Connell v. Hopkins

• Decision Date: 01 October 1930
• Docket Number: No. 4160.,4160.
• Citation: 43 F.2d 773
• Parties: CONNELL v. HOPKINS.
• Court: U.S. District Court — Panama Canal Zone

43 F.2d 773 (1930)

CONNELL v. HOPKINS.

No. 4160.

District Court, N. D. Texas, Dallas Division.

October 1, 1930.

P. Walter Brown, of Fort Worth, Tex., and Harry Friedman, of Washington, D. C., for plaintiff.

N. A. Dodge, U. S. Atty., of Fort Worth, Tex., for defendant.

ATWELL, District Judge.

A jury was waived. An agreed statement of facts evidence that the taxpayer, S. B. Burnett, filed his return for the year 1918, on March 16, 1919, showing a tax due of $11,712.18. This amount was paid in installments.

Burnett died in 1922. On March 13, 1924, an additional tax of $92,498.42 was assessed against the estate for the year 1918. On March 27, 1924, a claim for abatement of said additional assessment was filed, and on March 27, 1925, an abatement was allowed in the sum of $37,692.13. On April 18, 1925, the collector, defendant, demanded payment of the balance of $54,806.29, plus interest, and on April 28, 1925, the executors paid, under protest, $58,377.47.

On September 25, 1925, a claim for refund on blank 843, which contained this printed heading, "amount to be refunded (or such greater amount as is legally refundable)," was made for $25,517.23. On January 30, 1926, the commissioner wrote the plaintiff: "Your claim for the refunding of $25,517.23, part of individual income tax for the year 1918, has been examined. The basis of your claim is: 1. that the March 1st., 1918 value of cattle, less depreciation, sold in 1918, should be allowed as a deduction from sales. 2. The distribution of certain property on community basis. A conference was arranged upon request and held in this office, December 22, 1925, at which time the contested issues were discussed. After careful consideration of the information submitted with the claim and at the conference, it is held by this office that the evidence submitted relative to the first issue is too meager to warrant a change in the audit as previously made. As advised at the conference the decision of the Texas supreme court in which it is held that the income of oil royalties which was separate property of either the wife or the husband was community income, has not been accepted by this office. The representative recognized the decision of the office and agreed to accept this decision of this issue. Since you have not been assessed an amount in excess of the correct tax liability, the claim will be rejected. The rejection of the claim will officially appear on the next schedule to be approved by the commissioner."

On November 25, 1929, plaintiff filed with the commissioner an application for the reopening and the allowance of the claim for refund, alleging that the collection was barred and setting out certain dates which would tend to show that fact. On February 24, 1930, the application was denied, the commissioner stating, among other things: "In this connection it is held by the bureau that the precise ground upon which the refund or credit of taxes is demanded must be stated in the claim for refund or credit, and a suit to recover the taxes cannot be based upon an entirely different and distinct ground than that presented in the claim." Citing authorities. The letter then continues, "a review of the entire file of the cases discloses that the only claim filed subsequent to the payment of the tax on April 28, 1925 was the claim for refund of $25,517.23, filed on September 25, 1925, which was based on the following grounds, viz., (1) that the March 1, 1913 value of cattle, less depreciation, sold in 1918 should be allowed as a deduction from sales, and (2) distribution of certain property on the community basis."

The letter then continues: "Relative to the clause `refund of taxes illegally collected,' shown on the former claim for refund (Form 843), you are advised, it is intended to cover cases in which, through ignorance of the law or the proper method of computation, claimants might insert incorrect amounts, and, on examination of the claim, it is found that taxpayer is entitled to more than the amounts specified on the items set forth as grounds for refund."

There were no waivers concerning assessment or collection. The plaintiff and his secretary testified that they had never received any other notices concerning the rejection of the claim.

The case presents a double limitation. It is not now contended that the government was not entitled to the additional collection that the collector made, but it is contended that the collection was made after the debt was barred.

When a citizen is called upon for a tax payment that he considers illegal, he must, before suing for its recovery, ask for a refund. Such request must be based upon the ground that is expected to be alleged in a suit if the refund is refused. It is unnecessary to mention, at this late hour, that the sovereign may not be sued unless it consents. The provisions authorizing suit must be observed. "Literal compliance with statutory requirements that a claim or appeal be filed with the commissioner before suit is brought for a tax refund may be insisted upon by the defendant, whether the collector or the United States." Kings County Savings Institution v. Blair, 116 U. S. 200, 6 S. Ct. 353, 29 L. Ed. 657; Maryland Casualty Co. v. U. S., 251 U. S. 342, 40 S. Ct. 155, 64 L. Ed. 297; Nichols v. U. S., 7 Wall. 122, 19 L. Ed. 125; Red Wing Melting Co. v. Willcuts, 15 F.(2d) 686; Tucker v. Alexander (C. C. A.) 15 F. (2d) 356; Id., 275 U. S. 228, 48 S. Ct. 45, 72 L. Ed. 253; Dodge v. Osborn, 240 U. S. 118, 36 S. Ct. 275, 60 L. Ed. 557.

The system which the Congress provides for the collection of revenue and for the remedying of errors in such collection is fixed and not variable. It is for universal observance, for the citizen's benefit, and for the benefit and guidance of a constantly changing army of officers. Cheatham v. U. S., 92 U. S. 85, 23 L. Ed. 561; Hicks v. James (C. C.) 48 F. 542; Rock Island Railroad Co. v. U. S., 254 U. S. 141, 41 S. Ct. 55, 65 L. Ed. 188.

Plaintiff contends that this fundamental rule has...