Concrete Engineering Co. v. Commissioner of Int. Rev.

• Decision Date: 13 April 1932
• Docket Number: No. 9124.,9124.
• Citation: 58 F.2d 566
• Parties: CONCRETE ENGINEERING CO. v. COMMISSIONER OF INTERNAL REVENUE.
• Court: U.S. Court of Appeals — Eighth Circuit

58 F.2d 566 (1932)

CONCRETE ENGINEERING CO. v. COMMISSIONER OF INTERNAL REVENUE.

No. 9124.

Circuit Court of Appeals, Eighth Circuit.

April 13, 1932.

George E. H. Goodner, of Washington, D. C., for petitioner.

Norman D. Keller, Sp. Asst. to the Atty. Gen. (G. A. Youngquist, Asst. Atty. Gen., Sewall Key, Sp. Asst. to the Atty. Gen., and C. M. Charest, Gen. Counsel, Bureau of Internal Revenue, and John D. Foley, Sp. Atty., Bureau of Internal Revenue, both of Kansas City, Mo., on the brief), for respondent.

Before STONE and KENYON, Circuit Judges, and CANT, District Judge.

STONE, Circuit Judge.

This is a petition by a taxpayer to review an order of the Board of Tax Appeals redetermining income and excess profits taxes for the year 1920.

Before the Board of Tax Appeals petitioner urged four errors in the assessment of this tax. One of these had to do with the failure of the Commissioner to allow a depreciation deduction on two patents which formed the foundation of petitioner's business. The Board found the values of the patents, and allowed a depreciation deduction equivalent to one-seventeenth of the value thereof. The petitioner acquiesces in this finding, and that question is not presented here however, see Burnet v. National Electric Ticket Register Co., 55 F.(2d) 587, this court, opinion filed January 23, 1932. Another error has to do with the contention that this assessment is barred by limitations. A third error is the failure of the Commissioner to include the value of the above patents as invested capital for the taxable year. The final error is that the Commissioner refused to allow petitioner the benefit of a "special assessment" in accordance with sections 327 and 328 of the Revenue Act of 1918 (40 Stat. 1093). As to this last error, the Board found that petitioner was entitled to this special assessment, and this finding of the Board is acquiesced in by the petitioner, except that it here contends that the Board erred in failing to hold that petitioner is entitled to have its tax liability computed both by special assessment and by the regular statutory basis with allowance of the patents as invested capital, and that whichever of these two methods results in the least tax is the proper one to apply.

I. Limitations.

The tax return of the petitioner for the year 1920 was filed on March 15, 1921. Under section 277 (a) (3) of the Revenue Act of 1926 (44 Stat. 9, 58, 26 USCA § 1057 (a) (3), taxes were required to be assessed within five years after the return for taxation was filed. Section 278(c) of the same act (44 Stat. 9, 59, 26 USCA § 1060 note) provided that "where both the commissioner and the taxpayer have consented in writing to the assessment of the tax after the time prescribed in Section 277 for its assessment the tax may be assessed at any time prior to the expiration of the period agreed upon." Under the above statutes, the limitation for the assessment of this tax would (without such consent) have expired on March 15, 1926. On February 2, 1926, a waiver, in the departmental form, was executed by the taxpayer and the Commissioner, expiring December 31, 1926. Upon June 14, 1926, the Commissioner notified petitioner of the deficiency assessment here involved. Petitioner concedes that, if this waiver is valid, the assessment is not barred, but it attacks the validity of this waiver. This attack is upon two grounds, which are: First, that this waiver was signed on the part of the Commissioner, "D. H. Blair, Commissioner, L. G.," which reveals that it was not signed by the Commissioner in person, and there was no showing as to who signed his name to this document; second, that the other signature is "Concrete Engineering Company, by A. P. Jessen, Sec'y-Treas., Taxpayer," and that, under the laws of Nebraska, the secretary of a corporation is not authorized to bind the corporation in the absence of specific authority.

In Stern Brothers & Co. v. Burnet, 51 F.(2d) 1042, 1046, a similar contention was made regarding a waiver signed "D. H. Blair, Commissioner, M. B.," and this court said:

"The contention as to the proper signature is met by the waiver itself, which contains the signature `D. H. Blair, Commissioner,' and the presumption of the verity of the acts of public officials. United Thacker Coal Co. v. Commissioner, 46 F. (2d) 231, 233 (C. C. A. 1); Trustees for Ohio & Big Sandy Coal Co. v. Commissioner, 43 F.(2d) 782, 784 (C. C. A. 4).

"In general, it may be said as to this controversy and those of a related character that a waiver of this kind is `essentially a voluntary, unilateral waiver of a defense by the taxpayer,' as stated in Stange v. United States, 282 U. S. 270, 276, 51 S. Ct. 145, 75 L. Ed. 335; also see Florsheim Bros. Drygoods Co. v. U. S., 280 U. S. 453, 466, 50 S. Ct. 215, 74 L. Ed. 542; that the signature by the Commissioner is a statutory requirement made, not for contract purposes, but `to meet exigencies of administration,' as said in Aiken v. Burnet, 282 U. S. 277, 281, 51 S. Ct. 148, 75 L. Ed. 339; also see Stange v. United States, 282 U. S. 270, 276, 51 S. Ct. 145, 75 L. Ed. 335; Burnet v. Chicago Railway Equipment Co., 282 U. S. 295, 298, 51 S. Ct. 137, 75 L. Ed. 349; Florsheim Bros. Co. v. U. S., 280 U. S. 453, 466, 50 S. Ct. 215, 74 L. Ed. 542; Greylock Mills v. Commissioner, 31 F.(2d) 655, 657 (C. C. A. 2); and where the taxpayer, by the execution of the waiver, has obtained delay in the assessment of additional taxes, and a more deliberate and thorough consideration of the questions involved, and where the waiver is regular in form and in the possession of the proper governmental bureau, every presumption should be taken in favor of its validity and binding effect, and the burden is upon the taxpayer to show such invalidity or ineffectiveness, see Trustees for Ohio & Big Sandy Coal Co. v. Commissioner, 43 F.(2d) 782, 784 (C. C. A. 4)."

Where a waiver of this character bears a purported signature of the Commissioner, and comes from the files of his office, the presumption is that it has been properly executed, and the burden is upon the taxpayer to prove otherwise, and is not upon the Commissioner to prove the verity or authority of his signature. That burden on the taxpayer has not been here sustained.

As to the sufficiency of the signature of the taxpayer: There is no question that the...