233 F. 704 | M.D. Penn. | 1915
Suit was instituted by the plaintiff to recover an excise tax assessed by the Internal Revenue Department and paid under protest. Judgment was entered December 24, 1915, for want of an affidavit of defense. This judgment the court is now requested to open, in order that the defendant may defend.
In support of the proposition that this court has the authority implied in the motion, attention has been directed to the cases of King v. Brooks, 72 Pa. 363, and Ladd v. Stevenson, 112 N. Y. 325, 19 N. E. 842, 8 Am. St. Rep. 748. An effort to distinguish these cases from the one in hand, although the same could likely be successfully accomplished, will not be required, since the proposition is conclusively
“In, this country all courts have terms and vacations. The time of the commencement of every term, if there be half a dozen a year, is fixed by statute, and the end of it by the final adjournment of the court for that term. This is the case with regard to all the courts of the United States, and if there be exceptions in the state courts they are unimportant. It is a general rule of the law that all the judgments, decrees, or other orders of the courts, however conclusive in their character, are under the control of the court which pronounces them during the term at which they are rendered or entered of record, and they may then be set aside, vacated, modified, or annulled by that court. But it is a rule equally well established that after the term has ended all final judgments and decrees of the court pass beyond its control, unless steps be taken during that term, by motion or otherwise, to set aside, modify, or correct 'them; and if errors' exist, they can only be corrected by such proceeding, by a writ of error or appeal, as may be allowed in a court which, by law, can review the decision. So strongly has this principal been upheld by this court that, while realizing that there is no court which can review its, decisions, it has invariably refused all applications for rehearing made after the adjournment of the court for the term at which the judgment was rendered. And this is placed upon the ground that the case has passed beyond the control of the court.”
■ The rule is of universal application, excepting cases wherein the court was influenced by clerical error or mistake. Sibbald v. United States, 12 Pet. 488, 9 L. Ed. 1167; Cameron v. McRoberts, 3 Wheat. 591, 4 L. Ed. 467; Phillips v. Negley, 117 U. S. 665, 6 Sup. Ct. 901, 29 L. Ed. 1013; Bronson v. Schulten, 104 U. S. 410, 415, 26 L. Ed. 797; Allen v. Wilson (C. C.) 21 Fed. 881; Baptist v. Trans. Co. (C. C.) 29 Fed. 180; Grames v. Hawley (C. C.) 50 Fed. 319; Klever v. Seawall, 65 Fed. 373, 12 C. C. A. 653; United States v. Fur Clippings, 106 Fed. 161, 45 C. C. A. 263; King v. Davis (C. C.) 137 Fed. 222; O’Connor v. O’Connor, 142 Fed. 449, 73 C. C. A. 565; United States v. One Trunk (D. C.) 155 Fed. 651; Electric Co. v. Import Co. (C. C.) 159 Fed. 492.
The twentieth paragraph of the statement of claim specifically avers that:
The “company’s property suffered actual depletion by reason of the mining of coal from said property to an amount for each ton so mined of at least 15 cents per ton, and the coal mined and sold by the said companies ’and each of them during the said tax years had, on the 1st of January, 1909, when the Excise Tax Law went into effect, a value in the ground of not less than 15 cents per ton.” v
This is the essential allegation of the complaint. It is to the effect that during these years the depredation or depletion amounted to at least 15 cents per ton. The fact that this was the amount which the Forty Fort Coal Company paid over to the trustee of the mortgage was not the basis of the claim for refund, apparently, but was merely part of the history of the transaction, showing how the government happened to insist erroneously on the disallowance of the claim for depletion. The act of Congress requires the allowance of depreciation of property in a reasonable amount. It is not denied in the petition to set aside that the plaintiff’s property was depleted to the amount of 15 cents for each ton of coal mined. The sole ground of the government’s claim is based on a book entry made in 1912 or 1913, and corrected in 1914.
The decisions under the Excise Tax Law and under the Income Tax Law are uniform to the effect that the government cannot base a claim for taxes on mere bookkeeping. Industrial Trust Co. v. Walsh (D. C.) 222 Fed. 437; Baldwin Locomotive Works v. McCoach (D. C.) 215 Fed. 967; Id., 221 Fed. 59, 136 C. C. A. 660. In the latter case it was decided by the Circuit Court of Appeals for this circuit that mere reappraisement of property by a corporation on its books cannot form the basis of assessment of taxes on net income, even though the books show that during the tax year the value of the property was increased by the amount on which the government claims the regular rate of tax. The plaintiff here has admitted that during the year 1912 or 1913 a certain amount of money was carried on the books of the company in surplus account, but insists that such amount should have been properly noted on the books as depletion reserve.
In the statement of claim, however, the truth of which is in no way disputed, it was specifically averred that the amount so temporarily shown on the books as surplus was not properly surplus, or net income, or profit, but was merely a return of capital asset, being an amount which represented the minimum value of the coal in the ground. It requires no argument to demonstrate that, under a tax law
The rule to open the judgment is denied.
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