West Virginia Rail Co. v. Jewett Bigelow & Brooks Coal Co.
| Decision Date | 23 February 1928 |
| Citation | 26 F.2d 503 |
| Parties | WEST VIRGINIA RAIL CO. v. JEWETT BIGELOW & BROOKS COAL CO. et al. |
| Court | U.S. District Court — Eastern District of Kentucky |
Jos. S. Graydon, of Cincinnati, Ohio, for plaintiff.
J. R. Schindel, of Cincinnati, Ohio, for Defendants.
This suit is before me on several matters:
First. The claim of the United States for taxes:
(1) The United States concedes that the 1917 taxes are barred. The claim for these taxes, therefore, is disallowed.
(2) The receiver concedes that the 1920 taxes are not barred. The claim for these taxes, therefore, is allowed.
(3) This leaves for determination the claims for 1918 and 1919 taxes. The claims for 1918 taxes are as follows: Jewett-Bigelow & Brooks, $69,393.33; Harlan-Fox Coal Company, $3,921.27.
The United States claims that the Jewett-Bigelow & Brooks claim is covered by a waiver. The receivers insist that the waiver should be produced. As to the Harlan-Fox Coal Company, the United States claims that the return was filed June 17, 1919, and the assessment was made March 12, 1924. The receivers insist that evidence of this should be produced. I think the position of the receivers in these two particulars is sound, and action is withheld until the waiver and evidence referred to are produced.
The claims for 1919 taxes are as follows: Jewett-Bigelow & Brooks, $1,931.10; J. B. Stores Company, $701.90.
The United States claims that these taxes were assessed March 5, 1925. I do not understand that the receivers question this. Indeed they concede that these two assessments were made on that date, and state that proofs of those claims were field with them March 14, 1925. Their position is that the filing of the claims with them was not the beginning of a proceeding to collect the taxes, and, as nothing else had been done by the United States, and more than five years has elapsed since the filing of the returns, the claims are barred. The United States contends that the filing of the claims with the receivers was the beginning of a proceeding for the collection of the claims, but, whether so or not, the assessment having been duly made within five years after the filing of the returns, the United States under section 278 (d) of the Act of 1924 (26 USCA § 1061 (d); Comp. St. § 6336 1/6zz (5) (d) had six years in which to enforce their collection. That such is the case was held in United States v. Russell (C. C. A.) 22 F.(2d) 249, and I think this decision sound. The words "without assessment" in the Act of 1926 (26 USCA § 105) make explicit what was implicit in section 277 (a) (2) of the Act of 1924 (26 USCA § 1057 (a) (2); Comp. St. § 6336 1/6zz (4) (a) (2). Otherwise we have this result: An assessment could be validly made on the very last moment of the five-year period, but no suit or proceeding for its collection could be brought because the making of the assessment had used up all of that period which was left when it was made. It could only be begun after the expiration of the five-year period. Section 278d provides that, "where the assessment of the tax is made within the period prescribed in section 277," it may be collected within six years after the assessment. This includes the assessment of a tax for year 1918, covered by section 277 (a) (2). And treating the provision as to beginning suit or proceeding to collect such tax having implicit in it the words "without assessment" brings the two provisions into harmony.
This relieves me of the necessity of determining whether the filing of the claims with the receivers was a beginning of a proceeding within the five years.
(4) Allocation of the Refunder. — The defendant Jewett-Bigelow & Brooks Company, which owned all the capital stock of the other defendant companies, and operated their properties, overpaid the United States, according to the determination of the assessing authorities, for the year 1920, the sum of $65,396.25, and it is entitled to have this with interest refunded to it. It had included all its subsidiaries in its return for 1920. The United States has determined that each subsidiary should have made its own return, and has made assessments accordingly. It is these separate...
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