Graham v. Goodcell Oak Worsted Mills v. United States Taft Woolen Co v. Same Second Nat Bank of Saginaw v. Same Boston Pressed Metal Co v. Same Daniel Reeves v. Anderson Jennings v. Same Wright Taylor v. Lucas Eastern Equities Corporation v. United States 11, 1930
| Decision Date | 26 January 1931 |
| Docket Number | No. 104,No. 105,No. 519,No. 36,No. 463,No. 337,No. 529,No. 323,No. 565,36,104,105,323,337,463,529,565,519 |
| Citation | 282 U.S. 409,51 S.Ct. 186,75 L.Ed. 415 |
| Parties | GRAHAM et al. v. GOODCELL. OAK WORSTED MILLS v. UNITED STATES. TAFT WOOLEN CO. v. SAME. SECOND NAT. BANK OF SAGINAW v. SAME. BOSTON PRESSED METAL CO. v. SAME DANIEL REEVES, Inc., v. ANDERSON, Collector of Internal Revenue. JENNINGS v. SAME. WRIGHT & TAYLOR, Inc., v. LUCAS, Collector of Internal Revenue. EASTERN EQUITIES CORPORATION v. UNITED STATES. Argued Dec. 8-11, 1930 |
| Court | U.S. Supreme Court |
[Syllabus from pages 409-412 intentionally omitted] Mr. John E. Hughes, of Chicago, Ill., for petitioners.
The Attorney General and Mr. G. A. Youngquist, Asst. Atty. Gen., for respondent.
Mr. Theodore B. Benson and William Meyerhoff, both of Washington, D. C., for petitioner.
The Attorney General, and Mr. Chas. B. Rugg, Asst. Atty. Gen., for the United States.
Messrs. Theodore B. Benson and Guil Barber, both of Washington, D. C., Chester F. Williams, of Milford, Mass., William Meyerhoff and Percy A. Matthews, both of Washington, D. C., Frederick G. Fischer, of New York City, and Frank J. Albus, of Washington, D. C., for petitioner.
The Attorney General, and Messrs. Thomas D. Thacher, Sol. Gen., of Washington, D. C., Chas. B. Rugg, Asst. Atty. Gen., Claude R. Branch, of Providence, R. I., George H. Foster and Erwin N. Griswold, both of Washington, D. C., and Bradley B. Gilman, of Worcester, Mass., for the United States.
Mr. W. A. Sutherland, of Fresno, Cal., for petitioner.
The Attorney General and Mr. Chas. B. Rugg, Asst. Atty. Gen., for the United States.
Mr. Harry Friedman, of Washington, D. C., for petitioner.
The Attorney General and Mr. Chas. B. Rugg, Asst. Atty. Gen., for the United States.
Messrs. Elkan Turk and Herman Goldman, both of New York City, for petitioner.
Mr. G. A. Youngquist, Asst. Atty. Gen., for respondent.
Messrs. Ewing Everett, of New York City, and Robert N. Miller and J. Robert Sherrod, both of Washington, D. C., for petitioner.
The Attorney General, and Messrs. Thomas D. Thacher, Sol. Gen., of Washington, D. C., G. A. Youngquist, Asst. Atty. Gen., Claude R. Branch, of Providence, R. I., and Norman D. Keller, John MacC. Hudson, and Erwin N. Griswold, all of Washington, D. C., for respondent.
Messrs. Donald V. Hunter and Robert N. Miller, both of Washington, D. C., for petitioner.
The Attorney General and Mr. G. A. Youngquist, Asst. Atty. Gen., for respondent.
Mr. Robert E. Goodwin, of Boston, Mass., for petitioner.
Mr. G. A. Youngquist, Asst. Atty. Gen., for the United States.
These cases involve the question of the effect and validity of section 611, which is to be read in connection with section 607, of the Revenue Act of 1928 (c. 852, 45 Stat. 791, 874, 875 (26 USCA §§ 2607, 2611)).1
No. 36, Graham et al. v. Goodcell, is typical of this group of cases. On March 22, 1918, petitioners filed their partnership income and excess-profits tax returns for the year 1917 and paid the taxes thereby shown to be due. Additional taxes were assessed by the Commissioner of Internal Revenue in January, 1920. The petitioners filed a claim for the abatement of this assessment on February 11, 1920, and the Commissioner rejected the claim on December 27, 1922. Under section 250(d) of the Revenue Act of 1921 (c. 136, 42 Stat. 227, 265), the five-year period for the collection of the taxes for 1917 expired on March 22, 1923. The Collector served notice and demand for payment on November 19, 1924, threatening distraint, and on November 29, 1924, and December 3, 1924, the petitioners paid the additional taxes under protest. On September 25, 1925, they filed a claim for refund upon the ground that the taxes were collected after the statute of limitations had run. The claim was rejected by the Commissioner on January 13, 1926, and this suit to recover the money paid was brought on December 23, 1927, in the District Court of the United States for the Southern District of California. The judgment entered in favor of the petitioners by the District Court was reversed by the Circuit Court of Appeals for the Ninth Circuit, 35 F.(2d) 586. This Court granted a writ of certiorari, 281 U. S. 708, 50 S. Ct. 240, 74 L. Ed. 1131.
There are variations in the other cases, but the determining features are the same. A claim in abatement was filed and collection was delayed; the collection was made after the statute of limitations had run, and before the enactment of the Act of 1928. In some of the cases, the suit to recover the amount paid was brought after, and in other cases before, the Act of 1928 became a law on May 29, 1928. The suits were either in the Court of Claims against the United States, or in the District Courts of the United States against the Collector, either individually or officially, or in both capacities. In all these cases the decisions below were in favor of the Government2 and writs of certiorari were issued by this Court.3 The contentions presented are, in substance, that sections 607 and 611 of the Revenue Act of 1928 (26 USCA §§ 2607, 2611) do not apply retroactively; that their provisions are not applicable to payments made under duress; that the stay contemplated by section 611 is not a mere voluntary delay in collecting the tax; that these sections were intended to control administrative action only and not to affect judicial proceedings; that section 611 should not be construed to apply to a personal action against the Collector to recover taxes illegally collected; that section 611 was repealed by the Act of May 29, 1928, c. 901, § 3, 45 Stat. 986, 996 (26 USCA § 149); that section 250(d) of the Revenue Act of 1921 (42 Stat. 265) extinguished the liability for taxes upon the expiration of the five-year period specified; that the Congress having extinguished the liability had no power under the Fifth Amendment of the Constitution to revive it; and that, if section 611 is construed to authorize the collection of the tax in the circumstances shown, it further violates the Fifth Amendment because the statute is unreasonable and arbitrary.
First. As to the construction of the statute: Section 607 provides that a tax assessed or paid after the expiration of the period of limitation applicable thereto shall be considered an 'overpayment' and shall be credited or refunded to the taxpayer, if claim therefor is duly filed. Section 611 enacts a qualification by providing that in stated circumstances the payment of the tax shall not be considered an overpayment under the provisions of section 607. These circumstances are (a) an assessment of the tax within the time applicable thereto and before June 2, 1924, (b) the filing of a claim in abatement, (c) the stay of the collection of any part of the tax, and (d) the payment of such part of the tax before, or within one year after, the enactment of the Act of 1928.
The occasion for this legislation, and the general purpose of the Congress in enacting it, are apparent. The Revenue Act of 1918, by section 250(d), (c. 18, 40 Stat. 1057, 1083) provided that 'no suit or proceeding' for the collection of taxes should be begun 'after the expiration of five years after the date when the return was due or was made.' This provision applied only to taxes assessed under that Act. Section 250(d) of the Revenue Act of 1921 (c. 136, 42 Stat. 227, 265) prescribed the same period of limitation for collection by suit or proceeding, and the provision was made applicable to the collection of taxes both under that Act and under prior income, excess-profits, or war-profits tax Acts, the five years running from the date of the filing of the return. The Treasury Department ruled that this limitation applied only to judicial proceedings and not to collection by distraint, the common method of enforcing payment.4 Section 1106(a) of the Revenue Act of 1926 (c. 27, 44 Stat. 9, 113 (26 USCA § 1249 note)) provided that the statute of limitations should 'not only operate to bar the remedy' but should 'extinguish the liability,' but that 'no credit or refund in respect of such tax' should be allowed unless the taxpayer had 'overpaid the tax.' In Bowers v. New York & Albany Lighterage Co., 273 U. S. 346, 47 S. Ct. 389, 71 L. Ed. 676 (decided February 21, 1927), this court held that the period of limitation fixed by section 250(d) of the Revenue Act of 1921 did apply to collection by distraint proceedings. It thus appeared that many of the collections theretofore made had been barred by the statute, and suits were brought to recover the moneys paid.5 In many cases claims in abatement had been filed and proceedings for collection had been delayed until the claims had been acted upon, and thereupon the taxes had been collected despite the fact that the statute of limitations had run. Large amounts had been paid into the Treasury in this way, and it was the purpose of the Congress that payments made in the circumstances described in section 611 of the Revenue Act of 1928 (26 USCA § 2611) should not be refunded.6
The petitioners urge that section 611, read in its relation to section 607, was intended to apply only prospectively, that is, to action to be taken by the Treasury Department on refund claims filed after the enactment of the Act. Stress is laid upon the language of section 607 that a payment made after the expiration of the period of limitation 'shall be considered' an overpayment and 'shall be credited or refunded' if claim therefor 'is filed.' But section 611 was manifestly intended to operate retroactively according to its terms. That is, it expressly applied to internal revenue taxes which had been assessed prior to June 2, 1924, and within the period of limitation applicable to the assessment. The section applied to taxes, so assessed, which had been paid before the enactment of the Act of 1928, as...
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...subject to the limitations imposed by the Fifth Amendment. The following language of Chief Justice Hughes, in Graham v. Goodcell, 282 U.S. 409, 431, 51 S.Ct. 186, 194, 75 L.Ed. 415, implies that the power of Congress to withdraw remedies is not unlimited: "If the Congress did not have the a......
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