U.S. Elec. Motors, Inc.

This case is not covered by Casetext's citator
Tax Court of the United States.Aug 9, 1946
7 T.C. 525 (U.S.T.C. 1946)

Docket No. 75-R.



Robert A. Littleton, Esq., for the petitioner. William V. Crosswhite, Esq., for the respondents.

RENEGOTIATION ACT OF 1943, SEC. 403 (e)(2)— LACK OF JURISDICTION.—Petitioner contends that its 90-day period for filing petition in this Court for a redetermination of excessive profits determined against it by respondents should date from the act of the last administrative officer approving a transmittal letter with which the determination and order of recovery was sent to petitioner, and not from the date of the meeting at which the Board actually made its determination. Held, that the determination was made at the meeting of the RFC Price Adjustment Board, within the meaning of section 403(e)(2) of the Renegotiation Act of 1943; that petitioner's petition was not filed within 90 days thereafter; and that this Court has no jurisdiction over the proceeding. Robert A. Littleton, Esq., for the petitioner. William V. Crosswhite, Esq., for the respondents.

Petitioner filed its petition with the Tax Court on October 2, 1944, for a redetermination of respondents' determination of excessive profits under certain contracts for the period April 28, 1942, to December 31, 1942. Respondents filed a motion on November 16, 1944, to dismiss for lack of jurisdiction. On February 28, 1945, the Court dismissed the petition for lack of jurisdiction. Appeal was taken to the United States Court of Appeals for the District of Columbia. On January 21, 1946, the Court of Appeals reversed the decision of the Tax Court and remanded the case for further proceedings, in order to ascertain the true date of the determination by the RFC Price Adjustment Board.

On April 24, 1946, a hearing was had on the motion to dismiss for lack of jurisdiction. The question for our determination is whether the respondents' determination was made on June 14, 1944, or July 3, 1944, or thereafter. If the first date is the date of the determination, the petition was filed too late, but if the July date is the correct date of the determination, then the petition was timely filed.


Petitioner's contracts with the War Department (Army Air Forces) were renegotiated for the year 1942 and a settlement agreement was entered into in April 1943. On October 14, 1943, the RFC Price Adjustment Board sent a letter to petitioner, advising that the effect of the July 1, 1943, amendment to the Renegotiation Act, Public Law 108, 78th Congress, rendered subject to renegotiation the contracts of petitioner with the four RFC subsidiaries for the period April 28, 1942, to December 31, 1942, which had been included among nonrenegotiable business in the War Department settlement.

Petitioner immediately protested that it had been renegotiated for 1942 and that the July 1 amendment should not be retroactively construed or applied and, after further correspondence, under protest, it supplied respondents with a minimum of financial information requested.

On the basis of the information received and the data acquired from the War Department renegotiation file, the Board proposed on March 20, 1944, in a letter to petitioner, that petitioner make a refund of $36,000. The making of such a refund would entitle the petitioner to a tax credit of $28,800.

The petitioner rejected the proposal in a letter dated April 10, 1944, adhering to its position that Public Law 108, 78th Congress, should not be so construed or applied.

On May 20, 1944, the chairman of the Board sent a letter to petitioner advising that, since the petitioner and the Board had not reached an agreement, the matter of the determination of the amount of excessive profits realized under petitioner's contracts subject to renegotiation, for its fiscal year ended December 31, 1942, would be considered on June 14, 1944, at 3 p.m., in the office of the Board, giving its Washington, D.C., address. The letter also stated that:

* * * While it will not be necessary for you to be present inasmuch as the facts in your case appear to have been rather fully developed with representatives of this Board, you may nevertheless appear at that time if you wish and you will be afforded an opportunity to make any statement or furnish any further information you desire in support of your case.

In such cases, where only a question of law was involved, a memorandum of the case was prepared by a special assistant for the Board prior to the date of its meeting. On June 14, 1944, petitioner's matter was considered and the memorandum was approved. Petitioner was not present, nor was the chairman of the Board. The practice, in such cases, was to have a ‘Determination of Excessive Profits‘ prepared in advance for the signature of the chairman, with the date of the meeting on the lower left-hand corner of the second or last page, which was initialed in advance by the secretary of the Board, its general counsel, and the special assistant, for correctness of form and figures. After this meeting on June 14, 1944, the determination was left in the office of the chairman of the Board for his signature. The secretary immediately wrote the minutes of the meeting, in which it was recited that the Board approved a finding and determination that excessive profits had been realized by petitioner on contracts with the RFC subsidiaries, for the fiscal year ended December 31, 1942, in the amount of $36,000, and that the Board authorized the chairman or the vice chairman of the Board, or the chairman of the Review Committee, to execute an appropriate order of recovery. Sometime thereafter, and by June 28, 1944, the chairman signed the determination and order of recovery, which was then sent to the general counsel, who prepared a transmittal letter for the treasurer to send petitioner. The transmittal letter was prepared by the general counsel on the date he received the determination and order, June 28, 1944, and was sent to the secretary and chief administrative officer for their inspection and initialing before going to the treasurer. The chief administrative officer initialed the letter on July 6, 1944, on which date it was mailed to petitioner by the treasurer, whose signature appears on the letter. The date of ‘July 6, 1944‘ was stamped on the letter by means of a rubber stamp. Enclosed with the transmittal letter was the determination and order of recovery.

The determination bore the stamped date of July 3, 1944, on the upper right-hand corner of the first page. It was not customary for a date to appear there. None of the officers could account for the stamped date of ‘July 3, 1944,‘ unless it was placed there inadvertently in the course of its transmittal from one department to another.

On July 27, 1944, petitioner wrote a letter to the treasurer of the Board, acknowledging receipt of his letter of July 6, 1944, ‘enclosing a signed copy, dated June 14, 1944, of a Determination and Order,‘ and stating that it could not accept or agree to the determination and order. This letter was signed by the general counsel of petitioner, as was other correspondence between petitioner and the representatives of the Board.


TURNER, Judge:

Petitioner contends that the Board's determination was not completed until all the administrative steps with respect to the transmittal of the order had been taken, which steps were terminated by the chief administrative officer inspecting and approving the transmittal letter prepared for and sent by the treasurer of the Board to petitioner, with the determination and order enclosed.

It is respondent's contention that the determination was completed by the action of the Board at its meeting on June 14, 1944.

The applicable statute, section 403(e)(2) of the Renegotiation Act, states:

* * * and any such contractor or subcontractor aggrieved by a determination of the Secretary * * * may, within ninety days * * * after the date of such determination, file a petition with The Tax Court of the United States for a redetermination thereof. * * *

Section 403(a)(2) of the act defines the term ‘Secretary,‘ in the case of the four subsidiaries of the RFC, as meaning ‘the board of directors of the appropriate corporation.‘

Pursuant to the authority of the act, the board of directors of the RFC subsidiaries set up the RFC Price Adjustment Board to renegotiate the renegotiable contracts they had made with contractors or subcontractors.

Such contracts had not been included in the original Renegotiation Act, but were included by the Military Appropriation Act of 1944, the act of July 1, 1943. (Public Law 108, 78th Cong.)

Thus the action of the RFC Price Adjustment Board was the action of the board of directors or ‘Secretary.‘

Petitioner's contracts with the War Department (Army Air Forces) for the year 1942 had been renegotiated, but the War Department had treated petitioner's contracts with the RFC subsidiaries as nonrenegotiable business. Upon notice from respondents that such contracts were to be renegotiated, petitioner immediately protested and took the position that the statute should not be applied to them, as it was retroactive and unconstitutional. It adhered to this position throughout. No question is presented with respect to the figures on which the excess profits determination was based.

The only question now before us is, What was the date of the determination of the Board? Was it the date on which the Board took action at its stated meeting, or was it a later date, when some other individual or individuals took some action in completing preparations for mailing the order of determination and in the actual mailing thereof?

In section 403(e)(1) of the act, applying to contracts ending subsequent to June 30, 1943, Congress provided that an aggrieved contractor could petition this Court for a redetermination of the excessive profits determined by the Board (War Contracts Price Adjustment Board) within 90 days ‘after the mailing of the notice of such order under subsection (c)(1).‘ As noted above, however, a petition filed under section 403(e)(2), supra, applicable to contracts ended prior to July 1, 1943, must be filed within 90 days after the determination is made. Whatever the reason Congress had for making such a distinction, it is our duty to apply the statute as enacted. If it be said that a determination is not made or completed until the chief administrative officer has approved the transmittal letter, it might also be said that there is no determination until the letter was mailed, since that was the last administrative step taken. Under such an interpretation, the difference between sections 403(e)(1) and 403(e)(2) would be meaningless. If Congress had so intended, we think it would have so stated.

The RFC Price Adjustment Board was authorized to make the determination, and it was the only one that could do so. The language of the statute is clear and conclusive, and we can give it only the meaning it conveys. The date of the determination is the date of the action of the Board. We conclude, therefore, that the determination of excessive profits herein was made by the Board at its meeting of June 14, 1944, and the statutory period within which a petition might be filed with this Court for the purpose of contesting that determination began to run on that date. The petition not having been filed within the statutory period, this Court is without jurisdiction in the matter.

The Court's order will be entered accordingly.