Opinion
Suit by the Gratons&sKnight Company against the United States.
Petition dismissed.
Howe P. Cochran, of Washington, D. C. (C. Leo De Orsay, of Washington, D. C., on the brief), for plaintiff.
John W. Hussey, of Washington, D. C., and Robert H. Jackson, 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 report of a Commissioner and the evidence, makes the following special findings of fact:
1. The Graton & Knight Manufacturing Company (hereinafter referred to as the 'Manufacturing Company' or, for convenience, as 'plaintiff') was a Massachusetts corporation organized January 1, 1872. It was dissolved April 30, 1928, by act of the Massachusetts Legislature (St.Mass.1928, c. 273). Prior to its dissolution, namely, March 1, 1926, a reorganization was effected under which all of its assets were acquired and its liabilities assumed by The Leather Company, a corporation organized on that date. The name of The Leather Company was changed May 14, 1926, to the Graton & Knight Company, plaintiff herein. Plaintiff brings this action as successor to the Manufacturing Company.
2. March 29, 1918, plaintiff filed its income and profits tax returns for 1917 showing a tax liability of $84,671.25, which was paid June 13, 1918. September, 1920, the Commissioner assessed an additional tax of $57,558.50 against plaintiff for 1917, and November 17, 1920, plaintiff paid $46,290.44 of such amount, leaving an unpaid balance of $11,268.06. On account of such balance an abatement claim for $9,627.77 was filed November 17, 1920, and at the same time a claim for credit was filed for $1,640.29. As a result of the filing of such claims the collection of such amount ($11,268.06) was stayed. May 16, 1925, the claim in abatement was rejected. July 24, 1925, the collector credited $11,268.06 on account of an overpayment for 1919 against the unpaid assessment for 1917, and such action was approved by the Commissioner August 13, 1925. No action was taken on the claim for credit other than appears in finding 6, where a refund of that amount is shown to have been made for 1917.
3. April 6, 1923, plaintiff executed an unlimited waiver for 1917. Such waiver was not signed by the Commissioner personally, but it was signed on his behalf some time subsequent to October 6, 1927, by A. B. Niess, head of Records Division, Income Tax Unit, who was duly authorized to sign such an instrument. February 5, 1924, and January 8, 1925, plaintiff executed additional waivers for 1917 (the latter also including 1914, 1915 and 1916), the first of which purported to extend the statutory period for assessment and collection for one year after the expiration of the statutory period then existing and the second until December 31, 1925, with certain limitations and conditions not here material. The two last-named waivers were likewise not signed by the Commissioner but his signature was placed thereto in the office of L. T. Lohman, who was then head of the Consolidated Returns Division of the Income Tax Unit and duly authorized by the Commissioner to sign such instruments. Lohman did not sign the waivers on behalf of the Commissioner, but the Commissioner's name and Lohman's initials thereunder were placed thereon by employees in Lohman's office and in accordance with oral instructions and directions of Lohman.
4. May 5, 1925, the Commissioner, by sixty-day letter, advised plaintiff of a final determination of deficiencies as follows:
1914 ..
$ 713.65
1915 .....
2,647.70
1916 .....
5,533.49
1917 ...
105,574.93
The same letter showed overassessments as follows:
August, 1925 the Commissioner assessed the foregoing deficiencies, and August 13, 1925, prepared a schedule of overassessments on which appeared the foregoing overassessments. In conformity with the usual instructions appearing on such a schedule of overassessments the collector applied the overassessments for 1909 to 1913 (which were also found to be overpayments) against the deficiencies for 1914 and 1915. Such credits were equal to the additional tax for 1914 and $842.52 of the additional tax for 1915, leaving a balance in the latter account of $1,805.18, which, together with the additional tax for 1916, was paid November 30, 1925. October 13, 1925, the collector prepared and forwarded to the Commissioner a schedule of refunds and credits which, together with the schedule of overassessments, showed the application of the overpayments for 1909 to 1913 as indicated above, and such schedule was approved by the Commissioner October 28, 1925.
1909 ..
$ 31.74
1910 ....
72.99
1911 ...
958.17
1912 ...
257.14
1913 ...
236.13
5. The additional assessment of $105,574.93 for 1917 (referred to in finding 4) was paid as follows:
December 17, 1925 ..
$55,309.30
January 9, 1926 ......
7,852.38
March 9, 1926 .......
42,413.25
6. February 4, 1929, plaintiff filed a claim for refund of $163,133.43 for 1917, and assigned the following basis therefor:
'The amount of $57,558.50 was assessed in 1920, but a portion only was collected within five years after the return for 1917 was filed. (New York and Albany Lighterage Co.) The balance of $105,574.93 was not assessed or collected within the statutory period of limitations. See New York & Albany Lighterage Co., Joy Floral Co. v. Commissioner, 58 App.D.C. 277, 29 F. (2d) 865, decided by Court of Appeals, District of Columbia, December 3, 1928, and Benj. Russell v. United States, 278 U.S. 181, 49 S.Ct. 121, 73 L.Ed. 255, decided by Supreme Court January 2, 1929.
'The taxpayer reserves the right to add new and further reasons why this claim should be allowed. An oral hearing is requested.'
September 3, 1929, the Commissioner allowed the claim for, and refunded, $1,640.29 (the amount of the claim for credit referred to in finding 2) to plaintiff, and rejected it for $161,493.14.
BOOTH, Chief Justice.
The plaintiff, a Massachusetts corporation, sues to recover $105,574.93, with interest thereon, on the grounds that the tax exacted by the Commissioner was assessed and collected at a time when the statute of limitations precluded such action.
The tax involved was an additional assessment for the year 1917. It was assessed in August, 1925, and paid in installments on proper dates thereafter. On January 8, 1925, the plaintiff filed a waiver extending the period for the assessment of the tax to December 31, 1925. A refund claim was timely filed and denied by the Commissioner.
The validity of the above waiver is challenged by the plaintiff. The necessity for having the waiver is apparent. Plaintiff sought to establish by oral testimony that the Commissioner did not consent in writing to the waiver, as section 278(c) of the Revenue Act of 1924, 43 Stat. 299, and the corresponding provision of the Revenue Act of 1926, § 278(c), 44 Stat. 59, provide he should do.
The basis for this contention centers upon the signatures placed upon the waiver in the Bureau of Internal Revenue when the same was received for filing. The waiver was not signed individually by the Commissioner. The Commissioner's signature was placed thereon by an employee in the office of L. T. Lohman, at the time head of the Consolidated Returns Division of the Income Tax Unit. Lohman's authority to sign the Commissioner's name to waivers is not challenged, and Lohman's initials were placed upon the waiver beneath the Commissioner's signature by some employee in his office. This fact is disputed but, we think, established.
In view of the numerous precedents involving the validity of waivers provided for and executed under section 278(c) of the Revenue Act of 1924 and similar provisions in other acts (see 26 U.S.C.A. § 276 and note), it is apparent that practically every technical question capable of being raised, affecting their validity, has been adjudicated. Stearns Co. v. United States, 2 F.Supp. 773, 77 Ct.Cl. 264; Id. 291 U.S. 54, 54 S.Ct. 325, 78 L.Ed. 647; Riverside & Dan River Cotton Mills v. United States, 11 F.Supp. 134, 81 Ct.Cl. 610; Id., 296 U.S. 624, 56 S.Ct. 148, 80 L.Ed. 444; Horuff v. United States, 9 F.Supp. 1016, 80 Ct.Cl. 761; Eclipse Lawn Mower Co. v. United States, 1 F.Supp. 768, 76 Ct.Cl. 354; Florsheim Brothers Co. v. United States, 280 U.S. 453, 50 S.Ct. 215, 75 L.Ed. 542; Stange v. United States, 282 U.S. 270, 51 S.Ct. 145, 75 L.Ed. 335; Sabin v. United States (Ct.Cl.) 44 F. (2d) 70; Fleitmann et al. v. Burnet, 62 App.D.C. 88, 65 F. (2d) 176; Pennsylvania-Dixie Cement Corporation v. United States, 83 Ct.Cl. ----, 17 F.Supp. 196, 200.
The plaintiff seeks to segregate the facts in this case from the record of adjudicated cases, and emphasizes a distinction predicated upon the testimony of Lohman, wherein he said that he did not sign the waiver and can not identify anyone in his office who did so. The witness was testifying some five or six years after the transaction and, manifestly, in view of the numerous transactions of a similar character and the volume and character of the work of his office, it is not at all strange that the details of precisely what was done escaped him.
There is no evidence that Lohman did not consent to the waiver and there is positive evidence that as head of the division he adopted what was done. The controversy in this case centers upon the signatures appearing upon the waiver, the plaintiff insisting that the testimony of the witness that he did not personally sign the waiver renders it invalid, obviously upon the contention that he did not consent in writing to it. The very fact that the witness testified that he did not personally sign the Commissioner's name to the waiver, or that he does not recall who did sign, in no way disproves Lohman's consent to the same, for he positively testified that 'the letters and the waivers and the communications and the memoranda all came into the office and as we had time we signed them, the girls and myself.' In addition to this fact, it appears of record that this waiver was duly recorded, as having been consented to in writing, in a book kept by the head of this division for the purpose of exemplifying waivers which had been consented to in writing.
The case and the statute involved clearly disclose a practical as well as legal administration. The waiver was treated in precisely the same routine procedure long adopted and enforced in the Bureau. It was on the form prescribed by the Bureau and waivers upon such a form were uniformly consented to as a formality. Hundreds of such waivers reached the witness; to sign them individually would have exacted exclusive application to the task and all that was done by the person who did affix the signatures was the mechanical and ministerial act of designating a previous consent which undoubtedly had been given to the same.
What the court said in the Pennsylvania-Dixie Cement Corporation Case, supra, is apropos: 'We think the plaintiff's contentions are entirely without merit. The head of the division in the Bureau which considered the returns for 1914 to 1916, inclusive, had a general authorization to sign the Commissioner's name to waivers. We think it immaterial whether this official personally placed the Commissioner's name on the waivers for those years or had it placed thereon by one of the clerks of his office working under his directions. It could make no earthly difference to the plaintiff or to any one else whether this official personally signed the Commissioner's name to the waiver or whether that act was performed at his direction by a clerk in his office. In substance the act of the clerk was the act of the official himself. The waiver for the years 1914 to 1916 was therefore valid. The same is true as to the waivers for the year 1917 signed on behalf of the Commissioner under the same circumstances.'
There is no evidence in this case warranting a finding that what was done in executing the waiver was done without authority, and nothing whatever disclosed which in any way prejudiced plaintiff's rights in the premises. We think finding 3 is sustained by the record, and the petition will be dismissed. It is so ordered.