
    OAK WORSTED MILLS v. THE UNITED STATES
    
    [No. J-180.
    Decided December 2, 1929]
    
      
      Mr. William Meyerhoff for the plaintiff. Mr. Gwil Barber was on the briefs.
    
      Mr. George H. Foster, with whom was Mr. Assistant Attorney General Herman J. Galloway, for the defendant.
    
      
       Certiorari granted.
    
   GeeeN, Judge,

delivered the opinion of the court:

A so-called tentative return was filed by the plaintiff on March 12, 1919, and as the assessment in controversy was made on March 26, 1924, the plaintiff claims that the five-year period of limitations for the assessment of taxes had expired, and that the assessment was therefore illegal. The defendant contends that the limitations period did not expire until five years from June 16, 1919, when the completed return was filed, and this presents the first question for our consideration.

The Board of Tax Appeals has consistently held in a number of cases that the filing of the so-called tentative return did not start the running of the statute of limitations. See Matteawan Mfg. Co., 4 B. T. A. 953. In this conclusion we concur for many reasons which will require a review of the preceedings which lead up to the filing of the tentative return, in order to ascertain its purpose and what was understood with reference thereto by both the Bureau of Internal Bevenue and the taxpayer. The “ revenue act of 1918,” was not approved until February 24, 1919. It was quite plain to everyone that large business concerns and individuals having large business interests would have great difficulty in filing a return within the time required by law, and the Bureau of Internal Bevenue would be deluged with . requests for extension of time for filing returns.. In fairness to the taxpayers, the most of these applications would have to be granted. The result would be to postpone the payment of taxes in such amount that the Government ■might become embarrassed for want of revenues, for although the World War was over the Government was still being carried on at. an enormous expense. In order to overcome this difficulty a plan was devised which provided the needed funds for the Government and certainly was .a valuable concession to the taxpayers who brought them.selves within its terms, by granting them an extension of time for filing complete returns. A circular was issued by the commissioner on February 21, 1919, giving the particulars of this plan as follows:

“ Income taxpayers, both corporation and individual, were today granted by the Internal Revenue Bureau further relief with respect to the filing of their completed tax returns for 1918. The statement that the taxpayer is unable by March 15 to execute and file the complete return will be accepted, under the new procedure, as sufficient reason for extending for forty-five days the time for filing complete income and excess-profits returns, provided in every case the taxpayer pays on or before March 15, at least 25% of the estimated amount of the tax due.”

It further stated that a supply of blanks for the use of taxpayers would be furnished for making a tentative return, and that the due date for the payment of taxes would not be extended nor would the taxpayer be relieved of interest if the amount paid was short of the amount eventually found due. The blank form furnished to and used by plaintiff was headed, “ Tentative Return and Estimate of Corporation Income and Profits Taxes and Request for Extension of Time for Filing Return,” and contained no statement whatsoever showing the gross income, deductions, invested capital, or other details necessary for a proper determination of plaintiff’s tax liability. It merely estimated the tax to be ■$80,000.00 and accordingly $20,000.00 was paid on the taxes. It specifically requested an extension of time for filing the “ return ” and in this connection we are at a loss to understand what return could possibly be meant except the return required by law. The tentative return was not only not required by the law but there was no provision in the law for it. It was merely an invention of the commissioner and its purpose was to give the taxpayer an extension of time for filing the return required by law and at the same time obtain the needed funds for the Government. The statute (section 250, act of 1918) provided that the tax shall be assessed within five years “ after the return was due or was made.” What return? The return not authorized by law and not referred to in the statutes ? Clearly not. ■ If 'was the return which the law required and which was not made by the tentative return. The return on which the statute of limitations is made to depend is the return required by section 239, which is very different from the so-called tentative return. In this connection we have no reference to returns where the taxpayer attempts to comply with the law but through error or mistake does not completely conform to its requirements. We have here a case where there was no pretense as far as making the return was concerned that the law was being complied with. There was merely enough done so that the commissioner would grant the extension of time.

If we look at the matter from the standpoint of equity between the Government and the taxpayer we can come to no other conclusion. The Government had five years in which to make an assessment on a different basis from the return, but surely this ought to be from the time when the taxpayer makes such a return as will enable the bureau to get at least some elementary knowledge as to how much tax he ought to pay. We think no one would contend that the taxpayer could merely file this tentative return and stop there without filing another and completed return but if the contention of the plaintiff is correct and this was a real return in the sense that the word “ return ” is used in the statute, nothing else was required.

It is argued that if the tentative return was not a return at all but merely an application or an agreement for an extension of time, the taxpayer was not bound to pay the first installment of his taxes until he filed the completed return. This argument overlooks the fact that the whole proceeding was a concession to the taxpayer beyond any requirement of the law, for the commissioner might grant or refuse an extension in his discretion, and having that right he could prescribe the terms on which an extension should be granted. The proposition on the part of the commissioner was simply that if the taxpayer would file an estimate of his taxes and a request for extension of time for filing a return and make payment of one-fourth the estimated tax, the extension would be granted, and he had a right to make these requirements.

It is also argued that the. Government is taking inconsistent positions; that it says at one time that the tentative return was a return and then when its interests require the contrary, says it is no return, but we find nothing inconsistent in its position. It has at no time stated that the so-called tentative return would be considered as the return required by law. On the contrary, the fact that an extension of time was granted for filing a complete return shows very clearly that it did not so consider it, otherwise no extension of time would have been necessaiy; and while we do not think it is material what the taxpayer understood, we are unable to see how it could have understood otherwise. The only meaning given in the dictionary to the word “ tentative ” which would at all apply to the situation under consideration is “ experimental,” and while this meaning may apply to some features of the case we are inclined to think that the common or colloquial meaning of the word “ tentative ” in such situations is with reference to something that will do or will answer for the time being but no further.

For the reasons above stated we concur in the view taken upon this question by the Board of Tax Appeals and by the Circuit Court of Appeals in the case of Florsheim Bros. Dry Goods Co. v. United States, 29 Fed. (2d) 895, and hold that the limitation did not begin to run until the completed return was filed and that the tax in question was assessed within the period prescribed by the statute.

Plaintiff also contends that the Commissioner of Internal Revenue having determined the tax liability of the plaintiff in April, 1922, was without authority to revise it, and that his later action making a new assessment was in excess of his authority, and the new assessment was therefore illegal.

We do not think it is necessary to discuss this question at length. The practice of the commissioner in making new and different assessments is of so long standing and has met with such, general acquiescence that this in itself constitutes a strong reason rejecting the contention of plaintiff. Ever since the Federal income-tax laws have been enacted, this practice has been going on. Congress has not merely acquiesced in it, but by various enactments has recognized the practice and has gone so far as to provide in the revenue act of 1921, which of course, was not applicable to this case, a limitation on the reopening of cases. The cases cited by plaintiff with reference to the acts of some official of the Government whose action is by law made final have no application here. The determinations of the commissioner are not binding on the taxpayer but are merely a prima fade regulation. Wickwire v. Reinecke, 275 U. S. 101. The distinction is clearly made in Fidelity & Columbia Trust Co. v. Lucas, 7 Fed. (2d) 146, 149. In Botany Worsted Mills v. United States, 278 U. S. 282, it appealed that the taxpayer filed a return and paid the tax on the basis thereof. Subsequently an additional assessment was made by the bureau and was paid. The implication of the decision, which held the taxpayer could not recover the amount of the additional assessment, was that the commissioner could make changes in the original assessment; and it was expressly so held by the Board of Tax Appeals in Appeal of James Couzens, 11 B. T. A. 1040, a case where the Government officials had fixed the amount of the tax which was paid by the party assessed.

Whilé the tax in question was assessed within the period of limitations it was not collected within the time fixed thereby and if this case is controlled by the rule laid down in Bowers v. New York & Albany Lighterage Co., 273 U. S. 346, the tax involved was unlawfully collected and the plaintiff is entitled to recover. The defendant, however, contends that section 611 of the revenue act of 1928, which was passed subsequent to the decision in the Bowers ease, so modifies the rule laid down therein that the court should deny a recovery in the case at bar and this contention presents a complicated question.

Section 607 of the act of 1928 provides:

“Any tax (or any interest, penalty, additional amount, or addition to such tax) assessed or paid (whether before or after the enactment of this act) after the expiration of the period of limitation properly applicable thereto shall be considered an overpayment and shall be creditéd or refunded to the taxpayer if claim therefor is filed within the period of limitation for filing such claim.” (Italics ours.)

Section 611 provides:

“If any internal-revenue tax (or any interest, penalty, additional amount, or addition to such tax) was, within the period of limitation properly applicable thereto,' assessed prior to June 2, 1924, and if a claim in abatement was filed, with or without bond, and if the collection of any part thereof was stayed, then the payment of such part (made before or within one year after the enactment of this act) shall not be considered as an overpayment under the provisions of section 607, relating to payments made after the expiration of the period of limitation on assessment and collection.” * (Italics ours.)

There can be no question of what these sections mean. In plaintiff’s argument it is said:

Bead together these sections provide that taxes assessed or paid out of time shall be credited or refunded to the taxpayer if a timely refund claim is filed except in cases of timely assessment made before June 2, 1924, and a claim in abatement was filed and collection of any part of the tax was stayed.” With this statement we agree.

But plaintiff insists that they have no application to this case and that if so construed as to deprive plaintiff of the right of recovery herein the sections are unconstitutional.

Further in argument the plaintiff insists that section 611 has no reference to suits on the part of taxpayers and merely defines the authority of the officials of - defendant in making refunds or credits. In support of this position it cites the cases of Clinton Iron & Steel Co. v. Heiner, 30 Fed. (2d) 542; Erie Coal & Coke Co. v. Heiner, 33 Fed. (2d) 135; and Gile & Jenks v. Huntley, Collector, 29 Fed. (2d) 209. All of these cases support the contention of plaintiff, but upon careful examination we are unable to agree to the rules laid down therein. In this connection, it should be noted that the case last above cited was reversed by a decision of the Circuit Court of Appeals to which reference will hereinafter be made.

In considering this contention, it should be observed at the outset that it is quite inconsistent with the meaning which is given by plaintiff’s counsel to the two sections under consideration and with which meaning, as stated in the quotation from plaintiff’s argument set out above, we agree. Our reasons for differing from these decisions cited by plaintiff are as follows:

It appears to us that Congress, by the provisions in the revenue act of 1928, was endeavoring to establish a rule whereby a condition of repose would be established and when taxes had been paid after the statute of limitations had run but which were due and ought to have been paid by the taxpayer before the expiration of the time of limitations, such taxes could not be recovered by the taxpayer. Whether this general observation may be correct or not, we think it quite clear that the construction of sections 607 and 611 adopted in the decisions cited on behalf of plaintiff is not correct, and that this will appear from a consideration of the logical effect of such a construction.

As we understand the argument in favor of the rule adopted by these decisions, the reason for the holdings therein is based largely upon the fact that in neither of these sections is there any reference to court proceedings, actions, or suits. But this is’ not necessary if the specifications made in the statute would make a suit unavailing.

Section 607 specifies the kind and nature of cases in which what is denominated an overpayment may arise by reason of the collection -of taxes after the expiration of the period of the statute of limitations although such taxes were originally due and owing by the taxpayer. Section 611 makes an exception to the rule laid down in .section 607 and in effect provides, with reference to cases included in this exception, that no “ overpayment ” shall arise. Necessarily it follows that if demand is made upon the collector for the refund or return of taxes paid after the running of the statute of limitations but which come under this exception, the collector is obliged to say that he is forbidden by law to repay them. It will be observed in this connection that the decisions cited by plaintiff assert that these sections, are merely directions to the commissioner, collector, or other officials of the Government and nothing more, and therefore notwithstanding their provisions suit may be brought and maintained to recover the tax. The doctrine laid down by these decisions as to cases which come under the exceptions of section 611 would create a situation that is very peculiar to say the least. If, for- example, a demand is made upon a collector for repayment he must say that he is forbidden by law to make it, but if suit is begun against him for the same thing for which demand was made, it can be maintained and judgment can be entered against him. That Congress intended anything so inconsistent and useless we think no one will contend. When the language of the two sections is considered we think it will be seen there is nothing in them which requires such a construction. True, as before stated, there is nothing said with reference to courts or court proceedings, but court proceedings are not the basis upon which actions are maintained in actions like the one at bar. That depends upon the rights of the plaintiff and its rights are fixed by these sections. If the plaintiff’s case came within the provisions of section 611, it had no right to repayment. This makes it necessary for us to consider as to whether its case is in fact included within the provisions of this section.

It is also contended by plaintiff that section 611 applies only to cases of voluntary payment and also to cases where “ the collection of any part thereof (of the claim) was stayed,” and that the collection of the taxes involved in the instant case was not in fact stayed.

As to the first contention, we think the language of the statute shows clearly that it is not well founded. The sec-ion relates to cases where a plea in abatement was filed which in itself would show that the tax was paid unwillingly. This contention also is contrary to the meaning given to the section by the report of the committee which presented the act to Congress, which will be hereinafter set out in connection with the second objection.

The second objection presents a more difficult question and for its proper consideration it will be necessary to examine that part of the report of the Ways and Means Committee on the revenue act of 1928 which explains the purpose of section 611 and the conditions which it was intended to meet. It is as follows:

“ Prior to the enactment of the revenue act of 1924, it was the administrative practice to assess immediately additional taxes determined to be due. Upon the assessment, taxpayers were frequently permitted to file claims in abatement with the collector and thus delay the collection until the claim in abatement could be acted upon. If this practice had not been followed, undue hardship undoubtedly would have been imposed upon the taxpayer. It was supposed that there was no limitation upon the collection by distraint of the amount ultimately determined to be due. However, the Supreme Court has recently held in a case in which the period for assessment expired prior to the enactment of the 1924 act, that the period for collection was limited to five years from the date on which the return was filed. Decisions upon claims in abatement are being made every day. Amounts have been paid, are being paid, by the taxpayer even though the statute of limitations may have run. Exceptionally large amounts are involved. Accordingly, it is of utmost importance to provide that the payments already made should not be refunded. In order to prevent inequality, it is also provided that the amounts not yet paid may be collected within a year after the enactment of the new act.
“ Your committee appreciates the fact that this provision will probably be subjected to severe criticism by some of the taxpayers affected. However, it must be borne in mind that the provision authorizes the retention and collection only of amounts properly due, and merely withdraws the defense of the statute of limitations. If it is determined that the amount paid is in excess of the proper tax liability, computed without regard to the statute of limitations, such excess will constitute an overpayment which may be refunded or credited as in the case of any other overpayment.” (Eeport No. 2,10th Congress, 1st session, p. 84.) (Italics ours.)

A reading of this excerpt from the report leaves no possibility of doubt about the intent and purpose which Congress undertook to embody in section 611. As before stated, the statute only applies to cases where the taxpayer had paid, after the running of the statute of limitations, taxes which had been rightfully due and owing to the Government. There is no equity in a claim for the refund of such taxes in any event, but the statute restricts the Government in retaining them to those cases only where as a favor to the taxpayer the Government had permitted the filing of a plea in abatement and collection was stayed; or in other words, to those cases where the taxpayer by filing a plea in abatement had succeeded in delaying the case over the period of limitations and then sought to take advantage of the favor that had been granted him.

The argument made by the plaintiff is that during the period under consideration there was no provision for a plea in abatement in the law and especially that there was nothing in the plea of abatement that would, under the law, in any event operate as a stay upon the collection of the tax. This may be admitted, 'but if the statute applies only to taxes the collection of which was stayed by the plea in abatement it becomes a practical nullity, for it could only apply to a small, number of cases arising under the act of 1924, which provided for the filing of a plea in abatement and bond to stay proceedings, if indeed it had any application at all. The language of section 611 and the statement made in the report, we think, forbid any such construction. The section is not limited to. cases where the collection is stayed by the filing of a plea in abatement, but simpty to cases where the collection “ was. stayed,” and we think the words “ was stayed ” were purposely used instead of “ is stayed.” Congress intended the act to apply to the conditions set out in the report showing that in numerous cases taxpayers had filed claims in abatement and delayed the collection until the claim in abatement could be acted upon. In this case the collector, in March, 1924, demanded payment of the tax in controversy and the plaintiff filed a plea in abatement, whereupon nothing more was done, until February, 1925, when the commissioner passed on the claim in abatement and allowed it in part, of which the plaintiff was notified, and in March of the same year plaintiff filed an appeal from the deficiency fixed by the last determination to the United States Board of Tax Appeals. No further action was taken by the collector until June, 1925. It thus-appears that plaintiff was granted a stay upon filing the plea in abatement. The word “ stay ” as used in ordinary conversation means to hold from proceeding, to postpone, or to keep back. In law, it generally means to suspend by judicial proceedings. We think it was not used in the statute in its strict legal meaning but in its ordinary sense and when we give it that meaning it is quite clear that the collection was stayed by the collector or commissioner, and there can be no doubt but that in so holding we are following the intention of Congress as expressed in the report to that body which explained the meaning and purpose of section 611. To put the construction on the statute contended for by plaintiff requires us to attribute to Congress .the absurdity of declaring that unless a stay was brought into effect 'by an act which did not and could not produce a stay, the statute would not operate and thus the statute would nullify itself. It needs no citations to show that it is our duty to so construe the statute as to give it some force and effect when this can be done consistently with its language. The construction given, in our opinion, not only accords with the language used, but is the •only construction that could properly be given.

These conclusions are supported in part, if not entirely, by the opinion rendered in the case of Clyde G. Huntley, Collector, v. H. S. Gile & W. T. Jenks, by the United •States Circuit Court of Appeals for the ninth circuit, 32 Ned. (2d) 857, reversing Gile & Jenks v. Huntley, 29 Fed. (2d) 209, cited by counsel for plaintiff; and also the case of Regla Coal Company v. Bowers, decided by the District Court, Southern District of New York, November 13, 1929, C. C. H. D - 9415, p. 8888. The decision in the case last cited contains an elaborate discussion of the proper construction of sections 607 and 611 and the Constitutional question raised in connection therewith. On all of these matters the same conclusion is reached as is set forth in this opinion. In the Huntley ease, supra, attention is called to the fact that if it be held that the statutory provisions have no application to taxes collected after the period of limitations has •expired, the statute is useless and meaningless. There would of course be no occasion or use whatever for the statute in eases where the tax was collected prior to the expiration of the period of limitations. The only reason for enacting the .statute in question was the fact, as shown by the report of the committee, that “ amounts have been paid, are being paid, by the taxpayer even though the statute of limitations may .have run.” It is quite evident that the intention of the lawmakers was that the statute should apply to taxes collected after the statute of limitations had run.

Objection has been made that the construction contended for by defendant is retroactive and that a statute ought not to be construed as having retroactive application unless it appears that Congress had such intent. The provisions of the statute under consideration, are retroactive in form and if anything further is needed to show the intent of the legislative body enacting it, it will be found in that portion of the report accompanying the act of 1928 which has already been set out in this opinion. The report makes it clear that the sole purpose of the provision was to obviate the effect of the decision in the case of Bowers v. New York & Albany Lighterage Co., supra, and to apply to cases arising under prior acts.

One other point remains to be decided. It is further contended that if the statute is construed in accordance with our holding, it is unconstitutional and invalid for the reason that it would deprive plaintiff of a vested right. If plaintiff acquired such a right, it was by virtue of the statute of limitations. In Huntley v. Gile & Jenks, (C. C. A. 9th Dist.) supra, it is said, “ no vested right accrues to the taxpayer out of the running of the ‘period of limitation for the collection of a valid tax,” citing Rafferty v. Smith, Bell & Co., 257 U. S. 226; United States v. Heinszen & Co., 206 U. S. 370; Collector v. Hubbard, 12 Wall. 1; Haight v. United States, 22 Fed. (2d) 367; Campbell v. Holt, 115 U. S. 620; Railroad Co. v. Alabama, 101 U. S. 832; Beers v. Arkansas, 20 How. 527; West Side Co. v. Pittsburgh Co., 219 U. S. 92; Brushaber v. U. P. R. R. Co., 240 U. S. 1; Lynch v. Hornby, 247 U. S. 339, 343.

These authorities would seem to dispose of the point last considered, but before concluding attention is especially directed to another rule which, in our opinion, effectually precludes this court from considering plaintiff’s claim.

Nothing is better settled than the principle that the legis.lative branch of the Government has complete right and authority to determine when, how, and where the Government shall be sued and whether it can be sued at all. If Congress sees fit to provide that a suit can not be maintained for taxes paid, it is clear (at least where the taxes were rightfully imposed) that they can. not be recovered. “ Where a statute creates a right and provides a special remedy, that remedy is exclusive.” United States v. Babcock, 250 U. S. 328, 331. The constructions which we have heretofore put on sections 607 and 611 of the revenue act of 1928, specify in what cases suits may be maintained to recover taxes paid which in their origin were valid and due from the taxpayer. If we are correct in this, then by clear implication only such suits as are permitted by these two sections can be maintained on the ground that the tax had been paid after the running of the statute of limitations, and that such was the intention of Congress we think admits of no doubt. As we find that plaintiff’s claim does not belong to a class for which suit may be brought, this court has no authority or jurisdiction to approve it, regardless of whether the rights of the plaintiff had vested or not.

It follows that the petition of the plaintiff must be dismissed and it is so ordered.

Williams, Judge, and LittletoN, Judge, did not hear and took no part in the decision of this case.

Graham, Judge, and Booth, OMef Justice, concur.

SUPPLEMENTAL OPINION ON MOTION POR NEW TRIAL

Green, Judge,

delivered the opinion of the court:

On the submission of this case it was contended by counsel for plaintiff that the tax in this case having been determined under the so-called relief provisions of sections 327 and 328 of the act of 1918, the matter of the amount of the tax was governed by the discretion of the commissioner in applying these provisions, and that having once determined the amount, he could not by a second and later determination increase the amount which he had originally fixed for the tax, and as the matter was within the discretion of the commissioner, his original determination was final and conclusive both upon him and this court. It is now urged by brief in argument on the motion for a new trial that this point receive further consideration, and as there are other cases on the docket involving the same question, it has been thought best to file this opinion supplemental to the one heretofore rendered.

At the outset, to avoid confusion of thought, it should be kept in mind that the question under consideration is not whether the commissioner’s action under the sections of the law above referred to is reviewable by this court. That question was settled by the Williamsport Wire Rope Co. case, 277 U. S. 551, wherein it was held that this court had no jurisdiction to review his decision in such cases. The question in the case at bar is whether the commissioner had authority to redetermine, change, or modify his original determination or reassess an additional amount against the plaintiff. Counsel for plaintiff, however, talcing the Williamsport Wire Rope Co. case, supra, as the basis for his argument, contends that the action of the commissioner was final and for that reason could not be changed even by himself when once it was made. It would seem a rather surprising doctrine that if the commissioner discovered the next day or the next month that he had made a gross error that he had no authority to correct it, but for reasons hereinafter stated we shall not discuss this point. Plaintiff’s counsel cites a number of cases which he claims hold that when a tribunal or an official is authorized to act with discretionary power, when that authority has once been exercised, no further authority exists; and that where lawful authority is delegated to an administrative officer, his acts in an administrative way are not subject to change or review. For the purposes of the argument, it may be conceded that where the acts of the officer are administrative in their nature a different principle prevails with reference to the review thereof than when he acts in a quasi-judicial capacity. Nevertheless, it is uniformly held that the decisions of such tribunal or officer may be set aside on the.ground of fraud or mistake, and it has also been held that an administrative officer whose decision is conclusive upon the courts may review and change his original decision, provided that no rights have become vested such as would arise from the issuance of a patent, a certificate, or something of that nature. Love v. Flahive, 205 U. S. 195, 199. Plaintiff also contends that in such event the burden of proof is upon the party seeking to have the decision changed to establish the fraud or mistake, and that even then it can only be done by a court and not by the officer or tribunal itself. The cases cited to support this rule would seem to show that it only applies when the Government is seeking to set aside the act of one of its own officials. In Austin Co. v. Commissioner of Internal Revenue., 8 B. T. A. 628, affirmed 85 Fed. (2d) 910, this particular question was involved in a case of the same nature as the one before us. With reference to the additional assessment made by the commissioner, the court said:

“ There is a presumption that he performed his duty.” (Citing United States v. Chemical Foundation, 272 U. S. 1.) And with reference to the claim that the commissioner lacked authority to make any further assessment, the court also said:
“ Even though there was lack of authority to make such assessment upon a changed view of the same facts, there was not lack of authority to make it where there was fraud or mistake of law or fact in the original assessment. In this situation the burden was on the petitioner to show that the commissioner’s action grew out of circumstances which did not warrant it.”

But it would require too much time and space to review the decisions recited on behalf of plaintiff, and we do not think it necessary to analyze them for the reason that in our opinion they have no application whatever to, the case at bar, and we can rest our decision firmly on other grounds. Our reasons for this holding are set out below.

A full consideration of the question now under consideration requires that we should go somewhat into the history of the income and profits tax system in force at the time when the tax in question was assessed. The first experience of this country with an income tax was at the time of the Civil War and for a short period thereafter. During that period the rates of the tax compared to those now in force were very low and the administrative provisions of the law were few and simple. The recovery of an amount overpaid could only be obtained in the same manner as an overpayment of any other tax, that is, when the payment had been made under protest and suit brought to recover the amount overpaid. This income tax law was repealed and finally adjudged unconstitutional. In 1913, the Constitution having been amended, another income tax law was placed upon our statute books. Here again the rates were, comparatively speaking, quite low, the administrative provisions few and and simple, in no case was the act of the commissioner discretionary, and no changes were made in the method of obtaining refunds in proper cases. After this country became involved in the World War it became necessary to greatly increase the rates of income and profits taxes, which was done first by the act of 1916 and then by the act of 1918, under which the taxes in question in this case were levied. It became evident — in fact, was a matter of common knowledge — that the application of these high rates through a tax with which neither the Government officials nor the citizenship of the country were familiar gave rise to numerous errors, inequalities, and hardships, both in favor of and against the taxpayers, which called for action by Congress. The result was that an entirely new body of laws was built up under which, while the administrative proceedings were in part governed by authorized Treasury regulations, for the most part they were ordered and directed by statutes in a manner which compared to the methods theretofore existing may be said to be exceedingly specific. These statutory provisions applied to the income and profits taxes. To‘what extent they applied to other taxes it is not necessary for us to herein determine. The special object and purpose thereof was to make clear and plain, so far as possible, the procedure -in administering the income and profits taxes, and they are to be found in connection with the revenue acts which imposed them. These acts made great changes in the proceedings for the assessment and collection of taxes and also for the refund of taxes erroneously or wrongfully collected. For the first time they provided for limitations upon the assessment and collection of taxes, for the refund of taxes although no protest had been made when they were paid, and eventually, gave the right to have the question of the taxpayer’s liability judi-dally determined without having first paid the tax. So also while Congress was thus making the path of the taxpayer easier and more definite, it prescribed limitations on his right to object to assessments and claim refunds. It was also important that the Government as well as the taxpayer should be protected from errors and mistakes that might enter into the assessment and collection of taxes.

The ultimate question in the case is not whether the decision of the commissioner was final, but when it became final; and that, as we shall see, was only when the statute of limitations had run against the Government. With the evident purpose of making it clear when the decision of the commissioner became final, Congress, in the act of 1921, included a comprehensive and sweeping provision applying to all cases under the income and profits taxes with reference to the time when a case was finally settled, showing definitely when assessments made by the commissioner became final, so that no further action could be taken. As the assessment which plaintiff claims was final was not made until 1922, this provision unquestionably applied thereto. It is found in a separate title of the act, headed in manner and form as set out below:

“ Title XIII. — General Administrative Provisions.”

This major division was also subdivided, and in one of these subdivisions we find section 1312 of the same act which, in our opinion, clearly controls the judgment in this and similar cases. This section with its subhead is set out below in exactly the form that it appears in the act as passed by Congress:

“ final determinations and assessments
“ Seo. 1312. That if after a determination and assessment in any case the taxpayer has without protest paid in whole any tax or penalty, or accepted any abatement, credit, or refund based on such determination and assessment, and an agreement is made in writing between the taxpayer and the commissioner, with the approval of the Secretary, that such determination and assessment shall be final and conclusive, then (except upon a showing of fraud or malfeasance or misrepresentation of fact materially affecting the determination or assessment thus made) (1) the case shall not be reopened or the determination and assessment modified by any officer, employee, or agent of the United States, and (2) no suit, action, or proceeding to annul, modify, or set aside such determination or assessment shall be entertained by any court of the United States.”

This section (1312) appeared for the first time in the 1921 act but was repeated verbatim et literatim under the same title and subhead in the revenue acts of 1924 and 1926 except that the words “ without protest ” are omitted. We think this statute so plain that “ he who runs can read.” A taxpayer had only to look at these headings to find under the head of “ final determinations and assessments ” whether the assessment which had been made against him was final. In Holmquist v. Blair, 35 Fed. (2d) 10, the court said with reference to this provision:

“ Section 1312 provides that, where the commissioner has determined and assessed the tax and without protest it has been fully paid or a refund accepted and a written agreement entered into by the commissioner and the taxpayer (approved by the Secretary), ‘such determination and assessment shall be final and conclusive ’ except for fraud, malfeasance, or misstatement of material fact. Sections 1309 and 1312 leave no doubt of the authorized power in the commissioner to make reexaminations, redeterminations, and reassessments. From the above sections of the act it is clear that Congress authorized reexaminations by the commissioner, and that the only limits thereon are that such must be made within four years (section 250 (d)) and must be after written notice to the taxpayer after investigation of the. necessity for such reexaminations. Section 1312 points out the way and the only way in which an assessment may be made final before expiration of the four-year period. ‘When a statute limits a thing to be done in a particular mode, it includes the negative of any other mode.’ Botany Mills v. United States, 278 U. S. 282, 289.”

Section 1309 referred to reexaminations.

In the same decision, Woodworth v. Kales, 26 Fed. (2d) 178, is reviewed and doubt is expressed as to whether, under the particular facts in the case, a contrary doctrine is held therein, but the court in its opinion says with reference to the case last cited that it prefers the rule laid down in Loewy & Son, Inc., v. Commissioner, 31 Fed. (2d) 652, in which the same construction is placed upon section 1312 of the revenue act of 1921.

We do not overlook that in Holmquist v. Blair, supra, and Loewy & Son v. Commissioner, supra, the assessment was not made under an administrative provision, but the line of argument used in the decisions is equally applicable to the case at bar. It should be noted also that in the Austin Co. case, supra, the assessments were made under a provision of the act of 1911 similar to the so-called relief provisions of the act of 1918 under which the assessments were made in the case at bar, and the act of the commissioner was therefore administrative, but the right of the commissioner to make a second assessment was upheld.

If it be claimed that prior to the passage of this provision of the law the first determination of the tax by the commissioner under the relief provisions was final, this affords no reason for such cases not being included within the purview of the section under discussion if Congress intended to exempt them from its provisions, but rather furnishes a conclusive argument that Congress did not so intend. Assuming for the purpose of the argument that prior to the passage of section 1312 such acts have been final, it makes it the more evident that if Congress had intended that this rule should continue, it would have so stated in this section which was three times enacted, and which we might say assumed by everyone to be all inclusive in its provisions. All the works on income taxation so treat it, and this has been the practice followed by the department, which has repeatedly reviewed its decisions upon special assessments under the relief act, upon the request of taxpayers.

It is said that when the commissioner determined the tax under the relief provisions of the act of 1918, and not only found that the plaintiff had been overassessed but sent the plaintiff a check for the amount of the overassessment, which plaintiff accepted, the whole matter was then settled. But section 1312 provides for exactly this kind of a case, and that such a settlement is not final unless an agreement is made in writing between tire taxpayer and the commissioner as provided therein.

It should also be noted that in section 273 of the revenue acts of 1924 and 1926 Congress provided that the commissioner might reverse his action in the case of an abatement, refund, or credit and reassess and collect the amount. It expressly recognizes that in arriving at the correct tax to be collected there may have been additional assessments or collections, abatements, refunds, and credits and clearly indicates that a refund, erroneous or otherwise, does not bar action by the commissioner within the statutory period provided by law. An amount erroneously refunded becomes none the less a tax because of that fact.

Since the submission of the case at bar, we have been favored with further argument on this same question in the case of Taft Woolen Co. v. United States, No. J-61. In the brief on the case last cited, attention is called to provisions of sections 204 (b) and 234 (a) (8) of the revenue act of 1918 which, it is said, were reenacted in the revenue act of 1921, and that there would be no necessity for these provisions, which are general in their nature, being enacted if the commissioner had power otherwise to redetermine the tax in all cases. There might possibly be some force in this argument if the particular provisions of these two sections had been reenacted in their entirety. Such is not the case. The part of these provisions which had general application, namely, the words “ the taxes imposed by this title and by Title III,” was omitted and other changes made when the sections to which reference is made were reenacted in the act of 1921, doubtless for the reason that Congress was making express provision elsewhere with reference thereto in section 1312 of the same act which we have set out above. As changed in the act of 1921, these provisions apply only to particular cases and state that in such cases the commissioner not only may reexamine the return, as he could in all other cases, but that he “ shall ” do so in certain instances. (Italics ours.) Also, in the argument in the Taft Woolen Co. case, supra, reference is made to sections 222 (a) and 222 (b) of the act of 1918 which it is said were reenacted in the act of 1921. An examination thereof will show that these provisions applied to amounts claimed by credits by the taxpayer by reason of taxes paid in foreign countries, or to refunds received therefrom and to nothing else. It was clearly necessary that a special provision should be made with reference thereto in a separate paragraph. It is also said that a Treasury regulation prevented the reopening of a case under circumstances such as existed in the case at bar, but a casual examination of the Treasury regulation with reference to the reopening of cases makes it plain that it applied only to cases where the taxpayer was making application to have the case reopened.

For the reasons above stated we hold that the commissioner was not precluded from making a reassessment within the period prescribed by the statute of limitations, which in this case had not expired. It follows that the motion for a new trial must be overruled and it is so ordered.

Williams, Judge, and Booth, Chief Justice, concur.

LittletoN, Judge,

concurring:

On the theory that the court has jurisdiction to go into the question of the authority of the commissioner to reconsider a determination made by him under sections 321 and 328 and change his first determination and reassess and collect a portion of the profits tax theretofore determined under these sections, and refunded, I agree with the foregoing opinion and the conclusion reached therein, but I think the claim of the plaintiff should be denied on the ground that the court is without jurisdiction to pass upon the question of the authority of the commissioner in this case.

This case relates entirely to a matter arising under the special-assessment provisions of the statute which confer discretionary power in the commissioner to determine the facts and the rate of profits tax through a comparison of the plaintiff with other corporations specified in section 328. It appears that the plaintiff made a return for the year 1918 and paid a total income and profits tax of $91,944.37. This return showed a total net income of $124,488.61, the normal tax upon which was $4,158.30 and the excess-profits tax, as computed under section 301 of the revenue act of 1918, was $87,836.07. Thereafter plaintiff made application to the commissioner for computation of its profits tax under section 328 of the said act, known as the special-assessment provision, claiming that the profits tax of $87,836.07 paid was too high and worked upon the plaintiff an exceptional hardship as compared with other corporations similarly circumstanced. The commissioner, in his discretion, concluded that this application should be granted, whereupon he made a computation under the special-assessment sections and on June 21, 1922, increased the net income of the plaintiff to $125,-219.28, but concluded that the excess-profits tax, when determined under section 328, should be $57,736.39 instead of $87,836.07. As a result, $26,487.97 of the profits tax paid on the return was refunded. In March, 1924, the commissioner reconsidered his action taken under the special-assessment provisions and made another determination of the amount of plaintiff’s profits tax under these provisions by comparison with other corporations and concluded that he had made a mistake; that the correct comparison and computations showed a profits tax of $73,368.23 and that, as a result, he had refunded $13,756.02 too much. No change was made in the net income. He recomputed and reassessed this amount and upon receiving notice thereof the plaintiff filed an abatement claim and a brief. Upon further consideration the commissioner made a further comparison under the special-assessment provisions and upon a further recompu-tation allowed the abatement claim for $6,354.76 and rejected it for $7,410.26. In August, 1925, the collector made demand for the payment of the last mentioned amount, and in September, 1925, the plaintiff paid it, together with interest in the amount of $592.82. In this suit plaintiff asks judgment for the amount upon the ground that the commissioner’s action on June 21,1922, under the special-assessment provisions refunding a portion of the excess-profits tax shown upon the return, was final and that he was without authority to reassess and collect any portion of the amount so refunded.

To go into the question whether the commissioner had authority to change his determination and reassess a portion of the tax refunded under the special-assessment provisions would be the same as inquiring into the correctness of such determination. The amount which the commissioner finally determined the plaintiff owed was less than the tax imposed by section 301. The entire matter was embraced within the. provisions of section 328. Plaintiff claims that the amount refunded lost its character as a tax and could be recovered only by a suit in which it would be incumbent upon the Government to prove that a refund was erroneous. In such a situation the court would not have jurisdiction to go into the matter, Williamsport Wire Rope Co. v. United States, 277 U. S. 551. And, however egregious the mistake in the first determination might have been, no portion of the amount erroneously repaid could be recovered by the Government.

Graham, Judge, concurs.  