Stern Bros. & Co. v. Burnet

• Decision Date: 13 July 1931
• Docket Number: No. 9046.,9046.
• Citation: 51 F.2d 1042
• Court: U.S. Court of Appeals — Eighth Circuit
• Parties: STERN BROS. & CO. v. BURNET, Commissioner of Internal Revenue.

51 F.2d 1042 (1931)

STERN BROS. & CO. v. BURNET, Commissioner of Internal Revenue.

No. 9046.

Circuit Court of Appeals, Eighth Circuit.

July 13, 1931.

Paul R. Stinson, of Kansas City, Mo. (I. P. Ryland, Arthur Mag, Roy B. Thomson, and Leslie C. Thurman, all of Kansas City, Mo., on the brief), for petitioner.

A. G. Divet, Sp. Asst. to Atty. Gen. (G. A. Youngquist, Asst. Atty. Gen., Sewall Key, and S. Dee Hanson, Sp. Assts. to Atty. Gen., and C. M. Charest, Gen. Counsel, Bureau of Internal Revenue, and Stanley A. Suydam, Sp. Atty., Bureau of Internal Revenue, both of Washington, D. C., on the brief), for respondent.

Before STONE and GARDNER, Circuit Judges, and MARTINEAU, District Judge.

STONE, Circuit Judge.

This is a petition to review a decision of the Board of Tax Appeals affirming a deficiency redetermination of taxes of the petitioner. There is no dispute that the amount of taxes claimed by the Government is proper. The only controversy is whether the assessment and collection of this deficiency is barred by limitations. It is conceded that it is so barred unless extended by two waivers. Therefore the real issues are as to the term of extension by these two waivers and as to the validity and binding effect of the waivers themselves.

Petitioner contends that the waivers are invalid for various reasons to be hereinafter noted, but that, even if valid, they do not suffice to extend the term to include the assessment and collection. Whether they do so extend the term or not depends upon the construction of the last sentence of the second waiver. The first waiver is as follows:

"January 9, 1924 (Date) "Received "Feb. 19 1924 "Special Assessment Section

"Income and Profits Tax Waiver.

"In pursuance of the provisions of subdivision (d) of Section 250 of the Revenue Act of 1921, Stern Bros. & Co. of Kansas City, Mo. and the Commissioner of Internal Revenue, hereby consent to a determination, assessment, and collection of the amount of income, excess-profits, or war-profits taxes due under any return made by or on behalf of the said corporation for the year 1918 under the Revenue Act of 1921, or under prior income, excess-profits, or war-profits tax Acts, or under Section 38 of the Act entitled `An Act to provide revenue, equalize duties, and encourage the industries of the United States, and for other purposes', approved August 5, 1909. This waiver is in effect from one year from the date it is signed by the taxpayer.

"Stern Brothers & Company "Corporate Seal Taxpayer "By Sigmund Stern, Pres "By Morris Stern, V. P "D. H. Blair, Commissioner.

"If this waiver is executed on behalf of a corporation, it must be signed by such officer or officers of the corporation as are empowered under the laws of the State in which the corporation is located to sign for the corporation, in addition to which, the seal, if any, of the corporation must be affixed."

The second waiver is as follows:

"January 19, 1924 (Date) "Received "Feb. 19 1924 "Special Assessment Section

"Income and Profits Tax Waiver.

"In pursuance of the provisions of subdivision (d) of Section 250 of the Revenue Act of 1921, Stern Brothers and Company of Kansas City, Mo., and the Commissioner of Internal Revenue, hereby consent to a determination, assessment, and collection of the amount of income, excess-profits, or war-profits taxes due under any return by or on behalf of the said Stern Brothers and Co. for the year 1918 under the Revenue Act of 1921, or under prior income, excess-profits, or war-profits tax Acts, or under Section 38 of the Act entitled `An act to provide revenue, equalize duties, and encourage the industries of the United States, and for other purposes', approved August 5, 1909. This waiver is in effect from the date it is signed by the taxpayer and will remain in effect for a period of one year after the expiration of the statutory period of limitation, or the statutory period of limitation as extended by any waivers already on file with the Bureau, within which assessments of taxes may be made for the year or years mentioned.

"Stern Brothers & Company "Corporate Seal Taxpayer, "By Sigmund Stern, Pres. "By M. Stern, V. P. "D. H. Blair, Commissioner MB "Distribution Center "Jan. 22, 1924 "P. U. & P. S. Section

"If this waiver is executed on behalf of a corporation, it must be signed by such officer or officers of the corporation as are empowered under the laws of the State in which the corporation is located to sign for the corporation, in addition to which, the seal, if any, of the corporation must be affixed."

The controverted question as to the proper construction of the last sentence of the second waiver is whether it served to extend the time for one year after the expiration of the statutory period, as extended by the first waiver. The argument is that the five-year limitation period had not expired at the time the second waiver was made, and therefore there was no need nor occasion for a further extension of that period by any previous or existing waiver, and that it was not the intention of the parties to make such additional extension, but that the sentence should be understood as meaning only that the assessment and collection "may still be made `within' the period as extended by any waivers then on file." Such a construction as contended for does obvious violence to the language here used and to the application of that language to the situation. Taking the language alone, of the above sentence, it is clearly in the alternative, one of which is that it shall remain in effect "for a period of one year after * * * the statutory period of limitation as extended by any waivers already on file with the Bureau." No other meaning can be given this language except that the above waiver not only extended the period for one year after the statutory period of limitation, but for one year after any existing extension of the statutory period by waiver on file with the Bureau. When the application of this wording to the situation is considered, the meaning of the above sentence is further sustained. This situation is that there was actually on file with the Bureau a waiver which extended the period for one year after the statutory limitation. Not only is it significant that the language of the first and second waivers are different in this particular, but there could be no possible purpose in the second waiver if given the meaning contended for by the petitioner, since it...