Petition for a Writ of Certiorari — United States v. John Barth Co.

INDEX

Specification of errors to be EE ee

CITATIONS

Cases:

McCaaghn, Collector, » Philadciphia Barge Co. 27 F. (2d)

ae 7 eeiniadinennai ieatinstteeniathecinims

United States \ Good Springs Anchor Co end Fidelity 4

Deposit Co. , net reported (D.C oS ee

I mited Btates ¥ Maryland Casualty Co, No. 398, October

Uadted States v Omkeow Bros Co., Jac., 23 F. (34) 967... _-

United Statice ¥ Phiip J. Rennolds, decided Aug 13, ig2s-

eat wported (DC RD Ny -

Statutes.

Revenue act of IWIK ¢ IK 40 Rtat. 1057. 1078, 1uR3

Bec, SMiaiiidiias

I nena soerinhainiariiiatasidingeainasanae

Kevenve act of 1821. ¢ 136, wee, 201d), 42 Beat. 227, 2a5___

Revenue act of 1924 « 234 awn 277, 274, 43 Stat. 253, gue.

_ ee Scntetn ines nimininiielepiiiatitipide a

Revenue ect of 1038. ¢ 27, wee. 1108 (a), 44 Rat 9, 113

1001628

it)

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— —

Inthe Supreme Court of the United States

OcToBer TERM, 1928

No, ——_——

UNITED STATES oF AMERICA, PETITIONER

v.

Tur JouN Barru COMPANY anp Unrrep STATES

Fidelity and Guaranty Company

a

PETITION POR A WRIT OF CERTIORARI TO THE UNITED

STATES CIRCUIT COURT OF APPEALS FOR THE 8K KATH

CIRCUIT

The Solicitor General, on behalf of the United

States, prays that a writ of certiorari ixsue to re-

view the judgment of the United States Circuit

Court of Appeals for the Seventh Circuit entered

in the above-entitled cause on the 7th day of

June, 1928 (Ro 29), affirming the judgment of

the District Court for the Eastern District of

Wisconsin. A petition for rehearing filed June 29,

IW2s, in the Cireuit Court of Appeals, was enter-

tained and was denied September 12, 1928 (Ro 31).

“o that this petition is filed within the lime pre-

seribed by the Act of February 13, 1925, on which

Jurisdiction rests,

‘})

The question presented in this case is whether

an action on a bond given to stay the collection of

a tax pending consideration of a claim in abate-

ment is barred after expiration of the period of

limitation prescribed by law on suits or proceed-

ings for the collection of taxes.

On June 25, 1919, the Commissioner of Internal

Revenue assessed income and profits taxes against

the John Barth Company in the sum of $126,182.81,

of which the John Barth Company paid $74,764.40.

(R. 4.)

On September 15, 1919, and on March 17, 1925,

the company filed claims for abatement. (R. 4.)

Section 234 (a) (14) (a) of the Revenue Act of

1918 (¢. 18, 40 Stat. 1057, 1079) provided in connec-

tien with such a claim for abatement that—

* * * In such case payment of the

amount of the tax covered by such claim shall

not be required until the claim is decided,

but the taxpayer shall accompany his claim

with a bond in double the amount of the tax

covered by the claim, with sureties satisfac-

tory to the Commissioner, conditioned for

the payment of any part of such tax found to

be due, with interest. If any part of such

claim is disallowed then the remainder of the

tax due shall on notice and demand by the

collector be paid by the taxpayer with inter.

est at the rate of 1 per centum per month

from the time the tax would have been due

had no such claim been filed

Pursuant to that statute and on September 20,

1919, the John Barth Company executed and deliv-

ered a bond, as principal, with the United States

Fidelity & Guaranty Company as surety, condi-

tioned for the payment of any part of such tax

found by the Commissioner of Internal Revenue

to be due upon determination of the claims in abate-

ment. (R. 4, 6.)

On March 25, 1926, the Commissioner of Internal

Revenue passed on the claims in abatement and de-

termined there was due from said John Barth Com-

pany for such taxes the sum of $29,842.32 with in-

terest, and notice thereof was given and demand for

payment was made, which was refused. (R. 5.)

Thereupon, and on September 22, 1926, the United

States commenced this action against the principal

and the surety on the bond to recover the taxes so

determined to be due. (R. 2.)

If no claim for abatement and bond had been

filed, and the suit had been one to recover the taxes,

it would have been barred by the statute of limita-

tions because commenced more than five years after

the date the return was filed, because of the provi-

sions of Section 250 (d) of the Revenue Act of 1918

(e. 18, 40 Stat, 1057, 1083), Section 250 (d) of the

Revenue Act of 1921 (c. 136, 42 Stat. 227. 2 265), and

Sections 277-278 of the Revenue Act of 1924 (ec. 234,

45 Stat. 253, 299, 300), which provided, generally,

that no suit or proceeding for the collection of any

faxes should be begun after the expiration of five

RIPEN LILIA LIT ABE UN PETS ES ON aE RIS ERIM PRO

4

years from the filing of the return except in case of

fraud.

On the institution of the suit these respondents

demurred to the complaint on the ground that the

action was not commenced within the time limited

by law, and the demurrer was sustained. (R, 8-9.)

From that decision the petitioner prosecuted error

to the Circuit Court of Appeals for the Seventh

Cireuit. (R. 10.) The latter court, on November

4, 1927, certified to this Court two questions. (R.

20-22.) This Court declined to answer the ques.

tions on the ground that they went to the entire case,

and disinissed the certificate, and remanded the cuse

to the Cireuit Court of Appeals, which affirmed the

District Court. CR. 24, 25, 29.)

SPECIFICATION OF ERRORS TO BE URGED

The Cirenit Court of Appeals erred :

1. In holding that the statutes limiting the time

for the assessment of taxes and for commencing

suits or proceedings for their collection applied to

an action on a bond given to secure the payment

of any part of an assemanent of taxes found to be

due after determination of a claim for the abate-

ment thereof,

2. In holding that the liability of defendants on

the bond was extinguished by Section 106 (a),

Revenue Act of 1926, which provides that the

statute of limitations in respect of internal-revenue

taxes shall net only bar the remedy but shall ale

extinguish the liability.

5

REASONS FOR GRANTING THE WRIT

(1) Substantially the same question as is pre-

sented in this case has been certified to this Court

by the United States Cireuit Court of Appeals for

the Ninth Circuit in United States v. Maryland

Casualty Company, No, 399, October Term, 1928,

and it is desirable to save the rights of the United

States in the present case pending the decision of

the case so certified.

(2) While there is as yet no conflict of decision

between the United States Circuit Courts of Ap-

peals on this question, there is among the District

Courts. The cases in the United States District

Courts holding that the statute of limitations with

respect to suits to collect taxes applies to suits on

bonds given to secure payment of taxes pending the

determination of claims in abatement are:

United States v. The Maryland Casualty Com-

pany (unreported ; District Court for the North-

ern District of California). United States v. Good

Springs Anchor Com pany and Fidelity & De posit

Company (unreported: District Court for the

Southern District of California). In the following

Thstriet Court cases the contention of the United

States has been sustained - United States v. Onken

Bros. Company, Inc. (23 F. * 2d) 367: Wyo-

ming }, McCaughn, Collector, ¥. Philade Iphia Barge

Company (27 ¥. (2d) G28: Eastern District of

Pennsylvania), United States v. Philip J. Rennolds

idecided August 13, 125; District Court for the

6

Southern District of New York, not officially —

reported ). 4

(3) There are a large number of similar cases |

pending. :

Under the circumstances it does not seem neces- 7

sary to submit a supporting brief and none will be

filed.

WHEREFORE, it is respectfully submitted that this q

petition for certiorari should be granted. q

WituaM D. Mrreue.,

Solicitor General.

OctoserR, 1928.