AS Kreider Co. v. United States, 6295.

• Decision Date: 27 June 1938
• Docket Number: No. 6295.,6295.
• Citation: 97 F.2d 387
• Parties: A. S. KREIDER CO. v. UNITED STATES.
• Court: U.S. Court of Appeals — Third Circuit

97 F.2d 387 (1938)

A. S. KREIDER CO. v. UNITED STATES.

No. 6295.

Circuit Court of Appeals, Third Circuit.

May 23, 1938.

Rehearing Denied June 27, 1938.

Donald Horne, of New York City, and Douglass D. Storey, of Harrisburg, Pa., for appellant.

James W. Morris, Asst. Atty. Gen., and Sewall Key, Norman D. Keller, Clarence E. Dawson, and Lee A. Jackson, Special Assts. to Atty. Gen.

Before BUFFINGTON, THOMPSON, and BIGGS, Circuit Judges.

THOMPSON, Circuit Judge.

This is an appeal from a judgment of the District Court for the Middle District of Pennsylvania. The taxpayer filed its income and profits tax return for 1920 in 1921 and paid the taxes in quarterly instalments in that year. Waivers filed prior to June 15, 1926 extended the time for assessment of taxes to December 31, 1926. In April, 1926 the Commissioner sent a deficiency notice claiming additional income and profits taxes for 1920 in the sum of $1,362.50. In July, 1926 the Commissioner assessed the additional tax which was paid in the same month. In March, 1929 the taxpayer filed a claim for refund. In September, 1929 the Commissioner filed a schedule of overassessment as follows:

                  Tax assessed
                  Original, Account No. 422,472 ......   $52,481.97
                  Additional July 1926, Page 1
                   Line 5 ............................    1,362.50
                                                        __________
                  Total assessment ...................  $53,844.47
                  Correct tax liability ..............   39,010.79
                                                        __________
                  Overassessment .....................  $14,833.68
                  Barred by Statute of Limitations ...   13,471.18
                                                        __________
                  Overassessment allowable ...........  $ 1,362.50
                  Certificate of Overassessment
                      Number:  2,092,506
                      Allowed: $1,362.50
                      Schedule No. 35778
                

The schedule was received by the taxpayer not later than October, 1929 and was accompanied by a check for $1,362.50, with interest. In March, 1932 the taxpayer instituted suit to recover $13,471.18, with interest, alleged to have been wrongfully withheld by the United States. At this time the Collectors to whom payments had been made were not in office.

The statute invoked by the taxpayer as authority for this suit, commonly known as the Tucker Act, Paragraph 20, Section 24 of the Judicial Code, 28 U.S.C.A. § 41 (20), reads:

"§ 41. The district courts shall have original jurisdiction as follows: * * *

"(20) Concurrent with the Court of Claims, of all claims not exceeding $10,000 * * * of any suit or proceeding commenced after the passage of the Revenue Act of 1921, for the recovery of any internal-revenue tax alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority or any sum alleged to have been excessive or in any manner wrongfully collected under the internal-revenue laws even if the claim exceeds $10,000, if the collector of internal revenue by whom such tax, penalty, or sum was collected is dead or is not in office as collector of internal revenue at the time such suit or proceeding is commenced. * * * No suit against the Government of the United States shall be allowed under this paragraph unless the same shall have been brought within six years after the right accrued for which the claim is made. * * *"

This statute granted a taxpayer the right to bring suit in the District Courts for tax refunds naming the United States as defendant even though the amount involved exceeded $10,000 if the Collector to whom payments were made was dead or out of office at the time of suit. Although it is conceded that each of the prerequisites to jurisdiction exists in the instant case the defense is that the statutory period for suit had expired. The United States relies upon R.S. § 3226 (44 Stat. 116, § 1113(a), 26 U.S.C.A. § 156, now 26 U.S.C.A. §§ 1672-1673) which provides: "No such suit or proceeding shall be begun * * * after the expiration of five years from the date of the payment of such tax, penalty, or sum, unless such suit or proceeding is begun within two years after the disallowance of the part of such claim to which such suit or proceeding relates. * * *"

It is obvious from an examination of the relevant dates that whether we consider November, 1921, when the original tax was paid, or July, 1926, when the deficiency was assessed and paid, as the date of the last payment, more than five years from the last payment elapsed prior to suit. It is equally obvious that more than two years elapsed from the date of disallowance of the claim for refund.

R.S. § 3226, however, has been amended by the Tucker Act, supra, so as to permit six years from the final date of payment as the time within which suit may be commenced, when the suit is against the United States and is brought in the District Court. The suit in the instant case was timely within the six-year statutory period. As was said by Mr. Justice Black in Bates Manufacturing Company v. United States of America, 58 S.Ct. 694, 696, 82 L.Ed. ___, opinion filed March 28, 1938:

"The erection of barriers to recovery in the District Courts which did not exist in the Court of Claims would have tended to defeat the prime objectives of the Act. Uniformity and equality in substantial rights and privileges — for claimants in both forums — were essential features in the system. Distinctions between the opportunities for recovery afforded in the two forums would have tended to mar the symmetry of the plan and to impair its effective and successful operation. As to substantial rights, Congress evidently meant to give claimants an identical status in both Courts where the amount in controversy was included in the jurisdiction of both. We find no support in the background or objective of the Act for a construction under which a claimant's rights would be preserved by filing a petition in the Court of Claims, but would be lost — without additional action — in the District Court."

Inasmuch as the Court below decided the procedural issue without passing upon the merits, the judgment is reversed and the cause remanded to the District Court with directions to consider and determine the merits of the controversy.

BIGGS, Circuit Judge (dissenting).

Upon March 15, 1921, the appellant filed its income tax for the calendar year 1920 with the Collector of Internal Revenue for the First District of Pennsylvania. The return so made by the appellant showed income tax due and payable by it in the sum of $52,481.97, which it proceeded to pay in four quarterly instalments.

Before June 15, 1926, the appellant filed an income and profits tax waiver, extending the statutory period of limitations for assessment of taxes for the year 1920, to December 31, 1926.

Upon April 10, 1926, the Commissioner of Internal Revenue informed the appellant in the manner prescribed by law that a deficiency existed in tax paid for the year 1920 in the amount of $1,362.50. Upon July 10, 1926, no appeal having been taken by the appellant to the Board of Tax Appeals, the deficiency was duly assessed by the Commissioner. The amount of the additional tax, viz., $1,362.50, was paid by the appellant upon July 28, 1926; that is to say, the appellant completed the payment of taxes for the year 1920 on July 28, 1926. Upon March 25, 1929, the appellant filed a claim for refund for all of the taxes paid for the year 1920, viz., $53,844.47, composed of two items, the $52,481.97 paid in four quarterly instalments and the additional tax paid July 28, 1926, in the sum of $1,362.50.

Upon September 9, 1929, the Commissioner signed a schedule of overassessment showing a "net amount refundable" to the appellant in the sum of $1,362.50, with interest. The certificate of overassessment was duly mailed to the appellant and is set forth in the majority opinion.

A check in the sum of $1,362.50, with interest, accompanied the certificate of overassessment and was received by the appellant at the same time the certificate of overassessment was received.

A comparison of dates makes it evident that, since the suit at bar to recover the sum of...