Clifton Manufacturing Co. v. United States/Opinion of the Court

by Benjamin N. Cardozo

A question of limitation, similar to the one considered in our opinions in Nos. 37 and 39, Zellerbach Paper Co. v. Helvering, 293 U.S. 172, 55 S.Ct. 127, 79 L.Ed. 264, and in Nos. 35 and 36, National Paper Products Co. v. Helvering, 293 U.S. 183, 55 S.Ct. 132, 79 L.Ed. 274, comes up for decision here.

The petitioner filed a return on May 28, 1918, under the Revenue Act of 1917 (40 Stat. 300) for the fiscal year ending March 31, 1918. The Revenue Act of 1918 (40 Stat. 1057) became a law on February 24, 1919, with retroactive provisions as of January 1, 1918. Thereafter the petitioner filed an additional return in accordance with Treasury Decision 2797 (approved March 11, 1919, and quoted in our opinion in Nos. 37 to 39), showing an additional tax of $50,638.75. The Act of 1918 provides (section 250(d) that except in the case of fraud, 'the amount of tax due under any return shall be determined and assessed by the Commissioner within five years after the return was due or was made.' See, also, section 250(d), Revenue Act of 1921. A deficiency assessment was imposed in May, 1921, which is admitted to have been timely, and another on May 26, 1926, which is contested as too late. There is also a contest in respect of both deficiencies growing out of delay in the collection. True, written waivers were in existence, adequate in form, which extended the date for assessment and collection until December 31, 1926. The taxpayer asserts, however, that they were procured by misrepresentation and signed without authority, and must therefore be ignored.

In an action to recover the tax paid by the petitioner under the two assessments in controversy, the District Court held (1) that irrespective of any waiver the term of limitation ran from the date of the additional return, and (2) that the waivers were valid and binding. 3 F.Supp. 508. On the authority of decisions in the Ninth Circuit (Zellerbach Paper Co. v. Helvering (National Paper Products Co. v. Helvering), 69 F.(2d) 852, 857), the Court of Appeals for the Fourth Circuit (70 F.(2d) 102) affirmed ruling No. 1 and did not pass upon the correctness of ruling No. 2.

For the reasons stated in our opinions in Nos. 37 to 39, and in Nos. 35 and 36, the first ruling is erroneous. The second ruling we do not consider, the question of the validity of the waivers being still open for determination in the court below.

The decree should be reversed, and the cause remanded to the Court of Appeals for the Fourth Circuit for further proceedings in accordance with this opinion.

It is so ordered.

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