New York Life Ins. Co. v. Anderson

• Decision Date: 11 March 1919
• Citation: New York Life Ins. Co. v. Anderson, 257 F. 576 (S.D. N.Y. 1919)
• Parties: NEW YORK LIFE INS. CO. v. ANDERSON, Internal Revenue Collector.
• Court: U.S. District Court — Southern District of New York

257 F. 576

NEW YORK LIFE INS. CO. v. ANDERSON, Internal RevenueCollector.

United States District Court, S.D. New York.

March 11, 1919

James H. McIntosh, of New York City, for plaintiff.

Addison S. Pratt, of New York City, for defendant.

LEARNED HAND, District Judge.

This case comes up for further hearing upon the amount of the verdict to be directed.The plaintiff has succeeded upon the issue that the dividends deducted from premiums are a proper allowance, but has failed in securing any allowance for the depreciation of its securities.The Commissioner of Internal Revenue was not consistent in his treatment of this second class of deductions, for in re-assessing the tax he allowed some depreciations and rejected others.The defendant claims that the verdict should be for no more than the balance actually due, if the Commissioner had re-assessed the tax consistently in accordance with my decision, and that therefore he should be entitled to a credit against the recovery of any taxes paid upon dividends for those items of depreciation which the Commissioner erroneously allowed.On the defendant's theory the calculation should be made as follows:

The amount sued for was $73,277.54.Certain amounts the defendant concedes to have been erroneously assessed and collected.They amount to:

Clerical error . . . $ 100.00

Depreciation for furniture, etc. . . .594.52

Addition to income to bring the premium receipts to an accrual basis . .4,163.89

Addition to income to bring interest and rents, etc., to an accrual basis . . . 4,611.27 $ 9,469.68

To this should be added the dividends applied in payment of the renewal premiums, which I have decided to have been erroneous . . . 18,994.87

$28,464.55

But the Commissioner in his assessment allowed the plaintiff to charge off $928,977.73, which was the amount of amortization necessary to bring down the book value of certain of its bonds to their market value, and a further sum of $86,492.14 a book adjustment for increasing or decreasing the book value of certain bonds, in order to adjust the accruals of discounts and to amortize the premiums at which it had purchased them.The sum of the taxes on these two items is $10,154.70.As the Commissioner added to the plaintiff's gross income an increase on the market value of certain of its bonds to the amount of $250,947.52, the tax upon this should be deducted, and that tax is $2,509.58.

The net result of these errors of the Commissioner shows an underassessment of $7,645.22, and if this sum be deducted from the amount of the plaintiff's recovery, $28,464,55 the resulting verdict would be $20,819.33.The question is whether the defendant may be allowed to disregard the Commissioner's return and to treat this action as though it were to re-assess the tax de novo, and to recover only the balance overpaid upon such a re-assessment.

The case is an action for money had and received, and it is well settled that in that action a plaintiff can recover only such money as he is in equity and good conscience entitled to, and as the...