United States v. Memphis Cotton Oil Co

• Decision Date: 09 January 1933
• Docket Number: No. 308,308
• Citation: 77 L.Ed. 619,53 S.Ct. 278,288 U.S. 62
• Parties: UNITED STATES v. MEMPHIS COTTON OIL CO
• Court: U.S. Supreme Court

288 U.S. 62

53 S.Ct. 278

77 L.Ed. 619

UNITED STATES

v MEMPHIS COTTON OIL CO.

No. 308.

Argued Dec. 9, 1932.

Decided Jan. 9, 1933.

Messrs. William D. Mitchell, Atty. Gen., and Chas. B. Rugg, Asst. Atty. Gen., for the United States.

[Argument of Counsel from page 63 intentionally omitted] Mr. Walter E. Barton, of Washington, D.C., for respondent.

Mr. Justice CARDOZO delivered the opinion of the Court.

Respondent, the plaintiff in the court below, brought suit against the United States in the Court of Claims to recover overpayments of income taxes for the years 1922 and 1923. The government opposed recovery upon the ground that the claims filed with the Commissioner of Internal Revenue for the refund of the tax were too general and indefinite to comply with the provisions of the statutes and regulations, and that amendment came too late. The Court of Claims gave judgment in favor of the taxpayer. 59 F.(2d) 276. A writ of certiorari (287 U.S. 585, 53 S.Ct. 87, 77 L.Ed. —-) brings the case here.

The central question in the controversy can be stated in a sentence: May a claim for a tax refund which has been seasonably filed, but which fails to state the grounds upon which the refund is demanded, be amended by specifying the grounds at any time before the claim in its original form has been finally rejected, though it be after the time when a wholly new claim would be barred by limitation?

The respondent made and filed its income tax returns for 1922 and 1923 in accordance with the statute. It paid the last installment of the earlier tax on December 7, 1923, and the last installment of the later one on December 6, 1924. Claims for refund of overpayments were filed in June, 1927, within the time prescribed by law.

In the refund claim for 1922 there was a statement of the amount of the tax paid $25,626.25), a statement of the correct amount due ($24,296.56), a statement that there had been overpaid in error $1,329.69, and a request for refund of that amount with interest as provided by law, or such greater amount as might be legally refundable. Attached to the claim was the following summary of the method of computation: Net income, $194,372.46; 12 1/2 per cent., $24,296.56; previously paid, $25,626.25; overpaid, $1,329.69. There was no other specification of supporting facts or reasons.

In the refund claim for 1923, the claimant followed the same form that was used for 1922, but with appropriate changes of the figures. The overpayment was stated to be $1,813.39, and there was a request for the return of that amount or of any greater amount due.

Upon receipt of these claims, the Commissioner of Internal Revenue, in order to pass upon the merits, made an investigation and an audit of the claimant's books and records for 1922 and 1923 through a duly appointed agent. The agent reported to the Commissioner that there had been overassessments for both years; the excess being fixed at $1,660.70 for 1922 and $4,835.76 for 1923. Thereupon a deputy commissioner notified the taxpayer in writing under date of October 13, 1928, that its refund claims had been considered, that the taxes had been readjusted in accordance with the new audit, and that the overassessments for the two years would be made the subject of certificates of overassessment, which would be transmitted in due course through the office of the appropriate collector. Nothing further was said or done as to the matter till January 26, 1929, when the same deputy commissioner who had signed the notice last mentioned transmitted to the taxpayer another notice that the claims were defective in form in that they failed to satisfy the requirements of the Treasury Regulations. After quoting the pertinent provisions, he stated: 'Since the information on file with the claims does not meet the requirements' of the regulations, 'and the claims do not indicate (i.e., apart from the investigations of the Revenue Agent) that the taxes have been illegally assessed, they will be rejected. The rejection will officially appear in a schedule to be approved by the Commissioner.' Thereupon the claim- ant, protesting that an amendment was unnecessary, filed a new claim with the Commissioner on April 2, 1929, in which the facts were set forth in detail. The Commissioner gave final notice of rejection on October 23, 1929, placing his ruling on the ground that the claims as first presented were defective and irregular. In this suit by the taxpayer, the Court of Claims has given judgment for the moneys overpaid.

Statutes make it necessary that claims for the refunding or crediting of any internal revenue tax erroneously or illegally assessed or collected shall be presented to the Commissioner within a prescribed period of time and prohibit allowance of the claims if these conditions are not satisfied. Revenue Act of 1926, § 284(b), 26 USCA § 1065(b). Statutes also provide that no suit or proceeding shall be maintained in any court for the recovery of such a tax 'until a claim for refund or credit has been duly filed with the Commissioner of Internal Revenue according to the provisions of law in that regard, and the regulations of the Secretary of the Treasury established in pursuance thereof.' Revenue Act of 1921, § 1318, as amended by Act of March 4, 1923, c. 276 (26 USCA § 156). During the period of these transactions, there had been promulgated under the Revenue Act of 1921 and was continuously in force a Treasury regulation which provides as follows: 'Claims by the taxpayer for the refunding of taxes and penalties erroneously or illegally collected shall be made on Form 843. In this case the burden of proof rests upon the claimant. All the facts relied upon in support of the claim should be clearly set forth under oath.' Treasury Regulations 62, art. 1036.¹

The claim for refund filed with the Commissioner in June, 1927, was not subject to rejection on the score of the time of its submission. As to this the parties are agreed. Indefinite and general it was, and hence, until amended or supplemented, an inadequate compliance with the Treasury requirement that the facts relied upon in support of a claim are to be stated under oath. Beyond doubt it might have been rejected as irregular while its form was uncorrected. This is far from saying that there was the presentation of a new claim and not the perfecting of an old one when the gaps were filled thereafter.²

Both the government and the taxpayer invoke analogies suggested by pleadings in a lawsuit. The general rule is said to be that an amendment of a pleading will take effect by relation and thus relieve against the bar of an intervening limitation if the identity of the cause of action is still substantially the same, but that the limitation will prevail if under the guise of an amendment there is the substitution of a new cause of action in place of another wholly different. Baltimore & O.S.W.R. Co. v. Carroll, 280 U.S. 491, 50 S.Ct. 182, 74 L.Ed. 566; Seaboard Air Line Ry. v. Renn, 241 U.S. 290, 293, 36 S.Ct. 567, 60 L.Ed. 1006; Harriss v. Tams, 258 N.Y. 229, 242, 179 N.E. 476. The analogy is helpful; yet it will confuse, instead of helping, if we do not insist at the beginning upon a definition of our terms or at least a recognition of their shifting meanings. A 'cause of action' may mean one thing for one purpose and something different for another.³ It may mean one thing when the question is whether it is good upon demurrer, and something different when there is a question of the amendment of a pleading or of the application of the principle of res judicata. Cf. Chicago R.I. & P. Ry. Co. v. Schendel, 270 U.S. 611, 617, 46 S.Ct. 420, 70 L.Ed. 757, 53 A.L.R. 1265; Baltimore S.S. Co. v. Phillips, 274 U.S. 316, 321, 47 S.Ct. 600, 71 L.Ed. 1069. At times and in certain contexts, it is identified with the infringement of a right or the violation of a duty. ⁴ At other times and in other contexts, it is a concept of the law of remedies, the identity of the cause being then dependent on that of the form of action or the writ.⁵ Another aspect reveals it as something separate from writs and remedies, the group of operative facts out of which a grievance has developed.⁶ This court has not committed itself to the view that the phrase is susceptible of any single definition that will be independent of the context or of the relation to be governed. None the less, it has fixed the limits of amendment with increasing liberality. A change of the legal theory of the action, 'a departure from law to law,' has at times been offered as a test. Union Pacific Ry. Co. v. Wyler, 158 U.S. 285, 295, 15 S.Ct. 877, 881, 39 L.Ed. 983. Later decisions have made it clear that this test is no longer accepted as one of general validity. Thus, in Missouri, Kansas & Texas Ry. Co. v. Wulf, 226 U.S. 570, 33 S.Ct. 135, 57 L.Ed. 355, Ann. Cas. 1914B, 134, plaintiff suing in her individual capacity under a Kansas statute for her son's death was allowed to amend to sue as administratrix under the Federal Employers' Liability Act (45 USCA §§ 51—59) after the statute of limitations would have barred another action. In New York Central Railroad Co. v. Kinney, 260 U.S. 340, 43 S.Ct. 122, 67 L.Ed. 294, there was in substance the same ruling. In Friederichsen v. Renard, 247 U.S. 207, 38 S.Ct. 450, 62 L.Ed. 1075, a cause of action by a defrauded buyer to set aside a contract was turned into a cause of action to recover damages for deceit. 'Of couse an argument can be made on the other side, but when a defendant has had notice from the beginning that the plaintiff sets up and is trying to enforce a claim against it because of specified conduct, the reasons for the statute of limitations do not exist, and we are of opinion that a liberal rule should be applied.' New York Central Railroad Co. v. Kinney, supra, page 346 of 260 U.S., 43 S.Ct. 122, 123.⁷

With this background of analogy, we reach the specific problem that calls for answer here. The respondent filed a...