The opinion
LITTLETON, Judge
(dissenting).
I am unable to agree with the conclusion that the filing of a claim for refund prior to the allowance of an overpayment by the Commissioner of Internal Revenue is necessary to enable a taxpayer to maintain a suit to recover an amount duly allowed by the Commissioner, pursuant to the provisions of the statute, during the period within which he may do so without the filing of a claim. The cause of action as stated in the petition is based wholly upon the Commissioner’s allowance of overpayments of $10,874.64 and $2,-628.26 for 1918 and 1919, respectively. This allowance, which was made on March 29, 1924, was timely as to' both years. Plaintiff had filed a timely claim for refund for 1918 which was allowed by the Commissioner. He filed no claim for refund for 1919, but the Commissioner allowed an overpayment of $2,-628.26 for that year within the period of *850 limitation in which he was required by (he statute to examine the return and to refund nr credit any overpayment found to have been made.
This suit is not based upon a claim for refund for 1918 or 1919, but is grounded upon the Commissioner’s allowance of March 29, 1924, as evidenced by the schedule of refunds, form"7805-A, approved by him on that date in the amounts sought to be recovered. There was no disallowance of a claim for refund, and the two-year limitation provided in section 3226, R. S. (26 USCA § 156 and note), for suits upon rejected claims, does not apply. The Commissioner determined and allowed the amounts stated in the petition, and the petition was filed within six years from the date on which the amounts were allowed. The suit was therefore timely instituted.
In so far as concerns the Commissioner’s •allowance of the amounts involved and the nature of the plaintiff’s cause of action, as stated in his petition, I can see no essential ■difference between this case and the ease of Bonwit Teller & Co. v. United States, 283 U. S. 258 , 51 S. Ct. 395, 397, 75 . L. Ed. 1018. In that case the.time for allowing •an overpayment without a claim had expired, but the Commissioner held that a certain document filed by the taxpayer was sufficient to •constitute a claim for refund, and upon the basis thereof he determined and allowed an ■overpayment of $10,866.43; his allowance was accomplished in the same way in which the overpayments involved in this case were ■allowed. Instead of refunding the overpayment allowed, however, the Commissioner •credited $9,846.06 thereof against an additional tax due by Bonwit Teller & Co. for the year ending January 31, 1917; said" credit having been made at the same time that he •allowed the overpayment. At.the time the credit was made, however, the collection of the tax due for 1917 was barred by the statute of limitation. The balance of the overpayment of $1,462.99 was refunded to the •plaintiff and a certificate of overassessment was mailed to it by the collector disclosing the amount allowed, the amount .credited, a nd 'the amount refunded. The taxpayer applied 'to the Commissioner for payment of that portion of the amount alloweil which had been credited against the barred tax for 1917. The 'Commissioner refused, and the company brought suit in this court to recover that portion of the overpayment for 1919 credited after the expiration of the statute of limitation. The illegality of the credit was eon-■ceded, but the defendant insisted in the Supreme Court that the suit was barred, inasmuch as it was not instituted within five years from the payment of the tax for the year with respect to which the Commissioner had made an allowance. The court said: This ease is not within the clause giving two years after disallowance, because here the claim was allowed. * * * The action is not for the overpayment of the tax in 1919 but is grounded upon the determination evidenced by the certificate issued by the Commissioner May 12, 1927. Upon delivery of the certificate to plaintiff, there arose the cause of action on which this suit was brought.” The plaintiff in this case bases his suit upon the Commissioner’s allowance of the amounts sued for, as evidenced by the schedule of refunds approved March 29, 1924. The determination and allowance by the Commissioner, pursuant to the mandate of the statute, of an amount due a taxpayer for a particular taxable year, before the expiration of the time within which he may make such allowance, is of the same force and effect as an allowance made by him in a case where the taxpayer filed a claim. It does not appear in this case whether a certificate of overassessments for 1918 and 1919 was delivered to the plaintiff, but I think this is unimportant. The plaintiff received notice of the amounts allowed for 1918 and 1919. The action of the Commissioner is determinative of whether the suit is for an alleged overpayment based upon a disallowed claim, or for a stated amount duly and legally allowed with respect to which the liability of the government is complete. United States v. Kaufman, 96 U. S. 567, 570 , 24 L. Ed. 792 ; United States v. Real Estate Savings Bank, 104 U. S. 728 , 26 L. Ed. 908 ; First National Bank of Greencastle v. United States, 15 Ct. Cl. 225 .
An allowance by the Commissioner of an overpayment in respect of the tax for a particular taxable year may not, strictly speaking, be an account stated as that term is generally defined in relation to transactions between private parties. However, in view of the manner in which the statute requires the Commissioner to decide with respect to the liability of the government and the taxpayer, and the time within whieh he may act, makes his adjudication and allowance of an amount due the taxpayer, where there 'is no legally enforceable liability of the taxpayer to the government, the equivalent of an account stated, and a binding obligation of the United States. A suit thereon may therefore be instituted within six years after the cause of action accrues. Such allowance is prima *851 facie evidence of tlie amount due, and the burden is on the government of showing' fraud or mistake.
In tho Kaufiuan Case, the suit was based upon the decision of tho Commissioner allowing1 the claim. The court held, that the foundation of the suit was the refusal of the government to pay a claim allowed by an officer authorized to repay moneys overpaid under ecu tain circumstances. It appeared that Kaufman applied to the Commissioner for a refund of .j:50, and submitted evidence in support of his application; that the Commissioner thereafter allowed the claim and hold that Ka.ufman was entitled to a refund of $T7.50, and advised the taxpayer of tho allowance made. Subsequently payment of the amount allowed was refused on the ground that the claim for refund had not been filed in time. The court said: “To say the least, the allowance of a claim unde-'1 this si átate [3420, B. S.J is equivalent to an account stated between private parties, which is good until inv peached for fraud or mistake. It is not the allowance of an ordinary claim against the government, by an ordinary accounting officer, hut the adjudication by the first tribunal to which the matter must by law bo submitted. * * * When submitted, and when allowed upon the adjudication, the liability is complete until in some appropriate form it is impeached. When, therefore, the court found the adjudication against the government, without impeachment, the liability to pay was established.”
United Slates v. Savings Bank, supra,, was a similar ease in which the Commissioner allowed an overpayment of tax, payment of which was later refused on the ground that the claim therefor had not been filed within two years, as required by section 3228, B. S. (26 USCA § 157 and note). The court held that the allowance by the Commissioner was equivalent to an account stated, and binding on tho United States, until in some appropriate form it was impeached for fraud or mistake, and that, if not paid on proper application, an action might be maintained on it in the Conrt of Claims, because it raised an implied promise on the part of the United States to pay; that if the officers of tho department refused to pay the claim after it had once been allowed by the Commissioner, the allowance might be nsed as the basis of an action against the United States in the Court of Claims, where it would he prima facie evidence of the amount due, and put on the government the burden of showing fraud or mistake. To the same effect is First National Bank of Greencastle v. United States, supra. In this ease plaintiff received information that the amounts had been allowed and that they had been credited against an additional tax due by the partnership of Westheiinor & Daube for 1917. Thereafter plaintiff made application for the payment to him of the amounts allowed in respect of excess payments of tax for 1918 and 1919 on the ground that the credit made was barred by the statute of limitation, and therefore illegal. Payment of the amounts allowed was refused. These facts bring the case within üio rule laid down in the cases cited above.
The Bonwit Teller Case is authority for tho proposition that the binding effect of the Commissioners allowance of an overpayment for a particular year Is not affected by the fact that there may be an unpaid tax liability for another year which cannot he legally collected. In determining whether an allowance of an overpayment should be made for a particular taxable year, the Commissioner cannot be governed by the fact that the taxpayer may not have paid the full amount of tax due for another taxable year. The statute is mandatory in its provision that tho Commissioner shall determine the correct amount of tax for each year. When he makes an allowance of an overpayment within five years after the return was due, there is an implied promise to pay, notwithstanding the taxpayer lias filed no claim for refund. See section 252 of the Revenue Act of 1921 ( 42 Stat. 268 ). He is required by the statute to credit the excess payment to any tax that may be then due from the taxpayer for any other taxable period. But he cannot apply the allowed overpayment as a credit if the period of limitation within which he may make collection of the tax due for the other year has expired. If no tax is due by the taxpayer, or if the outstanding tax for another taxable year cannot legally bo collected, because barred by the statute of limitation, the statute requires that the amount allowed “shall be immediately refunded to the taxpayer.”
The liability of the taxpayer and the question whether lie owes an additional tax or is entitled to a refund must be determined on an annua] basis. In Burnet v. Sanford & Brooks Co., 282 U. S. 359 , 51 S. Ct. 350, 152 , 75 L. Ed. 383 , the court said: “The net result of the two years, if combined in a single taxable period, might still be a loss; but it has never been supposed that that fact would relieve him from a tax on the first, or that it affords any reason for postponing the assessment of the tax until the end of a lifetime, or for some other indefinite period, to *852 ascertain more precisely whether the final outcome of the period, or of a given transaction, will he a gain or a loss.” If, therefore, the government was without authority under the revenue statute to apply all or any portion of the amounts allowed by the Commissioner in respect of the plaintiff’s tax for 1918 and 1919 as a credit against a tax due by the partnership, there was an implied promise to pay the amount allowed, which was binding on the United States. Upon the -refusal of the officials to pay such allowance, it constituted a proper basis of an action against the United States.
On the merits I concur in the conclusion reached in the majority opinion to the extent that it holds that the plaintiff is not entitled to recover the amount of $10,874.64 allowed by the Commissioner for 1918. In view of plaintiff’s agreement which the Commissioner had before him at the time he made the allowance for 1918, that “The Commissioner of Internal Revenue is hereby authorized and requested to apply and credit the amount refundable to each and all of the individual members of said partnership for 1918 against the additional tax assessed against said partnership for the year 1917, and this agreement to be taken and accepted as full and complete authority therefor,” the tax of the partnership for 1917, to the extent of the overpayment allowed for 1918, was satisfied and discharged when the Commissioner signed the schedule of refunds, form 7805-A, on March 29, 1924. This action of the Commissioner was taken within the period of limitation as extended by the waiver within which he could collect by credit the additional tax due by the partnership for 1917. At the time the Commissioner signed the schedule allowing $10,874.64 for 19.18, that amount legally belonged to the United States under his agreement and direction that it be retained in partial satisfaction of the liability of the partnership. The Commissioner’s action in this case was not controlled by the credit provisions of the statute and the regulations, but was governed by plaintiff’s agreement, the subject-matter of which was the satisfaction of the 1917 tax of the partnership. It was not the usual claim for credit for 1918. The plaintiff filed with his agreement a claim for refund for 1918 which protected his right to secure an allowance thereof beyond the period within which the Cormnissioner could make an allowance without a claim. In the circumstances it was not necessary so far as 1918 was .concerned that the Commissioner take the formal steps usually taken in making a credit of an overpayment by the taxpayer against a tax due by him for another taxable year. r Meticulous compliance with formalities customarily followed in making a credit is not necessary in every case. It is enough that the action taken is sufficient to accomplish a credit. Compare Royal Bank of Canada v. United States, 44 F.(2d) 249 , 70 Ct. Cl. 663 . In the usual case, the collector of internal revenue, in making his report to the Commissioner pursuant to the directions appearing upon the schedule of overassess-ments, in respect of the tax of a particular taxpayer for certain taxable years, is not permitted to include in such report a statement of the account of another and different taxpayer. The Commissioner might have instructed the collector at the time the schedule of overassessments was transmitted to him to examine the account of the partnership for 1917 and make appropriate entries in the schedule of refunds and credits concerning the account of the plaintiff and the partnership, and to distribute the overassessments according to the status of those accounts; however, in view of plaintiff’s agreement, it was not necessary that he do so. It seems to be conceded by plaintiff that had the Commissioner so instructed the collector he would have no cause of action in view of the approval of the schedule of refunds on March 29, 1924. The language of plaintiff’s agreement, however, made the Commissioner’s action of March 29, 1924, effective as a credit of the amount allowed for 1918 against the tax due by the partnership. The letter of July 28, 1924, from the Deputy Commissioner of the accounts and collection unit of the bureau to the collector, authorizing him to make appropriate entries in his records satis-' fying the partnership’s liability for 1917 to the extent of $10,874.64, was not therefore the allowance of the credit. The credit had already been legally accomplished, and these instructions related only to matters of bookkeeping by the collector. Cf. Meyersdale Fuel Co. v. United States, 44 F.(2d) 437 , 70 Ct. Cl. 765 . As to the year 1919 however, the instructions contained in this letter constituted the only affirmative act by the Commissioner toward crediting the allowed overpayment of $2,628.26 against the tax due by the partnership. On the date the letter was written the collection of the tax for 1917 was barred.
The majority opinion denies recovery of the amount of $2,628.26, allowed by the Commissioner for 1919 on the ground that the Commissioner’s allowance did not constitute an obligation of the United States, and that *853 the suit is prohibited by section 3226, R. S. (26 USCA § 156 and noto), since plaintiff filed no claim for refund for 1919. 1 dissent from this conclusion for the reasons herein-before slated. Plaintiff did not file a claim fo-r rotund for 1919; however, the Commissioner allowed the overpayment of $2,628.26 for that year within the period of limitation within which he could do so without a claim. The return for 1919 was filed June 19, 1920, and there is no claim by defendant that it was due earlier. There was apparently an extension of time to lile. The Commissioner's allowance, therefore, which is conceded to have been correct, was binding on the United States. The year 1919 was not included in plaintiff’s agreement with reference to the satisfaction of the partnership tax, and the action of the Commissioner on March 29, 1924, did not therefore constitute a credit of the amount allowed plaintiff for 1919 against the tax due by the partnership. The time within which he could legally have credited this overpayment against the partnership’s tax expired April 1,1924. I am of the opinion that judgment should be entered in favor of plaintiff for $2,628.26, with interest as provided in section 177 of the Judicial Code, as amended by section 615 (a) of the Revenue Act of 1928 (28 USCA § 284).