United States v. Green

• Decision Date: 29 June 1939
• Docket Number: No. 18262.,18262.
• Citation: 28 F. Supp. 549
• Parties: UNITED STATES v. GREEN et al.
• Court: U.S. District Court — Western District of Pennsylvania

28 F. Supp. 549

UNITED STATES v. GREEN et al.

No. 18262.

District Court, E. D. Pennsylvania.

June 29, 1939.

Thomas J. Curtin, Asst. U. S. Atty., of Philadelphia, Pa., and J. Cullen Ganey, U. S. Atty., of Bethlehem, Pa.

Milton A. Kamsler and Sundheim, Folz & Sundheim, all of Philadelphia, Pa., for defendants.

WELSH, District Judge.

The defendant taxpayer paid a tax of $1,146.19 upon income which she received in 1930 as the widow beneficiary of her husband's trust estate under an election by which she accepted such income in lieu of dower. Upon a review of the return, the Commissioner of Revenue determined that such income was not taxable, basing his findings upon the provisions of the 1928 Revenue Act as then interpreted by the decisions of Federal Circuit Courts of Appeal. A refund of the over-assessment found by the Commissioner was made to the taxpayer in 1932, amounting with interest to $1,256.35. Thereafter the Supreme Court, in an opinion construing the same provisions of the Act, overruled the law as declared in prior cases and held that income of the character in question was in fact taxable to the beneficiary. The present suit was brought by the plaintiff to recover the amount previously refunded to the taxpayer as an over-assessment, with interest.

The plaintiff contends that the refund was made because of the Commissioner's erroneous conclusion that the income in question was not taxable, which error has since been definitely established by the Supreme Court decision. On the other hand, the defendant argues that the Commissioner's conclusion was not then in error because it was supported by judicial decisions of Appellate Courts interpreting the statute and establishing the law which governed the Commissioner's acts; and that the subsequent contrary declaration of the Supreme Court did not render the prior determination of the question such an error as would justify the plaintiff in recovering the amount of the refund.

Section 610 of the Revenue Act of 1928, 26 U.S.C.A. § 1646, permits the recovery of any refund of tax which has been erroneously made, provided the suit is begun within two years of the time of the refund. The present suit was brought within that period. The error alleged by the plaintiff is the Commissioner's acceptance of the interpretation of the statute by the Circuit Courts in Warner v. Walsh, 2 Cir., 15 F.2d 367; United States v. Bolster, 1 Cir., 26 F.2d 760, 59 A.L.R. 491; Allen v. Brandeis, 8 Cir., 29 F.2d 363, in which cases it was held that income from a trust estate received by a widow beneficiary in lieu of dower is not taxable income until the income paid exceeds the value of the dower. Although such interpretation was then accepted in good faith by the Commissioner as a correct declaration of the law, the Supreme Court in the later case of Helvering v. Butterworth, 290 U.S....