Opinion
[Copyrighted Material Omitted] Walter J. Carrico, of Tulsa, Okl., for plaintiffs. George H. Foster, of Washington, D. C., and Frank J. Wideman, Asst. Atty. Gen., for the United States.
Before BOOTH, Chief Justice, and GREEN, LITTLETON, WILLIAMS, and WHALEY, Judges.
This case having been heard by the Court of Claims, the court, upon the stipulation of the parties and the documents and instruments offered in evidence, makes the following special findings of fact:
The Winona Oil Company was incorporated under the laws of the state of Missouri on June 20, 1906, and was dissolved on December 27, 1922, pursuant to the laws of that state, and an affidavit of dissolution duly filed on February 20, 1923.
At the time of dissolution, the board of directors of the Winona Oil Company consisted of Frank M. Breene, W. J. Breene, Edmond C. Breene, Samuel S. Bryan, C. W. S. Cobb, George N. Meissner, and Arthur F. Seep. The only other persons who had served as members of the board of directors subsequent to January 1, 1917, were John E. McKinney, R. W. Morrison, and John W. Morrison. The plaintiffs herein, Edmond C. Breene, Samuel S. Bryan, Arthur F. Seep, and George N. Meissner, were on June 6, 1932, the sole surviving members of the aforesaid board of directors at the date of dissolution.
The Winona Oil Company, on March 28, 1918, filed its income and excess profits tax returns for the calendar year 1917 reporting a tax of $47,882.30 which was paid in 1918. A similar return was made for the year 1918 reporting a tax of $86,235.68, upon which there was paid in the year 1919 the sum of $64,775.15; and a return was made for the year 1919 showing a tax of $1,518.27, which was paid in 1920.
On December 26, 1922, the Winona Oil Company of Delaware was organized under the laws of the state of Delaware. On December 27, 1922, the Winona Oil Company of Delaware became the owner of all the assets and assumed all the liabilities of the Winona Oil Company, and became liable at law and in equity for any and all federal income and excess profits taxes due from the Winona Oil Company for the calendar years 1917 to 1919, inclusive, which were or might thereafter be lawfully assessed against said Winona Oil Company, and became liable as transferee under the provisions of section 280 of the Revenue Act of 1926 (26 USCA § 1069 and note) for any and all Federal income and excess profits taxes due from the Winona Oil Company for the calendar years 1917 to 1919, inclusive, which were or might thereafter be lawfully assessed against the Winona Oil Company or against the Winona Oil Company of Delaware as transferee. The Winona Oil Company of Delaware was entitled to receive the proceeds from any refund of federal income and excess profits taxes overpaid by the Winona Oil Company for the calendar years 1917 to 1919, inclusive, which might be paid or payable to the Winona Oil Company or its lawful trustees.
On December 27, 1922, the board of directors of the Winona Oil Company were W. J. Breene, Arthur F. Seep, S. S. Bryan, Frank M. Breene, George N. Meissner, C. W. S. Cobb, and Edmond C. Breene. The board of directors of the Winona Oil Company of Delaware was identical, except that there was also included in the board of directors of the Winona Oil Company of Delaware, Kirol R. Holm. The president, treasurer, secretary, and assistant treasurer were the same for the Delaware company as for the Missouri company, and so remained until September 10, 1924. On that date E. C. Breene became president, but Kirol R. Holm remained secretary and Arthur F. Seep treasurer to January 6, 1933.
On February 16, 1926, the Commissioner of Internal Revenue addressed and sent a '60-day letter,' stating that an additional tax liability for the year 1917 of $11,361.16 and for the year 1919 of $3,104.75 had been disclosed by its returns for those years and also an overassessment for the year 1918 of $57,068.91. The letter requested that, if the said company desired to acquiesce in this determination, it execute an agreement inclosed which stated that the taxpayer agreed to the determination of taxes as indicated in its letter and shown above. This agreement consenting to the assessment was executed by the Winona Oil Company of Delaware by its secretary and returned to the Commissioner.
On April 27, 1926, assessments were made against the Winona Oil Company for the years 1917 and in the amounts of $11,361.16 and $3,104.75, respectively. An overassessment of $57,068.91, having been scheduled in favor of the Winona Oil Company for 1918 and sent to the collector together with a schedule of refunds and credits, was thereafter returned by the collector showing the disposition of said overassessment of $57,068.91 for the year 1918 as follows: $21,558.91, having been assessed for 1918, but not paid, that amount was abated; $11,476.64 was credited to the additional assessment for the year 1917; $3,136.31 was credited to the additional assessment for the year 1919; $7,175.87 was otherwise credited so as not to be issue in the instant suit; and the balance, $13,721.18, was shown as a refundable overpayment.
This schedule of refunds and credits was signed by the Commissioner on June 7, 1926.
Thereafter the certificate of overassessment for the year 1918 was mailed to the Winona Oil Company, Kennedy building, Tulsa, Okl., by the collector of internal revenue, together with the Treasury check for $20,441.16, which sum consisted of $13,721.18, overpayment of tax; $6,617.54, interest on the overpayment; $98.38, interest refunded; and $4.06 interest on the refunded interest.
This check was received by the Winona Oil Company of Delaware, was subsequently indorsed 'Winona Oil Company, by Arthur F. Seep, treasurer,' and the proceeds received by the Winona Oil Company of Delaware.
The following waivers among other were filed with the Commissioner of Internal Revenue:
Unlimited waiver for 1917, filed February 8, 1921, signed on behalf of Winona Oil Company by its vice president and secretary.
Unlimited waiver for 1917, filed February 11, 1924, signed on behalf of Winona Oil Company by the vice president of the Winona Oil Company of Delaware.
Unlimited waiver for 1917 and 1918, filed March 1, 1924, signed on behalf of the Winona Oil Company by the secretary of the Winona Oil Company of Delaware.
Unlimited waiver for 1917, filed March 6, 1924, signed on behalf of the Winona Oil Company by the secretary of the Winona Oil Company of Delaware.
One-year extension waiver for 1917, 1918, and 1919, filed December 31, 1924, signed on behalf of the Winona Oil Company by its vice president, and bearing the seal of the Winona Oil Company of Delaware.
Waivers to December 31, 1926, for 1917 and 1919, filed November 19, 1925, signed on behalf of the Winona Oil Company by its vice president, and bearing the seal of the Winona Oil Company (the Missouri corporation).
Several claims for refund were made, but only the two filed on May 28, 1930, are material to the issues joined in the case. One of these claims was for the refund of $11,476.64 which was applied on the taxes of 1917, as stated above, on the ground that such application had been made after the statutory period for assessment and collection of the taxes for 1917 had expired and that any waivers executed by the taxpayer had expired April 1, 1924. The other claim was for the refund of $3,136.31 which had been applied on the tax for 1919, as above stated, on the ground that this application had been made after the statutory period for assessment and collection of the 1919 taxes had expired and that any consent or waivers relied upon by the Commissioner or executed by the Winona Oil Company of Delaware and signed in its behalf by Kirol R. Holm, its vice president, were invalid.
GREEN, Judge.
This suit is brought by the plaintiffs as statutory trustees of the Winona Oil Company, a dissolved corporation, to recover $14,612.95 with interest, being a part of an overassessment paid on the taxes of the year 1918 which was credited on additional assessments for the years 1917 and 1919 made April 27, 1926.
The Winona Oil Company, of which the plaintiffs are statutory trustees, was dissolved December 27, 1922, and an affidavit of dissolution filed February 20, 1923. The plaintiffs herein were at the time this suit was commenced the sole surviving members of the board of directors as it existed at the date of dissolution. At the time this company was dissolved, the Winona Oil Company of Delaware became the owner of all of the assets and assumed all of the liabilities of the Winona Oil Company, becoming thereby liable for all of the federal taxes due from the Winona Oil Company for the years 1917 to 1919, inclusive, and also entitled to receive the proceeds from any refund thereof which might be paid to the Winona Oil Company or its lawful trustees. The directors of the two companies were the same persons except that on the board of the Delaware corporation was one Kirol R. Holm, who was secretary of the Missouri company, but not a member of the board of directors. He continued as secretary of the Delaware company, and Arthur F. Seep was treasurer of both companies. The same parties were evidently in control of the corporations.
Plaintiffs contend that the assessments of additional taxes upon which the credits were applied, as above stated, were not made until after the period of limitation upon assessment for 1917 and 1919 had expired, and also that the collection of taxes for these years was barred at the time when the Commissioner made the credits. On behalf of the defendant it is conceded that the statutory period for the assessment and collection of these taxes had expired when the credits were made, but it is urged that, by virtue of a number of waivers filed, the period for assessment and collection thereof was extended, and that in any event plaintiffs' action was not begun in time and is barred by the statute of limitations.
Under the facts shown by the evidence and set out in the findings, we think it is so clear that plaintiffs are not entitled to recover that it is unnecessary to enter into an extended discussion of the law applicable thereto. The fact that the company was dissolved and the plaintiffs became trustees for the purpose of settling its affairs did not prevent the government from proceeding with the assessment of taxes. Wonder Bakeries Co. v. United States, 6 F.Supp. 228, decided by this court June 4, 1934. And, if the dissolution did not prevent the plaintiffs from bringing this suit, it also did not prevent proceedings for the settlement of debts and claims against the Winona Oil Company. The plaintiffs must have known of the filing of the waivers, the last of which was executed in behalf of the Winona Oil Company by its vice president, and, under the rules laid down in Helvering, Commissioner, v. Newport Company, 291 U.S. 485, 54 S.Ct. 480, 78 L.Ed. 929, was valid. Upon the same principle we think the consent which was filed on behalf of the Winona Oil Company to the assessments in controversy was also valid. But it is not necessary to rest the decision on these matters.
The Commissioner, having received the assent of the Winona Oil Company to the assessments in controversy, proceeded to make them accordingly. Thereafter he sent the Winona Oil Company a certificate of overassessment for the year 1918, which stated that part of this overassessment had been applied in satisfaction of the deficiency assessments for 1917 and 1919, and transmitted therewith a check payable to the Winona Oil Company for the balance of the overassessment. This check was indorsed 'Winona Oil Company, by Arthur F. Seep, treasurer,' and the proceeds turned over to the Winona Oil Company of Delaware. It is immaterial that the evidence does not show that all the plaintiffs participated directly in this transaction. If they did not have knowledge, and they are chargeable with knowledge, and must be held to have ratified the disposition of the check and the proceedings which led up to its issuance. The company which plaintiffs represented having received the benefits of these transactions, they are now estopped to deny their validity, and, as a result thereof, the tax account between the defendant and the Winona Oil Company was settled. Cf. R. H. Stearns Co. v. United States, 291 U.S. 54, 54 S.Ct. 325, 78 L.Ed. 647. This is not all. Several claims for refund were made, but plaintiffs base their suit upon two which were filed May 28, 1930. One of these claims was for the refund of $11,476.64, which was applied on the taxes of 1917, as stated above, and the other for the refund of $3,136.31, which had been applied on the taxes of 1919. Both was based on the ground that the statutory period for the assessment and collection of the taxes for the respective years had expired. If we are correct in what has been stated above, the statutory period had been extended by the waivers; but, even if the waivers were invalid and there was no estoppel, there is another fatal objection to plaintiffs' case. The petition was not filed until more than four years after the payment of the taxes for 1917 and 1919 upon which a refund is now claimed. Plaintiffs contend that, when the Commissioner credited part of the overassessment for 1918 upon the taxes of 1917 and 1919, he thereby created a new cause of action for the recovery of the overpayment on the taxes of 1918, that its refund claims are based upon this cause of action, and the suit, having been brought within two years from the time the refund claims were rejected, is in time. This theory in somewhat different form was considered in Rosenstadt & Waller, Inc. v. United States, 7 F.Supp. 287, decided by this court June 4, 1934, and the majority of the court held that it had no support in the statutes.
Plaintiffs' petition must be dismissed, and it is so ordered.