105 F.2d 50 | D.C. Cir. | 1939
Lead Opinion
The New River Company (petitioner) is a West Virginia corporation, and together with its subsidiary companies is engaged in the business of mining coal. In the years 1918-19-20-21 it filed its income tax returns and paid the amounts shown to be due. Subsequently the Commissioner made additional assessments for those years. Petitioner paid these amounts in 1927, but in 1930 filed claim for refund on the ground that these sums had been erroneously assessed. The Commissioner rejected the claim, and petitioner then sued the United States in the District Court, Southern District of West Virginia. The case came on for hearing in January, 1933, and judgment by consent was entered against the United States in the sum of $110,000 — ‘‘with interest thereon from this date as provided by law”. The parties entered into formal stipulation waiving all right of appeal. Instead
This petition for mandamus was filed in the District Court July 25, 1936. An amended petition was filed March 31, 1938. The respondents filed an answer and an affidavit in support thereof. The case was heard below on the pleadings, and the trial court without opinion denied the petition. This appeal followed.
Petitioner’s case is founded on Section 614 of the Revenue Act of 1928 (26 U.S.C. § 1671, 26 U.S.C.A. § 1671), which provides that whenever overpayments of taxes are credited to deficiencies for other years the Government shall allow 6% interest from the date of overpayment to the date of the assessment of the deficiencies. The prayer of the petition is, in effect, that the writ issue commanding the Commissioner to allow interest on the sum of $110,000, determined to be the ' overpayment for the year 1918, from the date of payment, namely, 1927, rather than in accordance with the terms of the judgment of 1933, which carried interest only from its date. Stated otherwise, the contention is that, notwithstanding the consent judgment allowed interest only from its date, the statute made mandatory the payment of interest from the date of overpayment, which concededly was 1927. The stipulation filed in the West Virginia proceedings recited that it was agreed that petitioner had, in 1927, overpaid income taxes for the year 1918 in the sum of $110,000 and that judgment should be entered therefor without prejudice to any claims of the United States for taxes for years subsequent to 1921. This stipulation was carried into the court’s findings of fact. But the judgment itself was for that amount of money “with interest thereon from this date as provided \>y law”.
If we had to decide merely whether petitioner, having in 1927 overpaid its taxes for 1918, was entitled to receive interest on the overpayment from date of payment to date of refund or to date of credit on subsequent taxes, the case would be simple enough, for the statute is explicit to that effect; but here by reference to respondents’ answer to the petition we find set up as an affirmative defense that the judgment of the West Virginia District Court represented an agreement of the parties for the disposition of that suit; that the sum of the judgment was not arrived at by recourse to a computation under the revenue laws, but represented a flat sum settlement of all tax and interest to the date of judgment to which petitioner was entitled. This allegation is supported by the affidavit of the trial attorney of the United States in the West Virginia case which was received and considered by the lower court in this case without objection and in which it is stated that “to arrive at a round figure certain arbitrary adjustments had been made and interest had been approximated with the result that the above-mentioned sum of $110,000 has been determined to be, for the purposes of this suit, the amount of overpayment, including interest to which the taxpayer is entitled.” Petitioner does not claim that the restrictive language of the judgment, that is to say, that interest should run only from its date, was the result of mistake or inadvertence, and certain correspondence found in the record would negative such a contention. Obviously if the agreement of the parties was for a judgment waiving the statutory right tc back interest from the date of overpayment, it would not be subject to challenge here or elsewhere and would be conclusive of
Petitioner on the other hand says that the conclusion of the District Court that petitioner was entitled to recover the principal sum “with interest thereon as provided by law from the date of judgment” is meaningless; that the phrase “as provided by law” is inconsistent with the phrase “from the date of judgment”; that the phrase “as provided by law” is in conformity with the statute and therefore the phrase “from the date of judgment” should be rejected and treated as surplusage; and that since the statute is plainly mandatory, the court ought to grant the writ. Petitioner points to our decision in Mellon v. United States ex rel. Orono Pulp & Paper Co., 60 App.D.C. 242, 50 F.2d 1007, as sustaining its position in this respect. That case, like this, was on a petition for mandamus. There petitioner had obtained a judgment in the District Court in Maine for the recovery of overpayments of taxes. The judgment included interest from the date of payment to the date of the judgment (June 15, 1929). The Government paid on January 25, 1930. Petitioner asked for mandamus to compel payment of interest from the date of the judgment to a date not more than thirty days prior to the date of the refund check.
But we prefer to rest our affirmance upon another ground. The record here shows that some two years after the entry of the West Virginia judgment petitioner filed with the Commissioner a request that the amount of the judgment with interest from its date be credited against the tax deficiency for the two years 1927 and 1928. The Commissioner complied with this request. And when in the middle of 1935 additional assessments for the years 1929-32, inclusive, were made, these in turn were taken care of on December 30, 1935, by applying the balance of the judgment money and interest, plus $49,371.97 in cash which petitioner paid under protest. The grievance of petitioner does not arise directly from the refusal of the Commissioner to allow interest according to its request, but from the necessity of subsequently paying a very much larger sum in cash' than it would have had to pay if the interest had been so allowed. If the Commissioner was wrong in computing the amount due when final settlement, was made, then petitioner in 1935 overpaid its 1929-32 taxes in cash, and by reason of this overpayment it then had a perfectly adequate remedy at law. It could have sued in the Court of Claims and raised the question of its right to interest there.
Mandamus, therefore, was not the proper remedy. The right to the writ in a case on a claim to recover overpayment of taxes was recently denied by the Supreme Court in Girard Trust Co. v. Helvering, 301 U.S. 540, 57 S.Ct. 855, 857, 81 L.Ed. 1272. There the Supreme Court said: “But to try petitioner’s equitable right to the refund here is to make the writ of mandamus serve the purpose of an ordinary suit and to depart
For the reasons heretofore stated, we are of opinion the decision of the lower court is correct, and it is therefore affirmed, but without prejudice to any other appropriate proceeding for the refund of the tax.
Affirmed.
United States ex rel. Cole v. Helvering, 64 App.D.C. 35, 73 F.2d 852.
Revenue Act of 1928, section 615(b), 28 TT.S.O.A. § 284 (b), entitled, “Interest on Judgments,” amending section 177 (b) of the Judicial Code, reads in part as follows: “In any judgment of any court rendered * * * for any overpayment in respect of any internal-revenue tax, interest shall be allowed at the rate of 6 per centum per annum upon the amount of the overpayment, from the date of the payment or collection thereof to a date preceding the date of the refund check by not more than thirty days, such date to be determined by the Commissioner of Internal Revenue.”
Dissenting Opinion
(dissenting).
I am of the view that under McCarl v. United States ex rel. Leland, 1930, 59 App. D.C. 362, 42 F.2d 346; Lucas v. United States ex rel. Blackstone Mfg. Co., 1930, 59 App.D.C. 389, 45 F.2d 291; and American Propeller & Mfg. Co. v. United States, 1937, 300 U.S. 475, 57 S.Ct. 521, 81 L.Ed. 751, it was the duty of the Commissioner to apply the $110,000 against the several deficiencies as they came- due and therefore to charge no interest against the petitioner until the balance of the indebtedness was in the Government’s favor; and I think that under Blair v. United States ex rel. Union Pacific R. R. Co., 1925, 55 App.D.C. 359, 6 F.2d 484, this duty is compellable by mandamus.