Brast v. Winding Gulf Colliery Co., 4189.
| Decision Date | 04 January 1938 |
| Docket Number | No. 4189.,4189. |
| Citation | 94 F.2d 179 |
| Parties | BRAST v. WINDING GULF COLLIERY CO. |
| Court | U.S. Court of Appeals — Fourth Circuit |
S. Dee Hanson, Sp. Asst. to Atty. Gen. (James W. Morris, Asst. Atty. Gen., and Sewall Key and Norman D. Keller, Sp. Assts. to Atty. Gen., on the brief), for appellant.
E. L. Greever, of Tazewell, Va. (Chas. P. Gillespie, of Tazewell, Va., on the brief), for appellee.
Before PARKER, NORTHCOTT, and SOPER, Circuit Judges.
This is an action at law instituted in October, 1931, in the District Court of the United States for the Northern District of West Virginia, by the appellee, Winding Gulf Colliery Company, a corporation, here referred to as the plaintiff, against Edwin A. Brast, individually and as collector of internal revenue for the collection district of West Virginia, here referred to as the defendant. The object of the suit was to recover excess corporation income and profits taxes for the years 1919, 1920, and 1926. (The defendant, however, does not question the recovery for the year 1926, only the recovery for the years 1919 and 1920 are involved). The defendant filed a special plea to which the plaintiff replied specially, and in March, 1933, a stipulation was filed submitting the case to the judge, in lieu of a jury, to decide and determine all issues of fact, as well as law. A hearing was had at which a number of witnesses were examined. On February 21, 1936, the trial judge filed a written opinion finding for the plaintiff, 13 F.Supp. 743, and on May 28, 1936, an order was entered giving judgment for the plaintiff for excess taxes paid for the years 1919 and 1920, in the amount of $27,224.34, with interest. From this action of the court below this appeal was brought.
There is no dispute as to the facts as stipulated and found by the court. The plaintiff is a West Virginia corporation owning and operating coal mines in the state of West Virginia and the defendant was, at the time the action was instituted, collector of internal revenue for the collection district of West Virginia.
The plaintiff duly filed its returns and amended returns of corporation income and profits taxes for the years 1919 and 1920, and the Commissioner of Internal Revenue, as a result of an audit of the returns, on August 24, 1925, made a determination that there was a deficiency for the year 1919 in the sum of $18,400.10 and for the year 1920, in the sum of $36,847.76. The Commissioner in making his determination disallowed as expenses certain items for plant equipment and structures which the taxpayer had treated as expenses in its amended returns.
In September, 1925, the plaintiff filed a petition before the United States Board of Tax Appeals, asking for a review of the determination of the deficiencies by the Commissioner, and the case was set down for hearing before the Board of Tax Appeals on December 8, 1926. Before the case was reached the Board of Tax Appeals decided the same question, involved in the petition of the plaintiff, in two cases, Appeal of Union Collieries Company, 3 B. T.A. 540, and Appeal of Kirk Coal Company, 3 B.T.A. 755. After some correspondence a conference was held between the attorneys representing the taxpayer and the government, as a result of which the following stipulation was entered into:
On December 8, 1926, the Board of Tax Appeals entered its final order of redetermination as agreed on in the stipulation. No appeal was taken from this order, and the plaintiff, in accordance with the order, paid the additional taxes for the years 1919 and 1920. On November 8, and 18, 1929, respectively, the plaintiff filed a claim with the Commissioner for a refund of the additional taxes thus paid for the years 1919 and 1920, which claim was rejected by the Commissioner on a schedule dated March 7, 1930, and, as stated above, in October, 1931, the plaintiff instituted this action.
No question is raised on this appeal as to the correctness of the finding of the court below on the merits of the case, the only question presented by the defendant being whether the plaintiff was estopped from maintaining this action for the refund of taxes under the stipulation entered into and by the order of the Board of Tax Appeal based on said stipulation.
The contention of the defendant is that the plaintiff was estopped by the stipulation entered into from maintaining this action; that the stipulation was in the nature of a compromise and settlement; and that the order of the Board of Tax Appeals, entered pursuant to the stipulation, was a final adjudication of the matter here in controversy.
The plaintiff contends that the stipulation was entered into through a mistake of law; that it was in no sense a compromise, for the reason that the taxpayer received no consideration; and that the court below in the exercise of a sound discretion had a right to relieve the plaintiff from the stipulation.
The trial judge sustained the contention of the plaintiff, and we think properly did so. After the plaintiff had filed its petition before the Board of Tax Appeals for a redetermination of the Commissioner's findings of deficiencies, the Board decided the precise point raised contrary to the contention of the taxpayer, and it is apparent from the correspondence and the evidence given below that it was the intention of the taxpayer to submit to the finding of the Board. Afterwards, this court in the case of Marsh Fork Coal Company v. Lucas, 4 Cir., 42 F.2d 83, decided the same questions against the contention of the Commissioner, reversing the Board of Tax Appeals in its decisions under which the stipulation here was made. The decision in the Marsh Fork Case has been accepted as the established law. Under these circumstances, the stipulation entered into was evidently an agreement made under a mistake of law and did not partake of the nature of a compromise. The plaintiff by the stipulation merely agreed to pay what it was not, under the law...
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...relieved of their stipulations where it becomes evident that "the agreement was made under a clear mistake." Brast v. Winding Gulf Colliery Co., 94 F.2d 179, 180 (4th Cir.1938). Relief from erroneous stipulations is especially favored where the mistake made concerns a legal conclusion. Savi......
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