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Daube v. United States

289 U.S. 367 Court SCOTUS Decision date 1933-05-08 Docket No. 634 English

Delivered by Cardozo J.

Contents

Majority — Cardozo J.

p. 367
DAUBE v. UNITED STATES.
No. 634.
Argued April 10, 11, 1933. —
Decided May 8, 1933.
Mr. John E. Hughes, with whom Mr. William Cogger was on the-brief, for petitioner.
Mr. Whitney North Seymour, with whom Solicitor General Thacher and Messrs. John MacC. Hudson and William W. Scott were on the brief, for the United States.

delivered the opinion of the Court.

The petitioner brought suit in the Court of Claims upon a claim that for two years, 1918 and 1919, he had overpaid his income tax. As to the tax for 1918, the claim was dismissed upon the merits. As to the tax for

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1919, it was dismissed upon the ground that suit had not been brought within the tipie prescribed by law. 59 F. (2d) 842 ; 1 F. Supp. 771 . A writ of certiorari, restricted to the assessment for 1919, brings the case here.

The Commissioner, upon an audit of the petitioner’s returns, found underassessments for 1916,1917, and 1920, and overassessments for 1918 and 1919. A notice of the résult of the audit was mailed to the petitioner on November 10, 1923, the notice by its terms being provisional and tentative. Later, and on January 31, 1924, the Commissioner signed a schedule of overassessments, $22,151.88 for 1918, and $2,628.26 for 1919, and forwarded the schedule to the Collector of the District of Oklahoma, the petitioner’s residence. In accordance with the practice of the bureau, the Collector was instructed to examine! the accounts of the taxpayer and apply the excess payments as a credit against taxes due for other years. Upon such examination the Collector found that there* were additional assessments, still unpaid, for 1916, 1917, and 1920, in the sum of $11,277.24. This left an excess for 1918 of $10,874.64, and one of $2,628.26 for 1919, a total of $13,502.90. Upon that basis the Collector made out a schedule of refunds and credits, which he returned to the Commissioner with the schedule of overassessments.

At this stage complications developed by reason of the tax liability of a partnership of which petitioner was a member. The partnership owed the Government more than fifty thousand dollars, the amount of an excess profits tax for 1917, though the precise extent of the indebtedness was still undetermined. In anticipation of an assessment, petitioner had filed with the bureau an agreement and direction that any refund due to him individually for the year 1918 (but without mention of any other year) should be applied as a credit upon the taxes owing from the partnership. When the. schedule of refunds and credits came back from the Collector, the Commissioner over

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looked the order, then on file in hi& office, for the merger of the two accounts, and dealt with them a& -.separate. He made an additional assessment against the partnership for $53,012.47. On the same day, March 29, 1924, he signed an approval of the schedule of refunds and credits without applying any part of the overpayment to the partnership liability, and made out a check to the order of the petitioner for $13,502.90, which he mailed to the Collector. The Collector discovered the mistake, and instead of delivering the check returned it to the Commissioner. Thereupon the Commissioner canceled the check, revoked his earlier instructions, and ordered the Collector to apply the overpayments made by the petitioner individually upon the deficiency then owing frbm the members of the partnership. This order was proper to the extent of $10,874.64, the 1918 overpayment, for the credit to that extent was in accordance with the petitioner’s, agreement. It was an error in so far as it included the 1919 overpayment ($2,628.26), for the petitioner’s agreement did- not cover that year. The Collector did. what the Commissioner commanded. No notice, however, of his action was transmitted to the taxpayer. There was no delivery to the taxpayer of a certificate of overassessment. There was no delivery of a copy of any schedule of refunds and credits. Six years went by, almost to the day, without demand or protest. Then, on March 28,1930, the petitioner began this suit, asking judgmeiit for $24,780.14 with interest. He repudiated all the credits against the partnership deT ficiency, as well as other credits which there is no need to go into, for he allowed them later on. At the trial the contest narrowed down to two items. The first, $10,-874.64, is the overpayment for 1918, as it stood before it was applied upon the partnership assessment. The second, $2,628.26, is the overpayment for 1919. The writ of certiorari brings up the second item to the exclusion of any other.
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By § 3226 of the Revised Statutes as amended by the Revenue Act of 1921, no suit may be. maintained for the recovery of any internal revenue,tax erroneously or illegally assessed or collected unless, begun .within five years from the date of payment. Revenue Act of 1921, c. 136, 42 Stat. 268 ; § 1318, amending R.S. § 3226; 26 U.S. Code, § 156. This suit was not brought within the .time so limited. It, is therefore too late, if it is a suit for the recovery of a tax within the meaning of the statute. The petitioner insists that it is not such a suit, but one upon an account stated. The statement of an account gives rise to a new cause of action with a new term of limitation. Bonwit Teller & Co. v. United States, 283 U.S. 258 , 265. We are thus brought to the question whether there was such a statement here.

If the traditional tests, familiar to the law of contracts, are to be accepted as our guide, there was no account stated between Government and taxpayer. No balance was arrived at as the re'sult of computation and agreement. Volkening v. DeGraaf, 81 N.Y. 268 , 271. The Commissioner did not inform the taxpayer that the tax had been overpaid in a determinate amount. The taxpayer did not give assent either expressly or by silence to the outcome of the audit. The'essentials of an account stated in any strict or proper sen^e are lacking altogether. Toland v. Sprague, 12 Pet. 300 , 333; Nutt v. United States, 125 U.S. 650 , 655; Volkening v. DeGraaf, supra; Newburger-Morris Co. v. Talcott, 219 N.Y. 505 , 511, 512; 114 N.E. 846 . A different situation was. disclosed in the Bonwit Teller case, supra. There the certificate of over-assessment had been delivered to the taxpayer. “ Upon delivery of the certificate to plaintiff, there arose the cause of action on which this suit was brought.” Bonwit Teller & Co. v. United States, supra, p. 265. Cf. Wm. J. Friday & Co. v. United States, 61. F. (2d) 370.

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. The argument is made, however, that the allowance of the schedule of refunds and credits on' March 29,' 1924,. was something near to an account stated, something “ equivalent ” thereto, though not the standard article to be marked by the standard label. This doctrine of equivalence is borne out, we are told, by cases in this court and elsewhere, which were cited in the Bonwit Teller case and are again pressed upon us-now. United States v. Kaufman, 96 U.S. 567 , 575; United States v. Savings Bank, 104 U.S. 728 ; First National Bank of Greencastle v. United States, 15 Ct. Cls. 225; They fall short by a great deal of teaching such a lésson. The Kaufman case will serve as typical of the,others, for they" vary little in their facts. The Commissioner of Internal Revenue had been authorized by statute to make allowance to brewers for the value of tax stamps lost or wasted. He did make such an allowance, and certified his ''ruling to the Comptroller of the Treasury. The claimant suing-in the Court of Claims to recover .the amount of the award was met'by the objection that he must prove his claim anew. This court held that the allowance-by the Commissioner'was effective without more to make oüt a prima facie case, and spoke of it as at least “equivalent to"án account stated between private parties^ which is' good’ ‘until impeached for fraud or mistake.” There was no question in-the case as to the effect of the allowance'in'lifting the bar of a statute of limitaÜQns. The claim, had been seasonably filed and diligently pressed. There was no question as to the effeet of revocation or rescission! Cf. Ridgway v. United States, 18 Ct. Cls. 707, 714, 715. What had been done by the Commissioner had never been undone. There was only the question as to the probative force of an adjudication by an officer .who. had been appointed to decide and had definitively decided. The statute had given him the- position of an administrative tri
p. 372
bunal. He had done all that he could do. He had made the allowance and had certified his action to the disbursing agents of the treasury, whose duty was not to revise, but merely to obey. Notice of his action had been given to ' the 'claimant, who had accepted and approved' it. Kaufman v. United States, 11 Ct. Cls. 659, 662. The suit was on an award which had all the finality and authority that an award could ever gain.

A very different situation is laid before us here. No definitive adjudication in favor of this taxpayer was ever made by the Commissioner or by other competent authority. The transaction never went beyond the stage of intradepartmejqtal conference' and parley. - The Commissioner had put his hand, it is true, to a schedule of refunds and credits, and had transmitted a check to one of his subordinates to be delivered to the claimant. By none of these acts had he so divested himself of. control as to gener-r ate rights or interests in favor of the taxpayer if there was revocation or rescission in advance of notice or delivery. There had been messages back and forth between the officers and branches of an. administrative, bureau. There had been none to the outer, world. The Commissioner, after sigiiing the schedule, might scratch out his signature, and declare it inadvertent. Cf. Ridgway v. United States, supra; Austin Co. v. Commissioner, 35 F. (2d) 910 . This in substance is what he did'. After signing a check and mailihg it to his agent, he might cancel the check .while the agent still held it, and revoke the authority improvidently granted. The matter was still in fieri.

. High public interests make it necessary that there be stability and certainty in. the revenues of government. These ends are not. susceptible of attainment if periods of limitation may be. disregarded or extended. By the ruling in the Bgnwit Teller case a specific limitation applicable to claims for the recovery of taxes is set aside and superseded whenever the statement of an account sustains the

p. 373
inference of an agreement that the tax shall be rqpaicL •As soon as this appears,-a fresh term of limitation is.born and set in motion. It is a ruling nót to be extended through an enlargement of the concept of an account stated by latitudinarian construction.

Girard Trust Co. v. United States, 270 U.S. 163 , and United States v. Swift & Co., 282 U.S. 468 , are pressed upon us by counsel as helpful to the taxpayer. They do not touch the case at hand. In the case of the Girard Trust Co., a statute called fob interest, on the amount of the refund to the date of allowance. The claimant made the point that’ allowance was not perfected unless accompanied by payment, and that interest on the refund should be correspondingly extended. The court rejecting that contention held that allowance was complete within the meaning of the statute when the schedule, of refunds was approved by the Commissioner. -In the case of Swift & Co., a like ruling was made as to the effect of the approval 'of a credit. «In neither case was ■ there, any question as to the existence of an account stated, or as to the effect of an imprqvidént allowance, unknown to the taxpayer.

The judgment is Affirm,ed.

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