Opinion
This case having been heard by the Court of Claims, the court, upon the evidence adduced, makes the following special findings of fact:
1. Plaintiff is, and at all times hereinafter mentioned was, a Maine corporation with its principal office and place of business in Chicago, Ill. During 1917 it was one of a group of affiliated corporations of which Swift & Co. of Illinois was the parent corporation.
2. April 1, 1918, at the time Swift & Co. of Illinois filed a consolidated excess profits tax return for 1917, plaintiff filed its separate income and excess profits tax returns for 1917, showing a tax liability of $3,091.190.23. Of the foregoing amount, $2,991,085.41 was paid June 24, 1918, leaving a balance outstanding of $100,104.82, for which a claim in abatement was filed. Subsequently plaintiff's tax liability for 1917 was determined on the basis of its membership in the affiliated group. Shortly thereafter a further assessment was made against plaintiff for 1917 of $2,873,936.25 on the April, 1918, assessment list, for which plaintiff also filed a claim in abatement. In 1921, the Commissioner of Internal Revenue allowed the two aforementioned abatement claims.
3. September 6, 1923, the Commissioner approved an overassessment in favor of plaintiff for 1917 of $964,433.31, of which amount $961,308.95 was refunded and the balance of $3,124.36 was credited to outstanding additional taxes for other years. December 14, 1925, plaintiff was advised by the Commissioner that an error had been made in the computation of the overassessment of $964,433.31 resulting in an erroneous refund of $100,104.82, which was due to the fact that the Commissioner had failed to reduce the amount of taxes paid for 1917 by the amount of a previous abatement. January 11, 1926, the erroneous payment was duly refunded by plaintiff.
There is no dispute as to the correctness of the assessments and payments as set out in this and the preceding findings, the controversy having arisen over the manner in which a determined overpayment of $159,227.67 for 1917 should be credited or refunded as hereinafter shown.
4. April 24, 1926, after a further examination and audit of the returns of Swift & Co. of Illinois and its affiliated companies for 1917, the Commissioner notified Swift & Co. of Illinois of his determination of the tax liability of the various members of the group for 1917. By that letter plaintiff was advised that an overpayment had been determined for 1917 of $159,227.67 on account of excess profits tax, and $5,364.10 on account of income tax. However, plaintiff, as well as some of the other subsidiaries of Swift & Co. of Illinois, was advised that inasmuch as the Commissioner had determined that the claim for refund filed by the parent corporation, Swift & Co. of Illinois, was insufficient to constitute a claim for refund within the meaning of the statutes and regulations with reference to overpayments found in favor of the subsidiary companies, the overpayment of $159,227.67, referred to above, in favor of plaintiff was not refundable.
5. April 21, 1928, this suit was instituted by plaintiff to recover the overpayment of $159,227.67, referring to in finding 4. Suits for the same purpose were also instituted in this court by the other affiliated companies of Swift & Co. of Illinois similarly situated. The suit instituted by Swift & Co. of West Virginia, No. J-- 211, was selected as a test case to determine whether the claim for refund filed by Swift & Co. of Illinois, a copy of which is attached to the petition in this case as Exhibit A, was a valid claim for refund for and on behalf of various members of the affiliated group. March 18, 1929, this court held that the claim was proper and sufficient within the meaning of the statutes and regulations. See Swift & Co. v. U.S., 67 Ct.Cl. 322.
6. November 20, 1929, the Commissioner, basing his action upon the decision of this court referred to in finding 5, and his determination as shown in his letter of April 24, 1926, referred to in finding 4, signed a schedule of overassessments (IT:36704) showing an overassessment in favor of plaintiff for 1917 of $159,227.67 on account of excess profits tax, but no overassessment was shown on account of the other overassessment of $5,364.10 for 1917, since it was barred due to the expiration of the period of limitations within which a refund could be made. The schedule was transmitted to the collector for his action in accordance with the directions appearing thereon.
December 7, 1929, the collector signed and returned the foregoing schedule showing that the full amount of the overassessment of $159,227.67 was an overpayment, and that of the said overpayment $106,036.15 had been credited, at plaintiff's request, against the fourth installment of plaintiff's original income tax for 1928, the payment of which was due December 15, 1929. This left a balance of $53,191.52 which was certified as refundable, there being no other outstanding assessments against plaintiff. At the time this credit was made, there was pending an appeal to the Board of Tax Appeals from deficiencies in tax which had been determined against the taxpayer for the year 1919 in the amount of $412,212.95, and for the year 1925 in the amount of $146,841.88.
7. Thereafter, upon receipt from the collector of the schedule of overassessments referred to in finding 6, interest was computed on the overpayment as follows:
------------------------------------------------------------------------------
Amount
Amount
Interest
Allowed
credited
refunded
from--
to--
Interest
-----------
----------
----------
----------
-----------
$100,036.15
..........
6-24-18
11-20-29
$72,540.35
$53,191.52
6-24-18
12-20-29
35,582.21
-----------
Total
..........
..........
..........
$108,122.56
------------------------------------------------------------------------------
8. The aforementioned schedule of overassessments was transmitted to the Comptroller General of the United States by letter dated December 30, 1929, reading as follows:
"Attention is directed to the attached Schedule It-36704, on which an overassessment of income taxes in favor of the above-named taxpayer, for the year 1917, in the amount of $159,227.67 was reported by the collector of internal revenue, Chicago, Illinois, as follows:"In this connection you are advised that appeals from proposed deficiencies in tax against the taxpayer for the years 1919 and 1925 in the respective amounts of $412,212.95 and $146,841.88 are pending before the United States Board of Tax Appeals under Docket Numbers 42956 and 44343, respectively."
$106,036.15
credited to 1928 taxes.
53,191.52
certified for refund.
-----------
$159,227.67
After an examination by that official, the amount reported as refundable, $53,191.52, and the interest computed thereon, $35,582.21, aggregating $88,773.73, were deleted from the schedule of overassessments, for the reason that at that time there were pending before the United States Board of Tax Appeals petitions against the Commissioner's determination of the deficiencies referred to in the above letter. After the Comptroller General had deleted the aforementioned amount of $88,773.73, the schedule of overassessments was transmitted to the disbursing clerk of the Treasury Department for the issuance of a check in the amount of the interest allowed on the credit, namely, $72,540.35.
9. January 13, 1930, a check for $72,540.35 (the interest referred to in finding 8) was forwarded by the Commissioner to plaintiff with a certificate of overassessment, which read, in so far as material here, as follows:
"Certificate of Overassessment. "Number: 507143 "Allowed: $106,036.15 "Schedule: No. 36704 "An audit of your income-tax return, from 1031, and a consideration of all the claims (if any) filed by you for the calendar year 1917 indicates that the tax assessed for this year was in excess of the amount due:"The amount of the overassessment will be abated, credited, or refunded as indicated below. (You will be relieved from the payment of any amount abated: if an overpayment has been made and other taxes are due, credit will be made accordingly, and any amount refundable is covered by a Treasury check transmitted herewith.) "Included in the accompanying check is interest in the amount stated below, allowed on the refund or credit. "Abated: $______ "Credited:$106,036.15 "To tax. Year 1928 "Credited:$_____ "To tax. Year____ 'Refunded:$____ "Interest: $72,540.35.'
Tax assessed:
Original form 1031 Feb.
1918, P. 616, L. 15,
#26753462 ..........................
$3,091,190.23
$3,091,190.23
Less:
Overassessment allowed
1922 Schedule IT:A:4455
864,328.49
Allowed Abatement Order
6050 ...............................
100,104.82
-------------
964,433.31
-------------
Total assessment ..................................
$2,126,756.92
Correct tax liability..................................
1,962,165.15
-------------
Overassessment ....................................
$ 164,591.77
Less amount barred by statute of
limitations ..........................................
5,364.10
-------------
Overassessment allowable ..........................
$ 159,227.67
Less amount withheld in connection
with proposed deficiencies for 1919 and
1925 .................................................
53,191.52
-------------
Net overassessment ................................
$ 106,036.15
10. September 14, 1930, the United States Board of Tax Appeals entered a final order determining a deficiency against plaintiff for 1919 of $403,075.35. That deficiency, with interest, computed from February 26, 1926, to September 27, 1930, amounting to $110,911.98--that is, a total of $513,987.33--was assessed by the Commissioner on his assessment list of September 27, 1930. After notice and remand from the collector dated October 3, 1930, plaintiff on october 10, 1930, paid the said amount of $513,987.33.
11. November 4, 1930, in response to an inquiry from plaintiff's counsel as to the foregoing transaction, plaintiff's counsel was advised as follows:
"Reference is made to your recent inquiry at this office relative to the income-tax liability of Libby, McNeill and Libby (of Maine), Chicago, Illinois, for the years 1917 and 1919. "The records of this office indicate that an overassessment of income taxes in favor of the above-named taxpayer, for the year 1917, in the amount of $159.227.67, was adjusted by the collector of internal revenue, Chicago, Illinois, on a schedule dated November 20, 1929, by applying $106.036.15 as a credit to original tax for the year 1928 and certifying the balance, $53,191.52 for refund. "The refundable portion of the overassessment was withheld from payment on account of appeals from proposed deficiencies in tax, for the years 1919 and 1925, in the respective amounts of $412.212.95 and $146,841.88, which were pending before the United States Board of Tax Appeals. "Interest of $72,540.35 was computed on the credit of $106,036.15 and covered by Treasury check issued January 13, 1930. "The appeal for the year 1919 has been closed and a deficiency in tax of $403,075.35, with interest thereon of $110,911.98, a total of $513,987.33, was assessed in the first district of Illinois on the Commissioner's September 1930 list. "In connection with your statement that upon receipt of notice and demand from the collector and deficiency in tax and interest for the year 1919 were paid in full and your request that the balance of the overassessment for the year 1917, $53,191.52, be released for application as a credit to the taxpayer's original tax for the year 1929, you are advised as follows: "The scheduling of the overassessment for the year 1917 was in error, inasmuch as proposed deficiencies in tax in excess of the overassessment were pending before the United States Board of Tax Appeals and the administrative procedure and policy of the Bureau requires that, in such cases, the adjustment of the overassessment be withheld until the case before the Board has been closed. See decision of the Court of Appeals of the District of Columbia in the case of J.R. McCarl, Comptroller General of United States, and Robert H. Lucas, Commissioner of Internal Revenue, v. United States ex rel. Edmund F. Leland, 59 App.D.C. 362, 42 F. (2d) 346. "Section 284(a) of the Revenue Act of 1926 [26 U.S.C.A. § 1065(a) ] provides in substance that where there has been an overpayment of income tax, the amount of such overpayment shall be credited against any income tax then due and the balance shall be refunded. The tax to which the $106,306.15 was applied apparently covered the fourth installment of the 1928 tax not due until December 15, 1929, whereas the schedule on which the credit was effected is dated November 20, 1929. "It is apparent from the foregoing that the case was improperly adjusted and that the entire overassessment of $159,227.67 should have been applied to the 1919 deficiency in tax, on which interest of $16,393.91 only is due and the taxpayer has received an erroneous interest allowance of $56,146.44. "The collector has accordingly been instructed to transfer from the September 1930 list, $159,227.67 of the recent payment made in satisfaction of the 1919 deficiency in tax and to apply thereto the entire overassessment for the year 1917, $106,036.15 by transfer from the 1928 account and $53,191.52 by authorization from the Bureau. "Of the $159,227.67 which is transferred from the 1919 deficiency in tax, $56,146.44 will be deposited as a repayment to the appropriation from which the erroneous interest allowance was withdrawn and $103,081.23 will be applied to the taxpayer's 1928 liability, leaving a balance outstanding on that account of $2,954.92. "As a result of the application of the 1917 overassessment to the 1919 deficiency in tax, the collector has been advised that the deficiency interest of $110,911.98 should be reduced to approximately $67,098.20, leaving $43,813.78 for payment of the balance of the 1928 liability and for application to the taxpayer's 1929 account."
12. In a letter dated November 7, 1930, the collector was advised by the Commissioner as follows:
"There is enclosed herewith a copy of a memorandum from the Income Tax Unit dated October 31, 1930, relative to an overassessment in favor of Libby, McNeill and Libby (of Maine), % Swift and Company, Union Stock Yards, Chicago, Illinois for the year 1917 in the amount of $159,227.67, listed on schedule IT:36704. "The Income Tax Unit states that the refundable portion of the overassessment, $53,191.52, has been withheld from payment on account of appeals from proposed deficiencies in tax for the years 1919 and 1925, in the respective amounts of $412,212.95 and $146.841.88, which were pending before the United States Board of Tax Appeals. Interest of $72,540.35 was allowed on the credit of $106,036.15 and covered by Treasury check issued January 13, 1930. The appeal for the year 1919 has been closed, and a deficiency in tax of $403,075.35, with interest thereon of $110,911.98, a total of $513,987.33, was assessed on the Commissioner's September 1930 #4 list, page 1, line 8. It appears the deficiency in tax was paid in full and request was made that the balance of the 1917 overassessment of $53,191.52 be released for application as a credit to the taxpayer's original tax for the year 1929. "It appears that the scheduling of the overassessment for the year 1917 was in error, inasmuch as proposed deficiencies in tax in excess of the overassessment were pending before the Board, and the administrative procedure and policy of the Bureau requires that, in such cases, the adjustment of the overassessment be withheld until the case before the Board has been closed. "It therefore appears that the case has been improperly adjusted and the entire overassessment of $159,227.67 should have been applied to the 1919 deficiency in tax, on which interest of $16,393.91 only is due, and the taxpayer has received an erroneous interest allowance of $56,146.44. "It therefore will be necessary to transfer from your September 1930 #4 list, page 1, line 8, $159,227.67 of the recent payment made in satisfaction of the 1919 deficiency in tax, in order that the entire overassessment for the 1917 may be applied thereto. The credit of $106,036.15 should be transferred from the 1929 list, account No. 407113, to the 1919 deficiency in tax appearing on your September 1930 list. You are also authorized to credit to the same account $53,191.52. "Your accounts should be adjusted by debiting account 18 and crediting account 6a. Please attach a copy of this letter to the form 820 on which this transaction is reflected. "Of the payment of $159,227.67 which is to be transferred from the September 1930 #4 List, page 1,line 8, $56,146.44 should be returned to the appropriations from which drawn. This office will, therefore, request the Secretary of the Treasury to counter enter $56,146.44 from internal-revenue collections to the appropriation from which drawn. "Your accounts should be adjusted by debiting account 6 and crediting account 17 in the amount of $56,146.44, taking up the item as a returned check on your forms 22, 49, 79, 820, and 820C. "The balance of $103,081.23 should be applied to the 1929 List, Account No. 407113, leaving outstanding on that account $2,954.92. "As a result of the adjustment to be made by your office in accordance with the provisions of IT Mimeograph Coll. No. 3436, the interest of $110,911.98, which was asserted on the 1919 deficiency of $403,075.35, will be reduced to approximately $67,098.20, leaving $43,813.78 available for payment of the balance of the 1928 tax in the amount of $2,954.92 and for application to the taxpayer's 1919 account."
13. Pursuant to the letter of November 7, 1930, set out i the preceding finding, the collector changed his records in the following respect; He eliminated the former credit of a portion of the overpayment for 1917 which had been applied against the fourth installment of tax for 1928 and applied the overpayment for 1917 of $159,227.67 against the deficiency of $403,075.35 for 1919 of $243,847.68, to which amount he applied a part of the payment made October 10, 1930, referred to in finding 10.
14. The disposition made by the Commissioner of the payment received from plaintiff by the collector October 10, 1930 (referred to in findings 10 and 13), in the amount of $513,987.33 was as follows:
$243,847.68 applied to the balance of additional tax for 1919. (See finding 13.) 67,098.20 applied to the interest assessable on the balance of additional tax for 1919. (See finding 15.) 106,036.15 applied to the fourth installment of original tax for 1928. 56,146.44 deposited as a repayment of an appropriation for excess interest previously allowed on schedule of overassessments IT:36704. (See finding 16.) 40,858.86 balance retained by the Government and which defendant concedes plaintiff is entitled to have refunded as an excess payment. $513,987.33 total.
15. A recomputation of the interest assessable on the balance of additional tax for 1919 in the amount of $243,847.68 was made by the Commissioner, resulting in the determination of $67,098.20, interest due on the balance, instead of $110,911.98 previously assessed and included in the payment of October 10, 1930, in the amount of $513,987.33. Upon the application of the portion of the proceeds of the payment of October 10, 1930, to the interest of $67,098.20, as recomputed by the Commissioner, the balance of $43,813.78 was abated by the Commissioner, that is, the credit had been given for interest on the overpayment was canceled or reduced in that amount.
16. Upon a recomputation the Commissioner determined that interest had been excessively allowed and paid on the overpayment of $159,227.67 for 1917 as follows:
------------------------------------------------------------------------------
Amount credited to the
Interest
Allowed
additional 1919 tax
from--
to--
Interest
--------------------------
--------
-------
----------
$159,227.67 ...............
6-24-18
3-15-20
$16,393.91
Interest previously
allowed ..............
........
.......
72,540.35
Interest returned to
Treasury
----------
appropriation ........
........
.......
$56,146.44
------------------------------------------------------------------------------
17. It was not the practice in the collector's office, to which the aforementioned overpayment was referred, to credit an overpayment for one year to an installment of tax of another year which was not due for payment unless so requested by the taxpayer, but where such a request was made, it was the practice to make the application in the manner in which it was made with respect to the overpayment involved in this suit.
In the consideration of the schedule of overassessments by the Comptroller General, referred to in finding 8, that official, in accordance with his practice, accepted the certification as made by the collector with respect to the manner of applying a part of the overpayment in question for 1917 against the fourth installment of tax for 1928 and that the balance of $53,191.52 was the amount refundable after the satisfaction of all outstanding assessments against plaintiff.
As heretofore indicated, a result of the application by the collector of a part of the overpayment for 1917 against the fourth installment of tax for 1928, and consequently the certification of a refund of $53,191.52 instead of $159,227.67, was that the former instead of the latter amount was suspended from payment to plaintiff by the Comptroller General pending disposition of appeals by plaintiff to the Board of Tax Appeals on account of deficiencies which had been determined by the Commissioner for 1919 and 1925, as referred to in findings 8 and 10. G. Carroll Todd, of Washington, D.C. (Albert H. & Henry Veeder and Francis E. Baldwin, all of Chicago, Ill., and T. Hardy Todd, of Washington, D.C., on the briefs), for plaintiff.
J.H. Sheppard, of Washington, D.C., and Frank J. Widemann, Asst.Atty.Gen.
Before BOOTH, Chief Justice, and GREEN, WILLIAMS, and LITTLETON, judges.
GREEN, Judge.
The facts in the case are not in dispute. On November 20, 1929, the Commissioner of Internal Revenue signed a schedule of overassessments, abatements, credits, and refunds in which was listed an overassessment in favor of the plaintiff in the amount of $159,227.67 for the year 1917. This schedule was transmitted to the collector with the usual instructions with reference to his action thereon. December 7, 1929, the collector signed and returned the schedule, showing that the full amount of the overassessment of $159,227.67 was an overpayment and that of the said overpayment $106,035.15 had been credited, at plaintiff's request, against the fourth installment of plaintiff's original income tax for 1928, which did not become delinquent until December 15, 1929. There being no other outstanding assessments against plaintiff, $53,191.52 was certified as refundable. The collector returned the completed schedule to the Bureau of Internal Revenue and interest was computed on the credit and the refund amounting to $72,540.35 and $35,582.21, respectively. A certificate of overassessment showing the matter above stated was issued and sent to the plaintiff about January 13, 1930, together with a check for the interest of the credit, amounting to $72,540.35.
At the time the credit of $106,036.15 was made upon the 1928 tax and the check for $72,540.35 transmitted to the plaintiff, appeals by the plaintiff were pending before the Board of Tax Appeals from deficiencies in taxes determined for the years 191 and 1925 in the respective amounts of $412,212.95 and $146,841.88. The Commissioner in transmitting the schedule to the Comptroller General for an audit invited attention to these pending appeals. After the schedule had been examined by the Comptroller General, the amount shown thereon as refundable, $53,191.52, was deleted therefrom and that amount, together with the interest thereon of $35,582.21, was withheld to await the final determination of the Board of the appeal for the years 1919 and 1925.
On September 14, 1930, the Board entered an order determining a deficiency against the plaintiff for the year 1919 in the amount of $403,075.35. This deficiency, together with interest thereon in the total sum of $513,987.33, was assessed against plaintiff on September 27, 1930. October 3, 1930, the collector issued a notice and demanded for payment thereof and the same was paid by the plaintiff on October 10, 1930.
Later the plaintiff requested payment of the balance of the 1917 payment of the balance of the 1917 overassessment which was being withheld together with interest thereon. On November 4,1930, the Commissioner advised the plaintiff by letter that its account had been improperly adjusted; that the overassessment for 1917 should not have been scheduled until the appeal to the Board had been decided; that the entire overassessment for 1917 should have been credited against the deficiency determined by the Board for 1919; and that the collector had been instructed to readjust his records to correct the error. Pursuant to the instructions which he received from the Bureau, the collector changed his records as follows: He eliminated the credit of $106,036.15 to the fourth installment of plaintiff's 1918 taxes and applied the entire overassessment for 1917 ($159,227.67) against the deficiency of $403,075.35 for 1919 which he treated as still existing, leaving a balance of the additional tax for 1919 in the amount of $243,847.68 was made by the Commissioner, resulting in the determination of $67,098.20, interest due on the balance, instead of $110,911.98 previously determined and included in the payment of October 10, 1930. The difference in interest to the amount of $43,813.78 was stated to be "available for repayment of the balance of the 1928 tax in the amount of $2,954.92 and for application to the taxpayer's 1929 account." Upon this basis there would remain $40,858.86 which was retained by the government and which it was stipulated plaintiff was entitled to have refunded as an excess payment.
Upon the foregoing facts the plaintiff seeks to recover $53,191.52, being the balance of the 1917 overpayment after deducting the amount credited o the 1928 tax together with interest thereon as provided by law. The defendant contends that the plaintiff is not entitled to recover any amount whatever notwithstanding the stipulation entered into by the parties.
It will be observed from the facts recited above that after the Commissioner had allowed the overpayment for 1917 he applied part of it to a deficiency determined in the taxes for 1928 and certified the balance of $53,191.52 for refund. At the time this was done a deficiency in 1919 taxes had been determined and appeals had been taken by the plaintiff from this determination to the Board of Tax Appeals. Before anything further was done by the Commissioner in the way of changing this ruling, the appeal was decided, a deficiency determined for 1919 aggregating with interest $513,987.33, and upon notice and demand by the collector the plaintiff paid the amount of this tax in full.
It is insisted on the part of the plaintiff that after this payment was made the Commissioner had no right or authority to set aside the application which he had made of the overpayment upon the 1928 taxes and to also set aside the application of the overpayment thereon. The defendant, on the contrary, argues that the Commissioner had a perfect right to set aside his ruling and action in applying the overpayment on the 1928 taxes and that he had equal authority to set aside the application of the payment on the 1919 taxes and then apply the overpayment thereon. Counsel for each side cite many cases in support of their respective positions. Among others, there is cited on behalf of the plaintiff a number of cases determining the effect of a decision of an administrative board created under a special statute and acting in a quasi judicial capacity. We think those decisions have no application here. Counsel for defendant rely largely on Burnet v.Porter, 283 U.S. 230, 51 S.Ct. 416, 75 L.Ed. 996, wherein the Supreme Court held that the Commissioner might set aside an allowance for a refund and it is urged that the allowance of a credit is as much subject to redetermination as the allowance of a refund. There is much force in this argument, but we do not find it necessary to determine this question in order to decide the case which is before us. Conceding for the purposes of the argument that the Commissioner in the first instance could have set aside the application of the overpayment for 1917 on the 1928 taxes and put it upon the 1919 deficiency which, in out opinion, was due when it was determined if not before, this does not dispose of the principal obstacle to the defense.
The question of whether the Commissioner could set aside the payment of the 1919 taxes depends upon altogether different facts and entirely different principles. At the time the Commissioner undertook to change his records, the 1919 deficiency had been paid, and there was nothing owing upon it. As the situation then stood, there was no error or mistake in the collection of the 1919 taxes. The amount thereof had been adjudicated by the Board of Tax Appeals, the taxes had been properly assessed, and when the collector sent out a notice and demand for their payment he did only what he had the right and the authority to do. It was his duty to collect taxes that were outstanding and had no set-off against them, and there was none at this time. When the plaintiff in response to this notice and demand paid these taxes and payment was applied thereon, the debt was extinguished, and there were no taxes of 1919 thereafter upon which an overpayment could be applied. If plaintiff had not complied with the demand and paid the tax, it would have been subject to a heavy penalty. The transaction was not simply the action of a government official which was revocable, it included a proper demand upon the plaintiff followed by payment by the plaintiff of a tax due and acceptance thereof by the proper official. There was an accord and satisfaction between the parties with no fraud or mistake involved therein to vitiate it. After this had been done, we are constrained to hold that the Commissioner could not set aside the application of the overpayment on the 1928 taxes and apply it upon the 1919 deficiency as that no longer existed.
The situation is very different from cases such as York Safe & Lock Co. v. United States, 40 F. (2d) 148, 69 Ct.Cl. 529; Standard Oil Co. v. United States, 5 F.Supp. 976, 78 Ct.Cl. 714; McCarl, Comptroller General, v. United States ex rel. Leland, 59 App.D.C. 362, 42 F. (2d) 346; and Lucas, Commissioner, v. United States ex rel. Blackstone Mfg. Co., 59 App.D.C. 389, 45 F. (2d) 291. One other point perhaps ought to be noted. The findings show that after the items of plaintiff's tax account had been readjusted and rearranged by the Commissioner there still remained under the Commissioner's own figures $40,858.86, which was withheld by the government and by stipulation conceded to be due the plaintiff. Counsel for defendant now contend that the plaintiff is not entitled even to this last-named sum for the reason, as we understand the argument, that the overpayment for 1917 had been applied on the deficiency for 1919 and thus had become an overpayment for that year. No application for refund for 1919 was filed and it is therefore contended that the plaintiff can recover nothing. This contention ignores the fact that the plaintiff is suing to recover part of an overpayment on taxes of 1917 for which a refund claim was duly filed. It is true that the Commissioner undertook to apply this overpayment on the deficiency for 1919, but we have held above that at the time the Commissioner so acted the 1919 taxes were paid and settled and consequently that the Commissioner could not lawfully make such an application. In other words, his action was a mere nullity. Nor could he then set aside his original application of a part of the overpayments to the 1928 for there were no taxes for any other year then due. After the application of a part of the overpayment to the taxes of 1928, for still remained $53,191.52 due plaintiff with interest thereon as provided by law. We might state some further objections to this defense, but we think it is not necessary.
Judgment will be rendered in favor of the plaintiff for $53,191.52 with interest as provided by law.
BOOTH, Chief Justice, and WILLIAMS, and LITTLETON, Judges, concur.
WHALEY, Judge, took no part in the consideration or decision of this case.