Vica Co. v. Commissioner of Internal Revenue

• Decision Date: 20 January 1947
• Docket Number: No. 11206.,11206.
• Citation: 159 F.2d 148
• Parties: VICA CO. v. COMMISSIONER OF INTERNAL REVENUE.
• Court: U.S. Court of Appeals — Ninth Circuit

159 F.2d 148 (1947)

VICA CO. v. COMMISSIONER OF INTERNAL REVENUE.

No. 11206.

Circuit Court of Appeals, Ninth Circuit.

January 20, 1947.

Walter A. Gleason, of San Francisco, Cal., and Max Radin, of Berkeley, Cal., for petitioner.

Sewall Key, Acting Asst. Atty. Gen., and Helen R. Carloss, Newton K. Fox, and Harry Marselli, Sp. Assts. to Atty. Gen., for respondent.

Before GARRECHT, HEALY, and BONE, Circuit Judges.

GARRECHT, Circuit Judge.

Vica Company, petitioner herein, has appealed from the order of dismissal of the Tax Court of the United States of a claim for refund of processing taxes paid by it on the processing of hogs. The claim relied upon by the Vica Company was filed on June 30, 1937, with the Collector of Internal Revenue for the First District of California, pursuant to Title VII, Revenue Act of 1936, c. 690, 49 Stat. 1648, 26 U.S.C.A. Int.Rev.Acts, page 960 et seq., entitled: "Refunds of Amounts Collected Under the Agricultural Adjustment Act."¹

Pursuant to this statute and regulations, as a condition of the allowance of a refund, the claimant is required to file a claim stating the ground of the claim, supported by factual evidence, under oath, relied upon to show that it bore the burden of the tax and did not shift it to others.

The Tax Court held with the Commissioner that the petitioner failed to satisfy the requirements of the applicable provisions of the Revenue Act of 1936 and the regulations promulgated thereunder in that the claimant did not set forth sufficient facts from which the amount of the tax burden borne by it in the processing of hogs, and not shifted, as indicated by marginal evidence,² could be computed. It further held that evidence of new or additional facts not set forth in the claim may not be introduced at the trial, and where the claim is clearly inadequate in its statement of facts, the proceeding may be dismissed without hearing, since a hearing would serve no useful purpose.

Petitioner contends that the Tax Court erred in declaring the claim insufficient because it failed to allege the marginal data, and if there were any technical defects in the claim, the Commissioner waived these defects by his course of conduct.

A case decided December 5, 1946 by the United States Circuit Court of Appeals, Sixth Circuit, United States of America v. Standard Oil Company, an Ohio Corporation, 158 F.2d 126, 128, is analogous. In that case the Circuit Court concluded that the claim for refund relied on by the Standard Oil was insufficient to furnish the essential lawful basis for its court action and the judgment of the district court awarding the refund to the Standard Oil Company was reversed and the complaint was directed to be dismissed. The court said:

"It is clear that the statute and the treasury regulations with which we are concerned exact of the taxpayer an affirmative showing that he has not shifted the burden of the tax to the purchaser of the commodity. The effect of this requirement was to add a new element in the right to refund, namely the non-shifting of the tax burden, which was necessary to be asserted and proved as an element of the claim or cause of action, both in the proceeding before the Commissioner and subsequently in the district court. See United States v. Jefferson Electric Manufacturing Co., 291 U.S. 386, 397, 54 S.Ct. 443, 78 L.Ed. 859, in which the additional element was analogous to that involved here.

"* * * the burden rested upon it, (taxpayer) pursuant to the statute and the regulations, to state in its refund claim and to establish before the Commissioner that neither it nor its subsidiaries had included the tax in the price of the oil and gasoline subsequently sold by the subsidiary companies to ultimate purchasers. The appellee taxpayer failed to make such claim or to carry such burden. Meticulous compliance by a taxpayer with conditions prescribed for recovery of taxes paid must appear before the taxpayer can recover. Maas & Waldstein Co. v. United States, 283 U.S. 583, 589, 51 S.Ct. 606, 75 L.Ed. 1285." (Emphasis supplied.)

A necessary part of a proper claim for refund is an adequate statement of the contention of the taxpayer of the extent to which the taxpayer bore the burden of the processing tax, together with a statement of facts in support of that contention.

An examination of the record and of the claim involved in this proceeding shows that the claim is incomplete on its face, that it is wholly inadequate for its purpose and that the claimant wholly failed to comply with the formal conditions of the statute relative thereto.

The Vica Company insists that even if it failed to comply with the requirements of the regulation as to the refund claim, and if there were any technical defects in the claim, the Commissioner waived these defects by his course of conduct, and it is entitled to the opportunity to present to a judicial tribunal the same evidence and data presented to the Commissioner.

The same contention was made in the above mentioned Standard Oil Co. case. There the Circuit Court said:

"The Standard Oil Company insists and the district court held that, even if the taxpayer failed to comply with the requirements of the treasury regulations as to refund claims, compliance was in fact waived by the Commissioner. * * *

"The first authority cited in the opinion of the district court, Tucker v. Alexander, 275 U.S. 228, 231, 48 S.Ct. 45, 72 L.Ed. 253, holds that statutory requirements and requirements of treasury regulations as to refund claims may be waived by stipulation of the parties; but, here, there was no stipulation of waiver. The Commissioner, after investigation and consideration of the claim, rejected it, not only on its merits, but also on the failure of the claimant to claim or establish that it had not passed the tax on to customers. * * *

"The district court mentioned that, in Angelus Milling Co. v. Commissioner of Internal Revenue, 325 U.S. 293, 296, 65 S.Ct. 1162, 89 L.Ed. 1619, Mr. Justice Frankfurter had observed that situations under which the Commissioner has the power to waive defects in claims for refund have not been made crystal clear by the authorities. The language of the opinion of the Supreme Court, 325 U.S. at pages 297, 298, 62 S.Ct. 1162, 89 L.Ed. 1619, was quoted. The holding in the Angelus Milling Co. case, however, was against the right of the taxpayer to recover a refund of a processing tax paid under the Agricultural Adjustment Act, 7 U.S.C.A. § 601 et seq. It was held that the evidence was insufficient to establish that the Commissioner, by investigating the merits of the claim, had waived compliance with requirements of treasury regulations as to the form of the claim; and that the claim, therefore, had been properly rejected. In the instant case, the position of the Government is stronger, for the reason that the defect in the claim for refund is not merely technical but is most substantial in that there was a failure on the part of the taxpayer to claim and establish an essential statutory element upon which its right to a refund was grounded." (Emphasis supplied.)

We quote the above for the reason that in this case claimant too relies on Tucker v. Alexander, 275 U.S. 228, 48 S.Ct. 45, 72 L.Ed. 253, cited above. Here the Commissioner's alleged waiver would have been an attempted abandonment of an absolute defense to the claim, and the decisions are numerous emphasizing that conditions precedent to suit, prescribed by statute, cannot at least without proper stipulation, be waived by the Commissioner but must be complied with strictly.

Petitioner refers to the case of Anniston Manufacturing Co. v. Davis, 301 U.S. 337, 57 S.Ct. 816, 81 L.Ed. 1143, to make clear the relation between the jurisdiction of the Commissioner and of the Processing Tax Board of Review (now the Tax Court) in his...