Anderson v. PW Madsen Inv. Co., No. 1037.

CourtUnited States Courts of Appeals. United States Court of Appeals (10th Circuit)
Writing for the CourtPHILLIPS, McDERMOTT, and BRATTON, Circuit
Citation72 F.2d 768
PartiesANDERSON, Collector of Internal Revenue, v. P. W. MADSEN INV. CO.
Decision Date18 August 1934
Docket NumberNo. 1037.

72 F.2d 768 (1934)

ANDERSON, Collector of Internal Revenue,
v.
P. W. MADSEN INV.
CO.

No. 1037.

Circuit Court of Appeals, Tenth Circuit.

August 18, 1934.


72 F.2d 769

S. E. Blackham and Wm. B. Waldo, Sp. Assts. to the Atty. Gen. (Frank J. Wideman, Asst. Atty. Gen., Sewall Key, Sp. Asst. to the Atty. Gen. and Dan B. Shields, U. S. Atty., of Salt Lake City, Utah, on the brief), for appellant.

John Enrietto, of Washington, D. C. (Chas. D. Hamel, Alan E. Gray, and Hamel, Park & Saunders, all of Washington, D. C., on the brief), for appellee.

Before PHILLIPS, McDERMOTT, and BRATTON, Circuit Judges.

PHILLIPS, Circuit Judge.

On March 14, 1927, the Madsen Company filed its income tax return for the year 1926. On September 28, 1928, it executed and delivered to the Collector of Internal Revenue a closing agreement as to the final determination of its tax liability for 1926, fixing it at $19,613.66. On December 28, 1928, H. F. Mires as Acting Commissioner signed the agreement, and on December 31, 1928, it was approved by Henry Herrick Bond as Acting Secretary of the Treasury. On January 3, 1929, the Commissioner forwarded one copy of the agreement to the Madsen Company.

In its return the Madsen Company included $97,340 received as dividends from a building and loan association.

In United States v. Cambridge L. & B. Co., 278 U. S. 55, 49 S. Ct. 39, 73 L. Ed. 180, decided November 19, 1928, the court held that earnings of a building and loan association were exempt under the provisions of section 231 (4), Revenue Act 1926, 26 US CA § 982 (4). It follows that the dividends returned were deductible under section 234 (a) (6), Revenue Act 1926, 26 USCA § 986 (a) (6).

The Madsen Company filed a claim for a refund of $13,040.90 setting forth that there was included in its return $97,340 received as dividends from a building and loan association, which should have been allowed as a deduction. After more than six months had elapsed without any action being taken on the claim, this action was filed to recover $13,040.90, as an overpayment.

In his answer the Collector pleaded the closing agreement as a defense.

In its reply the Madsen Company alleged that the closing agreement was executed by it because of certain representations made by an internal revenue agent which were contrary to fact and law, that it was not executed in accordance with section 606, Revenue Act 1928;1 and that it lacked the necessary prerequisites prescribed by that section.

Mires was not authorized in writing by the Commissioner to execute the agreement.

At the trial the Collector offered the closing

72 F.2d 770
agreement in evidence. The trial court held that, absent an authorization in writing by the Commissioner to an officer or employee of the bureau, only the Commissioner could execute the agreement and only the Secretary or Under-secretary could approve it, and rejected the offer

Judgment for the Madsen Company followed, and the Collector appealed.

To be valid a closing agreement must be entered into in accordance with the formal requirements of section 606, supra. Botany Worsted Mills v. United States, 278 U. S. 282, 288, 289, 49 S. Ct. 129, 73 L. Ed. 379. When a statute limits a thing to be done in a particular manner, it includes the negative of any other mode. Botany Worsted Mills v. United States, supra; Raleigh, etc., R. Co. v. Reid, 13 Wall. 269, 270, 20 L. Ed. 570.

It is plain that Congress did not intend to entrust the making of closing agreements, which preclude both the taxpayer and the government from thereafter reopening the case as to matters agreed upon, except upon a showing of fraud or malfeasance or misrepresentation of a material fact, to the action of subordinate officials in the bureau.

Does the statute prescribe that only the Commissioner may execute such an agreement or designate in writing an officer or employee of the bureau to do so, and that only the Secretary or Under-secretary may approve such an agreement? Or may one who is authorized to perform the duties of Commissioner during a vacancy in that office or during the absence or inability of the Commissioner to act, during the existence of one of those conditions, execute the agreement; and may one who is authorized to perform the duties of Secretary or Under-secretary during a vacancy in those offices or during the absence or inability of such officers to act, during the existence of one of those conditions, approve such an agreement?

While the Congress intended to make formal action by the head of the bureau or department essential to the validity of such agreements, and to definitely fix the responsibility therefor, we do not think it intended that times should exist when, because of vacancies in the offices of Commissioner, Secretary, and Under-secretary, or in the absence of such officials, the department would be unable to execute or approve such agreements. Vacancies do occur in those offices, and there are times when such officers are absent or ill, or unable to act. The Congress provided that...

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10 practice notes
  • Sanders v. Commissioner of Internal Revenue, No. 4968-4970
    • United States
    • United States Courts of Appeals. United States Court of Appeals (10th Circuit)
    • September 30, 1955
    ...the statute. Botany Worsted Mills v. United States, 278 U.S. 282, 49 S.Ct. 129, 73 L.Ed. 379; Anderson v. P. W. Madsen Inv. Co., 10 Cir., 72 F.2d 768; Bank of New York v. United States, 3 Cir., 170 F.2d 20; Joyce v. Gentsch, 6 Cir., 141 F.2d 891; Brast v. Winding Gulf Colliery Co., 4 Cir., ......
  • Cooper Agency v. United States, Civ. A. No. 68-533.
    • United States
    • United States District Courts. 4th Circuit. United States District Court of South Carolina
    • July 16, 1969
    ...178 F.Supp. 426, 432. 6 Compliance is presumed in the absence of a contrary showing. Anderson v. P. W. Madsen Inv. Co. (C.C.A.Utah 1934) 72 F.2d 768, 771. Or, as phrased in Stearns Co. v. United States (1934) 291 U.S. 54, 64, 54 S.Ct. 325, 78 L.Ed. 647, there is always a "presumption o......
  • United States v. Shafer, Civ. No. 8218.
    • United States
    • United States District Courts. 4th Circuit. United States District Court (Maryland)
    • June 17, 1955
    ...of those conditions will be presumed in the absence of a contrary showing." Anderson v. P. W. Madsen Investment Co., 10 Cir., 72 F.2d 768, at page 771. See also U. S. v. Signore, 7 Cir., 115 F.2d 669, 672; Ryan v. U. S., 136 U.S. 68, 81, 10 S.Ct. 913, 34 L.Ed. 447; U. S. v. Eighty Acre......
  • United States v. Eighty Acres of Land, No. 3144.
    • United States
    • United States District Courts. 7th Circuit. United States District Court of Northern District of Indiana
    • January 28, 1939
    ...F. 256; Crane v. Nichols, D.C., 1 F.2d 33, 36; Aderhold v. Menefee, 5 Cir., 67 F.2d 345; Anderson v. P. W. Madsen Investment Co., 10 Cir., 72 F.2d 768; Ryan v. United States, 136 U.S. 68, 10 S.Ct. 913, 34 L.Ed. That the Acting Secretary of Agriculture did make such investigation and determi......
  • Request a trial to view additional results
10 cases
  • Sanders v. Commissioner of Internal Revenue, No. 4968-4970
    • United States
    • United States Courts of Appeals. United States Court of Appeals (10th Circuit)
    • September 30, 1955
    ...the statute. Botany Worsted Mills v. United States, 278 U.S. 282, 49 S.Ct. 129, 73 L.Ed. 379; Anderson v. P. W. Madsen Inv. Co., 10 Cir., 72 F.2d 768; Bank of New York v. United States, 3 Cir., 170 F.2d 20; Joyce v. Gentsch, 6 Cir., 141 F.2d 891; Brast v. Winding Gulf Colliery Co., 4 Cir., ......
  • Cooper Agency v. United States, Civ. A. No. 68-533.
    • United States
    • United States District Courts. 4th Circuit. United States District Court of South Carolina
    • July 16, 1969
    ...178 F.Supp. 426, 432. 6 Compliance is presumed in the absence of a contrary showing. Anderson v. P. W. Madsen Inv. Co. (C.C.A.Utah 1934) 72 F.2d 768, 771. Or, as phrased in Stearns Co. v. United States (1934) 291 U.S. 54, 64, 54 S.Ct. 325, 78 L.Ed. 647, there is always a "presumption of off......
  • United States v. Shafer, Civ. No. 8218.
    • United States
    • United States District Courts. 4th Circuit. United States District Court (Maryland)
    • June 17, 1955
    ...existence of those conditions will be presumed in the absence of a contrary showing." Anderson v. P. W. Madsen Investment Co., 10 Cir., 72 F.2d 768, at page 771. See also U. S. v. Signore, 7 Cir., 115 F.2d 669, 672; Ryan v. U. S., 136 U.S. 68, 81, 10 S.Ct. 913, 34 L.Ed. 447; U. S. v. Eighty......
  • United States v. Eighty Acres of Land, No. 3144.
    • United States
    • United States District Courts. 7th Circuit. United States District Court of Northern District of Indiana
    • January 28, 1939
    ...F. 256; Crane v. Nichols, D.C., 1 F.2d 33, 36; Aderhold v. Menefee, 5 Cir., 67 F.2d 345; Anderson v. P. W. Madsen Investment Co., 10 Cir., 72 F.2d 768; Ryan v. United States, 136 U.S. 68, 10 S.Ct. 913, 34 L.Ed. That the Acting Secretary of Agriculture did make such investigation and determi......
  • Request a trial to view additional results

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