
    CASPERS TIN PLATE COMPANY v. THE UNITED STATES
    [No. 470-54.
    Decided May 8, 1957]
    
      
      Mr. Robert P. Smith for the plaintiff. Messrs. Robert Y. Smith, Joseph W. Kiernan, D. A. Baher and Smith, Ristig <& Smith were on the brief.
    
      Mr. David R. Frazer, with whom was Mr. Assistant Attorney General Charles K. Riee, for the defendant. Mr. James P. Garland was on the brief.
   Jones, Chief Judge,

delivered the opinion of the court:

This is a suit to recover excess profits taxes for the year 1945in the amount of $31,927.67.

The plaintiff is a corporation organized under the laws of the State of Illinois, and maintains its principal place of business in Chicago, Illinois.

On March 15, 1946, the plaintiff filed its Federal excess profits tax return for the taxable year ending December 31, 1945, and paid the amount of $171,470.95 which was shown to be due. On or about July 25, 1947, the plaintiff paid additional excess profits taxes for the year 1945 in the amount of $3,693.37 and interest of $259.75.

Section 722 (d) of the Internal Eevenue Code of 1939, as amended, 26 U. S. C. §722 (d), which was applicable to the taxable year 1945, provided in part as follows:

(d) Application for Belief Under this Section. — The taxpayer shall compute its tax, file its return, and pay the tax shown on its return under this subchapter without the application of this section, except as provided in section 710 (a) (5). The benefits of this section shall not be allowed unless the taxpayer within the period of time prescribed by section 322 and subject to the limitation as to amount of credit or refund prescribed in such section makes application therefor in accordance with regulations prescribed by the Commissioner with the approval of the Secretary. * * *

Section 322 of the Internal Revenue Code of 1939, as amended, 26 U. S. C. § 322, provided in part as follows:

Sec. 322. Refunds and Credits.

$ * * * *
(b) Limitation on Allowance.—
(1) Period of Limitation. — Unless a claim for credit or refund is filed by the taxpayer within three years from the time the return was filed by the taxpayer or within two years from the time the tax was paid, no credit or refund shall be allowed or made after the expiration of whichever of such periods expires the later. * * *

On the morning of March 15, 1949, the plaintiff received from its auditing firm Form 991 which had been prepared by its auditors for execution by plaintiff’s officers. When this form was signed by plaintiff’s officers and notarized by plaintiff’s assistant secretary and comptroller, Mr. Roy Kritzer, it became the plaintiff’s application for relief under, section 722 with respect to excess profits taxes for the taxable year 1945. Mr. Kritzer took this application for relief, with a duplicate copy thereof, to the collector’s office in Chicago, Illinois, at about 11 a. m. on March 15. The undisputed testimony shows that Mr. Kritzer personally tendered the application for relief under section 722 to the office of the Collector of Internal Revenue for the Chicago district for the purpose of having it filed as a claim. It was presented to a young lady at the counter who looked it over and told Mr. Kritzer that she felt that it should be filed in Washington. It had been the custom theretofore for the Collector of Internal Revenue at Chicago to receive not only income tax returns but also claims for refunds and applications for relief. Mr. Kritzer asked the girl to check with her superior. She did so and told Mr. Kritzer that her superior had advised her to instruct Mr. Kritzer that he should go immediately to the airport and send the claim to Washington by airmail; that the Revenue Department was staying open all over the country until midnight that night; and that by using the airmail he felt quite sure the claim would reach the Washington office of the Commissioner on time.

Mr. Kritzer took the application for refund to the airport and personally mailed it by registered airmail, with return receipt requested, to the Commissioner of Internal Revenue, Washington, D. C. This was shortly after noon. The postmaster at the airport assured him that planes were leaving for Washington within the next hour and that the claim certainly would be on one. The testimony indicates that the flying time from Chicago to Washington was between two and three hours.

The defendant placed no witnesses from the Chicago office on the stand. The only witness who appeared for the defendant was Richard R. McLaughlin who worked in the Readjustment Section of the Bureau of Internal Revenue in Washington at the time plaintiff’s claim was filed. Mr. McLaughlin testified that in the year 1949 he worked in the Readjustment Section; that he had no personal recollection of the particular claim; that the incoming mail went first to the mail room and was there distributed; and that he did not know how long it was kept in the mail room before it was sent to the Readjustment Section. However, the stamp on plaintiff’s claim recited “Received MAR 16 1949 Readjustment Section.”

It is altogether possible, even probable, that plaintiff’s claim arrived in Washington and was received in the mail room of the Commissioner of Internal Revenue before midnight of March 15th. However, there is no conclusive proof on this point.

Plaintiff was notified on August 5, 1952, that its excess profits tax liability for 1945 was $139,548.28, that $175,164.32 had previously been assessed for that year, and that there was an overassessment for that year of $3,693.37, the balance of $31,927.67 being barred by the statute of limitations. It is for this latter amount that plaintiff now sues.

Plaintiff takes the position that its claim for relief on Form 991 for the year 1945 was timely and properly filed with the defendant. In the alternative it argues that the parties negotiated a settlement of plaintiff’s claims for the years 1940 to 1945, and that the settlement constituted an account stated entitling plaintiff to recover.

It is the defendant’s position that plaintiff’s claim is barred because not timely filed. Defendant also denies that an account stated occurred between the parties and urges that the statute of limitations on claims against the United States can never be waived by an officer or agency of the Government.

It is clear that if plaintiff’s claim was timely filed it is entitled to recover the amount for which it sues. The defendant does not dispute the fact that payments made by plaintiff for the year 1945 exceeded its tax liability for that year by $35,621.04 and that only $3,693.37 was refunded to plaintiff. Defendant points out, however, that both the regulations and the instructions attached to Form 991 provided that Form 991 should be filed with the Commissioner of Internal Revenue in Washington, D. C., and that March 15, 1949, was the final day on which plaintiff could file its claim. Defendant concludes that since Form 991 was not received by the proper officials in Washington until March 16,1949, the claim is barred.

Plaintiff says that the claim was received by the proper officials in Washington on March 15, and that even if it was not received in Washington, it was properly filed in Chicago on that date.

Although it appears likely that plaintiff’s claim arrived in the mail room of the Commissioner of Internal Revenue in Washington before midnight on March 15,1949, the evidence presented does not definitely establish this fact. However, it is clear from the evidence that plaintiff tendered to a representative of defendant’s Chicago office on the morning of March 15, 1949, a properly signed and executed application for relief under section 722 which constituted a valid claim for refund. The evidence also reveals that on previous occasions applications for relief and claims for refund had been accepted in the Chicago office. It is also clear that when the defendant’s agents in Chicago refused to accept the application, plaintiff’s officer made every effort to file the application in Washington on March 15, and in so doing acted pursuant to instructions of the defendant’s agent in Chicago.

We believe that the established practice of the Commissioner of accepting and processing claims for refund and relief when filed in the Chicago collector’s office superseded any technical regulation to the contrary.

In the light of the facts and circumstances revealed by the evidence in this case we conclude that a constructive filing, if not an actual one, occurred on March 15, 1949, and we so hold. To hold otherwise would be to reach a harsh and unjust result contrary to every rule of fair play known- to us.

The plaintiff pleads in the alternative that the parties negotiated a settlement of plaintiff’s claims for the years 1940 to 1945, and that the settlement constituted an account stated upon which plaintiff should be allowed recovery. Plaintiff originally claimed an overpayment of more than $200,000 in excess profits taxes for the years 1940 to 1945. After numerous conferences between representatives of the plaintiff and defendant and considerable correspondence, the parties agreed under section 722 to a constructive average base period net income of $187,000 for each of the years 1941 to 1945, inclusive, and to a constructive average base period net income of $106,800 for the year 1940. Despite this agreement, plaintiff was notified on August 5, 1952, that $31,927.67 for the year 1945 was barred because the claim for relief under section 722 was not timely filed.

The facts as disclosed by the record might well be construed as constituting ah account stated, but since we are bolding that there was a timely constructive filing of a claim for relief for the year 1945, we need not consider that question.

The plaintiff is entitled to recover. Judgment will be entered in favor of the plaintiff in the amount of $31,927.67, with interest as provided by law.

It is so ordered.

Laramore, Judge; Madden, Judge; Whitaker, Judge; and Littleton, Judge, concur.

FINDINGS OF F'AGT

The court, having considered the evidence, the report of Commissioner William E. Day, and the briefs and argument of counsel, makes the following findings of fact: -

1. The plaintiff is a corporation.organized under the laws of the State of Illinois, and maintains its principal place of business at 4100 West 42nd Place, Chicago, Illinois.

2. For the taxable year ended December 31, 1945, the plaintiff filed its Federal excess profits tax return on March 15, 1946, and payment of the excess profits tax shown to be due, in the amount of $171,470.95, was made. On or about July 25, 1947, the plaintiff paid additional excess profits taxes for the year 1945 in the amount of $3,693.37 and interest of $259.75.

3. For the years 1940 to and including 1944, the plaintiff filed applications for relief under section 722 from excess profits taxes paid.

4. Section 722 (d) of the Internal Revenue Code, 57 Stat. 601, which was applicable to taxable year 1945, provided as follows:

(d) APPLICATION FOR RELIEF UNDER THIS SECTION. — The taxpayer shall compute its tax, file its return, and pay the tax shown on its return under this subchapter without the application of this section, except as provided in section 710 (a) (5). The benefits of this section shall not be allowed unless the taxpayer within the period of time prescribed by section 322 and subject to the limitation as to amount of credit or refund prescribed in such section makes application therefor in accordance with regulations prescribed by the Commissioner with the approval of the Secretary. If a constructive average base period net income has been determined under the provisions of this section for any taxable year, the Commissioner may, by regulations approved by the Secretary, prescribe the extent to which the limitations prescribed by this subsection may be waived for the purpose of determining the tax under this subchapter for a subsequent taxable year.

5. Regulations 112, section 35.122-5, provide in part as follows:

(&) Method of filing and information required. — The application on Form 991 (revised January, 1943) shall be filed in duplicate with the Commissioner of Internal Revenue, Washington, D. C., attention of the Income Tax Unit, Clearing Division, Claims Control Section, * * *

6. Printed instructions were appended to Form 991 (revised January 1943) to be torn off by the taxpayer at the time of filing. Such instructions provide in part as follows:

I. Form 991 (revised January 1943) is to be used by a corporation for each excess profits tax taxable year for which it claims the benefits of section 722 of the Internal Revenue Code, as amended by section 222 (a) ofthe Revenue Act of 1942, relating to the computation of constructive average base period net income.
II. This form should be executed in duplicate and filed, within 6 months after the time provided for filing the excess profits tax return, or if the application relates to a taxable year beginning after December 31,1939, but not beginning after December 31, 1941, on or before April 21,1943, with the Commissioner of Internal Revenue, Washington, D. C., attention Income Tax Unit, Clearing Division, Claims Control Section. * * *

7. On the morning of March 15,1949, the plaintiff received from its auditing firm Form 991 which had been prepared by its auditors for execution by plaintiff’s officers. When signed by its officers and notarized by its assistant secretary and comptroller, Mr. Roy Kritzer, it became the plaintiff’s application for relief under section 722 with respect to excess profits taxes for the taxable year 1945. Mr. Kritzer then took such application for relief, with a duplicate copy thereof, to the collector’s office in Chicago, Illinois, at about 11 a. m. The undisputed testimony shows that Mr. Kritzer personally tendered the application for relief under section 722 to the office of the Collector of Internal Revenue for the Chicago district for the purpose of having it filed as a claim. It was presented to a young lady at the counter who looked it over and told Mr. Kritzer that she felt that it should be filed in Washington. It had been the custom theretofore for the Collector of Internal Revenue at Chicago to receive not only income tax returns but also claims for refunds and applications for relief. Mr. Kritzer asked the girl to check with her superior. She did so, and told Mr. Kritzer that her superior had advised her to instruct Mr. Kritzer that he should go immediately to the airport and send the claim to Washington by airmail; that the Revenue Department was staying open all over the country until midnight that night; and that by using the airmail he felt quite sure the claim would reach the Washington office of the Commissioner on time.

Mr. Kritzer took the application for refund to the airport and personally mailed it by registered airmail, with return receipt requested, to the Commissioner of Internal Revenue, Washington, D. C. This was shortly after noon. The postmaster at the airport assured him that planes were leaving for Washington within the next hour and that the claim certainly would be on one. The testimony indicates that the flying time from Chicago to Washington was between two and three hours. There is no evidence in the record as to what happened to the return receipt or what it showed as to the date of delivery of the registered airmail for which it was requested.

8. The original application for relief for taxable year 1945 filed by the plaintiff is in evidence. It bears a rubber stamp impression with the words “Received Mar 16 1949 Readjustment Section.” In the organization of the Bureau of Internal Revenue in March 1949, there was an Income Tax Unit of which the Clearing Division was a part. Within the Clearing Division, there was a Claims Control Section as well as a Readjustment Section.

9. There is in evidence on behalf of the plaintiff its exhibit 6, being the letter of transmittal dated October 24, 1950, enclosing the revenue agent’s report dated September 15, 1950, covering the examination of the plaintiff’s applications for relief under section 722 of the Internal Revenue Code for the years 1940 through 1945, inclusive. The summary (the third page of the exhibit) shows among other things the date on which the claim was filed for each year 1940 through 1945, inclusive. For the year 1945, it shows that the date the claim was filed was March 16, 1949 (3/16/49).

10. In February 1951, the plaintiff submitted a protest or reply to conclusions reached in the letter of October 24,1950. Conferences were then had between representatives of the plaintiff and the Internal Revenue Service.

11. Thereafter on April 30,1951, the Acting Internal Revenue Agent in Charge of the Chicago Division of the Internal Revenue Service directed the following letter to the plaintiff:

Your applications for relief filed under the provisions of section 722 of the Internal Revenue Code for the taxable years ended December 31,1940 to 1945, inclusive, together with your formal protest have received careful consideration by this office.
As a result of conference action it has been concluded that your constructive average base period net income for the foregoing years should be as follows:
Years ended, Constructive average tase period net income
December 31, 1940-_$97,583.00
December 31, 1941-_116,170.00
December 31, 1942-_116,170.00
December 31, 1943-_116,170. 00
December 31, 1944-_116,170. 00
December 31, 1945_ _116,170. 00
The case, together with the recommendations with respect to your applications for relief, is being forwarded to the Excess Profits Tax Council, Bureau of Internal Revenue, Washington 25, D. C., and further communication relating to the case should be directed to such office.

12. Thereafter conferences were had between representatives of the Excess Profits Tax Council and representatives of the plaintiff.

13. On December 27, 1951, the plaintiff, through counsel, executed its agreement to amount of constructive average base period net income determined under section 722 of the Internal Revenue Code for the excess profits tax taxable years and in the respective amounts shown below:

Constructive Tamable year ended average base period net income
December 31, 1940_ _$106, 800. 00
December 31, 1941-_ 137, 000.00
December 31, 1942_ _ 137, 000.00
December 31, 1943-.-_ 137, 000. 00
December 31, 1944_ _ 137,000.00
December 31, 1945_ _ 137,000. 00

The figures quoted above were those which resulted from the conferences referred to in the preceding finding.

14.On August 5, 1952, the plaintiff was notified by a 30-day letter that its excess profits tax liability for 1945 was $139,543.28, that there had been previously assessed $175,-164.32, and that there was an overassessment for that year of $3,693.37, the balance of $31,927.67 being barred by the statute of limitations. There is quoted below pertinent information in explanation of the action taken:

The application for relief filed on Form 991 for the year 1945 received by the Bureau of Internal Revenue, Washington, D. C. on March 16, 1949 constitutes a timely and valid claim for refund only to the extent of the additional excess profits tax in the amount of $3,693.37 assessed on July 25,1947.

CONCLUSION OE LAW

Upon the foregoing findings of fact, which are made a part of the judgment herein, the court concludes as a matter of law that the plaintiff is entitled to recover, and it is therefore adjudged and ordered that the plaintiff recover of and from the United States the sum of thirty-one thousand nine hundred twenty-seven dollars and sixty-seven cents ($31,927.67), with interest as provided by law. 
      
      Mr. Kritzer, plaintiff’s assistant secretary and comptroller, testified as follows:
      Q. Have you previously filed documents with the Collector’s Office in Chicago ?
      A. We do that all the time, Mr. Smith, and all our documents are filed with the Collector’s Office.
      Q. Including claims for refunds?
      A. Yes, sir.
      Q. And claims for relief?
      A. Yes, sir.
     