Chicago Railway Equipment Co. v. Com'r of Internal Revenue
| Decision Date | 27 March 1930 |
| Docket Number | No. 4225,4226.,4225 |
| Citation | 39 F.2d 378 |
| Parties | CHICAGO RAILWAY EQUIPMENT CO. v. COMMISSIONER OF INTERNAL REVENUE. |
| Court | U.S. Court of Appeals — Seventh Circuit |
William S. Oppenheim, of Chicago, Ill., for appellant.
John V. Groner, of Washington, D. C., for appellee.
Before ALSCHULER, PAGE and SPARKS, Circuit Judges.
No. 4225. In Chicago Ry. Equipment Co. v. Blair, 20 F.(2d) 10, where most of the facts appear, we reversed the order of the Board of Tax Appeals (Appeal of Chicago Ry. Equipment Co., 4 B. T. A. 452), which sustained assessments of additional taxes for the years 1917, 1918, and 1919.
On the second hearing, the Statute of Limitations was pleaded, new evidence was taken, an order sustaining the assessments entered, and petitioner again asks for a reversal.
That the assessments for the years 1917 and 1918 were made after the statute had run, unless saved by waivers, is admitted. Petitioner admitted a waiver on December 10, 1925, long after the statute had run.
The Board has held that the burden is upon the Commissioner to prove a waiver. Bonwit Teller & Co. v. Commissioner, 10 B. T. A. 1300; Farmers Feed Co. v. Commissioner, 10 B. T. A. 1069; Stevens v. Commissioner, 14 B. T. A. 1120. Respondent offered no evidence of a waiver. The evidence shows the waiver of December 10, 1925, and two letters written to petitioner by the Revenue Department, both after the statute as to the 1917 and 1918 taxes had run, stating that waivers had been filed.
The Board held the assessments legal on the theory that: (a) The statements in the letters were evidence that waivers had been made; (b) a waiver at any time is a sufficient basis for an assessment.
We are of opinion that the letters were not even evidence that waivers had been made, and certainly they were no evidence of the time when they were made, or when they expired, or of any other fact. Such waivers were so obviously a part of respondent's case that the only inference to be drawn from his failure to produce them is that they did not exist.
It is urged, on authority of Insley Mfg. Co. v. Thurman, 33 F.(2d) 441, decided by this court, that a waiver, after the statute has run, is good. While in that case there was such a waiver, it was made while a former waiver, made before the statute had run, was still in force. The question here was not there decided, nor was it before us.
In Pictorial Printing Co. v. Commissioner, 38 F.(2d) 563, decided February 28, 1930, we had before us the question as to whether a waiver, made at a time when the Commissioner had no authority to assess the tax in question and the taxpayer was under no obligation to pay it, had any force. We there held that no valid waiver was shown, and we here hold that the statute had run as to the 1917 and 1918 assessments. No such error is assigned as to the 1919 assessment.
It is urged that the Board erred in fixing the March 1, 1913, fair market value of petitioner's properties, consisting of large factory buildings and equipment, located in five states.
The plants were bought between 1892 and 1912, from older concerns, some of them from receivers or trustees, and at prices much below the original cost. From time to time large sums of money were spent upon the properties for buildings, renewals, and repairs.
Appraisals prior to 1913 showed a property value of $334,244.09 greater than the cost of the properties to petitioner, and the book values were increased by that sum.
Respondent, apparently ignoring the question of March 1, 1913, fair market value, proceeded to find the cost of the properties on December 31, 1916. The parties undertook before the Board to establish the March 1, 1913, market value.
The evidence before the Board shows several sets of figures bearing upon values.
(1). It is admitted that the cost
of the properties as of Dec
31, 1916, was ..................... $1,384,034.11
There was expended on the
properties between1 Jan. 1
1913, and Dec. 31, 1916 ........... $ 385,441.05
_____________
So that the cost March 1, 1913
was, .............................. $ 998,593.06
If we add the amount put on
the books because of the appraisals
prior to 1913 and
above referred to, ................ $ 334,244.09
_____________
We have, as the March 1, 1913
undepreciated value, as shown
by those figures, ................. $1,332,837.15
Four of the appraisals prior to 1913 were made as early as 1908, and the last one in 1912. The above figures aid but little in finding the March 1, 1913, market value.
(2). Coats & Burchard, between
Nov. 27, 1915, and Feb. 1
1916, appraised all of petitioner's
properties. Those
appraisal books are not before
us, but the appraisals
purport to show the reproduction
cost, new, of all properties
at that time. Such cost
was, ................................ $1,720,884.47
By deducting additions for 1913,
1914 and 1915, amounting to, $ 326,130.75
_____________
We have the March 1, 1913, reproduction
value, as, .......................... $1,394,753.72
Forward testified he thought
Coats & Burchard depreciation
figures were ........................ $ 262,000.00
_____________
So that, on those figures, the
March 1, 1913, depreciated
value was, .......................... $1,132,753.72
(3). Petitioner's president Leigh testified that he knew the fair cash market value of the properties March 1, 1913, and stated that it was $1,536,323. Forward testified that the properties on that date were...
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