Champ Spring Co. v. United States, 8299.

• Decision Date: 18 December 1929
• Docket Number: No. 8299.,8299.
• Citation: 38 F.2d 988
• Parties: CHAMP SPRING CO. v. UNITED STATES.
• Court: U.S. District Court — Eastern District of Missouri

38 F.2d 988 (1929)

CHAMP SPRING CO. v. UNITED STATES.

No. 8299.

District Court, E. D. Missouri, E. D.

December 18, 1929.

Fordyce, Holliday & White, of St. Louis, Mo., for plaintiff.

Louis H. Breuer, U. S. Atty., of Rolla, Mo., and Claude M. Crooks, Asst. U. S. Atty., of St. Louis, Mo.

FARIS, District Judge.

Plaintiff sues defendant United States to recover the sum of $22,975.76 paid to a former collector, now out of office, as an alleged excise tax provided by law to be levied on any manufacturer of springs for automobiles.

The controlling facts are few and simple. Originally the money in dispute, or a sum equal thereto, was paid by the plaintiff to such former collector as and for taxes due from plaintiff to defendant on automobile springs made and sold by plaintiff. Later, and of course after such taxes were paid, the then Commissioner of Internal Revenue made a ruling, pursuant to which plaintiff made an application for and was granted a refund of the whole amount of such excise taxes paid by plaintiff. In passing it may be said that this ruling was to the effect that the business of plaintiff was not such as to bring it within the purview of the statute pursuant to which the taxes had been exacted. Of course this ruling had to do with a mixed question of law and fact; the fact being as to the precise nature of the business in which plaintiff was engaged, and of the precise nature of the springs made and sold by plaintiff. Thereafter the Commissioner of Internal Revenue made another ruling in the matter, which in the last analysis rendered the collection of these taxes lawful. In other words, the construction last put by the Commissioner of Internal Revenue upon the law and the facts was to the effect that plaintiff was liable to the defendant for the sum in taxes which defendant had erroneously repaid to plaintiff, on the theory that there existed no such liability. Thereupon a reassessment was made against plaintiff for all such taxes not then barred by statutory limitation, and under threat of distraint plaintiff paid to the collector of internal revenue, under protest, as it is claimed, the sum here in dispute, and plaintiff now sues the defendant to recover such sum.

It is not very strenuously disputed that under the facts and under the law when properly construed plaintiff was liable to pay this tax, and therefore, if defendant had retained the money when it had it, plaintiff could not in any action have recovered such money. But defendant, through an erroneous interpretation of the law by the Commissioner, and also, as is now contended by defendant, a misunderstanding as to the nature of plaintiff's business, and as to the nature and use of the springs made by plaintiff, put it in the power of plaintiff to get this money back by way of a refund. Neither is it very strongly disputed that the collector had no legal right to distrain in order to enforce the collection of money erroneously paid as a refund by defendant to plaintiff.

Clearly, I think, it was the duty of defendant to have brought a plenary action against plaintiff to recover back the amount of the erroneous refund. Such actions have been sustained as proper, Talcott v. U. S. (C. C. A.) 23 F.(2d) 897; Kelley v. U. S. (C. C. A.) 30 F.(2d) 193, and in one case, in fact, precisely on all fours with the case at bar, United States v. Standard Spring Manufacturing Co. (D. C.) 23 F.(2d) 495, so far, at least, as concerns the right of the United States to sue in a plenary action for money refunded, which money had originally been paid as a manufacturer's excise tax on automobile springs. But defendant's collector and Commissioner, deeming the matter one involving a tax, collected summarily from plaintiff by the threat of distraint. It is not necessary to a decision of the case now, and may be therefore wholly academic, but I am clearly of the opinion that section 154, tit. 26, U. S. C. (26 USCA § 154) did not apply to the situation existing when plaintiff under threat of distraint paid the money in dispute to the collector. I am fully mindful of the many decisions supporting the language of section 154, supra, but no one can successfully contend that the collector can merely by his ipse dixit make that a tax which clearly bears no resemblance whatever to a tax. True it is that, if the obligation is seemingly a tax, and is laid by law, no injunction will lie to defeat or impede collection, even though the law be constitutionally invalid or void on any account. But if it is a mere penalty, and not a tax (Lipke v. Lederer, 259 U. S. 557, 42...