Taxes on spirits

stroyed.

An allowance by the Commissioner of Internal Revenue under this section of a claim for refundment of taxes erroneously collected is conclusive as to the facts upon which the allowance is made, but not as to questions of law arising therein. (VI Comp. Dec., 259.)

An application filed with the Commissioner of Internal Revenue for the refunding of taxes alleged to have been erroneously or illegally assessed and collected, though informal or defective, may nevertheless be regarded as a claim, so far at least as to be a foundation for an amendment. (14 Op. Atty. Gen., 615.)

Where a distiller in consequence of the destruction of the stamp is forced to affix a new one, the Commissioner, on proof of these facts, may direct the price of the second stamp, or rather the tax thus a second time exacted, to be refunded, under the power given him to refund taxes illegally assessed. (13 Op. Atty. Gen., 574.)

The Commissioner of Internal Revenue has no authority under this section to refund to a surety on a distiller's bond who has paid a judgment recovered against him thereon the amount of such judgment, when the Commissioner finds that the tax upon which this recovery was had was not illegally assessed, but was justly due from the distiller, and the only claim for refund is founded on the allegation that the surety was not liable therefor on his bond. (Seat r. United States (1883), 18 Ct. Clms., 458.)

Under section 3220, the Commissioner is authorized to pay to the plaintiff in a judgment recovered against a collector of internal revenue for damages for a seizure of property for an alleged violation of the internal-revenue laws made by the collector under the direction of a revenue agent connected with the office of the supervisor of internal revenue the amount of such judgment, and is not restricted to the payment of such amount to the collector. Judgment may be paid without certificate of probable cause. (United States r. Frerichs, 124 U. S., 315; 34 Int. Rev. Rec., 39.)

Regulation relative to transmitting claims for refund to Secretary. (Dupasseur v. United States, 19 Ct. Clms., 1.)

As to suits to enforce allowances. (Boehm v. United States, 21 Ct. Clms., 290.)

Various acts of Congress relative to refund commented upon. (White v. Arthur, 10 Fed. Rep., 80.)

Receipts on Form No. 1 must be filed with the claim for refund. Other instructions relative to the preparation of claims. (Vol. 2, Treas. Dec. (1899), No. 21705.)

Circular No. 174, dated October 30, 1877, relative to the taking of additional testimony in support of claims for abatement or refund of taxes.

Schedule A.-Evidence required in support of claims for amounts paid for adhesive stamps used in error or excess. (Vol. 2, Treas. Dec., (1899), No. 20875.)

Relative to special taxes and penalties.-Claims for refunding to be made on Form 46. (Circular letter June 20, 1899, Vol. 1, Treas. Dec., No. 21282.)

Stamp tax-Refunding.-Revised ruling as to refunding amounts paid for documentary stamps used in error or excess, and as to the redemption of unused documentary stamps. (Vol. 2, Treas. Dec. (1899), No. 21706.)

SEC. 3221, as amended by section 6, act of March 1, 1879 (20 Stat., 327). accidentally de- The Secretary of the Treasury, upon the production to him of satisfactory proof of the actual destruction by accidental fire or other casualty, and without any fraud, collusion, or negligence of the owner thereof, of any distilled spirits, while the same remained in the custody of any officer of internal revenue in any distillery warehouse, or bonded warehouse of the United States and before the tax thereon has been paid, may abate the amount of internal taxes aceruing thereon, and may cancel any warehouse bond, or

enter satisfaction thereon, in whole or in part, as the case may be. And if such taxes have been collected since the destruction of said spirits, the said Secretary shall refund the same to the owners thereof out of any moneys in the Treasury not otherwise appropriated. And when any distilled spirits are hereafter destroyed by accidental fire or other casualty, without any fraud, collusion, or negligence of the owner thereof, after the time when the same should have been drawn off by the gauger and placed in the distillery warehouse provided by law, no tax shall be collected on such spirits so destroyed, or if collected, it shall be refunded upon the production of satis factory proof that the spirits were destroyed as herein specified.

This section provides allowance for loss by accidental fire or other unavoidable accident when the manufacture of spirits has been completed and they are destroyed before being drawn off and carried into the distillery warehouse and when the whisky is destroyed in the distillery warehouse.

Section 8, act of May 28, 1880 (§ 3309a, p. 191), releases the distiller from the payment of tax upon spirits destroyed by accident while in the process of manufacture.

If the spirits are removed from a distillery warehouse to a manufacturer's warehouse, and are lost in the course of such removal, section 15 of the act of May 28, 1880, provides for remission of the tax. (§ 3433b, p. 296.)

A similar provision is made where spirits are removed from a distillery warehouse for export. (Act Dec. 20, 1879, § 3330 b, p. 207.) (Greenbrier Distillery Company v. Johnson, internal revenue collector, et al., 88 Fed. Rep., 638.)

This section applicable to brandy stored in special bonded warehouses. (§ 5, act of March 3, 1877, p. 212.)

Secretary Manning's construction of the law relative to abatement of tax on spirits said to have been lost from packages in warehouse. (31 Int. Rev. Rec., 189.)

Allowance for loss in warehouse. (§ 3294a p. 178 and § 3294b, p. 179).

Leakage not casualty. (Revised Ruling of the Department May 25, 1894, giving historical review of the laws; 40 Int. Rev. Rec., 173.)

The collapse of a barrel filled with whisky from the pressure of other barrels superimposed upon it is not a casualty within the meaning of the law. (Letter from Secretary of the Treasury to Commissioner Int. Rev., July 24, 1894; 40 Int. Rev. Rec., 237.) "Casualty," means an accident; an event not to be foreseen or guarded against. Excessive and unusual summer heat is not a casualty, neither are undiscovered worm holes in whisky barrels a casualty within the meaning of this section. (Crystal Springs Distilling Company v. Cox, collector, circuit court Kentucky, 1891; 47 Fed. Rep., 693; 37 Int. Rev. Rec., 328.)

Decision affirmed, circuit court of appeals, 1892. (49 Fed. Rep., 555.)

Unavoidable casualty signifies events or accidents which human prudence, foresight, and sagacity can not prevent. (Wells v. Castees, 3 Gray, 325.)

Proof required in cases of destruction of distilled spirits by incendiaries. (43 Int. Rev. Rec., 285.)

Denial of claim for refund of tax on spirits alleged to have been destroyed by incendiary fire while in warehouse; insufficient evidence. (Letter from Secretary of the Treasury, October 15, 1895; 42 Int. Rev. Rec., 49.)

Where spirits are withdrawn from warehouse tax-paid and stamped, and afterwards destroyed by accident, the tax can not be refunded. (Vol. 1, Treas. Dec., 1898, No. 18996.)

No provision authorizing relief when spirits are stolen from warehouse. (Vol. 1, Treas. Dec., 1898, No. 19520.)

Can abate the tax on spirits which have been in bonded warehouse beyond bonded period. (18 Op. Atty. Gen., 379; 32 Int. Rev. Rec., 94.)

Retrospective

effect of preceding section.

When tax on lost spirits is in

surance.

The destruction of spirits stored in distillery warehouses by fire while in the warehouse constituted a "removal," so as to make the tax payable before the expiration of the three years. (48 Fed. Rep., 714, reversed; United States v. Peace et al., 53 Fed. Rep., 999.) See Insurance Companies v. Thompson. (95 U. S. (5 Otto), 547.)

If accounting officers refuse to allow a claim after the Secretary's decision in its favor, claimant can recover in Court of Claims. (Hoffheimer Bros. v. United States, 20 Ct. Clms., 371.) Liability of obligors on warehousing bonds to pay the tax on spirits destroyed in a distillery warehouse can be relieved only in the manner prescribed by the statute. (Farrell v. United States, 8 Biss., 259; 99 U. S. (9 Otto), 221; 25 Int. Rev. Rec., 83.) The statute (§ 3221) contemplates that the burden of proof shall be upon the applicant. (Opinion of Solicitor of the Treasury. Letter to Secretary of the Treasury of October 21, 1885.) A revocation of an order for abatement under section 3221, R. S., does not restore the previous liability of the obligors on the warehousing bond to pay the tax on the spirits claimed to have been destroyed. (United States v. Alexander et al., 110 U. S., 325.) Regulations and instructions governing the abatement of taxes on spirits destroyed by fire, Series 7, No. 7, Revised, and No. 14, Revised.

Assessment of tax on spirits destroyed by fire.
No. 349, 36 Int. Rev. Rec., 277.)

(Circular

SEC. 3222. The preceding section shall take effect in all cases of loss or destruction of distilled spirits as aforesaid which have occurred since January one, eighteen hundred and sixty-eight.

This does not embrace the later addition made to section 3221 by act of March 1, 1879, section 6, which by its own terms expressly relates only to spirits thereafter destroyed. (See italicized portion of § 3221, p. 107.)

SEC. 3223, as amended by section 3, act of March 1, 1879 (20 Stat., 327), demnified by in- When the owners of distilled spirits in the cases provided for by the two preceding sections may be indemnified against such tax by a valid claim of insurance for a sum greater than the actual value of the distilled spirits before and without the tax being paid, the tax shall not be remitted to the extent of such insurance.

Suits to re

strain assess

ment

The liability for tax on bonded spirits is an insurable interest. (Insurance Company v. Thompson et al., 95 U. S. (5 Otto), 547.) An insurance policy upon whisky in bond, without reference to the Government tax, entitles the assured to include the tax in his recovery in case of loss, if the assured is liable for the tax. (Hedger v. Union Insurance Company, circuit court, district of Kentucky, 17 Fed. Rep., 498.)

SEC. 3224. No suit for the purpose of restraining the or collec assessment or collection of any tax shall be maintained in any court.

tion of taxes.

The constitutionality of a law can not be inquired into in an injunction suit. (The Delaware Railroad Company v. Prettyman, collector, 17 Int. Rev. Rec., 99.)

A collector can not be restrained from collecting an assessment by injunction. (Pullan v. Kissinger, 2 Abb. (U. S.), 94; 11 Int. Rev. Rec., 197; Alkan and Swenger v. Bean, 8 Biss., 83; 23 Int. Rev. Rec., 351; Kensett v. Stivers, 27 Int. Rev. Rec., 1; 18 Blatch., 397; 10 Fed. Rep., 517; State Railroad Tax Cases, 92 U. S. (2 Otto), 613; Snyder v. Marks, 109 U. S., 189; 29 Int. Rev. Rec., 403; Keely r. Sanders, 99 U. S., 443; Robbins v. Freeland, collector, 14 Int. Rev. Rec., 28; United States v. Hodson, 14 Int. Rev. Rec., 100; Roback v. Taylor (1866), 4 Int. Rev. Rec., 170.)

Purely injunction bills can not be maintained to restrain the collection of taxes upon the sole ground of their unconstitution

ality. (Allen v. Pullman's Palace Car Company, 139 U. S., 658.)
The courts will not interfere by mandamus with the execu-
tive officers of the Government in the exercise of their ordinary
official duties. (United States v. Black, Commissioner of Pen-
sions, 128 U. S., 40.)

The court in this case followed an earlier decision of Decatur
v. Paulding (14 Pet., 497), and made clear the distinction be-
tween the mere ministerial act of the executive officer, which
may be controlled by the courts by mandamus, and an act in
the performance of which an officer is vested with quasi-judi-
cial discretion.

In matters which require an executive officer of the United States to exercise judgment or consideration, or which are dependent upon his discretion, no rule will issue for a mandamus to control his action. (Carrick v. Lamar, 116 U. S., 423.)

When mandamus may issue. (Marbury v. Madison, 1 Cranch (U.S.), 137; United States v. Shurz, 102 U. S., 378.)

A bill for a mandatory injunction, requiring a collector to accept an export bond for certain spirits in a bonded warehouse after the bonded period has expired, and allow their withdrawal for export without requiring payment of the tax thereon, is in effect a bill to restrain the collection of internal-revenue taxes, which the court is forbidden to entertain. (Miles v. Johnson, collector, 59 Fed. Rep., 38; 40 Int. Rev. Rec., 10.)

A collector can not be restrained by injunction from making a seizure. (See under § 3163, p. 72.)

Instructions to collector as to obeying subpoena and produc-
ing records. (34 Int. Rev. Rec., 261.)

Subpana against a collector of internal revenue-Habeas corpus.-
A collector of internal revenue is justified in refusing to testify
or furnish copies of official papers, acting under instructions
from the Department. (Decision of Judge Evans, United States
district court, district of Kentucky, discharging the collector;
in re David N. Comingore, collector (1899), 96 Fed. Rep., 552;
Vol. 2, Treas. Dec., No. 21584.)

of proof as

to

SEC. 3225. When a second assessment is made in case of Suits to recover taxes collected any list, statement, or return, which in the opinion of the under second ascollector or deputy collector was false or fraudulent, or con- sessment, burden tained any understatement or undervaluation, no taxes col- fraud, etc. lected under such assessment shall be recovered by any suit, unless it is proved that the said list, statement, or return was not false nor fraudulent, and did not contain any understatement or undervaluation.

Bergdoll v. Pollock (95 U. S., 337).

SEC. 3226. No suit shall be maintained in any court for Suit for recov ery of taxes the recovery of any internal tax alleged to have been errowrongfully colneously or illegally assessed or collected, or of any penalty lected, claimed to have been collected without authority, or of any sum alleged to have been excessive or in any manner wrongfully collected, until appeal shall have been duly made to the Commissioner of Internal Revenue, according to the provisions of law in that regard, and the regulations of the Secretary of the Treasury established in pursuance thereof, and a decision of the Commissioner has been had therein: Provided, That if such decision is delayed more than six months from the date of such appeal, then the said suit may be brought, without first having a decision of the Commissioner at any time within the period limited in the next section.

It is clearly not the intent of the statute to allow the collector to be sued unless the taxpayer has first applied for relief to the Commissioner within the time and manner pointed out by law, and relief has been denied him. (Cheatham et al. v. United

Limitation

covery of taxes

lected.

States, 92 U. S., 85; 22 Int. Rev. Rec., 311; King's County Savings Institution v. Blair, 116 U. S., 200; 32 Int. Rev. Rec., 30.)

A suit against an internal-revenue collector to recover taxes alleged to have been illegally collected is cognizable in the circuit court both under section 629, p. 357, giving the court jurisdiction of causes arising under any law providing internal revenue, and under act March 3, 1887, giving it jurisdiction of causes arising under the laws of the United States.

As the right to sue the United States through its collectors, to recover taxes alleged to have been illegally collected, is only a remedy given by statute, no such right exists unless the conditions prescribed by sections 3226, 3227 are strictly complied with, namely, that an appeal must first be taken to the Commissioner of Internal Revenue, and the suit must be brought within two years from the date of his decision. (Commissioners of the Sinking Fund of Louisville v. Buckner, 48 Fed. Rep., 533.) Not necessary to make a claim for refund if claim for abatement has been made and rejected. (San Francisco Savings Society v. Cary, 17 Int. Rev. Rec., 109; (2 Saw., 393.)

The right of a party who has made an involuntary payment under protest, to a collector of taxes having no legal right to demand it, to recover the money back can not be doubted irrespective of any statutory provisions. (Moore v. Miller, 23 Wash., D. C., Law Rep., 65.)

In the absence of a statutory rule to the contrary, the defense of a statute of limitations, which is not raised either in pleading, or on the trial, or before judgment, can not be availed of. (Retzer v. Wood, collector, 109, U. S., 185.)

A promise on the part of a collector of taxes to repay a tax illegally collected and paid only under protest can not be implied where statute makes it the duty of such officer to pay into the public Treasury without any deduction on account of claims of any description the gross amount that he received.

The prohibition that no suit shall be maintained in any court to recover a tax illegally assessed, except on certain conditions stated in the section, operates on all suits brought subsequently to the time fixed by the act for it to take effect, and on suits brought in State courts as well as in Federal. (The Collector v. Hubbard, 12 Wall., 1.)

The inhibition against suits "for the purpose of restraining the assessment or collection of a tax," and the provisions of sections 3226 and 3227, that a suit to recover an illegal tax shall not be brought until after appeal to the Commissioner of Internal Revenue, and must be brought within two years next after the cause of action accrued, do not apply to a proceeding in which the Government is the moving party; and, therefore, upon an application by the United States for an order upon a receiver to pay an assessment the receiver may show that the assessment was erroneous or illegal, without regard to the lapse of time or to whether there has been an appeal to the Commissioner of Internal Revenue. (United States r. Nebraska Distilling Company (1897), Circuit Court of Appeals, 80 Fed. Rep., 285.)

SEC. 3227. No suit or proceeding for the recovery of any to suits for re- internal tax alleged to have been erroneously or illegally wrongfully col- 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, shall be maintained in any court unless the same is brought within two years next after the cause of action accrued: Provided, That actions for such claims which accrued prior to June six, eighteen hundred and seventy-two, may be brought within one year from said date; and that where any such claim was pending before the Commissioner, as provided in the preceding section, an action thereon may be brought within one year after such decision and not after. But no right of action which was already barred by any statute on the said date shall be revived by this section.