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118 C. Cls.

THE UNITED STATES, PETITIONER, v. ALCEA

BAND OF TILLAMOOKS

(No. 45230]

(115 C. Cls. 463 ; 340 U. S. 873) Certiorari granted November 6, 1950.

On January 8, 1951, the following order was entered by the Supreme Court in this case:

The motions for leave to file briefs of Association on American Indian Affairs, Inc., and Ernest L. Wilkinson, as amici curiae, are denied.

THOMAS M. SMITHER, PETITIONER, v.

THE UNITED STATES

(No. 48650]

[117 C. Cls. 574; 340 U. S. 931] Eminent domain; suit for just compensation for taking of land inundated by the waters of Shasta Dam. Judgment for plaintiff.

Plaintiff's petition for writ of certiorari denied by the Supreme Court February 26, 1951.

BROOKLYN WATERFRONT TERMINAL CORPORATION, PETITIONER, v. THE UNITED STATES

(No. 48679)

(117 C. Cls. 62; 340 U. S. 931] Rental of property by Government; claim for alleged breach of covenants of lease. Judgment for plaintiff.

Plaintiff's petition for writ of certiorari denied by the Supreme Court February 26, 1951.

BORG-WARNER CORPORATION, ETC., PETI

TIONER, v. THE UNITED STATES

(No. 45220)

[117 C. Cls. 1; 340 U. 8. 946) Government contract; suit on alleged contract "implied in law" under Special Jurisdictional Act. Petition dismissed.

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Plaintiff's petition for writ of certiorari denied by the Supreme Court March 12, 1951.

THE UNITED STATES, PETITIONER, v.

ELLIS R. LEWIS

(No. 48903]

(117 C. Cls. 336; 340 U. S. 590]* On writ of certiorari (340 U. S. 903) to review a judgment of the United States Court of Claims holding that plaintiff was entitled to recover on his claim for refund of income taxes for 1944 and interest and penalty on part thereof where plaintiff during the year 1944 received from the corporation of which he was an officer and employee a stated salary and in addition a bonus of 10 percent of the net profits of the company before deduction of taxes, all of which was returned by plaintiff as taxable income for 1944 and the tax paid thereon, and where, thereafter, in 1946, in litigation between plaintiff and the company in a State court it was adjudged that plaintiff was entitled to the bonus of 10 percent after taxes, instead of before taxes; and where, in accordance with the State court's decree, plaintiff made a proper refund to the corporation. Judgment for the plaintiff in the amount of $7,217.16.

On March 26, 1951, the judgment of the Court of Claims was reversed by the Supreme Court in an opinion delivered by Mr. Justice Black, holding:

Under the "claim of right” doctrine announced in North American Oil v. Burnet, 286 U. S. 417, the entire $22,000 was income in 1944, and respondent was not

entitled to recompute his 1944 tax. The opinion of Mr. Justice Black is as follows:

Respondent Lewis brought this action in the Court of Claims seeking a refund of an alleged overpayment of his 1944 income tax. The facts found by the Court of Claims are: In his 1944 income tax return, respondent reported about $22,000 which he had received that year as an employee's bonus. As a result of subsequent litigation in a state court, however, it was decided that respondent's bonus had been improperly computed;

*Rehearing denied April 30, 1951.

118 C. Cls.

under compulsion of the state court's judgment he returned approximately $11,000 to his employer. Until payment of the judgment in 1946, respondent had at all times claimed and used the full $22,000 unconditionally as his own, in the good faith though “mistaken” belief that he was entitled to the whole bonus.

On the foregoing facts the Government's position is that respondent's 1944 tax should not be recomputed, but that respondent should have deducted the $11,000 as a loss in his 1946 tax return. See G. C. M. 16730, XV-1 Cum. Bull. 179 (1936). The Court of Claims, however, relying on its own case, Greenwald v. United States, 57 F. Supp. 569, held that the excess bonus received “under a mistake of fact” was not income in 1944 and ordered a refund based on a recalculation of that year's tax. 91 F. Supp. 1017. We granted certiorari, 340 U. S. 903, because this holding conflicted with many decisions of the courts of appeal,

see, e. 9., Haberkoon v. United States, 173 F. 2d 587, and with principles announced in North American Oil v. Burnet, 286 U. S. 417.

In the North American Oil case we said: "If a taxpayer receives earnings under a claim of right and with. out restriction as to its disposition, he has received income which he is required to return, even though it may still be claimed that he is not entitled to retain the money, and even though he may still be adjudged liable to restore its equivalent.” 286 U. S. at 424. Nothing in this language permits an exception merely because a taxpayer is mistaken" as to the validity of his claim. Nor has the "claim of right” doctrine been impaired, as the Court of Claims stated, by Freuler v. Helvering, 291 U. S. 35, or Comm'r v. Wilcox, 327 U. S. 404. The Freuler case involved an entirely different section of the Internal Revenue Code, and its holding is inapplicable here. 291 U. S. at 43. And in Comm'r v. Wilcox, supra, we held that receipts from embezzlement did not con stitute income, distinguishing North American Oil on the ground that an embezzler asserts no "bona fide legal or equitable claim." 327 U. S. at 408.

Income taxes must be paid on income earned (or accrued) during an annual accounting period. Cf. I. R. C., SS 41, 42; and see Burnet v. Sanford & Brooks Co., 282 U. S. 359, 363. The "claim of right” interpretation of the tax laws has long been used to give finality to that period, and is now deeply rooted in the federal tax system. See cases collected in 2 Mertens, Law of Federal Income Taxation, $ 12.103. We see no reason why the Court should depart from this well-settled in

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a

terpretation merely because it results in an advantage or

disadvantage to a taxpayer.* Reversed. Mr. Justice Douglas filed a dissenting opinion, as follows:

The question in this case is not whether the bonus had to be included in 1944 income for purposes of the tax. Plainly it should have been because the taxpayer claimed it as of right. Some years later, however, it was judicially determined that he had no claim to the bonus. The question is whether he may then get back the tax which he paid on the money.

Many inequities are inherent in the income tax. We multiply them needlessly by nice distinctions which have no place in the practical administration of the law. If the refund were allowed, the integrity of the taxable year would not be violated. The tax would be paid when due; but the government would not be permitted to maintain the unconscionable position that it can keep the tax after it is shown that payment was made on money which was not income to the taxpayer.

THE UNITED STATES, PETITIONER v. ALCEA

BAND OF TILLAMOOKS ET AL.

[No. 45230]

[103 C. Cls. 494; 115 C. Cls. 463; 329 U. S. 40; 341 U. S. 48] On writ of certiorari (340 U. S. 873) to review a judgment of the Court of Claims holding that certain Indian tribes (plaintiffs) under the Special Jurisdictional Act (41 Stat. 801) were entitled to a judgment, including interest, as compensation for lands taken in 1855.

On April 9, 1951, the judgment of the Court of Claims was reversed by the Supreme Court in an opinion per curiam on the ground that the Special Jurisdictional Act contains no provision authorizing an award of interest. The opinion of the Supreme Court is as follows:

The facts leading to this controversy are fully set forth in United States v. Alcea Band of Tillamooks,

329 U. S. 40, where this Court affirmed a judgment of * It has been suggested that it would be more "equitable" to reopen respond

While the suggestion might work to the advantage of this taxpayer, it could not be adopted as a general solution because, in many cases, the three-year statute of limitations would preclude recovery. I. R. C., $ 322 (b).

941207-51 -49

ent's 1944 tax return.

118 C. Cls.

the Court of Claims that certain named Indian tribes "are entitled to recover” compensation for the taking of original Indian title by the United States in 1855. The amount of recovery was reserved expressly for the further proceedings which are before the Court in this

After the affirmance, the Court of Claims heard evidence on the amount of recovery and entered a judgment for the value of the lands as of 1855 plus interest from that date. We granted certiorari limited to the question presented by the award of interest. 340 U, S. 873.

It is the "traditional rule” that the interest on claims against the United States cannot be recovered in the absence of an express provision to the contrary in the relevant statute or contract. 28 U. S. C. (Supp. III), § 2516 (a). United States v. Thayer-West Point Hotel Co., 329 U. S. 585, 588, and cases cited therein. This rule precludes an award of interest even though a statute should direct an award of “just compensation" for a particular taking. United States v. Goltra, 312 U. S. 203. The only exception arises when the taking entitles the claimant to just compensation under the Fifth Amendment. Only in such cases does the award of compensation include interest. Seaboard Airline R. Co. v. United States, 261 U. S. 299; United States v. Thayer-West Point Hotel Co., supra.

Looking to the former opinions in this case, we find that none of them expressed the view that recovery was grounded on a taking under the Fifth Amendment. And, since the applicable Jurisdictional Act, 41 Stat. 801, contains no provision authorizing an award of in

terest, such award must be reversed. Mr. Justice Jackson took no part in the consideration or decision of this case.

THE UNITED STATES, PETITIONER, v. ROGUE

RIVER TRIBE OF INDIANS ET AL.

(No. 45231]

(116 C. Cls. 454; 341 U. S. 902]

Indian claims; land reserved under treaty of November 29, 1854; valuation of lands; offsets. Judgment for plaintiffs.

Defendant's petition for writ of certiorari denied by the Supreme Court April 9, 1951.

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