Angelus Milling Co v. Commissioner of Internal Revenue

• Decision Date: 21 May 1945
• Docket Number: No. 610,610
• Citation: 65 S.Ct. 1162,89 L.Ed. 1619,325 U.S. 293
• Parties: ANGELUS MILLING CO. v. COMMISSIONER OF INTERNAL REVENUE
• Court: U.S. Supreme Court

325 U.S. 293

65 S.Ct. 1162

89 L.Ed. 1619

ANGELUS MILLING CO.

v COMMISSIONER OF INTERNAL REVENUE

No. 610.

Argued March 7, 8, 1945.

Decided May 21, 1945.

Rehearing Denied June 18, 1945.

See 325 U.S. 895, 65 S.Ct. 1562.

Mr. Prew Savoy, of Washington, D.C., for petitioner.

Mr. J. Louis Monarch, of Washington, D.C., for respondent.

Mr. Justice FRANKFURTER delivered the opinion of the Court.

This is a suit under Title VII of the Revenue Act of 1936, 49 Stat. 1648, 1747, 7 U.S.C. § 644 et seq., 7 U.S.C.A. § 644 et seq., for a refund of processing taxes paid under the Agricultural Adjustment Act of 1933. The problem of the case derives from the procedural requirements of a claim for such a refund.

The petitioner, Angelus Milling Company, known until June, 1933 as the Middleport Flour Mills, Inc., was a processor of wheat, with its principal office in Niagara Falls, New York. During the years for which the refund is claimed—1933 to 1936—its processing operations were closely connected with those of the Niagara Falls Milling Company. The two companies had the same officers, employees, and majority stockholder, and a joint bank account. They also had a common set of books, but the respective transactions of the two companies—purchases, costs of manufacture, sales—were entered in their separate accounts on the books. Between July 9, 1933, and January 31, 1935, the companies filed joint processing tax returns. Between February 1, 1935, and November 31, 1935, Niagara filed returns in its name on behalf of itself and petitioner.

After United States v. Butler, 297 U.S. 1, 56 S.Ct. 312, 80 L.Ed. 477, 102 A.L.R. 914, invalidated the processing tax, three claims were filed with the Commissioner on June 22, 1936, all stating the name of the taxpayer and claimant as 'Niagara Falls Milling Co., Inc., and/or Middleport Flour Mills, Inc.' Each of these claims is for only part of the period during which the tax was paid, and their total is $434,045.27. Admittedly the form of these claims did not satisfy the requirements of the statute¹ or the authorized Treasury Regulations.² They were filed on an old Form 843 and not on the required Form P.T. 79. While these claims were still undetermined, Niagara, on June 30, 1937, filed a claim in the sum of $436,231.73. This claim was in due form but was filed by Niagara on its own behalf alone. Thereafter, on August 15, 1938, petitioner filed a claim, designated 'Amendment to Claim', for itself alone for the refund of $145,839.12. While this claim was submitted on Form P.T. 79, it failed to give the information required by the form and the regulations, containing merely an apportionment between Angelus and Niagara of the three earlier claims. An attached affidavit stated that this claim 'was originally filed on the 22nd day of June 1936 in the name of the Niagara Falls Milling Company and/or Middleport Flour Mills, Inc.' The Commissioner, on May 23, 1941, denied this claim.

To review this disallowance, petitioner brought proceedings in the United States Processing Tax Board of Review. A motion to dismiss, because of a fatal defect in the claim, was denied by the Board, but the Commissioner in his answer stood on his ground that the Board was without jurisdiction to entertain the proceedings. At this stage in the litigation Congress abolished the Processing Tax Board of Review and transferred its jurisdiction to the present Tax Court. That Court granted the Commissioner's renewed motion to dismiss, 1 T.C. 1031, and the Circuit Court of Appeals for the Second Circuit affirmed. 144 F.2d 469. We brought the case here, 323 U.S. 703, 65 S.Ct. 268, because conflict was urged with the decision in United States v. Memphis Cotton Oil Co., 288 U.S. 62, 53 S.Ct. 278, 77 L.Ed. 619.³

Petitioner's claim for recovering processing taxes paid by it was properly rejected by the Commissioner if it did not satisfy the conditions which Congress directly and through the rule-making power given to the Treasury laid down as a prerequisite for such refund Insofar as Congress has made explicit statutory requirements, they must be observed and are beyond the dispensing power of Treasury officials. Tucker v. Alexander, 275 U.S. 228, 231, 232, 48 S.Ct. 45, 46, 72 L.Ed. 253; United States v. Memphis Cotton Oil Co., 288 U.S. 62, 71, 53 S.Ct. 278, 281, 77 L.Ed. 619; United States v. Garbutt Oil Co., 302 U.S. 528, 533, 58 S.Ct. 320, 323, 82 L.Ed. 405. Without needless elaboration, we conclude that there is nothing in what Congress has explicitly commanded to bar the claim. The effective administration of these modern complicated revenue measures inescapably leads Congress to authorize detailed administrative regulations by the Commissioner of Internal Revenue. He may insist upon full compliance with his regulations. See United States v. Memphis Cotton Oil Co., supra, 288 U.S. at page 71, 53 S.Ct. at page 281, 77 L.Ed. 619; Commissioner of Internal Revenue v. Lane-Wells Co., 321 U.S. 219, 223, 224, 64 S.Ct. 511, 513, 88 L.Ed. 684. It is hardly contended that the confusing series of petitioner's claims which we have summarized, whether singly or in conjunction, obeyed the regulations. For such default the Commissioner could have rejected the claims out of hand. He did not do that, and by what he did do he has given rise to the contention that he waived the requirement of his regulations. The basis of this claim of waiver is that the Commissioner through his agents dispensed with the formal requirements of a claim by investigating its merits.

Candor does not permit one to say that the power of the Commissioner to waive defects in claims for refund is a subject made crystal-clear by the authorities. The question has been somewhat complicated by cases involving amendments of claim. Thus, in United States v. Memphis Cotton Oil Co., supra, a claimant's amendment was allowed because filed before his original claim was rejected on formal grounds. According to what was there said there can be no amendment after a rejection though the Commissioner had examined the claimant's books and tentatively found an overpayment. See Edwards v. Malley, 1 Cir., 109 F.2d 640; 10 Mertens, Law of Federal Income Taxation (1942) § 58.19. It smacks too much of the strangling niceties of common law pleading to find no existing claim to which a curative amendment may be attached, although there has been an examination of the merits, simply because of the prior rejection of a formally defective claim and yet find waiver of a formal defect merely because an examination of the merits by the Commissioner manifests consideration of the claim.

Treasury Regulations are calculated to avoid dilatory, careless, and wasteful fiscal administration by barring incomplete or confusing claims. Tucker v. Alexander, supra, 275 U.S. at page 231, 48 S.Ct. at page 46, 72 L.Ed. 253; Commissioner v. Lane-Wells Co., supra, 321 U.S. at page 223, 224, 64 S.Ct. at page 513, 88 L.Ed. 684. But Congress has given the Treasury this rule-making power for self-protection and not for self-imprisonment. If the Commissioner...