Toledo Edison Co. v. McMaken

• Decision Date: 05 April 1939
• Docket Number: No. 7744.,7744.
• Citation: 103 F.2d 72
• Parties: TOLEDO EDISON CO. v. McMAKEN, Collector of Internal Revenue (UNITED STATES, Intervener).
• Court: U.S. Court of Appeals — Sixth Circuit

103 F.2d 72 (1939)

TOLEDO EDISON CO. v. McMAKEN, Collector of Internal Revenue (UNITED STATES, Intervener).

No. 7744.

Circuit Court of Appeals, Sixth Circuit.

April 5, 1939.

George D. Welles, of Toledo, Ohio (Welles, Kelsey & Cobourn, George D. Welles, and Harry S. Bugbee, all of Toledo, Ohio, on the brief), for appellant.

Wm. B. Waldo, of Washington, D. C. (James W. Morris, Sewall Key, Norman D. Keller, and Wm. B. Waldo, all of Washington, D. C., Emerich B. Freed, of Cleveland, Ohio, and Gerald P. Openlander, of Toledo, Ohio, on the brief), for intervener.

Before SIMONS, ALLEN, and HAMILTON, Circuit Judges.

SIMONS, Circuit Judge.

The appeal involves an alleged overpayment of corporation excise taxes for 1909 and 1910 and consolidated suits for recovery begun over twenty-six years ago against McMaken, the then Collector of Internal Revenue at Toledo, Ohio. The petitions were filed October 16, 1912. McMaken is long since dead, his first administratrix is superseded by another, the two District Judges who participated in the proceedings are likewise deceased, the plaintiff has undergone a metamorphosis, and the record, disclosing long intervals of immobility by court and litigants, have made the problem presented to us difficult. We make no effort to apportion the blame for long delay and unnecessary complications, but proceed to a recital of facts thought to be material and legal contentions of appellant and the United States, which as intervenor challenges the appeal and moves its dismissal.

The appellant, then known as The Toledo Railways & Light Company, sought to recover as overpayments sums paid to the collector under protest. The defendant appeared through the United States Attorney for the District, entered a general denial, and asserted the taxes to have been collected under the authority of a certification by the Commissioner of Internal Revenue. Nothing further appears to have been done until July 1, 1918, when upon waiver of jury the cases were tried to the court. At the hearing the plaintiff moved in each case to substitute for the defendant, Frank B. Niles, his successor in office as Collector of Internal Revenue, and orders were entered granting the motions and making the substitutions. The cases were then submitted upon stipulated facts. On September 4, 1919, the United States Attorney moved to dismiss each case on the ground that the defendant therein was suable only in his personal and not in his official capacity, and that the effect of the orders of substitution had been voluntary dismissals of the actions against McMaken. Nearly three years later the District Judge in a memorandum opinion signified agreement with the contention raised by the motions, but no orders were entered in pursuance thereof. On April 3, 1922, of the same term, the plaintiff moved to vacate and set aside the orders substituting Niles for McMaken and to reinstate McMaken as defendant of record, with McMaken's written consent. Subsequently McMaken died, his widow as administratrix of his estate entered her appearance as defendant and consented to the vacating of the substitutions.

Another interval of six years elapsed. On December 26, 1928, orders were entered granting the motions to vacate, but each limited "to the extent that said prior orders substituted Frank B. Niles personally as defendant herein for the original defendant William V. McMaken personally and that said prior order of substitution is hereby vacated to said extent and Georgie D. McMaken, administratrix of the estate of William V. McMaken, deceased, is hereby instated as the defendant herein personally, but not as a representative of the United States. It is further ordered that this order shall not work to reconnect the United States with plaintiff's contention herein or to compel it to reassume the burdens involved from the filing of this suit. * * *" Plaintiff immediately filed motions for judgment, and with the approval of the United States Attorney, they were entered upon the original record, but with the notation that they were judgments against McMaken's administratrix personally and not as a representative of the United States. Thereupon both parties to the suits filed motions for certificates of probable cause, with a stipulation that McMaken as Collector had collected the taxes in question in accordance with assessments made and certified by the Commissioner and that the money had been paid into the Treasury of the United States. These motions were presented on February 23, 1929, to the late Judge Hahn, then recently appointed District Judge, and were granted. On April 20, 1929, the United States intervened and moved in each case for an order vacating the order of February 23d and for a rehearing upon the motions. Two years later in the one case, and four years later in the other, its motions were granted and the certificates vacated. Subsequently the death of Georgie D. McMaken was suggested and the cases were revived in the name of Myra McMaken Pickett as successor administratrix of McMaken's estate. On June 6, 1934, the plaintiff filed new motions for certificates of probable cause and the United States on its own behalf moved to strike them from the files and to dismiss. Discussions followed at the suggestion of the court in efforts to reach an agreement as to the amount of the overpayments because of concessions that the judgments were not responsive to the stipulated facts. No agreement being reached, the late District Judge Killits denied the motions for certificates of probable cause and nunc pro tunc as of March 23, 1922, dismissed the petitions.

Upon this confusing and halting sequence of events the appellant challenges the nunc pro tunc orders of dismissal as made too late, and the orders denying its motions for certificates of probable cause as beyond the scope of discretion. The District Court, it urges, had no power in 1936 to vacate judgments entered in 1928 when no extension of the term during which the judgments were entered had been sought or granted, but that the court should have modified the judgments to accord with the amounts overpaid in response to the stipulated facts and concessions of the intervenor; that it should have granted certificates of probable cause to the amount of the conceded liability, since the granting of such certificates under the provisions of T. 28, U.S.C. § 842, 28 U.S.C.A. § 842, when the Collector has acted under the direction of a proper officer of the Government and has paid the monies collected as taxes into the Treasury, is mandatory, and even if discretionary, the denial of them is an abuse of discretion when there is a showing of probable cause for the making of the collections. Upon behalf of the intervenor it is urged that the orders denying the motions for certificates of probable cause are orders made after entry of judgment, and so not appealable, wherefore the appeal should be dismissed; that in any event the taxpayer having substituted the successor collector for the collector who had received the tax payment and having accepted as a condition for reinstatement of the original defendant a provision that the judgments should not bind the United States, is not entitled as of right to certificates of probable cause.

Construing the orders denying motions for certificates as final and appealable in respect to the intervenor, since through their instrumentality alone may the judgments against the collector or his estate be made a charge on the United States, and confining decision to them, we recognize a fundamental infirmity at the root of the appeal from such orders that makes it unnecessary to decide all, if any, of the controverted issues...