US SUPREME COURT DECISIONS

1. The Court of Claims has jurisdiction of a suit brought against the United States to recover back certain taxes and penalties alleged to be of the character mentioned in secs. 3220, 3228, Rev.Stat., where payment thereof was refused to the plaintiff, whose claim thereto had in due time been presented on appeal to and allowed by the Commissioner of Internal Revenue. United States v. Kaufman, 96 U. S. 567, cited and approved.

2. Lodging the appeal with the proper collector of internal revenue, for transmission to the Commissioner in the usual course of business, under the requirements of the Treasury regulations, is in effect the presentation of it to the Commissioner.

Sections 3220 and 3228 of the Revised Statutes are as follows:

"SEC. 3220. The Commissioner of Internal Revenue, subject to regulations prescribed by the Secretary of the Treasury, is authorized, on appeal to him made, to remit, refund, and pay back all taxes erroneously or illegally assessed or collected, all penalties collected without authority, and all taxes that appear to be unjustly assessed or excessive in amount, or in any manner wrongfully collected. . . ."

"SEC. 3228. All claims for the refunding of any internal tax alleged to have been erroneously or illegally assessed or collected, or of any penalty alleged to have been collected without authority, or of any sum alleged to have been excessive or in any manner wrongfully collected, must be presented to the Commissioner of Internal Revenue within two years next after the cause of action accrued. . . ."

The material regulations prescribed by the Secretary of the Treasury applicable to this case are these:

"Claims for the refunding of taxes erroneously assessed and collected should be presented through the collectors of the respective districts upon blank form No. 46. . . ."

"The collector should keep a perfect record, in a book furnished for the purpose, of all claims presented to the Commissioner, and must certify as to each claim, whether it has been before presented or not."

"Where the case of an appeal involves an amount exceeding

Page 104 U. S. 729

two hundred and fifty dollars, and before it is finally decided the Commissioner of Internal Revenue will transmit the case, with the evidence in support of it, to the Secretary of the Treasury for his consideration and advisement."

For some years it has been the practice of the officers of the Treasury Department to regard appeals for refunding taxes illegally assessed and paid, when deposited with collectors, under the rules, in season to be forwarded to Washington within the two years' limitation, to have been duly presented to the Commissioner according to law.

On the 10th of July, 1878, the Real Estate Savings Bank of Pittsburgh, Pa., paid to the collector of internal revenue for the proper district in Pittsburg, certain internal taxes which had before that time been assessed, and on the 9th of July, 1880, it presented to the same collector, at his office, an appeal to the Commissioner of Internal Revenue, made out on the blank form prescribed by the Secretary, to refund and pay back $972.69, which, it was alleged, had had been illegally assessed, and erroneously paid. This appeal was delivered to the collector in time to have reached Washington by due course of mail on the 10th of July if it had been promptly forwarded, but it was retained until the 15th, when it was sent to the Commissioner with an endorsement by the collector that he had investigated the facts and found the statements of the claimant were in all respects true. The papers reached the Commissioner on the 17th of July, and he, on the 13th of October following, submitted them to the Secretary of the Treasury, as required by the regulations, for his consideration and advice. On the 18th of October, the Secretary signified to the Commissioner his approval of the payment of the claim, and on the 21st the Commissioner certified its allowance. On the presentation of this certificate through the accounting officers of the Treasury Department, payment was refused. The certificate has never been revoked by either the Secretary or the Commissioner, but it is still in force so far as the action of these officers is concerned. After payment was refused, suit was brought on the certificate in the Court of Claims, where judgment was given for the claimant. From this judgment, the United States appealed. chanrobles.com-redchanrobles.com-red

Page 104 U. S. 730

MR. CHIEF JUSTICE WAITE, after stating the case, delivered the opinion of the Court.

The objections made to the recovery are in substance 1, that the Court of Claims had no jurisdiction of the suit, because the claim sued for was not founded on any law of Congress or upon contract, and 2, that the appeal to the Commissioner of Internal Revenue was not taken within two years after the cause of action accrued, and that consequently the allowance by the officer was without any authority of law.

The first of these objections is, we think, disposed of by United States v. Kaufman, 96 U. S. 567. That case arose chanrobles.com-redchanrobles.com-red

Page 104 U. S. 733

under sec. 3426 Rev.Stat., which is as follows:

"The Commissioner of Internal Revenue may from time to time make regulations upon proper evidence of facts for the allowance of such of the stamps issued under the provisions of this chapter or any internal revenue act and may have been spoiled, . . . and such allowance shall be made either by giving other stamps in lieu of the stamps so allowed for or by repaying the amount or value, after deducting therefrom, in case of repayment, the sum of five per cent, to the owner thereof. . . ."

And we held that the allowance of a claim by the Commissioner under this section was equivalent to an account stated between private parties, and binding on the United States, until in some appropriate form it was impeached for fraud or mistake, and that if not paid on proper application through the accounting officers of the Treasury Department, an action might be maintained on it in the Court of Claims because it raised an implied promise on the part of the United States to pay what might actually be due the claimant, and also because the claim therefor was founded on a law of Congress within the meaning of that term as used in defining the jurisdiction of the court. We cannot discover any material difference between the powers of the Commissioner under sec. 3426, and those which he has under sec. 3220. Under sec. 3426, he is to "allow" the claim, which is done either by giving other stamps in lieu of those that have been spoiled, &c., or by repaying the amount or value. Under sec. 3220, he is to "refund" and "pay back." His payments of money in both cases must be made through the accounting officers of the Treasury Department, as he is not himself a disbursing officer. Whether his allowance is conclusive on the other officers through whose hands it must necessarily pass before it can be paid by the Treasurer we did not then and need not now decide. All we said then and all we say now is that if payment is not made by reason of the refusal of any of the officers of the department to pass or pay the claim after it has once been allowed by the Commissioner, the allowance may be used as the basis of an action against the United States in the Court of Claims, where it will be prima facie evidence of the amount that is due, and put on the government the burden chanrobles.com-redchanrobles.com-red

Page 104 U. S. 734

of showing fraud or mistake. This burden is not overcome by proving that some other officer in the subsequent progress of the claim through the department declined to do what the law or Treasury regulations required of him before payment could be obtained. The fact of fraud or mistake must be established by competent evidence the same as any other fact in issue. An allowance by the Commissioner in this class of cases is not the simple passing of an ordinary claim by an ordinary accounting officer, but a statement of accounts by one having authority for that purpose under an act of Congress. Until an appeal is taken to the Commissioner, no suit whatever can be maintained to recover back taxes illegally assessed or erroneously paid. If on the appeal the claim is rejected, an action lies against the collector (Rev.Stat., sec. 3226), and through him, on establishing the error or illegality, a recovery can be had. If the claim is allowed and payment for any cause refused, suit may be brought directly against the government in the Court of Claims. This, as it seems to us, is the logical result of the legislation of Congress upon the subject. A rejected claim may be prosecuted against the collector, and an allowed claim, not paid, may be sued for in the Court of Claims. To say the least, the decision of the Commissioner on the appeal is sufficient to determine whether one form of remedy shall be resorted to by the claimant or the other.

Upon the other branch of the case, we are entirely satisfied with the conclusions reached by the court below, and that the lodging of the appeal made out in due form with the proper collector of internal revenue for the purpose of transmission to the Commissioner in the usual course of business, under the requirements of the regulations of the Secretary, was in legal effect a presentation of the appeal to the Commissioner. The effect of the regulation was to designate the office of the collector of internal revenue as a proper place for the presentation of the appeal. The whole subject is so fully and satisfactorily considered in the opinion below that we deem it unnecessary to do more than refer to what is there said.

Judgment affirmed.