University Distributing Co. v. United States

• Decision Date: 14 March 1938
• Docket Number: No. 7065.,7065.
• Parties: UNIVERSITY DISTRIBUTING CO. v. UNITED STATES.
• Court: U.S. District Court — District of Massachusetts

22 F. Supp. 794

UNIVERSITY DISTRIBUTING CO. v. UNITED STATES.

No. 7065.

District Court, D. Massachusetts.

March 14, 1938.

O. Walker Taylor, of Boston, Mass., for plaintiff.

Francis J. W. Ford, U. S. Atty., and Arthur L. Murray, Sp. Asst. to U. S. Atty., both of Boston, Mass., James W. Morris, Asst. Atty. Gen., and Andrew D. Sharpe and John E. Garvey, Sp. Assts. to Atty. Gen.

McLELLAN, District Judge.

This is an action at law against the United States to recover taxes assessed and collected on the untenable theory that a jigsaw puzzle of more than 50 pieces is a game.

The defendant has insisted upon the granting of its motion to dismiss the action before any further proceedings could be had. This insistence is the occasion for the numerous exceptions to the admission of evidence with which the stenographic record is replete. The motion is in substance that "this Court is without jurisdiction to hear and determine this cause of action" because barred by section 3226 of the Revised Statutes of the United States, as amended by section 1103 of the Revenue Act of 1932, 26 U.S.C.A. §§ 1672-1673, "for the reasons set out in the affidavit for respondent." The affidavit was in substance that the claim for refund, a copy of which was annexed to the affidavit, did not satisfy the requirements of section 621 (d) of the Revenue Act of 1932, 26 U.S.C.A. § 1420 et seq. note, in that it did not establish "in accordance with regulations prescribed by the Commissioner with the approval of the Secretary, (1) that he has not included the tax in the price of the article with respect to which it was imposed, or collected the amount of tax from the vendee, or (2) that he has repaid the amount of the tax to the ultimate purchaser of the article, or unless he files with the Commissioner written consent of such ultimate purchaser to the allowance of the credit or refund."

There was also a long motion by the petitioner to strike the motion to dismiss.

A short parenthetical observation as to these motions may not be amiss. The respondent's motion raises no real question of jurisdiction. It is an attempt to have a portion of the case heard before a hearing of the whole case. This is sometimes desirable and under the state practice is permissible, in the absence of the court's consent, only in equity. Sometimes it is economical to hear first a single issue, and sometimes the contrary is true. As to the petitioner's motion to strike the respondent's motion, it seems unnecessary. On January 7, 1938, both motions were set down for a hearing and counsel for the petitioner wished to introduce evidence pertinent to the motions. The time allotted to the hearing being insufficient for this purpose, I concluded, as a discretionary matter, to postpone further consideration of the motions. The case was then set down for a hearing on March 1, 1938, upon the motions and the merits. At this time counsel for the respondent urged that the motion to dismiss be heard first and determined before a hearing upon the merits of the case. I had seen enough of the controversy to be satisfied that it would save time and be fair to both parties if I took all of the evidence bearing upon the issues presented by the motions and by the petition and answer. In this connection, attention may be called to the fact that the motion to dismiss is not treated as the equivalent of a demurrer, but by its very terms is dependent upon facts set forth in an affidavit. Accordingly, I propose to state the facts as they appeared at the trial, and then the conclusions as to the motion to dismiss and as to the judgment which should be entered.

By oral stipulation, as disclosed by the stenographic record, it appears, and I find, that the petitioner paid to the collector of internal revenue a total of $67,390.34, made up of items as follows:

                   April 17, 1933            $   8,848.17
                   April 27, 1933               14,923.63
                   June 6, 1933                 19,031.60
                   June 6, 1933                 10,491.42
                   March 23, 1934                  650.54
                   January 3, 1934                 106.16
                   February 13, 1934               105.97
                   January 24, 1935             13,232.85
                                           ________________
                                               $67,390.34
                

Of this amount, a total of $9,211.98 has been refunded in two items of $7,000 and $2,211.98. A balance of $58,178.36 has therefore been retained by the collector. It is this amount which, with interest, the petitioner seeks to recover in this action.

On January 30, 1935, the petitioner filed a claim for refund on Form 843 of the Treasury Department. In the ensuing copy of the claim, the underlined material represents what was added to the blank form, and the matter not underlined represents the blank before it was filled. It reads:

"Form 843 Treasury Department Internal Revenue Service Revised June, 1930 Claim

"To Be Filed With The Collector Where Assessment Was Made Or Tax Paid

"The Collector will indicate in the block below the kind of claim filed, and fill in the certificate on the reverse side.

Collector's Stamp • Refund of Tax Illegally ---------------- Collected. | (Date received | • Refund of Amount Paid | | for Stamps Unused, or | | Used in Error or Excess | | • Abatement of Tax Assessed | | (not applicable | | to estate or income | | taxes). ---------------- "State of Massachusetts | > ss County of Middlesex | Name of taxpayer or purchaser of University Distributing stamps Company ------ c/o O. Walker Taylor Type Attorney or Business address (Street) (City) (State) Print 11 Beacon Street ------ Boston, Massachusetts

"The deponent, being duly sworn according to law, deposes and says that this statement is made on behalf of the taxpayer named, and that the facts given below are true and complete:

1. District in which return (if any) was filed Massachusetts

2. Period (if for income tax, make separate form for each taxable year) from June 6, 1932, to February 13, 1934

3. Character of assessment or tax Excise taxes under Section 609, Act of 1932 26 U.S.C.A. § 1420 et seq. note.

4. Amount of assessment, $67,390.34; dates of payment See Par. No. 1 below.

5. Date stamps were purchased from the Government

6. Amount to be refunded (or such other amount legally refundable) $67,390.34

7. Amount to be abated (not applicable to income or estate taxes)

8. The time within which this claim may be legally filed expires, under Section 1106 (a) of the Revenue Act of 1932 26 U.S.C.A. § 1433, on April 17, 1937.

"The deponent verily believes that this claim should be allowed for the following reasons:

1. The sums herein claimed for refund aggregating $67,390.34 represent taxes, interest and penalties collected from the claimant upon the manufacture of jig-saw puzzles so-called under the guise of Sec. 609 of the Revenue Act of 1932 and the dates of payment were as follows:

                April 17, 1933  $ 8,848.17  April 23, 1934  $   650.54
                April 27, 1933   14,923.63  Jan.   3, 1934      106.16
                June   6, 1933   19,031.60  Feb.  13, 1934      105.97
                June   6, 1933   10,491.42  Jan.  24, 1935   13,232.85
                

2. The claimant contends that jig-saw puzzles are not `sporting goods', `games' or any other such article as contemplated by the statute but that such articles are expressly exempt from taxation under the statute since they are both in fact and in law `toys' or `puzzles' as the name implies, and that, therefore, the taxes, penalties and interest, indicated above, were wrongfully, illegally, and erroneously collected. Consideration of this claim at an early date is urgently requested.

(Attach letter size sheets if space is not sufficient)

Signed University Distributing Co. By S David Adams Treas.

"Sworn to and subscribed before me this 30th day of January, 1935.

S Timothy W. Good, Jr., Notary Public (Signature of officer administering (Title) oath) Notarial Seal (See Instructions on Reverse Side) 2 — 11704"

All the foregoing appeared on the face of the claim for refund. On the back appeared some printed matter not necessary here to be stated, followed by the following printing:

"Instructions

"1. The claim must set forth in detail and under oath each ground upon which it is made, and facts sufficient to apprise the Commissioner of the exact basis thereof.

"2. The claim should be sworn to by the taxpayer, if possible. Whenever it is necessary to have the claim executed by an attorney or agent, on behalf of the taxpayer, an authenticated copy of the document specifically authorizing such agent or attorney to sign the claim on behalf of the taxpayer shall accompany the claim. The oath will be administered without charge by any collector, deputy collector, or internal revenue agent.

"3. If a return is filed by an individual and a refund claim is thereafter filed by a legal representative of the deceased, certified copies of the letters testamentary, letters of administration, or other similar evidence must be annexed to the claim, to show the authority of the executor, administrator, or other fiduciary by whom the claim is filed. If an executor, administrator, guardian, trustee, receiver, or other fiduciary files a return and thereafter refund claim is filed by the same fiduciary, documentary evidence to establish the legal authority of the fiduciary need not accompany the claim, provided a statement is made on the claim showing that the return was filed by the fiduciary and that the latter is still acting.

"4. Where the taxpayer is a corporation, the claim shall be signed with the corporate name, followed by the signature and title of the officer having authority to sign for the corporation.

"U. S. Government Printing Office 1930 2 — 11704"

On February 1, 1935, Mr. Thomas B. Hassett, acting collector for the Massachusetts district, wrote the petitioner in part as follows: "Receipt is acknowledged of claim filed by you in duplicate, received in this office January 31, 1935, for alleged overpayment of excise...