United States v. Onken Bros. Co.

• Decision Date: 14 October 1927
• Docket Number: No. 1750.,1750.
• Citation: 23 F.2d 367
• Parties: UNITED STATES v. ONKEN BROS. CO., Inc., et al.
• Court: U.S. District Court — District of Wyoming

23 F.2d 367 (1927)

UNITED STATES v. ONKEN BROS. CO., Inc., et al.

No. 1750.

District Court, D. Wyoming.

October 14, 1927.

Albert D. Walton, U. S. Atty., of Cheyenne, Wyo.

D. L. Webb, H. Berman, and Fred N. Holland, all of Denver, Colo., for defendants.

KENNEDY, District Judge.

This is a suit against the defendants to recover upon a bond, in which the petition has been challenged by a demurrer now before the court for determination. From the petition, as far as may be necessary for the consideration of the point involved, the facts appear to be as follows:

That the defendant, Onken Bros. Company, was engaged in business in Sheridan, Wyo., during the years 1917 and 1918; that in April, 1921, defendant was assessed for additional corporation income and profits taxes for the years first mentioned; that in May, 1921, a claim for abatement of the additional tax was filed; that in order to protect against the collection of the assessed taxes pending a hearing upon the claim for abatement the bond in controversy was filed, with the defendant Royal Indemnity Company as surety, by which it was provided that, in the event the claim for abatement should be rejected, the surety would insure the payment of the tax, with penalties and interest, and save the internal revenue collector harmless from liability under his bond by reason of any default in the payment of such assessed taxes; that subsequently, and in June, 1923, the claim for abatement was passed upon by the Commissioner, who allowed it for the year 1917, but rejected it for the year 1918; that demand was made for the payment of the finally assessed tax, and the defendant surety company notified of the default, and likewise a demand was made upon it, but payment was refused; and that in consequence of such situation the suit is brought upon the bond to recover the penal sum thereof, it being less than the entire amount of the assessed tax, penalties, and interest.

Under their demurrer, which challenges the petition on the ground that the petition fails to state facts sufficient to constitute a cause of action, the point is raised that the cause of action is barred by the statute of limitations, as fixed by section 250(d), Revenue Act of 1921 (chapter 136, 42 Stats. 227-265 Comp. St. § 6336 1/8tt), which provides that 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 filed.

Defendants chiefly rely upon the...