Cohen v. United States, 226.

• Decision Date: 19 March 1940
• Docket Number: No. 226.,226.
• Citation: 32 F. Supp. 1
• Parties: COHEN v. UNITED STATES. In re HENRY J. PERKINS CO.
• Court: U.S. District Court — District of Massachusetts

32 F. Supp. 1

COHEN v. UNITED STATES.

In re HENRY J. PERKINS CO.

No. 226.

District Court, D. Massachusetts.

March 19, 1940.

Abraham Kamberg, of Springfield, Mass., for plaintiff.

Edmund J. Brandon, U. S. Atty., and C. Keefe Hurley, Asst. U. S. Atty., both of Boston, Mass., and Samuel O. Clark, Jr., Asst. Atty. Gen., (Andrew D. Sharpe, John J. Remey, and E. E. Angevine, Sp. Assts. to Atty. Gen., of counsel), for defendant.

The Facts.

McLELLAN, District Judge.

This is a suit by a trustee in bankruptcy to recover alleged overpayments of income taxes for the calendar years 1929 and 1930. The case was submitted on the pleadings and upon agreed statements of facts. I adopt the facts so stipulated as my findings of fact. The plaintiff asserts that the Commissioner erred in various ways in the determination of taxes due from the bankrupt for the years 1929 and 1930. The defendant says, as one of its defenses, that the taxes in question were paid by the trustee in pursuance of an order of the referee, that no effort was made to secure a review of that order, or to have it set aside, and that the matters raised here are now fully adjudicated. The following facts suffice to indicate the legal problem involved:

During the calendar years 1929 and 1930, the Henry J. Perkins Company, a Massachusetts corporation, hereinafter called Perkins, was engaged in the wholesale fruit and produce business. Perkins seasonably filed its Federal income tax returns for the years 1929 and 1930, disclosing a tax liability of $2,366.35 and $171.41 respectively. These amounts were duly paid in the years in which they became due, and no claim is now made for their refund. On January 30, 1933, Perkins was adjudicated a bankrupt, and Gerald J. Callahan, of Springfield, Massachusetts, was elected its trustee. On or about February 13, 1933, the Collector of Internal Revenue for the District of Massachusetts filed with the referee a proof of claim for additional income taxes for the years 1929 and 1930 in the sum of $7,759.30, together with interest at 6% per annum from January 30, 1933 to the date of payment. This claim was duly allowed by the referee and no review of his order allowing the claim was sought. Later in the year 1933, the trustee tried to compromise the additional taxes claimed, but his offer of compromise was refused. He then paid taxes and interest as follows:

                Additional tax and interest for
                  1929 ...........................  $2,773.83
                Interest at 6% from January 30
                  1933 ...........................     194.29
                                                    _________
                    Total (Paid June 21, 1934)       2,968.12
                Additional tax and interest for     =========
                  1930 ...........................  $4,985.47
                Interest at 6% from January 30
                  1933 ...........................     367.11
                                                    _________
                                                     5,352.58
                Paid as follows
                  May 1, 1934.......... $2,461.37
                  June 21, 1934........  2,474.74
                  May 1, 1934.....................  $5,352.58
                                                    _________
                

These are substantially the amounts involved in this suit. On July 13, 1934, the referee marked "reconsidered and disallowed" on the claim. It has been stipulated that this was done as a matter of course, and in accordance with his usual practice, and does not indicate that he reopened the claim for further consideration of the merits. Neither side contends that this legend on the claim should not be treated as a nullity and I so treat it. (See second stipulation on file.) Mr. Callahan, the trustee, filed his first and final report December 4, 1934, and was discharged. The Henry J. Perkins Company was dissolved as of March 31, 1934.

Thereafter, on April 22, 1936, claims for refund covering the entire amounts set forth above were filed with the Collector of Internal Revenue at Boston, and signed by Gerald J. Callahan, former trustee in bankruptcy of Perkins, and by Louis E. Bauer, former president and treasurer of Perkins. These claims for refund were disallowed in full by the Commissioner April 16, 1937. On February 24, 1939, the estate of Perkins was reopened, and Justin Cohen, the plaintiff herein, was duly appointed trustee and his bond approved by the referee. Thereafter the 1929 and 1930 refund claims were reopened by the Commissioner and small amounts of interest paid were refunded to Cohen as trustee of Perkins. This suit is brought to recover the balance of the taxes paid as set forth above in 1934.

Conclusions of Law.

The plaintiff is not entitled to maintain this suit. It is the Government's contention that the trustee in bankruptcy had a right to have the amount and legality of the taxes in question determined by the court at the time the claim was allowed, and that having failed to do so, the matter is now fully adjudicated. The trustee contends,...