*1 Board petition Plaintiff filed asking paid for Economic Warfare pound, plus its rubber at cents 22% shipment and charges connected with Twenty-two and
storage, except freight. pound is about cents
one-half cents a 2% pound plaintiff paid than us, This, Ceylon. it seems to rubber in cover fair amount added to cost to freight profit. opinion $463,361.19 just
We are
compensation, claimed petition
in its filed with the Board of Econ- represents
omic the amount Warfare. This average price at the entitled to surplus program, under the stocks $9,100.66
plus profit. Deducting there- already paid $227,-
from the amounts
333.79 leaves due a balance this, plaintiff is entitled addition compensation payment, for delay at 4 per puted annum from 1942, May 4, 1944, the above sum of $463,361.19, except period February WHITAKER, Judge, dissenting. $236,027.40 per annum on May payment. to date of Judgment will be entered in favor of
plaintiff against the defendant for
027.40, plus computed interest set out
above. sois ordered. Ansell, Tracy B. Washington, D.C. Klein,
(George H. Ethan C. Prewitt and Clark, Klein, Waples, Brucker & De- troit, Mich., Ansell, and Ansell & of Wash- C., ington, D. brief), plaintiff. on the GARGARO v. UNITED STATES. Joseph Sheppard, H. Washington, D. No. 47877. C., Caudle, L. Atty. Theron Asst. Gen. (Robert N. Anderson and Andrew D. Court of Claims. Sharpe, C., Washington, both of D. on the Nov. brief), for defendant. Before and MAD-
DEN, WHITAKER, HOWELL and LIT- TLETON, Judges.
MADDEN, Judge. sues to recover income tax- paid by him for the es petition. demurs are as stated follows: facts *2 $24,000 the 1942, plaintiff was sion his 1942 of During the income for the The company. subsequently Com- employee Gargaro refunded to the of an officer and re- corporation. elapsed and no Inc., statutory time pany, having Michigan sponse for company having made to this emplo>ment the been contract with of refund, stipulated plaintiff brought this suit. provided the receive a that he should that, $24,000, says consisting and, addition, his toas salary payment to- time its profits the cor- he of percent of of net of plaintiff company until re- by of the the year. The amount poration for that paid un- company, definitely it to the by di- profits was to determined net conditionally obligated it because corporation with reference rectors of the paid by company it was and received de- regular The accounting its methods. by plaintiff of under mutual mistake made on profits was termination of the net company’s in- net 31, 1942, as to what was the and. their December for $650,748. come 1942. amount $65,074.80, paid plaintiff his 10 said, de- the Government along with He included amount bonus. plaintiff murs. income tax return his other income $24,000 of in 1942 under a claim paid taxes on it. disposi- and without restriction 1944, 1, pursuant to Sec- August About tion, controversy. and that ends Act 403 of the of points Oil Consoli- to North American 226, 245, by Act of as amended Stat. Burnet, dated 21, 1942, 56 the Act Stat. October language o'f which 1, 1943, 348, 50 U.S. 57 Stat. tends to bear out its contention. C.A.Appendix, the Reconstruction § seems us to situation Adjustment 'Corporation Price Finance plaintiff like Greenwald v. renegotiation proceedings Board initiated F.Supp. Company, Inc. with re- Gargaro against case, this, In that as in 272. company spect by realized to amounts salary plus percentage employed govern- during with 1942 under contracts corporation’s profits. account of net agencies and under subcontracts ants made for three successive false audits agen- governmental with contractors corporation had showing that 3, 1945, the Board deter- March On cies. profits larger made than it made. mined, expressed agreement be- in an paid corporation plaintiff bonuses company dated and the tween the Board plain audits the basis of the false company day, chat paid tiff taxes the bonuses re $240,000 amount real- of the the Board When the were dis ceived. falsifications contracts and subcon- by it ized covered, repaid to- éxcesses company refund- during tracts corporation filed claims for $240,000 March on or before ed the parts its income taxes at of the funds reduced the This refund tributable the excesses. We held $650,748 1942 from profits net plaintiff could recover. of those $65,074.80 which he had wej-e from the impressed in $41,074,80, paid at the end been and, similarly impressed 28, 1945, $24,000. On a reduction June injustice here, with the Govern plaintiff to called company in For the ment’s position. $24,000, which he repay to the keeping by taxes to it a tax sist 29, 1945. payer the mistaken belief June own August which was has received or about by benefit, he received it in fact Collec- when filed with the mistake, and ob an honest Michigan Internal Revenue tor give got no- $18,985.28, liged back to and for a refund a claim District benefit, nothing to be said from there is in- which was the this, morally. the Government can do If increased the inclu- tax had come writ- a claim plainly presence it is (1) law is ditioned because the ten, (2) the interpretation alleged gain fairer because a public obliga- an unclear throw the absence aof *3 repay would revenues into confusion. tion to or return that which serious gain.” a otherwise constitute plainly so being to law in this right claim of written, it is case of Commission not. The case, supra, was in the Greenwald er v. ignor- was neutralized he shows L.Ed. A.L.R. ant relevant facts. The absence Wil how far law is. clear to a definite unconditional em money cox from his had embezzled a Govern- was due to the fact that ployer em gambling. in and lost it agency yet had. not exercised ployer and forgave the never embezzlement renegotia- statutory discretion to right repaid. was initiate asserting proceedings. was But the situation Commissioner of Internal Revenue might that whatever money deduction of Tax Court embezzled held renegotiators, there would be made was Cir taxable income Wilcox. The Circuit, be a Appeals cuit Court the Ninth proportional to refund his 148 F.2d Tax and reversed the Court share Supreme the deduction. United States affirmed the decision Circuit Court As to whether it would throw the Gov- Appeals. an asked to hold that ernment’s disorder to revenues into serious money honest man who received escape allow the taxation immediately it when mistake and restored enjoy, income keep which he did not discovered, pay must we think that it said in would not. As we it, income tax whereas an embezzler case, supra, taxpayer in Greenwald money sup (we who used it pay these cases of mistake will tax be- pose it is immaterial that he lost it why cause he any is not aware gambling) and not restore it If, period per- he should not. within the rightful owner, owes the no Government taxpayers filing mitted other suppose tax. We would that if there rectify errors, claims discovers to be a difference in the treatment these income, mistake and disgorges the think situations, two difference getting money that his his tax back will taxpayer honest would be treated endanger the revenues. than the considerately embezzler. The defendant’s demurrer is overruled. the North American Con It Oil is so ordered. case, supra, taxpayer re solidated ceived the in 1917 was taxed and HOWELL it for He claimed that LITTLETON, Judges, concur. should, instead, have been taxed litigation year WHITAKER, Judge (dissenting). right ap money to the was concluded If I according had to decide this case pellate appeals had courts. The been with be, ought might what I think law I supersedeas, hence he not had done; majority decide it but as the has our kept ceived the and had job, is to the case ac- decide it, completely but free to it in had is, cording the law as it and I do not meantime, although fully aware majority this. think the done has right. contest about his The decision course, completely just. unjust seem dictum, upon
Court’s pay which the Govern tax on not al- relies, literally keep, cannot be I think ment lowed to but followed pertinent took language view his bonus from the com- of this should. Wilcox, supra: pany believing of Commissioner v. he was entitled to purposes, present however, right pleased. to with "For is with the do it what he enough gain absolutely unconditionally, to note con- a taxable figured.
far
any
So
knew the
one knew until
far as
ascertain,
Under
could
passed.
then
pany’s
to him.
this constituted
income.
authorities
North
It is
contingency
true
following
statement
there was
Burnet, 286
Oil
this was
American
Consolidated v.
try
L.Ed.
get
52 S.Ct.
too much income and
approval
quoted
pay
has been many
times
but wheth-
back some of
upon:
not,
knew;
taxpayer
receives er they
relied
“If
one
earnings
they
with- nor
claim of
know how much
*4
disposition,
excessive,
has Government
restriction as to its
claim
required to what
finally
received income which
be
return,
though
upon.
may
speculative,
even
be claimed
contingent,
still
This was
money,
imaginary,
not
entitled to retain
he is
until
close of
may
though
adjudged
year.
even
still
taxable
So far as
equivalent.”
knew,
liable to restore its
have
or could
ascertained at
company actually
this
an income
See,
others,
among
Schramm
v.
1942
States,
181;
F.Supp. 1021,
36
computed,
basis
as
Cir.,
Co.,
Commissioner Alamitos Land
9
v.
liability
been. Tax
is deter-
648;
Robertson,
112
4
F.2d
Penn et al. v.
mined
the basis of the facts
hand or
167;
Cir.,
City
115
Bank of
F.2d
National
ascertainable at
the close of
93;
Cir.,
Helvering,
York
F.2d
New
v.
happen
year,
may
not
what
the fu-
Commissioner,
Cir.,
Saunders
v.
F.
Mellon,
ture. Heiner
U.S.
2d 407.
S.Ct.