Hutzler Bros. Co. v. United States, 280.

• Decision Date: 02 July 1940
• Docket Number: No. 280.,280.
• Citation: 33 F. Supp. 801
• Parties: HUTZLER BROS. CO. v. UNITED STATES.
• Court: U.S. District Court — District of Maryland

33 F. Supp. 801

HUTZLER BROS. CO. v. UNITED STATES.

No. 280.

District Court, D. Maryland.

July 2, 1940.

Cook & Markell, and Charles Markell and Charles Markell, Jr., all of Baltimore, Md., for plaintiff.

Carl Ross McKenrick, Asst. U. S. Atty., of Baltimore, Md., and E. H. Horton and Ruppert Bingham, Sp. Assts. to the Atty. Gen., for the United States.

WILLIAM C. COLEMAN, District Judge.

The sole question in this case is whether the conditions for allowance of refunds prescribed in Section 902 of the Revenue Act of 1936, 7 U.S.C.A. § 644, relating to floor stocks taxes, assessed under the Agricultural Adjustment Act, have been met by the plaintiff. This act was passed following the decision of the Supreme Court in United States v. Butler, 297 U.S. 1, 56 S.Ct. 312, 80 L.Ed. 477, 102 A.L.R. 914, declaring unconstitutional the Agricultural Adjustment Act of May 12th, 1933, 48 Stat. 31, 7 U.S.C.A. § 601 et seq. The plaintiff, a Maryland corporation, conducts a very large and long-established retail department store, — in fact one of the leading stores of this kind in the city of Baltimore. The amount of floor stocks taxes paid, refund of which is here sued for, is $3,746.95 and interest, plaintiff's claim for same having been duly presented to and denied by the Commissioner of Internal Revenue, following which the present action was instituted. These taxes were levied and collected under the Agricultural Adjustment Act, upon the sale of articles processed wholly or chiefly from cotton. There is no dispute as to the main facts in the case. They have been stipulated.

I find by the very definite weight of the credible evidence that the statutory requirements for refund have been sufficiently met. Section 902 reads as follows:

"No refund shall be made or allowed, in pursuance of court decisions or otherwise, of any amount paid by or collected from any claimant as tax under the Agricultural Adjustment Act this chapter, unless the claimant establishes to the satisfaction of the Commissioner in accordance with regulations prescribed by him, with the approval of the Secretary, or to the satisfaction of the trial court, or the Board of Review in cases provided for under Section 906 section 648 of this title, as the case may be —

"(a) That he bore the burden of such amount and has not been relieved thereof nor reimbursed therefor nor shifted such burden, directly or indirectly, (1) through inclusion of such amount by the claimant, or by any person directly or indirectly under his control, or having control over him, or subject to the same common control, in the price of any article with respect to which a tax was imposed under the provisions of such Act chapter, or in the price of any article processed from any commodity with respect to which a tax was imposed under such Act this chapter, or in any charge or fee for services or processing; (2) through reduction of the price paid for any such commodity; or (3) in any manner whatsoever; and that no understanding or agreement, written or oral, exists whereby he may be relieved of the burden of such amount, be reimbursed therefor, or may shift the burden thereof; or

"(b) That he has repaid unconditionally such amount to his vendee (1) who bore the burden thereof, (2) who has not been relieved thereof nor reimbursed therefor, nor shifted such burden, directly or indirectly, and (3) who is not entitled to receive any reimbursement therefor from any other source, or to be relieved of such burden in any manner whatsoever."

Before considering the case on its merits, it is necessary to rule upon a motion submitted by the Government to dismiss the action on the ground that, by the allegations of the complaint, this court is without jurisdiction to entertain the action. The basis of the motion is the following provision contained in Section 903 of the same Act, 7 U.S.C.A. § 645, relating to filing of claims: "No refund shall be made or allowed of any amount paid by or collected from any person as tax under the Agricultural Adjustment Act this chapter unless, after the enactment of this Act June 22, 1936, and prior to July 1, 1937, a claim for refund has been filed by such person in accordance with regulations prescribed by the Commissioner with the approval of the Secretary. All evidence relied upon in support of such claim shall be clearly set forth under oath. * * *" It is contended that by this provision the plaintiff was required to set forth under oath all of the evidence upon which it relied as a condition precedent to the allowance of any claim for refund, and that no suit may be maintained in this court by plaintiff unless it alleges,—as it did not do, — as an essential part of its right of action, that it had presented to the Commissioner all the available evidence bearing upon its right to refund. The Government also contends that, in any event, the plaintiff is here limited in its production of evidence to the same evidence that was previously submitted to the Commissioner.

We find this position of the Government to be without merit. Where a claim has been rejected by the Commissioner and such fact is alleged in the complaint, no further allegation is necessary for the maintenance of a suit for refund; and in such suit a plaintiff is not limited to the same evidence produced before the Commissioner. The intent of the statute, reasonably interpreted from the language employed and above quoted, is to bar consideration of claims merely on informal statements or memoranda, and to surround the presentation of claims with full verification, but it is not intended that a claimant who produces before the Commissioner certain evidence is forever thereafter barred from introducing further evidence in resorting to a court proceeding for refund, — a right which is expressly given by Section 905 of the Act, 7 U.S.C.A. § 647. This construction is supported by Anniston Manufacturing Co. v. Davis, 301 U.S. 337, 57 S.Ct. 816, 81 L.Ed. 1143 where the Supreme Court, in defining the procedure, rights and liabilities under this same act, said, 301 U.S. at page 343, 57 S.Ct. at page 819, 81 L.Ed. 1143: "With respect to floor stock taxes, no serious question is presented as to the adequacy of the remedy. The remedy by suit is expressly preserved. If the Commissioner refuses refund, suit may be brought against the United States in the Court of Claims or in the District Court for the recovery of the amount claimed to have been illegally exacted. Section 905 of the Act (7 U.S.C.A. § 647)." That seems clearly to support the view here taken that the right to invoke the jurisdiction of this court is no different, under the statute here involved, if the taxpayer feels that he has been aggrieved, from the right which he would have in the ordinary income tax refund case. Of course, the express conditions imposed by Section 902 of the Act present different questions from those presented in the ordinary income tax case, but in so far as the right to invoke the jurisdiction of this court and the right to have the question of refund determined are concerned, the taxpayer, in the one case any more than in the other, cannot be hedged around by administrative rulings or views of the Commissioner, which conceivably might keep the taxpayer forever out of court.

We come then to the basic question in the case: Have the conditions of the...