Court Opinion

ID: 4495432
Source: CourtListenerOpinion
Date Created: 2020-01-23 18:14:19.609992+00
Date Added: 2024-06-11T08:49:27.346331
License: Public Domain

Muedocxc,
concurring: Although I agree that the consents-extended the statutory period for assessment, I do not agree that the effectiveness of the consents depends upon equitable estoppel. The question of whether or not an equitable estoppel has been established is not to be decided by considering only such general principles as are quoted in the prevailing opinion. Cf. Tide Water Oil Co., 29 B. T. A. 1208. There are certain essentials of an equitable estoppel, all of which must be present in order to estop a party to a proceeding. The following brief statement of these essentials will suffice for present purposes: (1) a misrepresentation or concealment of a material fact; (2) this fact must be known to the party estopped; (3) the person claiming the benefit of the estoppel must have been in ignorance of the truth of this fact at the time of the misrepresentation or concealment, at the time that he acted upon the fact, and until it was too late to change his action; (4) the misrepresentation or concealment must have been done with the intention or expectation that it would be acted upon by the other party or, under such circumstances, that it was natural or probable that it would be acted upon; (5) the fact must have been relied upon and acted upon by the other party; (6) his action must have changed his position *505for the worse. Bigelow on Estoppel, p. 437; Pomeroy’s Equity Jurisprudence, 4th ed. vol. 2, par. 805; Bouvier’s Law Dictionary and Words and Phrases, tit. “ Estoppel Howard Sheep Co., 1 B. T. A. 966; Ergenbright v. Henderson, 72 Kan. 29; 82 Pac. 524. It has been held, in connection with requirement (3)., that the deceived party must not only not know the fact, but must have had no convenient or ready means of acquiring knowledge of the fact. Brant v. Virginia Coal & Iron Co., 93 U. S. 326. Furthermore, the deceived party must have exercised reasonable diligence under the circumstances to learn the truth. Bailey v. Lisle Mfg. Co., 238 Fed. 257. The prevailing opinion does not indicate that due consideration has been given to the question of whether or not all of the essentials of an estoppel are present in this case. It fails to point out precisely what the fact was which was misrepresented or concealed and upon which the Commissioner relied to his disadvantage.
The Commissioner apparently seeks to estop the petitioner to deny that the consents which the Commissioner relied upon were in fact the consents of this petitioner. The rationale of this contention would seem to be that the petitioner, in order to deceive the Commissioner, had the Delaware corporation execute the consents, and the Commissioner, not knowing that there were two corporations having similar names and believing that the consents filed had been executed by the petitioner, relied upon those consents until after the statutory period for assessment had expired. There could be no estoppel based upon such a contention if, under the circumstances, a reasonably prudent person, acting with such care as he might be expected to exercise in an important matter, would not have been misled. Bailey v. Lisle Mfg. Co., supra; Frankfort Land Co. v. Hughett, 137 Tenn. 32; 191 S.W. 530; Fourth N.B. v. Nashville, C. & St. L. Ry. Co., 128 Tenn. 530; 161 S.W. 1144; Southwestern Investment Co., 19 B. T. A. 30. The petitioner, in its return filed for 1928, specifically called the attention of the Commissioner to the change in its name, and the Commissioner’s letter of February 11, 1930, clearly indicates that he then knew of the existence of two corporations having similar names. But perhaps the Commissioner in his consideration of prior tax liability ought not to be charged with knowledge of the change in name furnished in a return for a later year, even though that information came to him more than a year before the expiration of the assessment period for the earlier taxes, and, of course, on February 11, 1930, it was too late to assess unless the consents were valid. Aside from these circumstances, however, there was another circumstance which a reasonably prudent man would not have overlooked and which precludes the Commissioner from successfully raising the defense of estoppel in connection with *506these consents. The Commissioner knew all along that the taxpayer was an Illinois corporation, yet each of the consents upon which he relies was clearly impressed with a seal which plainly showed that it was the seal of a Delaware corporation. The seals were placed in accordance with the instructions on the forms supplied by the Commissioner. ^Reasonable diligence upon his part in the examination of these documents would have disclosed the fact that the seal was not that of the taxpayer and he must.be charged with knowledge of that fact. He knew that he wanted consents from an Illinois corporation and that he did not want consents from a Delaware corporation. Estoppel can not be raised as a defense to avoid the consequences of one’s own negligence. Bailey v. Lisle Mfg. Co., supra Frankfort Land Co. v. Hughett, supra Fourth N.B. v. Nashville, C. & St. L. Ry. Co., supra. The Commissioner has failed to establish his right to estop the petitioner to deny that the consents were its consents or to deny any material fact in the case.
However, it does not follow that the consents were invalid or ineffective to extend the statutory period for assessment of the deficiencies for 1924 and 1925. The Delaware corporation was not organized until 1927 and, of course, had no tax liability or income tax questions for the years 1924 and 1925. The Illinois corporation was the taxpayer, and its duly authorized representative had a number of conferences and communications with the Commissioner in which both parties fully understood that they were dealing with the tax liability of the Illinois corporation for the years 1924 and 1925. The parties apparently disregarded the change in name in these conferences and communications. It seems reasonably clear to me, from a consideration of all of the evidence, that both the taxpayer and the Commissioner intended the consents to be valid consents on the part of the taxpayer to the later assessment of its taxes for the years 1924 and 1925. The name used on these consents was the name which both parties had used at all times theretofore in their negotiations and discussions. The officer who signed these consents on the part of the taxpayer was in fact the assistant treasurer of the taxpayer. The use of the seal of the Delaware corporation on the consents seems to have been an error rather than an attempt on the part of the taxpayer to invalidate the consents which it obviously intended to give. Fraud on the part of the corporation should not be imputed. The statute does not require that there be any seal on a consent, and for present purposes, the seal can be regarded as mere surplusage. Cf. Pictorial Printing Co., 12 B. T. A. 1407; reversed, 38 Fed. (2d) 563. The consents were valid consents in writing and served to extend the period for assessing the deficiencies for 1924 and 1925.
SteriihageN, Goodrich, and Leech concur in the above.