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October 7, 1940, to March 2, 1941


[No. 42658. Decided October 7, 1940]

On the Proofs

Income and profits tax; interest on overpayment; application of tax payments by Commissioner; direction of application by taxpayer. Decided upon the authority of Eastman Kodak Co. v. United States, 82 C. Cls. 504, in which it was held:

"Where the taxpayer, in July 1926, made payments of amounts of tax deficiencies for the years 1909 to 1919, exclusive of the year 1918, of which it had been notified but which were not assessed against it until September following, with direction that the payments be applied to such deficiencies, and there was then an unrefunded overpayment for the year 1918, and also unpaid original taxes for the year 1920; the Commissioner of Internal Revenue was not required to apply such payments to the deficiencies, as directed by the taxpayer, but could apply the 1918 overpayment to the deficiencies, and apply such payments by the taxpayer to the unpaid taxes for 1920."

The Reporter's statement of the case:

Mr. O. R. Folsom-Jones for the plaintiff. Mr. Kingman Brewster, Mr. John Ward Cutler, and Hubbell, Taylor, Goodwin, Nixon & Hargrave were on the brief.

Mr. John A. Rees, with whom was Mr. Assistant Attorney General Samuel O. Clark, Jr., for the defendant. Mr. Robert N. Anderson and Mr. Fred K. Dyar were on the brief.

Plaintiff seeks to recover $216,966.33, with interest, representing a portion of the total amount of $1,289,095.42 paid


92 C. Cls.

Reporter's Statement of the Case

to the collector of internal revenue on July 27, 1926, on account of income and profits tax due by it which it alleges was unlawfully and illegally misappropriated and applied by the defendant to and in satisfaction of an assessed and unpaid tax for 1920.

The court, having made the foregoing introductory statement, entered special findings of fact as follows:

1. Prior to the institution of this suit plaintiff on February 27, 1931, commenced a suit in this court, No. M-81, for the recovery of additional interest on an overpayment of income and profits taxes for 1918. The opinion was rendered in that case March 3, 1936 (Eastman Kodak Company v. United States, 82 C. Cls. 504), under which it recovered a judgment for $9,524.54 of an amount claimed of $471,919.19. In rendering that opinion the court made detailed special findings of fact with respect to the determination of the overpayment involved in that proceeding, the manner in which it was credited, refunded, or otherwise deemed satisfied by the Commissioner, the manner in which interest was computed by the Commissioner, and many other related facts.

2. Subsequent to institution of suit No. M-81, but prior to the decision of the court in that case, namely, May 11, 1934, plaintiff instituted this suit for the recovery of a portion of the principal sum in connection with the payment of which interest was demanded for an overpayment for 1918 in the prior proceeding, stating that such action was being brought "under U. S. C., Title 28, Sec. 250 (1)." Subsequent to the decision of this court in M-81 the parties entered into a stipulation that the evidence introduced in that case might be considered the evidence in the present case. Since the special findings of fact set out by the court in its decision in M-81 cover in detail the facts which are made the basis of this suit, those findings are incorporated herein by reference and made a part hereof.

3. After the institution of suit M-81 and prior to the institution of the present suit, namely, February 20, 1933, plaintiff delivered to the Commissioner of Internal Revenue


Opinion of the Court

a letter in which it reviewed the reasons for its demand for the interest claimed as a judgment in M-81, and stated further:

If the Bureau is correct and it should later be so held that the credits could be applied as claimed by the commissioner, then it must follow that the taxpayer is entitled to the return of the $1,289,095.42 paid over to the Collector on July 27, 1926, together with interest thereon. It was stated in the conference on February 15th in your office that the taxpayer, even on this theory, could obtain a return to it of only the balance between the $1,289,095.42 and the $922,137.66 later refunded in respect to the 1920 tax, together with interest thereon. The Bureau must be in error on any such assumption, in view of the effect of the statute of limitations in respect to both amounts; and indeed the conferees admitted they had not at the time their statement was made given adequate study to the facts in this connection.

4. Since the decision by this court in Eastman Kodak Company v. United States, supra, no payment has been made by the defendant to plaintiff except $9,524.54, representing the amount of the judgment for interest in that case.

The court decided that the plaintiff was not entitled to


LITTLETON, Judge, delivered the opinion of the court: The amount of $216,966.33 which plaintiff seeks to recover in this case is a portion of the tax payments involved in the case of this taxpayer in case No. M-81 considered and decided by this court March 3, 1936, 82 C. Cls. 504 (certiorari denied, 299 U. S. 581). In that case we held that certain amounts, totaling $1,289,095.42, paid by plaintiff to the collector of internal revenue as taxes due by it, of which the amount of $216,966.33 here sought to be recovered is a part, were properly and legally applied by the Commissioner of Internal Revenue to the extent necessary in satisfaction of an assessed and unpaid original tax for 1920 which had been assessed June 5, 1921, and remained unpaid at the time the payments totaling the amount above-mentioned were made by plaintiff in 1926. In the prior suit, M-81, supra, this court made detailed findings of fact concerning all the transac

291825-41-CC-vol. 92-3

Opinion of the Court

92 C. Cls.

tions between plaintiff and the Treasury Department with reference to the taxes due by and collected from plaintiff and to the overpayments, credits, refunds, and computations of interest as determined and made by the Commissioner, which findings are not repeated in this case but are made a part of the findings of fact herein by reference.

While the specific claim made by plaintiff in the prior case, M-81, was for additional interest of $47,762.33 alleged to be due on an overpayment of $1,207,619.62 for 1918, the ground for that claim for additional interest which was denied by the court, except as to $9,524.54 representing interest on a refund for a certain payment other than for 1918, was that the Commissioner of Internal Revenue had erroneously and illegally used and applied a portion of the total amount of $1,289,095.42 paid on July 27, 1926. The amount here sought to be recovered is a portion of that amount and the ground of the claim here made is the same as that upon which the claim for additional interest was predicated in the prior suit. The decision of the court in the prior case of Eastman Kodak Co. v. United States, 82 C. Cls. 504, and the decision in Standard Oil Company (Indiana) v. United States, 78 C. Cls. 714 (certiorari denied, 293 U. S. 599), preclude recovery of the amount claimed in the instant case. Plaintiff has not overpaid the taxes due by and collected from it, for any year from 1909 to 1920, inclusive, in excess of any overpayment determined and refunded, or credited by the Commissioner. No claim for refund was filed with respect to the amount of $216,966.33 here sought to be recovered within four years after payment, but plaintiff insists that it is entitled to recover the amount here claimed under sec. 145 of the Judicial Code, U. S. Code sec. 250 (1), Title 28. It was under those sections that the court had jurisdiction of the prior suit, and it is clear from the facts and circumstances that there was no contract, express or implied, which obligated the defendant to refund to plaintiff the amount here sought to be recovered. The amount involved was due from plaintiff and was paid by it as a tax, and it was applied and retained by the defendant as a tax due from plaintiff as a result of a proper and legal determination, assessment,



and application as was specifically held by the court in Eastman Kodak Co. v. United States and Standard Oil Company (Indiana) v. United States, supra.

Plaintiff's only complaint in the prior and instant case was, and is, that the amount of $1,289,095.42 paid on July 27, 1926, after the Commissioner had determined deficiencies in that amount for 1909-1917, inclusive, and for 1919, and while there was outstanding an assessed, due, and unpaid original tax of $1,207,619.62 for 1920, should have been applied in satisfaction of the additional taxes determined but not assessed at the time of the payment, for 1909-1917 and for 1919, and that an overassessment of $3,145,338.89 computed for 1918 but not formally allowed on July 27, 1926, should have been credited to the due and unpaid original tax for 1920 which had theretofore been assessed on June 5, 1921. This contention was considered and held to be without merit in the prior case, M-81, and a similar contention was considered and denied in Standard Oil Company (Indiana) v. United States, supra. Plaintiff cites the case of Kirkendall v. United States, 90 C. Cls. 606, 31 F. Supp. 766, but the facts in that case so clearly distinguish it from the case at bar as not to require discussion.

The petition is dismissed. It is so ordered.

WHITAKER, Judge; GREEN, Judge; and WHALEY, Chief Justice, concur.


[No. 43304. Decided October 7, 1940]
On the Proofs

Government contract; decision of contracting officer final.-Where contract provided that the decision of the contracting officer should be final and conclusive on all questions of fact, subject to appeal within 30 days to head of the department, and where no such appeal was taken and where the record does not disclose that the decision of the contracting officer was erroneous, it is held that the plaintiff is not entitled to recover.

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