United States v. John Barth Co
| Decision Date | 13 May 1929 |
| Docket Number | No. 526,526 |
| Parties | UNITED STATES v. JOHN BARTH CO. et al |
| Court | U.S. Supreme Court |
The Attorney General and Mrs. Mabel Walker Willebrandt, Asst. Atty. Gen., for the United States.
Messrs. Louis Quarles, of Milwaukee, Wis., and Walter H. Moses, of Chicago, Ill., for respondents.
This was a suit by the United States, through its district attorney for the Eastern district of Wisconsin, against the John Barth Company, a corporation of Wisconsin, and the United States Fidelity & Guaranty Company, a corporation of Maryland. The subject-matter of the suit is the recovery of the amount due on a bond in the sum of $60,000 whereby the respondents bound them- selves jointly and severally to pay to the United States the sum therein named under the following circumstances and conditions:
On June 25, 1919, the United States Commissioner of Internal Revenue assessed income and profits taxes against the Barth Company for the year 1918 in the sum of $126,182.81, and of this sum the company paid $74,764.40. On September 15, 1919, and March 17, 1925, the company filed claims for the abatement of $39,501.58 of the taxes thus assessed. The Barth Company, as principal, and the United States Fidelity & Guaranty Company, as surety, in consideration of the United States refraining from and suspending the collection of taxes thus outstanding against the Barth Company for the year 1918, pending consideration and adjudication of the foregoing claims for abatement, executed and delivered a bond on September 20, 1919, binding them to pay "on notice and demand by the collector * * * any part of such tax found by the Commissioner to be due, with interest at the rate of 12 per cent. per annum from the time such tax would have been due, had no such claim been filed."
The Barth Company filed its claim of abatement on the ground that it had sustained a substantial loss resulting from a material reduction of the value of its inventory for the taxable year and from actual payment after the close of the taxable year of rebates in pursuance of contracts entered into during such year upon sales made during the year.
On March 25, 1926, the Commissioner considered the claims, allowed about $10,000, and rejected the rest, in the sum of $29,842.32. The Barth Company was notified, and payment under the bond of the tax as determined, with interest thereon, requested on February 27, 1926, and on April 5 and 20, 1926, but the Barth Company refused to pay. On August 10 and 27, 1926, the Guaranty Com- pany was notified of the rejection of the abatement claims in the sum above stated, and of the amount and interest due, but that company also refused payment. The suit was authorized by the Commissioner of Internal Revenue.
To the petition respondents filed a demurrer "for the reason that * * * the action was not commenced within the time limited by law which time is prescribed by sections 205d (205d) of the Revenue Acts of 1918 and 1921, and sections 277a-2, 278d, and 278e of the Revenue Act of 1924, and sections 277a-3, 278d, 278e, and 1106a of the Revenue Act of 1926."
The District Court sustained the demurrer, the United States elected to stand on its complaint, and judgment was entered dismissing the complaint.
The United States carried the judgment on writ of error to the Circuit Court of Appeals, which after an unsuccessful effort to certify to this court certain questions, which were dismissed (276 U. S. 606, 48 S. Ct. 338, 72 L. Ed. 728), heard the writ of error and affirmed the judgment of the District Court. 27 F.(2d) 782. The case is now here on writ of certiorari.
Paragraph 14(a), § 234(a) of the Revenue Act of 1918, c. 18, 40 Stat. 1057, provides that:
In section 250(d) the provision is:
"Except in the case of false or fraudulent returns with intent to evade the tax, the amount of tax due under any return shall be determined and assessed by the Commissioner within five years after the return was due or was made, and no suit or proceeding for the collection of any tax shall be begun after the expiration of five years after the date when the return was due or was made."
Section 250(d) refers to a failure of the Commissioner of Internal Revenue to pass upon the return made by the...
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