Pierce Oil Corporation v. COMMISSIONER OF INTERNAL REVENUE

• Decision Date: 25 April 1934
• Docket Number: Docket No. 49704.,Docket No. 49703,Docket No. 49702
• Citation: 30 BTA 469
• Parties: PIERCE OIL CORPORATION, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. PIERCE NAVIGATION COMPANY, INC., Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. PIERCE PIPE LINE COMPANY, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent.
• Court: U.S. Board of Tax Appeals

30 B.T.A. 469 (1934)

PIERCE OIL CORPORATION, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent.

PIERCE NAVIGATION COMPANY, INC., Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent.

PIERCE PIPE LINE COMPANY, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent.

Docket No. 49702, Docket No. 49703, Docket No. 49704.

Board of Tax Appeals.

April 25, 1934.

ORDER.

On March 8, 1934, petitioners filed a motion for leave to reopen the above entitled proceedings, after trial, but on which no decision has been had, to the extent of enabling them to amend their petitions by pleading the statute of limitations with respect to the proposed deficiencies for each of the calendar years 1918, 1919, and 1920, and for leave to present evidence in support of such allegations.

In accordance with a memorandum this day filed in these proceedings, it is

ORDERED that said motion be and the same hereby is denied.

ENTERED:

April 25, 1934.

JED C. ADAMS, Member.

MEMORANDUM TO ACCOMPANY ORDER DENYING PETITIONERS' MOTION TO AMEND THEIR PETITIONS BY PLEADING THE STATUTE OF LIMITATIONS FOR THE CALENDAR YEARS 1918, 1919, AND 1920, AND FOR LEAVE TO PRESENT EVIDENCE IN SUPPORT OF SUCH ALLEGATIONS.

Before STERNHAGEN, SMITH, and ADAMS.

ADAMS:

The above entitled proceedings involve deficiencies in income and profits taxes determined by the respondent for the years 1918, 1919, and 1920. After prolonged negotiations in the Bureau of Internal Revenue, the Commissioner sent a notice of deficiency to petitioners under date of June 3, 1930. On July 31, 1930, petitions were filed with the Board and a hearing on the merits was commenced May 22, 1933, and continued until concluded, July 28, 1933. Final briefs were filed January 2, 1934.

Thereafter, on March 8, 1934, the petitioners filed a motion to reopen the proceedings, on which no decision has been had, to enable them "to amend their petitions by pleading the Statute of Limitations with respect to the proposed deficiencies for each of the calendar years 1918, 1919 and 1920, and for leave to present evidence in support of such allegations." This motion was accompanied by affidavits of Adrian C. Humphreys, Eugene Untermyer, Stanley Worth, and Samuel W. Everett. No proposed amended petition was attached.

The motion was set for argument April 11, 1934, at which time the parties appeared by their counsel before this Division, specially constituted to hear and act upon the motion.

The grounds on which petitioners base their motion are clearly set out in the affidavit executed by Eugene Untermyer, one of petitioners' counsel, and attached to the motion herein, in which he says:

I am informed and verily believe that no claim for abatement was at any time filed in behalf of the taxpayers for any of said years.

I was informed at and prior to the hearing, and then believed that the taxpayers had from time to time given waivers extending the period for assessment and that such period, as extended, had not expired prior to the mailing of the 60-day letter. On this assurance, the taxpayers, at and prior to the hearing, refrained from pleading the Statute of Limitations.

I made no inquiry to ascertain whether such waivers had been duly signed by the Commissioner in view of the decision made some time before the hearing in Commissioner of Internal Revenue v. Hind, (C. C. A., 9th Cir., decided October 13, 1931), 52 Fed. (2d) 1075, holding that a waiver was a unilateral act and did not require the signature of the Commissioner to afford its validity.

Since that time, however, and at or about the time that the hearing was being held, the Circuit Court of Appeals for the 3rd Circuit, in Commissioner of Internal Revenue v. United States Refractories Corporation, 64 Fed. (2d) 69, held that a waiver in respect of income, excess profits or war taxes had no validity unless it was also signed by the Commissioner of Internal Revenue and that a waiver given in that case, where the Commissioner did not sign the same, was null and void. The case was affirmed by the Supreme Court of the United States by an equally divided court sub. nom. Helvering v. United States Refractories Corporation, on October 23, 1933, 54 Sup. Ct. Reporter, p. 95.

The affirmance by the Supreme Court did not occur until many months after the hearings were closed, and such affirmance was not invited to my attention until about one month ago.

I thereupon communicated with the petitioners' representative in Washington, Mr. Stanley Worth, to ascertain whether the waivers in question had been signed by the Commissioner and, if possible, to secure photostatic copies of the pertinent waivers. To my distinct surprise, I was advised, not only by Mr. Worth but by the Commissioner's office, that neither access to the waivers nor photostatic copies thereof would be furnished to the taxpayers.

Upon these considerations, and others which we deem less material, petitioners urge the right and propriety of reopening this record to enable them to plead the statute of limitations and to show facts material to that issue.

It is not shown, however, that any new facts have been discovered which would justify the reopening of the case. It only appears that petitioners suspect, because of the refusal of the Commissioner's office to permit them to examine the waivers on file, that such waivers have not been properly executed by the Commissioner, and that an examination of them would justify a plea of limitation under the authority of Helvering v. United States Refractories Corp., 290 U.S. 591. The motion, therefore, is not categorically for permission to prove significant facts of which the petitioners now have knowledge and evidence, but rather it is in the nature of a bill of discovery to enable petitioners after the hearing is closed and the proceedings submitted upon briefs to ascertain from their adversary whether there is in existence evidence of facts upon which they can predicate a plea of limitations.

From the record in the proceedings and from the moving papers, which for the purposes of the present motion we may assume to correctly state the facts, it appears that whatever basis there may be for a plea of the statute of limitations was in existence and available to the petitioners either upon request or subpoena from the time when their petitions were originally filed, July 31, 1930. And we do not overlook the fact that the original petitions were filed more than a year before Commissioner v. Hind, 52 Fed. (2d) 1075, was decided by the Circuit Court of Appeals, Ninth Circuit. In fact, the opinion of the Circuit Court reversed the Board's opinion, which was promulgated November 9, 1929, 18 B.T.A. 96. So that at the time the original petitions were filed the Board's position on this question was substantially the same as that later laid down in the United States Refractories Corp. case. On June 25, 1931, the Board decided United States Refractories Corp., 23 B.T.A. 872, and reaffirmed its position in the Hind case, and in Corn Products Refining Co., 22 B.T.A. 605. On January 14, 1933, the petitioners amended their petitions. On March 7, 1933, the Refractories Corp. case was affirmed by the Third Circuit, Commissioner v. United States Refractories Corp., 64 Fed. (2d) 69. On March 21, 1933, petitioners again filed an amendment to their petitions. On May 8, 1933, certiorari to the Supreme Court was granted in the Refractories Corp. case, and on June 21, 1933, a third amendment to their petitions was filed by petitioners. Neither the original petitions nor any of the amendments suggested the bar of the statute of limitations, although the very tribunal to which petitioners were appealing was consistently holding that the consent to extend the statute of limitations by waiver was not a unilateral act, and its latest decision on that question had been affirmed by the Circuit Court of Appeals and certiorari granted to the Supreme Court of the United States.

This condition continued throughout the long trial of the proceedings, but petitioners made no attempt to have this question determined, although the evidence contains the notice of deficiency of June 3, 1930, with statement attached in which it is stated that returns for the years 1918, 1919, and 1920 were filed by the petitioner, and "consents which will expire December 31, 1930, except as extended by the provisions of section 277 (b) of the Revenue Act of 1926, are on file for the years 191...