
    532 F. 2d 1344
    FRANCIS COLLINS v. THE UNITED STATES
    [No. 238-73.
    Decided April 14, 1976]
    
      
      Peter B. Bang, attorney of record, for plaintiff.
    
      Patricia B. Tucker, with wbom was Assistant Attorney General Bcott P. Orarrifton, for defendant. Theodore D. Peyser and Robert B. Watkins, of counsel.
    
      Before Nichols, Kashiwa, and Kunzig, Judges.
    
   Kashiwa, Judge,

delivered the opinion of the court:

This is an action to recover $3,748.85, plus interest, which represents the amount paid by the plaintiff, Francis Collins, to the Internal Revenue Service to satisfy the proposed income and excise tax deficiencies of Summertime Cafe, Inc., for the years 1964 and 1965. For the reasons stated below, we hold for the defendant.

The plaintiff purchased Summertime Cafe, Inc., in December, 1963. Its principal asset was a seasonal liquor license. The corporation operated a nightclub, the Candy Lounge, from April 1 to November 30 during each of the years 1964 and 1965. By an agreement dated August 3,1965, Mr. Collins sold the stock of the corporation to Harold Loew.

In the spring of 1968, Mr. Collins was contacted by Revenue Agent D. E. Harrington, who was conducting an audit of Summertime Cafe, Inc.’s, federal income tax returns for 1964 and 1965. The main item under consideration was the band expense deduction claimed for each year. In connection with this audit, Mr. Collins made available to Mr. Harrington the receipts signed by the individual band leaders and also copies of his own personal tax returns for 1964 ’and 1965. After a review of the receipts, Mr. Harrington told Mr. Collins that the deductions claimed for band expenses were doubtful but that, if the deductions were allowed, the question of cabaret taxes would arise.

Mr. Collins received two revenue agent’s reports in May, 1969, in which deficiencies were proposed with respect to Summertime Cafe, Inc.’s, and Mr. Collins’ personal income taxes for the years 1964 and 1965. The report addressed to Summertime Cafe, Inc., in care of Mr. Collins proposed the disallowance of the claimed band expense deductions of the corporation plus a negligence penalty for the years 1964 'and 1965, and other minor adjustments for 1965. The report addressed to Mr. Collins proposed an adjustment for his personal income taxes based on the inclusion of income in the amount of the disallowed band expenses for each year as a constructive dividend to Mr. Collins. An additional item for 1964 was Mr. Collins’ receipt of unreported, tip income in the amount of $135.

At Mr. Collins’ request a conference was scheduled between John MacDonald, District Conferee, and Mr. Collins to consider the proposed tax deficiencies of both Summertime Cafe, Inc., and Mr. Collins. In preparation for this conference, Mr. MacDonald reviewed the case files and researched case law dealing with the substantiation of claimed expenses. At the first conference with Mr. Collins, Mr. MacDonald reviewed the cases with Mr. Collins and noted that a question existed with respect to whether Mr. Collins had sold the stock or the assets of the corporation. Mr. MacDonald explained that Mr. Collins might be liable for the corporate taxes if he had sold the 'assets of the corporation. Conversely, as Mr. MacDonald explained, if the stock had been sold, the continuing corporation would be liable for the corporate deficiencies, although the purchasers might look to Mr. Collins for reimbursement if the contract contained a warranty clause. In order to resolve these questions, Mr. MacDonald asked Mr. Collins for a copy of the sale document. In response to this explanation, Mr. Collins became visibly agitated and stated that he did not want to go into the sale and that he would pay the taxes.

The remainder of the first conference and the other three conferences between Mr. Collins and Mr. MacDonald concerned the amount of taxes due from the corporation and from Mr. Collins. Mr. MacDonald requested the band receipts and other information pertaining to the band expense deductions in issue. On the basis of the information provided, Mr. MacDonald concluded that the band expense deductions claimed by the corporation were allowable.

As Mr. MacDonald had explained to Mr. Collins at their first conference, if the band expense deductions were allowed, an excise (cabaret) tax would then become due. The amounts of corporate cabaret and income tax deficiencies were computed and the imposition of a 25 per cent penalty for failure to file the required cabaret tax returns was proposed. The allowance of the band expense deductions at the corporate level eliminated the proposed constructive dividend to Mr. Collins. Consequently, the only remaining adjustment was the unreported tip income which resulted in a tax deficiency of under $80.

About a week after their last conference, Mr. Collins informed Mr. MacDonald that he had retained legal counsel to assist him with respect to the proposed deficiencies. On August 26, 1969, Mr. Collins executed a power of attorney form authorizing Peter Sang to represent him before the Internal Revenue 'Service. Thereafter, Mr. Collins’ attorney handled all substantive matters concerning the proposed deficiencies.

Mr. Collins’ attorney and Mr. MacDonald had one conversation relating to the proposed penalties for failure to file the required cabaret tax returns. After the conversation an affidavit explaining the failure to file the required returns and reaffirming Mr. Collins’ willingness to pay the corporate deficiencies was submitted. The affidavit was signed by both Mr. Collins and his attorney. Based on the information contained in the affidavit, Mr. MacDonald recommended that penalties for the failure to file cabaret tax returns not be imposed.

On or about 'September 12, 1969, Mr. Collins paid the proposed income and cabaret tax deficiencies of Summertime Cafe, Inc., for 1964 and 1965 in the total amount of $3,148.85. In the present action Mr. Collins seeks the recovery of these amounts plus interest.

This is an action for the recovery of amounts paid by the plaintiff to satisfy the proposed tax deficiencies of Summertime Cafe, Inc. This case involves the further consideration of the right of the Internal Revenue Service to accept and retain amounts offered by a third party to satisfy the tax liabilities of a separate entity. Initially, we note that the plaintiff has not argued that Summertime Cafe, Inc., did not owe the income or excise taxes paid or that the taxes were excessive in amount. The plaintiff’s position appears to be that the Internal Revenue Service has no right to retain the amounts he tendered to satisfy the proposed corporate deficiencies.

The principal issue is whether the plaintiff was a volunteer in paying the taxes of Summertime Cafe, Inc.

Plaintiff states that jurisdiction is conferred upon the court by 28 U.S.C., Section 1491, citing Fidelity de Casualty Co. v. United States, 203 Ct. Cl. 486, 490 F. 2d 960 (1974). The Fidelity case, like this case, involved an action for the recovery of amounts tendered by the plaintiff to satisfy the tax liabilities of another party. In that case the court assumed jurisdiction to determine whether the circumstances surrounding the acceptance of the payment in issue created a contract implied in fact even though the plaintiff was not a taxpayer entitled to maintain an action for the overpayment of taxes.

It is the defendant’s position that the circumstances surrounding payment in this case do not support any finding of a contract implied in fact. We assume jurisdiction to consider this question. Cf. J. C. Pitman & Sons, Inc. v. United States, 161 Ct. Cl. 701, 317 F. 2d 366 (1963); Ralston Steel Corp., Assignee v. United States, 169 Ct. Cl. 119, 340 F. 2d 663, cert. denied, 381 U.S. 950 (1965).

In order to consider this question, we first have to examine the voluntariness of plaintiff’s payment. In cases involving the payment of tax liabilities by a third party, it is fundamental that the plaintiff cannot recover if the payment in issue was voluntary and the plaintiff bears the burden of proving some element which would remove him from the category of volunteer. In Fidelity & Casualty Co. v. United States, supra, we held:

Even viewed in a light most favorable to plaintiff, the actions of IRS in the circumstances surrounding payment of the taxes by plaintiff cannot be considered so overpowering as to have inhibited plaintiff from the unfettered exercise of its reasoned judgment. * * * [203 Ct. Cl. at 497,490 F. 2d at 966.]
$ $ $ $ $
There are no circumstances in this case whereby a contract implied in fact can be established based on the dealings between IRS and the plaintiff. Plaintiff has failed to carry its burden in this regard, and it must be placed in the fatal category of a volunteer.* * * [203 Ct. Cl. at 498, 490 F. 2d at 967.]

See J. C. Pitman & Sons, Inc. v. United States, supra; Combined Industries, Inc. v. United States, 83 Ct. Cl. 613, 15 F. Supp. 349 (1936) ; Central Aguirre Sugar Co. v. United States, 77 Ct. Cl. 17, 2 F. Supp. 538 (1933).

Plaintiff’s main contention appears to be that the deficiencies proposed against Summertime Cafe, Inc., were paid as the result of duress applied by the Internal Revenue Service. We have considered the question of duress in a wide variety of situations and in Fruhauf Southwest Garment Co. v. United States, 126 Ct. Cl. 51, 62, 111 F. Supp. 945, 951 (1953), summarized its conclusions as follows:

* * * three elements are common to all situations where duress has been found to exist. These are: (1) that one side involuntarily accepted the terms of another; (2) that circumstances permitted no other alternative; and (3) that said circumstances were the result of coercive acts of the opposite party. * * *

Even if the plaintiff’s version of the disputed facts is accepted, we find that none of these elements can be found here.

First of all we find that there is no evidence of the involuntary acceptance of terms dictated by the Internal Revenue Service. Even if the payment in issue was made as the result of Mr. Harrington’s alleged statement that Mr. Collins was personally liable for the proposed corporate tax deficiencies, there is no indication that Mr. Collins involwntamly accepted these terms. To the contrary we find that Mr. Collins, who could have obtained a copy of the sale agreement at any time from the attorney who prepared the sale agreement, did not produce the document for Mr. Harrington and refused to produce it for Mr. MacDonald. Much has been said of a mistake in this case on plaintiff’s part. A copy of the sale agreement would have answered all questions. Ignorance is never sufficient to constitute a ground of relief if it appears that the requisite knowledge might have been obtained by reasonable diligence. United States v. Ames, 99 U.S. 35, 47 (1878). He wbo averts knowledge to bimself cannot later claim lack of knowledge. This is elementary. Mr. Collins further testified that he never told Mr. MacDonald that he was in any way reluctant to pay the corporate taxes. In fact, after retaining legal counsel Mr. Collins reaffirmed his willingness to pay the corporate taxes in an affidavit which was signed by both Mr. Collins and his attorney and submitted to Mr. MacDonald prior to the payments in issue. As Mr. Collins testified, he figured that it would be easier to pay the tax than to fight it. Moreover, Mr. Collins’ decision to pay the taxes in question may very well have been made in the belief of his liability for the corporate taxes under the contract for the sale of the stock. We hold that the evidence is not sufficient in this case to support a finding that the plaintiff’s acquiescence to Mr. Harrington’s alleged representation that he was liable for the corporate taxes (even if the payment in issue is found to be the result of such statement) was in any way involuntary. The plaintiff, who averted knowledge to himself as above indicated, cannot claim that his acquiescence was involuntary.

Secondly, contrary to the plaintiff’s assertions, other alternatives were available. The payments in issue were made as part of a district conference settlement. If agreement had not been reached at that level, an appellate conference could have been scheduled or a notice of deficiency could have been issued and a petition filed in the United States Tax Court. Mr. Collins’ attorney, who handled these cases prior to the payment in issue, was certainly aware of the alternatives to making the payment at the district conference level.

The final element essential to a finding of duress is that the circumstances which permitted no other alternative (assuming that this element were otherwise established) were the result of coercive acts of the opposite party. The coercive acts referred to must be of such a nature that they are sufficient to overpower the free will of the plaintiff and to prevent any other course of action. In Beatty v. United States, 144 Ct. Cl. 203, 206, 168 F. Supp. 204, 206-207 (1958), we stated as follows:

A party is always entitled to say that if his offer is not accepted, ho will avail himself of his legal rights; it is only the threat of a wrongful or unlawful act that may constitute duress. Such a threat will amount to duress only if it is sufficient to overpower the will of the other party and prevent the free exercise of his will. * * *

See Fruhauf Southwest Garment Co. v. United States, supra, 126 Ct. Cl. at 64, 111 F. Supp. at 952.

We hold that the record here is completely devoid of any coercive actions by agents of the Internal Revenue Service. At best the plaintiff has demonstrated only a misrepresentation of law by Mr. Harrington. Where, as here, the plaintiff was represented by tax counsel prior to and at the time of the payment in issue, misrepresentation of law cannot form the basis for a finding of duress. In Mills v. United States, 187 Ct. Cl. 696, 700, 410 F. 2d 1255, 1257-1258 (1969), we held:

Even if the plaintiffs could show misrepresentation of law, we could not grant the relief requested. In the absence of unusual circumstances, representations as to questions of law form no basis for setting aside a contract. * * * Ordinarily one having need of legal advice will retain counsel and not take it from the other side of the negotiating table. * * *

The lapse of 18 months between the alleged misrepresentation by Mr. Harrington and the payment in issue further negates any inference of urgency or coercion necessary to a finding of duress. If the intervening events — Mr. MacDonald’s explanation of the tax consequences of the different types of sales and the retention of and reliance upon tax counsel by Mr. Collins — are considered, the impact of Mr. Harrington’s statements are even more attenuated. Even if the payments in issue were made as the result of these statements, as the plaintiff contends, we hold that the statements, at best, constitute merely a misrepresentation of law insufficient to constitute duress under the decisions of this court.

While, in certain cases, actions have been maintained for the recovery of amounts used to satisfy the liabilities of another person, such instances of recovery have been limited to those cases in which the actions of the agents of the Government are so egregious as to constitute a fraud on the rights of the individual. See United States v. State Bank, 96 U.S. 30 (1877); Kirkendall v. United States, 90 Ct. Cl. 606, 31 F. Supp. 766 (1940). Conversely, the facts in this case illustrate not only that no such fraudulent actions occurred, but rather that the actions of the district conferee who accepted the payment in issue were correct and appropriate. It is our opinion that the payments in issue were accepted by Mr. MacDonald from an individual who—

(1) had been informed that questions existed as to his persona] liability for the corporate taxes;
(2) had been offered assistance in making a determination as to his own liability;
(3) ref used such assistance;
(4) orally stated that he was willing to pay the corporate taxes;
(5) never indicated in any way that he was unwilling to pay the corporate taxes ;
(6) retained and relied upon tax counsel prior to making the payment; and
(7) subsequently reaffirmed, in writing, his willingness to pay the corporate taxes under 'his signature and the signature of his attorney.

Under these circumstances we find that Mr. MacDonald’s acceptance and retention of the payment in issue were entirely proper.

Plaintiff has argued that the payment in issue is the result of a misrepresentation of law made to an individual who was not represented by counsel. If payment had been made to Mr. Harrington, the original agent, different problems might be presented. However, this is not the case here. Once counsel was retained, any prior misrepresentation is irrelevant. As this court noted in Mills v. United States, supra, 187 Ct. Cl. at 700, 410 F. 2d at 1258:

* * * Ordinarily one having need of legal advice will retain counsel and not take it from the other side of the negotiating table. * * * The relationship of the parties was not such that it was reasonable for one side to have relied on the representations of the other.

In essence plaintiff, with no reference to legal support whatsoever, is asking this court to hold that a misrepresentation of law made to an individual who was not represented by counsel cannot under any circumstances be remedied by later events. The multiple remedial actions present in this case dictate that the impact of Mr. Harrington’s alleged statement was thoroughly dissipated by 18 months of intervening events. As we see this case, Mr. Collins, who could have produced the sale agreement at any time, made a decision that it was easier to pay the corporate taxes than to attempt to work out the question of liability. Having made this decision, Mr. Collins assumed the risk that he was in error as to his legal duty.

Subsequently, the plaintiff dealt with Mr. MacDonald to arrive at a figure for the corporate deficiencies with absolutely no indication to Mr. MacDonald that he was unwilling to pay the resulting figure. The failure to convey to Mr. MacDonald any reluctance Mr. Collins might have had is fatal here. Mr. MacDonald was certainly not on notice that Mr. Collins was making the payment in issue on the basis of a misconception of his duty, even if this were in fact the case. To hold the Government responsible for the plaintiff’s later change of mind would impose an unfair and unwarranted burden. See J. C. Pitman & Sons, Inc. v. United States, supra.

Under these circumstances, no contract implied in fact existed. A contract implied in fact exists only where the circumstances illustrate that the equivalent of mutual assent is present. Porter v. United States, 204 Ct. Cl. 355, 366, 496 F. 2d 583, 590-591 (1974), cert. denied, 420 U.S. 1004 (1975). Conversely, a contract implied in law is one in which a duty to make restitution is implied, regardless of the lack of mutual assent, for reasons of justice and equity. 1 CORBIN ON CONTRACTS, § 19 (2d ed. 1963). There is absolutely no indication of mutual assent in this case. Rather, plaintiff’s case is based solely on unproved charges that plaintiff was “coerced” and that this case involved an instance of “IRS high-handedness.” Since it cannot be shown that a contract implied in fact existed and since this court’s jurisdiction over implied contracts is limited to contracts implied in fact, the plaintiff has presented no claim over which this court can exercise its jurisdiction and the petition is dismissed.

Kunzig, Judge,

dissenting:

In this cabaret excise tax refund suit the majority overturns the recommended decision of Trial Judge Bernhardt and denies plaintiff a recovery for taxes paid to defendant despite the fact that plaintiff was never liable to defendant for the taxes. The primary basis for the majority’s holding is that plaintiff paid the tax as a “volunteer” on behalf of Summertime Cafe, Inc., and produced insufficient facts to warrant his recovery on an implied in fact contract because he did not make the tax payments under duress. I agree that plaintiff is not entitled to recover on an implied in fact contract theory in the instant case. However, I differ with the majority on a second phase of the case and would adopt Trial Judge Bernhardt’s recommendation that plaintiff has established a right to recover based on section 7422(b) of the Internal Revenue Code of 1954.

According to the majority, in order to maintain an action for the refund of taxes, the plaintiff must “be the taxpayer who has overpaid his own taxes.” The court cites Economy Plumbing and Heating Co. v. United States, 200 Ct. Cl. 31, 470 F. 2d 585 (1972) for this proposition. Undoubtedly, “persons who are not taxpayers * * * within the system” have no standing to maintain a refund suit. Economy Plumbing, supra, 200 Ct. Cl. at 37, 470 F. 2d at 589. However, the majority opinion in the instant case conveniently ignores a crucial determination by the trial judge:

In contrast to Economy Plumbing, the present plaintiff is clearly within the administrative system defined by the court because he was assessed a tax deficiency as a taxpayer, had. been formally audited as a taxpayer, paid the tax as a taxpayer, and filed and was denied his refund claim as a taxpayer.

Having treated plaintiff as a taxpayer at each stage of the administrative process, defendant should not now be heard to say that plaintiff is an “outside third party.”

Defendant’s “nontaxpayer” argument appears even more tenuous when one considers the fact that until the final stages of the administrative process plaintiff appeared fro se. Further, the record is totally silent as to any attempts by defendant to recover the tax from the proper party, Summertime Cafe, Inc. I would hold, as did the trial judge, that plaintiff has standing to maintain the present action as a taxpayer.

Clearly, if plaintiff is entitled to bring the instant action as a taxpayer it is irrelevant that he did not pay the tax under duress. § 7422 (b), sufra.

Moreover, although plaintiff camiot recover if 'he was a volunteer, Fidelity & Casualty Co. v. United States, 203 Ct. Cl. 486, 497, 490 F. 2d 960, 967 (1974), he need only prove “some element which would remove [him] * * * from the fatal category of pure volunteer.” J. C. Pitman, & Sons, Inc. v. United States, 161 Ct. Cl. 701, 706, 317 F. 2d 366, 369 (1963). In the case at bar the trial judge correctly found that plaintiff established such an element by showing that both he and defendant operated under a mutual mistake of fact as to the contents of plaintiff’s contract to sell Summertime Cafe, Inc. Both parties believed that it provided for a sale of assets (in which case plaintiff would have been liable for the cabaret tax) when in fact it provided for a sale of stock (and plaintiff was not liable for the tax). Therefore, plaintiff was not a volunteer and is able to bring the present action.

Plaintiff had standing as a taxpayer. He was not a volunteer. Accordingly, all plaintiff needed to show in the instant case was that a tax was wrongfully collected from him, a proper refund claim was submitted which was denied by the Internal Eevenue Service and a timely action was brought in the present suit. From the record it is apparent that plaintiff has met such prerequisites. I would, therefore, hold for plaintiff.

FINDINGS OF FACT

1. The plaintiff, Francis Collins, currently resides at 14 Summit Avenue, Cbelsea, Massachusetts. Until 1973, Mr. Collins resided at 54 Eliot Eoad, Eevere, Massachusetts.

2. In December of 1963, Mr. Collins purchased Summertime Cafe, Inc., a Massachusetts corporation. In connection with the purchase, Mr. Collins retained a Boston attorney.

3. The principal asset of Summertime Cafe, Inc., which operated the Candy Lounge, was a seasonal liquor license. The Candy Lounge, which was operated from April 1 to November 30 during each of the years in issue, was a nightclub which offered alcoholic beverages for purchase and provided band entertainment.

4. By an agreement dated August 3,1965, Mr. Collins sold the stock of 'Summertime Cafe, Inc., to Mr. Harold Loew for $14,000 in cash plus an amount equal to the wholesale price of the liquor inventory at the time of closing, all deposits with public utilities, and cash on hand, subject to the adjustments for taxes described in finding 19, infra.

5. Subsequent to sale of Summertime Cafe, Inc., Mr. Collins’ only contact with the corporation or the purchaser of the corporation was as an occasional patron of the nightclub.

6. In the spring of 1968, Mr. Collins was contacted by Eevenue Agent D. E. Harrington, who was conducting an audit of 'Summertime Cafe, Ine.’s federal income tax returns for the years 1964 and 1965. In connection with this audit, Mr. Harrington had five conferences with Mr. Collins at his home.

7. The main item under investigation by Mr. Harrington was the band expense deduction claimed by Summertime Cafe, Inc., on its 1964 and 1965 federal income tax returns. Although Mr. Collins had turned the books of the corporation over to the purchasers in 1965, he had retained the individual bills and receipts for each band payment and made them available to Mr. Harrington for use in his audit.

8. After a review of the band receipts, which were largely handwritten by Mr. Collins and signed by the individual band leaders, Mr. Harrington told Mr. Collins that the claimed deductions for band expenses were doubtful and that, if band entertainment had been provided, a cabaret tax would then be due.

9. The cabaret tax referred to by Mr. Harrington was an excise tax in force during 1984 and 1965. The tax was based on gross receipts during the period in which band entertainment was provided. If the band expenses were allowed, the corresponding cabaret tax would automatically arise.

10. During the course of the audit of Summertime Cafe, Inc.’s, 1964 and 1965 federal income tax returns, Mr. Harrington requested from Mr. Collins retained copies of his personal federal income tax returns.

11. As the result of Mr. Harrington’s audit, deficiencies in federal income taxes for the years 1964 and 1965 were proposed against both Summertime Cafe, Inc., and Mr. Collins in audit reports mailed under cover letters dated May 22, 1969. The audit report for Summertime Cafe, Inc., was mailed to the corporation in care of Francis Collins. The proposed deficiency was mainly based on the disallowance of band expense deductions claimed for the years 1964 and 1965 and the proposal of a 5 percent negligence penalty.

The deficiency proposed against Mr. Collins resulted from the inclusion in his income of the amounts disallowed as band expense deductions to the corporation, on the ground that Mr. Collins, as the sole shareholder of the corporation, received a constructive dividend in those amounts. In addition, for the year 1964, Mr. Collins was determined to have additional tip income in the amount of $135.

12. After the issuance of a revenue agent’s report and a letter from the Internal Kevenue 'Service containing an explanation of appeal rights, a district conference may be requested. If, and only if, a conference is requested, the case is assigned to a district conferee. If agreement is not reached at the district conference level, an appellate conference may be requested or a notice of deficiency may be issued to allow the filing of a petition in the United States Tax Court.

13. As the result of a request by Mr. Collins, four district conferences were held between Mr. Collins and John MacDonald, District Conferee, Internal Eevenue Service, who bad been assigned to the cases of Summertime Cafe, Inc., and Francis Collins in June 1969.

14. In .preparation for his conferences with Mr. Collins, Mr. MacDonald received the case file and conducted legal research in the area of substantiation of band expenses.

15. During the first conference, which took place in July of 1969, Mr. MacDonald raised the question of whether Mr. Collins had sold the stock or the assets of Summertime Cafe, Inc., in 1965 and explained that if the assets had been sold, Mr. Collins might be liable for the corporate taxes. However, as Mr. MacDonald explained, if the stock of the corporation had been sold, the continuing corporation rather than Mr. Collins would be liable for the tax deficiencies, although the purchasers might look to Mr. Collins for reimbursement if the sale contract contained a warranty clause. After making this explanation, Mr. MacDonald requested a copy of the sale contract from Mr. Collins so that a determination as to the nature of the sale could be made.

Mr. Collins appeared to Mr. MacDonald to understand the explanation given and neither asked questions nor requested any further explanations. Since Mr. Collins appeared to understand the explanation, Mr. MacDonald felt that it was unnecessary to repeat the request.

16. In response to Mr. MacDonald’s explanation and request for a copy of the sale contract, Mr. Collins became visibly agitated and stated that he didn’t want to discuss the sale and that he would pay the taxes. Thereafter, Mr. MacDonald considered Mr. Collins to be, and treated him as, a volunteer.

17. During the discussion of the question of Mr. Collins’ personal liability, Mr. MacDonald did not state that Mr. Collins was liable for the corporation’s taxes as a transferee or in any other capacity.

18. Although Mr. Collins could have obtained a copy of the sale contract at any time, he never produced the document in response to Mr. MacDonald’s request and never tried to give a copy of the document to Mr. Harrington.

19. The sale was in fact a sale of stock and the contract does in fact contain a warranty clause stating that all taxes of the corporation other than then-current taxes would be paid in full and that all required income reports would be filed by the time of purchase. Further, taxes for the current year (1965) were to be prorated between the buyer and seller and a corresponding adjustment made to the sale price of the corporation. Later arising tax liabilities were to be handled as follows:

if, at any time, subsequent to the consummation of this purchase and sale, it shall be finally determined by the taxing authorities that the aforementioned adjustment of taxes was incorrect, then a readjustment between the 'SELLER and the BUYER, shall be made.

Section 9 of the contract, which is ambiguously and ungrammatically worded, purports to limit the seller’s warranty to a period of 90 days following the consummation of the contract, and creates a question as to whether that period would apply to taxes for the current year. However, that uncertainty is not relevant to the present issue of plaintiff’s tax liability vis-a-vis the defendant, but relates only to plaintiff’s liability to reimburse the corporation for any taxes it would be required to pay.

20. In cases involving transferee liability (the liability of a transferee of assets for taxes owed by the transferor en tity), the transferor’s tax liabilities are assessed against the transferee. In processing a transferee case, special forms and reports are required to be prepared and submitted by the revenue agent handling the case. Mr. MacDonald was familiar with the procedures required in transferee cases and followed these procedures on an average of three times per year in various cases assigned to him. It was his practice to follow these procedures in all cases involving transferee liability whether or not liability as a transferee is contested. In the processing of this case, none of the special procedures were followed and no transferee reports or transferee statements were prepared by Mr. MacDonald.

21. As the result of legal research conducted prior to these conferences, Mr. MacDonald had concluded that the band expense deductions claimed by Summertime Cafe, Inc., would be allowable if certain infomation were provided by Mr. Collins. Mr. MacDonald requested from Mr. Collins the receipts signed by the various band leaders and other specific information relating to the provision of live entertainment. On the basis of tibe receipts and other information provided by Mr. Collins, Mr. MacDonald concluded that the band expenses were allowable as deductions. Mr. MacDonald also concluded that with respect to the separate case of Mr. Collins individually, the only adjustment would be the additional tip income resulting in a deficiency of under $30.

22. As Mr. MacDonald had explained to Mr. Collins at their first conference, if the band expenses were allowable as deductions, excise (cabaret) taxes would automatically become due. At the last conference with Mr. Collins, Mr. MacDonald computed the cabaret taxes due from the corporation and discussed the imposition of a penalty for failure to file the required cabaret tax returns. Subsequently, cabaret tax returns were prepared by Mr. MacDonald and sent to Mr. Collins.

23. When dealing with individuals who are not represented by counsel, it was Mr. MacDonald’s practice to provide to the individual certain assistance which would normally be provided by counsel. In this case, for example, Mr. MacDonald explained to Mr. Collins the tax consequences of the various types of sale, offered to examine the sale document to make a determination as to Mr. Collins’ liability, and suggested the type of evidence necessary to substantiate the corporate expenses in issue.

24. Mr. Collins testified that he would not have continued with the conferences with Mr. MacDonald if he had been unwilling to pay the taxes and that he did not indicate to Mr. MacDonald in any way that he was unwilling to pay the taxes under consideration. After his last conference with Mr. Harrington, Mr. Collins believed that the final figure might be as low as $1,000 and he “figured it’s easier to pay than to fight it.”

25. At this point, Mr. Collins retained Peter Sang as counsel to represent him with respect to the tax adjustments in issue. From that point on, further discussions with Mr. MacDonald concerning substantive matters with respect to Mr. Collins’ personal taxes and the corporate tax matters were handled solely by Mr. Sang.

26. Approximately a week after their last conference, Mr. Collins telephoned Mr. MacDonald to inform him that he (Mr. Collins) had retained counsel. Mr. MacDonald requested and received from Collins a signed power of attorney form, dated August'26,1969.

27. After the power of attorney form had been submitted, Mr. MacDonald and Mr. Sang discussed the proposed imposition of a penalty for late filing of the cabaret tax returns. As the result of this discussion, an affidavit signed by Mr. Collins and Mr. Sang was received by Mr. MacDonald. The affidavit contained Mr. Collins’ explanation of the failure to file the required carabet tax returns and concluded with the following paragraph:

Collins now knows and he admits that cabaret taxes were due for 1964 and 1965 and must now be paid. Based upon the circumstances surrounding his entrance into the nightclub business and his record of having filed all necessary employment forms, it is felt that there should be no imposition of any penalty for late filing. Upon learning of the fact that cabaret taxes are due, Collins has been willing to pay these taxes plus interest.

Based on the contents of this affidavit, Mr. MacDonald recommended that the penalties not be imposed.

28. Subsequent to receipt of the affidavit, on or about September 12, 1969, Mr. Collins submitted the executed cabaret tax returns and paid the following proposed tax liabilities of Summertime Cafe, Inc.:

Cabaret Tax
Quarters ending:
June 30, 1964. $700. 00
Sept. 30, 1964. 700. 00
Dec. 31, 1964. 469. 00
$1, 869. 00
June 30, 1965. 907. 00
Sept. 30, 1965 605. 00
Income Tax 1965 (tax and penalties) 367. 85
1, 512. 00
367. 85
$3, 748. 85

29.Mr. MacDonald did not discuss this case with Mr. Harrington, the original revenue agent, at any time. Mr. Harrington died in the summer of 1973, about the time that the plaintiff filed the petition in this case.

30. On March. 27,1971, Mr. Oollins filed claims for refund of the corporate taxes listed in finding 28, supra. 'Statutory-notices of the disallowance of these claims were issued on February 3,1973.

ultimate RINDING OE FACT

Based on all the relevant evidence presented in this case, Mr. Collins’ payment of the proposed tax deficiencies of Summertime Cafe, Inc., was voluntary and was not induced by duress exerted by agents of the Internal Bevenue Service.

CONCLUSION OE LAW

Upon the foregoing findings of fact and opinion, which are adopted by the court and made a part of the judgment herein, the court concludes as a matter of law that judgment is entered for the defendant and plaintiff’s petition is dismissed. 
      
      We reach a contrary result to the recommended opinion of Trial Judge C. Murray Bernhardt.
     
      
       Under Section 4231 (6) of the Internal Revenue Code of 1954, Ch. 33, 68A Stat. 497 (repealed by the Excise Tax Reduction Act of 1965, P.L. 89-44, Title III, § 301, 79 Stat. 136, 145, effective December 31, 1965), a cabaret excise tax was imposed on the receipts of establishments which provided live music or similar entertainment. The tax imposed was 10 per cent of the gross receipts during the period in which such entertainment was provided.
     
      
      
         In order to maintain an action for the refund of taxes under the Internal Revenue Code, the plaintiff must be the taxpayer who has overpaid his own taxes. See Economy Plumbing & Heating Co. v. United States, 200 Ct. Cl. 31. 470 F. 2d 585 (1972). In this case the taxpayer was Summertime Cafe, Inc., and there is no claim here that the amounts paid were not actually due from the corporation. The plaintiff, a nontaxpayer, must establish independent jurisdictional grounds for his action.
     
      
       Although the plaintiff has made no legal argument on this point, several references have been made to a mutual mistake of fact in the plaintiff’s brief. The evidence presented does not support this allegation. Mr. MacDonald, the district conferee who received the payment in issue, testified that he did not make a determination that Mr. Collins had sold the assets of the corporation after Mr. Collins declined to produce a copy of the sale agreement and stated that he was willing to pay the corporate taxes. To the contrary, Mr. MacDonald considered Mr. Collins to be making a voluntary payment. Consequently, any mistake made was unilateral in nature. Since Mr. Collins could have rectified this mistake at any time, he must bear the consequences of his inaction.
     
      
       A claim founded on a mistake as to a legal duty owed Is essentially an action In restitution. Restitution based on a mistake of law is allowable only if the recipient of the funds in issue (1) has notice of the mistake as to legal duty; (2) knows that no such duty is owed; and (3) knows that the transfer was made on the basis of a misconceived duty. See RESTATEMENT, RESTI-TÜTION, §14(1), comment c (1958), and J. C. Pitman & Sons, Inc. v. United States, supra. None of these elements are present here. In any event, restitution on this basis is grounded on a contract implied in law over which this court has no jurisdiction.
     
      
       A taxpayer may bring an action for a refund “whether or not such tax * * • has been paid under protest or duress.*' § 7422(b), Int. Rev. Code of 1954.
     