 738, 69 Ct. Cl. 638, were based on the view that the allowance of the overpayment of $10,866.43 was not barred at the time it was made because the taxpayer had filed a sufficient claim for refund, and that it was entitled to recover because “the allowance of the refund by the Commissioner is equivalent to an account stated between private parties, which is good until impeached for fraud or mistake.” In the Supreme Court the government contended that no claim for refund had been filed, and that the refund of the overpayment was barred at the time it was allowed by the Commissioner; that, even if the allowance was timely, the suit in this court was barred because it was not instituted within five years after the tax was paid nor within two years after the allowance of the overpayment. The Supreme Court, after holding that Bonwit Teller & Co. had filed a sufficient claim for refund of $10,866.43, said: “ * * * The Commissioner allowed the claim and on March 8 approved and scheduled to the collector the certificate of overassessment. * * * The collector credited $9,846.06 against the additional tax assessed for the year ending January 31, 1917. May 12, 1927, the Commissioner caused the certificate, showing the deduction made by the collector, to be delivered to plaintiff with a check for the balance of the overassessment and interest, $1,462.99. Plaintiff objected to the application of any part of the refund against such additional assessment on the ground that the 1917 tax was barred and declined to accept the check in full settlement, but offered to apply it in partial payment of the claim.” Upon these facts the court said that “the action * * * is grounded upon the determination evidenced by the certificate issued by the Commissioner May 12, 1927. Upon delivery of the certificate to plaintiff, there arose the cause of action on which this suit was brought. United States v. Kaufman, 96 U. S. 567, 570, 24 L. Ed. 792; United States v. Savings Bank, 104 U. S. 728, 26 L. Ed. 908; Bank of Green*860castle’s, 15 Ct. Cl. 225. There is no merit in the contention that the suit is barred.”
In Daube v. United States, 53 S. Ct. 597, 598, 77 L. Ed. -, decided May 8, 1933, the court, after referring to the Bonwit Teller & Co. Case and the fact that in it a certificate of overassessment had been issued and delivered, said “the statement of an account gives rise to a new cause of action with a new term of limitation.” The decision of this court dismissing the petition in the Daube Case was affirmed by the Supreme Court on the ground that no certificate of overassessment was delivered to the taxpayer. I do not think the decision of the Supreme Court in the Daube Case approves everything that was said by this court in that case.
We have held that when the Commissioner signs a schedule of refunds and credits he allows an overpayment, and, when there is an entry thereon showing a tax due for another year, a credit is simultaneously made. Pottstown Iron Co. v. United States, 40 F.(2d) 142, 69 Ct. Cl. 427. But the allowance of the overpayment must occur before the credit can be effective. The certificate of overassessment, which follows the approval of the schedule allowing the overpayment, states the account for the particular taxable year by showing the total amount of the overpayment allowed and division thereof to the amount credited and the amount refunded; therefore, if the amount satisfied by an offset or credit of a portion of the overpayment is not legally due the government, or is barred by the statute of limitation, the taxpayer is entitled to recover the balance of the overpayment allowed and shown on the certificate of overassessment. Each taxable year stands alone, Burnet v. Sanford & Brooks Co., 282 U. S. 359, 51 S. Ct. 150, 75 L. Ed. 383, and the allowance of an overpayment and the delivery of a certificate of over-assessment for a particular taxable year is a statement of the account for such year, and, if there is no tax legally due the government for another taxable year, the statute raises an implied promise to pay the overpayment allowed by the Commissioner and stated in the certificate of overassessment. In these circumstances I cannot agree with the statement that “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.” The Commissioner of Internal Revenue is not required to agree independently of his official allowance of the overpayment and the issuance of a certificate of overassessment as to the amount due the taxpayer. Finding 4, therefore, I think answers finding 6. The very fact that he, .as the responsible officer, officially makes the allowance of the overpayment for the particular taxable year and delivers to the taxpayer the certificate of overassessment showing the overpayment due the taxpayer for such taxable year gives rise to an implied promise to pay the overpayment if there is no tax for another taxable year that can be legally collected, and such statement of the account for the taxable year involved “gives rise to a new cause of action with a new term of limitation.” There is no appeal from the Commissioner’s allowance of an overpayment and the statute of limitation which requires a suit to be instituted within two years after the disallowance of a claim for refund in the ease of rejected claims, or within five years after the tax was paid, does not apply.
The statute of limitation is jurisdictional in this court. In Naumkeag Steam Cotton Co. v. United States, 2 F. Supp. 126, decided January 9, 1933, this court recognized that a suit instituted within six years after the delivery of the certificate of overassessment to recover a portion of an overpayment allowed and credited against a barred tax for another year was timely but dismissed the petition on the ground of estoppel.
The next contention of the defendant, which is not discussed in the majority opinion, is that plaintiffs’ cause of action for interest on the unrefunded portion of the 1919 overpayment accrued when the Commissioner signed the schedule of refunds and credits May 15, 1924, and was therefore barred at the time the petition was filed on June 10, 1930. We held in Bonwit Teller & Co. v. United States, 52 F.(2d) 904, 72 Ct. Cl. 559; certiorari denied 285 U. S. 538, 52 S. Ct. 311, 76 L. Ed. 931, a case in all respects similar to the present, that, where an overpayment was timely allowed and illegally credited, interest continued to run under the statute when a suit was brought to recover the balance of the overpayment and that the taxpayer was entitled to recover interest on the overpayment allowed and unpaid from the date of payment of tax to a date not more than thirty days preceding the date of the refund check in accordance with section 177 (b) of the Judicial Code as amended by section 615 (a) of the Revenue Act of 1928 (28 USCA § 284 (b). Plaintiffs are, therefore, entitled to recover the interest claimed.
I am of opinion that judgment should be entered in favor of plaintiffs for $34,814.04 with inteojest at 6 per cent, per annum on *861$12,141.05 from September 15, 1920, and on $22,672.99 from June 14, 1920, to such date as the Commissioner of Internal Revenue may determine in accordance with the provisions of section 177 (b) of the Judicial Code, as amended by section 615 (a) of the Revenue Act of 1928.