author: WELSH, District Judge.

text:
    UNITED STATES v. RECORD PUB. CO. et al.
    Civ. No. 4807.
    District Court, N. D. California, N. D.
    April 20, 1945.

      Frank J. Hennessy, U. S. Atty., of San Francisco, Cal., and Emmet J. Seawell, Asst. U. S. Atty., of Sacramento, Cal., for plaintiff.
    Holloway Jones, Hugh K. McKevitt, and Jack M. Howard, all of San Francisco, Cal., for defendant Acme Color Print Co., Limited.
    Robert W. Kenny, Atty. Gen. of California, and Ward Sullivan and Ralph R. Planteen, Deputy Attys. Gen., for defendant California Employment Stabilization Commission.
   WELSH, District Judge.

The facts herein are not in dispute. A written stipulation on file recites that defendants, V. C. Richards and C. H. Deuel, entered into a conditional sales contract by the assignment of which defendant, Record Publishing Company, a corporation, acquired the right to purchase newspapers known as “Chico ' Record” and “Chico Weekly Record” and certain other property. Default occurred and Richards and Deuel retook possession of said newspapers and said other property. An agreement was thereupon made whereby Richards and Deuel agreed to receive all monies paid into the office of the Chico Record which belonged to and were the property of said Record Publishing Company, pursuant to which they actually received $1347.23, which was deposited with the Treasurer of the County of Butte, State of California, pending the determination of rights thereto.

Plaintiff alleges in its complaint that defendant, Record Publishing Company, became indebted to it for taxes, including contribution tax, $184.33 for the third quarter of 1942, insurance contribution tax $148.14 for the fourth quarter of 1942, Federal unemployment tax for the year 1942, $96.12, Federal unemployment tax additional assessment for 1942, $536.41, together with penalties on said sums.

Defendant, Acme Color Print Company, Ltd., claims $618.77 as a balance due on a judgment recovered against Record Publishing Company on or about the 1st day of February, 1943, pursuant to which execution was levied.

Defendant, California Employment Stabilization Commission, asserts that it is entitled to $623.71 by reason of unemployment insurance collections.

Section 3670 of the Internal Revenue Code, 26 U.S.C.A. Int.Rev.Code, § 3670, allows a lien for Federal taxes: “If any person liable to pay any tax neglects or refuses to pay the same after demand, the amount * * * shall be a lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to such person.”

Section 3671, Internal Revenue Code, 26 U.S.C.A. Int.Rev.Code, § 3671, provides: “Unless another date is specifically fixed by law, the lien shall arise at the time the assessment list was received by the collector •ft ¥ ‡ ^

Section 3672, I.R.C., 26 U.S.C.A. Int.Rev. Code, § 3672, however, specifies: “Such lien shall not be valid as against any mortgagee, pledgee, purchaser, or judgment creditor until notice thereof has been filed by the collector — (1) In accordance with the law of the State * * * in which the property subject to the lien is situated * * * (2) In the office of the clerk of the United States district court for the judicial district in which the property subject to the lien is situated * *

Hence, as against other liens not given a preference by statute, the lien of the United States on the funds collected by defendants Richards and Deuel arose “at the time the assessment list was received by the collector.” Such time was January 26, 1943, as to three of the claims and February 19, 1943, as to the fourth.

However, as against “a mortgagee, pledgee, purchaser, or judgment creditor” the liens were not valid until recorded in accordance with Section 3672 of the Internal Revenue Code. The notices specified by said section were not filed until the 8th day of February, 1943 in one instance, and the 15th day of March, 1943, in the other.

Under said statutes, therefore, said Acme Color Print Company, Ltd., as a judgment creditor perfected its lien so that it became entitled to priority over that of the plaintiff on the 1st day of February, 1943.

California Employment Stabilization Commission did not perfect its lien until after the judgment was recovered by the Record Publishing Company, to-wit: on or about the 16th day of February, 1943. It gave notice “to withhold”, but did not recover any judgment. Consequently it cannot show itself entitled to any prior lien as a judgment creditor.

The above-quoted sections of the Internal Revenue Code were applied in MacKenzie v. United States, 9 Cir., 109 F.2d 540, wherein the legislative history was traced. A decision of the District Court of the United States for the Northern District of California was affirmed, and the necessity of a judgment in order to effectuate priority over a Federal tax lien was stressed. The Court pointed out that prior to 1913 no provision for priority on the part of third persons was made; that in said year Congress added the provision that the tax lien shall not be valid against any mortgagee, purchaser, or judgment creditor until recordation of the notice prescribed, and said (page 542 of 109 F.2d) : “Congress at this time undoubtedly recognized that under the statute as it existed prior to 1913 no third person was protected under any circumstances, from an unrecorded federal tax lien. By the 1913 amendment it intended to extend protection, not to all third parties, but to the three classes of third parties designated therein, namely, mortgagees, purchasers, and judgment creditors. We conclude that in order to be protected, the claimant must show that he is within one of those three classes.”

Defendant, Acme Color Print Company, Ltd., did show at the trial hereof that it is within one of those three classes, to-wit: judgment creditor. It thereby became entitled to the first payment from the monies now impounded.

Defendant, California Employment Stabilization Commission, was unable to show that it was within any one of those classes.

Section 2897 of the California Civil Code reads: “Other things being equal, different liens upon the same property have priority according to the time of their creation.”

In Mortgage Securities v. Pfaffmann, 177 Cal. 109, 169 P. 1033, L.R.A.1913D, 118, the Supreme Court of California took the view that said section governs unless the statute prescribed otherwise, and that the question of priority is wholly controlled by statutory law. It said (177 Cal. 112, 169 P. 1034, L.R.A.1913D, 118) : “The general rule touching liens is that preference goes with priority.”

In Paul v. United States, 6 Cir., 127 F.2d 64, the Court approved the reasoning in United States v. Greenville, 4 Cir., 118 F.2d 963, which was a suit to foreclose a lien for unpaid income taxes upon real estate upon which there were also liens for real estate taxes due the city, county and state, which were by state law made paramount to all other charges. The later opinion contains these expressive sentences (page 66 of 127 F.2d): “But it was held that since such liens were acquired subsequent to the acquisition of the lien of the United States, the latter was entitled to priority in payment. Such is our conclusion in the instant case.”

It is accordingly held that the liens on the funds heretofore received by the County Clerk of the County of Butte, State of California, from Richards and Deuel and held in trust by the Treasurer of said county be satisfied in the following order— First: Acme Color Print Company, Ltd.; Second: United States of America; Third: California Employment Stabilization Commission.

It is ordered that, in view of the nature of this proceeding and the good faith of all parties, none recover costs.

Counsel for Acme Color Print Company, Ltd., will prepare findings and judgment in accordance with this opinion.


source: Caselaw Access Project

author: SMITH, District Judge.

license: Public Domain

text:
    BRYANT ELECTRIC CO. v. INDUSTRIAL ELECTRONICS CORPORATION.
    Civil Action No. 4142.
    District Court, D. New Jersey.
    March 13, 1945.
    Cooper, Kerr & Dunham, of New York City (Thomas J. Byrne, of New York City, of counsel), for plaintiff.
    Darby & Darby, of New York City (Samuel E. Darby, Jr., of New York City, of counsel), for defendant.
   SMITH, District Judge.

The plaintiff, Bryant Electric Company, a wholly owned subsidiary of Westinghouse Electric & Manufacturing Company, brought suit in this court against the defendant, Industrial Electronics Corporation, for the infringement of Patent No. 2,355,476, of which the said plaintiff is allegedly the owner. Thereafter, one Maxwell M. Bilofsky, president of the said defendant, brought suit in the United States District Court for the Southern District of New York against the said plaintiff and the Westinghouse Electric Supply Company for the infringement of Patent No. 2,341,520, of which the said Bilofsky is allegedly the owner. The former suit was filed on November 6, 1944, and the latter suit was filed on November 24, 1944.

The present action is before the Court at this time on the motion of the plaintiff to restrain “any further proceedings in (the) action brought by Maxwell M. Bilofsky * * * against Westinghouse Electric Supply Company” and the plaintiff. This motion must be denied.

It is well established that in all cases of concurrent jurisdiction, the court first acquiring jurisdiction of a controversy should retain it until there is a final adjudication, and, in order to preserve that jurisdiction and prevent vexatious litigation, should enjoin the parties from further proceedings in another forum. Crosley Corporation v. Hazeltine Corporation, 3 Cir., 122 F.2d 925, certiorari denied 315 U.S. 813, 62 S.Ct. 913, 86 L.Ed. 1224; Triangle Conduit & Cable Co. v. National Electric Products Corporation, 3 Cir., 125 F.2d 1008, certiorari denied 316 U.S. 676, 62 S.Ct. 1046, 86 L.Ed. 1750; Crosley Corporation v. Westinghouse Elec. & Mfg. Co., 3 Cir., 130 F.2d 474, certiorari denied 317 U.S. 681, 63 S.Ct. 202, 87 L.Ed. 546. It is equally well established, however, that the duty to enjoin further proceedings arises “only if the controversy in each court involves the same issues and the same parties.” Crosley Corporation v. Hazeltine Corporation, supra; Triangle Conduit & Cable Co. v. National Electric Products Corporation, 3 Cir., 138 F.2d 46, certiorari denied 320 U.S. 784, 64 S.Ct. 191, 88 L.Ed. 471; Cresta Blanca Wine Co. v. Eastern Wine Corporation, 2 Cir., 143 F.2d 1012. It is obvious in the instant case, despite extensive arguments to the contrary, that the issues and the parties in each of the suits in question are not the same.

The said Maxwell M. Bilofsky, the plaintiff in the other suit, is not a party to the present suit and is, therefore, not subject to the jurisdiction of this court. The present motion must, therefore, be denied for this reason, if for no other.

The defendant shall prepare and submit, on notice to the plaintiff, a proper order.


author: MOSCOWITZ, District Judge.

text:
    UNITED STATES v. LOMAS.
    District Court, S. D. New York.
    March 8, 1945.
    John F. X. McGohey, U. S. Atty., for Southern District of New York, of New York City (Irving Tick, Asst. U. S. Atty., of New York City, of counsel), for United States.
    Banton & Pécora, of New York City, for defendant.
   MOSCOWITZ, District Judge.

The defendant has applied for an order dismissing and setting aside the information filed against him on the ground that the o ffense charged therein is an infamous crime, which, under the Fifth Amendment to the Constitution of the United States, can be prosecuted only by presentment or indictment of the Grand Jury.

The information contains twenty counts. Each of ten counts charges the defendant with a violation of Section 4 of Public Law 421, 77th Cong., 56 Stat. 23, known as the Emergency Price Control Act of 1942, Title 50 U.S.C.A.Appendix, § 901 et seq., and the rules, regulations and orders duly adopted and issued thereunder, in that he is alleged to have sold bed-springs without first having submitted any report to the Office of Price Administration applying for specific authorization of a maximum price and without having first obtained an authorization from the Price Administrator of a maximum price for that bed-spring, all of which is required by the said statute, rules, regulations and orders. The other ten counts charge violations of the same statute and of Maximum Price Regulation No. 188 in that the said sales enumerated in the first ten counts were at prices in excess of those set by the Office of Price Administration for that commodity.

In support of his contention that he is being deprived of constitutional rights, defendant advances two arguments, both without merit and clearly controverted ,by substantial authority.

Section 205(b) of the Emergency Price Control Act, -50 U.S.C.A.Appendix, § 925(b), provides that: “Any person who willfully violates any provision of section 4 of this Act * * * shall, upon conviction thereof, be subject to a fine of not more than $5,000, or to imprisonment * * * for not more than one year * * * or to both such fine and imprisonment * * Thus the maximum imprisonment for a violation of the Act is limited to a period of one year. Title 18 U.S.C.A. § 541 provides that: “All offenses which may be punished by death or imprisonment for a term exceeding one year shall be deemed felonies. All other offenses shall be deemed misdemeanors.” It thus follows that the violation of Section 4 of the Emergency Price Control Act here involved is a misdemeanor.

Defendant contends that the aggregate prison sentence which might be imposed upon him under this information exceeds one year and that the offense thereby becomes an infamous crime. That defendant is charged with a misdemeanor only and that such misdemeanor may be prosecuted by information is well settled. The number of counts in the indictment is immaterial. Taylor v. United States, 9 Cir., 1944, 142 F.2d 808, 816, certiorari denied 65 S.Ct. 56, citing Duke v. United States, 301 U.S. 492, 57 S.Ct. 835, 81 L.Ed. 1243; Blanc v. United States, 9 Cir., 258 F. 921; Catlette v. United States, 4 Cir., 132 F.2d 902; Thorm et al. v. United States, 3 Cir., 59 F.2d 419, certiorari denied 287 U.S. 624, 53 S.Ct. 78, 77 L.Ed. 541; Falconi et al. v. United States, 6 Cir., 280 F. 766; Hunter v. United States, 4 Cir., 272 F. 235, certiorari denied, 257 U.S. 633, 42 S.Ct. 47, 66 L.Ed. 407.

Defendant has cited to the Court 18 U.S.C.A. § 753f as it was enacted by the Act of May 14, 1930, at which time it provided that the Court could, upon conviction of a defendant, direct the “type of institution” in which the term of imprisonment was to be served. Defendant argues that since the Court might, under authority of this statute, designate a penitentiary as the place of commitment and that an inmate of a penitentiary may be assigned to hard labor, the possibility of this punishment makes the crime for which it might be imposed infamous and within the protection of the Fifth Amendment. The defendant failed to note and cite to the Court the 1941 amendment to § 753f, which, among other changes, adds the clause “Provided, That any sentence of imprisonment for an offense punishable by imprisonment for a term of one year or less shall not be served in a penitentiary except with the defendant’s consent.” Thus there is no possibility that the defendant here may be sentenced to hard labor unless he expressly consents thereto.


author: PER CURIAM.

text:
    ADAM v. UNITED STATES.
    No. 44230.
    Court of Claims.
    May 7, 1945.

      Fred B. Rhodes, of Washington, D. C, for plaintiff.
    S. R. Gamer, of Washington, D. C., and Francis M. Shea, Asst. Atty. Gen., for defendant.
    Before WHALEY, Chief Justice, and LITTLETON, WHITAKER, JONES, and MADDEN, Judges.
   PER CURIAM.

The court has jurisdiction of the claim. Kawneer Company et al. v. United States, 100 Ct.Cl. 523.

The proof shows that plaintiff incurred increased labor costs of $938.01 as a result of the enactment of the National Industrial Recovery Act, but the evidence fails to show what amount of increased costs, if any, were incurred for material and overhead as a result of the enactment of that act.

Defendant says that plaintiff’s compliance with the National Industrial Act Code (finding 5) was so incomplete that it would not be fair and equitable to allow it reimbursement under the act of June 25, 1938 for the increased wages of $938.01 paid from February 1934, when plaintiff subscribed to the Code and increased its hourly wage rates.

The history and purpose of the act of June 25, 1938 show that the reason or cause for the increased cost, rather than full or substantial compliance with a Code, is the basis for reimbursement set forth in that act, which provides for entry of judgment for “increased costs incurred as a result of the enactment of the National Industrial Recovery Act.” McCloskey & Co. v. United States, 98 Ct.Cl. 90, 106-134. In Consumers Paper Co. v. United States, 94 Ct.Cl. 713, 720, relied on by defendant, the increased wages claimed were not allowed for the period August 25, 1933 to April 6, 1934, because plaintiff had not satisfactorily proven that such increase resulted from the enactment of the National Industrial Recovery Act. Here, however, the proof satisfactorily shows that the increased wages paid in the amount of $938.-01 resulted from the enactment of the act of June 16, 1933, and the Code promulgated thereunder. Judgment is therefore entered in favor of plaintiff for this amount. It is so ordered.


author: MADDEN, Judge. WHITAKER, Judge

text:
    KENT v. UNITED STATES.
    No. 46037.
    Court of Claims.
    May 7, 1945.

      James O. Wynn, of New York City (Robert N. Montgomery and J. Marvin Haynes, both of Washington, D. C., on the brief), for plaintiff.
    Elizabeth B. Davis, of Washington, D. C., and Samuel O. Clark, Jr., Asst. Atty. Gen. (J. Louis Monarch and Fred K. Dyar, both of Washington, D. C., on the brief), for defendant.
    Before WHALEY, Chief Justice, and LITTLETON, WHITAKER, JONES, and MADDEN, Judges.
   MADDEN, Judge.

Delivered the opinion of the court:

The plaintiff claims that he was required to pay $113,938.02 more than he owed for income taxes and interest thereon for the years 1936 and 1937. The Commissioner of Internal Revenue assessed to and collected from the plaintiff taxes on the income of three trusts which the plaintiff had set up on May 20, 1932. The plaintiff was made a trustee of each of the trusts, and a trust company, a different one for each trust, was named as the other trustee. Since the trusts were similar in their provisions, except that each named a different child of the plaintiff and a different corporate trustee, a description of one of the trusts will bring out the tax question presented by each of them. We therefore describe the Elizabeth Kent Van Alen Trust.

By the trust deed the plaintiff transferred 28,762 shares of stock of the At-water Kent Manufacturing Company to be held in trust until the death of the survivor of the grantor and his wife and his daughter Elizabeth Kent Van Alen. Out of the net income the trustees were to pay the daughter during her life the yearly sums named in an .annexed schedule, which sums began at zero for 1932 and increased $5,000 each year to $75,000 for the year 1946 at which amount they were to remain from that time on. After the death of the daughter they were to pay $10,000 a year for the maintenance and education of, during minority, and thereafter to, each of the daughter’s children for life, provided that the total of these payments to the daughter’s children in any year should not exceed one-half the net income of the trust for that year. After making the directed payments to the daughter or her children the trustees were, during the life of the grantor, to retain any remaining income of the trust for two years after its receipt, and then disburse the retained amounts on the June 30th or the December 31st which came first after the end of the two-year period of retention of any income (1) not to exceed $5,000 to the daughter or her children as needed to bring the payments to them for the preceding calendar year up to the maximum amounts stated for them for that year; (2) the balance to the plaintiff, if living.

The Commissioner of Internal Revenue, in assessing the disputed tax, and the Government, in this suit, urge that Section 167(a) (1) of the Revenue Act of 1936, 26 U.S.C.A.Int.Rev.Code, § 167(a) (1) made the retained income taxable to the plaintiff. It provides:

“Sec. 167. Income for Benefit of Grant- or

“(a) Where any part of the income of a trust—

“(1) is, or in the discretion of the grant- or or of any person not having a substantial adverse interest in the disposition of such part of the income may be, held or accumulated for future distribution to the grantor;

* * * * *

then such part of the income of the trust shall be included in computing the net income of the grantor.”

The statute seems to fit the provision in the trust deed for the retention of the income and its payment to the plaintiff. The plaintiff urges, however, that it was uncertain whether retained income was being “held or accumulated for future distribution to the grantor” since, under the trust deed, it would not be distributed to him unless he was living at the end of the two year period of retention, and some or possibly all of it might not be distributed to him even if he was alive at the, end of the period, since it might have to be used, to the extent of possibly $10,000 in any year, to make up a deficit in the share of the daughter or her children for the preceding year.

These are, without doubt, substantial uncertainties. They present the question whether Section 167(a)(1) is applicable, in the kind of situation here involved, only when the terms of the trust make it certain that the income whose taxation is in question will be paid to the grantor.

Treasury Regulation 94, promulgated under the Revenue Act of 1936, provides:

“Art. 167-1 Trusts in the income of which the grantor retains an interest.

“(b) Test of taxability to the grantor.— The test of the sufficiency of the grantor’s retained interest in the trust income, resulting in the taxation of such income to the grantor, is whether the grantor has failed to divest himself, permanently and definitively, of every right which might, by any possibility, enable him to have the income, at some time, distributed to him, actually or constructively.”

This is strong language, and would carry much farther than it is necessary to go to decide this case. But we think that at least the direction in which it points is correct, as an interpretation of the intent of Section 167(a) (1). In the taxation of incomes, the rate bracket in which they are placed for tax purposes is vital to the revenues. For one to unburden himself of much of his income tax, by ridding himself, pro tanto, of his income, is permissible. But a device by which one seeks to rid himself of much of the tax, by placing the income producing property in several separate trusts, thereby attempting to diminish almost geometrically, because of the elimination of higher surtax rates, the aggregate of income taxes payable on the same amount of income, while at the same time the income finds its way into the same pocket as before, deserves the careful scrutiny of any intelligent taxing system. As the plaintiff set up his trusts, he was, except for the possible deduction of $10,000 noted above, to get the income by surviving the two year period of retention. If, by failing to survive, he did not get it, it was,by the terms of the trust, to go to his wife, or to other natural objects of his bounty, in substantially the manner, when the several concurrently created trusts are considered, that other property which he owned outright would normally go, upon his death. He had, then, as to the income of the property which he had owned completely- before he put it in trust, the substance of continued ownership of the income, which substance consisted of (a) the primary right and the probability that the income would actually come into his possession and (2) the arrangement whereby, upon his death, which would keep the income from coming into his possession, it would go largely if not entirely to persons who would, normally, take by inheritance or devise what he owned when he died.

We think that Section 167(a) (1) intended to tax such income to the grantor. If, as the plaintiff urges, we read into the statute words requiring that the income be held unconditionally for future distribution to the grantor, we open the way to the insertion, in trust conveyances, of conditions, of various degrees of likelihood of occurrence, which would have the intent, and frequently the effect, of leaving in a grantor the income which he had before he made the grant, while requiring his less ingenious contemporaries to make up the taxes which he escaped. We do not think that Congress intended that the statute should receive any such construction. If it had so intended, it must have known that the statute was hardly worth its space in the books.

The plaintiff cites Commissioner of Internal Revenue v. Dean, 10 Cir. 102 F.2d 699, in which it was held that trust income, paid to a beneficiary on' January 3 of a given year, was not taxable to him, but to the trust, because during the preceding year in which it was collected by the trustee, the beneficiary had no right to have it paid to him currently, and had no right that it should ever be paid to him unless he was alive on January 3, the end of the administrative year of the trust. That decision followed the express terms of the applicable statute. The beneficiary there was not the grantor, and the income was not, when received, currently payable to him. It was, therefore, taxable to the trust. The different treatment given by the statutes to the grantor as beneficiary of his own trust, and other persons as beneficiaries, is natural. The status quo, when the grantor sets out to create a trust, is that he owns the property, is entitled to its income, and is liable for taxes on that income. The trust device has been used for centuries not only for proper purposes, but, on occasion, to create appearances which do not correspond with the substance of ownership, in order to defeat some policy of the state. When, therefore, the grantor makes himself a beneficiary of a trust of his own creation, the law must be astute to see whether not only the appearance of things, but their substance, has been changed by the creation of the trust. It takes note of the status quo ante the trust, i. e., that the now beneficiary was then the complete owner. If, as in our case, it finds that after the creation of the trust he is still the one who has the primary right to enjoy the fruits of ownership, it may think it necessary to'disregard the change in legal title in order to prevent some policy of the law from being nullified by a legal device. For example, one can, in most states, create a spendthrift trust for one other than himself. But when one attempts to put his own property in trust so that he may have its income to enjoy, but not to pay his debts with, the law forbids, and allows the creditors to take the property in spite of the trust. We think that Section 167(a) (1) has something of the same purpose; that one should not, by means of a trust, succeed in ridding himself of his income taxes while keeping his income. We see nothing in this statutory purpose which should cause us to give the statute a narrow construction.

The Government has urged other reasons why the plaintiff should not recover on the merits of the case, but we do not find it necessary to discuss them. The Government also vigorously contends that because, as shown in the findings, the Circuit Court of Appeals for the Third Circuit in the case of Kent v. Rothensies, 3 Cir., 120 F.2d 476, held that the plaintiff was liable, under the same trusts here involved, for the retained income of the trusts for the years 1932, 1933, and 1934, the question is now res ad judicata and we are bound to decide the case for the Government, regardless of our views as to its merits. However, since we agree with the cited decision on its merits, we prefer not to consider the res adjudicata question. Cf. Engineers’ Club of Philadelphia v. United States, 42 F.Supp. 182, 95 Ct.Cl. 42, certiorari denied, 316 U.S. 700, 62 S.Ct. 1294, 86 L.Ed. 1769.

The petition will be dismissed. It is so ordered.

■ WHALEY, Chief Justice, and LITTLE-TON, Judge, concur.

WHITAKER, Judge

(concurring).

I concur both for the reasons stated and for the reason that in my opinion the decision of the 3rd Circuit Court of Appeals in Kent v. Rothensies, 3 Cir., 120 F.2d 476, is res adjudicata.

JONES, Judge, took no part in the decision of this case.

       After the payment of $10,000 to Elizabeth Kent Van Alen, pursuant to the terms of the trust referred to in finding 2.

       After the payment of $15,000 to Elizabeth Kent Van Alen, pursuant to the terms of the trust referred to in finding 2.

       After the payment of $14,092.13 to Elizabeth Kent Van Alen, pursuant to the terms of the trust referred to in finding 2.

       The plaintiff was taxed on only $14,117.55 after the payment of $14,093.38 to A. Atwater Kent, Jr., pursuant to the terms of the trust referred to in finding 4.

       After the payment of $28,186.46 to Elizabeth Kent Van Alen, pursuant to the terms of the trust referred to in finding 2.

       After the payment of $10,000 to Virginia Tucker Kent, pursuant to the terms of the trust referred to in finding 3.

       After the payment of $20,000 to A. Atwater Kent, Jr., pursuant to the terms of the trust referred to in finding 4.


text:
    CHASE v. UNITED STATES.
    No. 46133.
    Court of Claims.
    May 7, 1945.
    M. Anderson Thomas, of San Francisco, Cal., for plaintiff.
    Joseph H. Sheppard, of Washington, D. C., and Samuel O. Clark, Jr., Asst. Atty. Gen., for defendant.
    Before WHALEY, Chief Justice, and LITTLETON, WHITAKER; JONES, and MADDEN, Judges.
   PER CURIAM.

Plaintiff sues to recover $75,000 as a reward alleged to be due him under Treasury decision 4663 issued pursuant to authority of sec. 3463 Revised Statutes, 26 U.S. C.A. Int.Rev.Code, § 3792.

Plaintiff alleges in his petition that on November 28, 1935, he was promised orally by George Boyd, an internal revenue agent, and by Donald Rogers, a special agent of the Bureau of Internal Revenue at San Francisco, that if he would give information which would lead to the detection of anyone for violation of the Internal Revenue Laws by evading income taxes and to the recovery of income taxes, and penalties thereon, he would be rewarded therefor by the Commissioner of Internal Revenue, in accordance with Treasury decision 4663, in the amount of ten percent of the amount recovered; that, relying on such promise and offer of reward by said agents and by the Commissioner of Internal Revenue under such Treasury decision, plaintiff gave said agents some information and thereafter, for the greater part of a year immediately following said date, continuously devoted his time to securing and giving additional information, and gave information which, according to his best information and belief, led to the detection of Charles H. Strub of San Francisco for violation of the Internal Revenue laws by evading income taxes in the First and Second Collection Districts of the state, and to the recovery of income taxes and penalties thereon assessed and collected by the Bureau of Internal Revenue, which information was furnished by him to Internal Revenue Agent Boyd and Special Agent Rogers of the Bureau of Internal Revenue.

The petition further alleges that plaintiff does not know the exact amount of income taxes and penalties thereon assessed and collected from said Charles H. Strub, or when the taxes and penalties were paid, but is informed and believes that the sum was $750,000, or thereabouts, and that it was paid to the Bureau of Internal Revenue and into the Treasury of the United States during the period between January 1, 1939, and January 29, 1941; that application was made for an examination of papers in the Bureau of Internal Revenue to the Commissioner of Internal Revenue, but the Commissioner refused plaintiff’s request to inspect said papers, being records in the office of Internal Revenue showing the amount of income taxes and penalties collected from Charles H. Strub for 1935 and 1936, and a letter signed by a Mr. Brady in the month of December, 1936, instructing Internal Revenue Agent Boyd to work with Special Agent Rogers and investigate approximately thirty persons with regard to tax, and which letter referred to the “Jack Chase case.”

Plaintiff further states that on January 29, 1941, he made and filed with the Bureau of Internal Revenue his claim for reward for giving such information under Treasury decision 4663 for ten percent of the amount recovered, and that on May 31, 1941, the Commissioner of Internal Revenue disallowed the said claim in its entirety by a letter mailed to plaintiff.

The question presented by the facts alleged in the petition has been decided adversely jto the claim made by plaintiff in Gordon v. United States, 36 F.Supp. 639, 92 Ct.Cl. 499, 500, and Katzberg v. United States, 36 F.Supp. 1023, 93 Ct.Cl. 281, 282. Plaintiff’s allegation that Internal Revenue Agents Boyd and Rogers orally promised him that-if he would give information of the character described he would be rewarded by the Commissioner in accordance with T. D. 4663 in the amount of ten percent of the amount of tax and penalties recovered, cannot be treated as an agreement expressed or implied by the Commissioner to pay any definite sum. Katzberg v. United States, supra, 36 F.Supp. 1023, 93 Ct.Cl. at page 282. The agents could not, in the absence of express authority, - bind the Commissioner in the manner suggested, and since the only offer of the Commissioner was in T. D. 4663 which specifically stated that he would pay such reward “as he may deem necessary,” plaintiff is not entitled to recover upon the facts alleged. Montgomery Ward & Co. et al. v. United States, 94 Ct.Cl. 309, 310-313.

The demurrer is sustained and the petition is dismissed. It is so ordered.


author: MADDEN, Judge,

text:
    BURTON v. UNITED STATES.
    No. 45735.
    Court of Claims.
    May 7, 1945.

      Clarence F. Rothenbury, of Washington, D. C. (Hamel, Park & Saunders, of Washington, D. C., on the brief), for plaintiff.
    Elizabeth B. Davis, of Washington, D. C., and Samuel O. Clark, Jr., Asst. Atty. Gen. (Robert N. Anderson, and Fred K. Dyar, both of Washington, D. C., on the brief), for defendant.
    Before WHALEY, Chief Justice, and LITTLETON, WHITAKER, JONES, and MADDEN, Judges.
   MADDEN, Judge,

delivered the opinion of the court:

The plaintiff complains that he was required to pay a federal gift tax larger by $5,901.76 than the law required, on gifts made by him in 1936 in trust for his children and grandchildren. In that year he executed a declaration of trust, the pertinent provisions of which are quoted at length in finding 3. The question here litigated is whether the interests given to the plaintiff’s children and grandchildren by the trust instrument were, as the Government claims, future interests. The Internal Revenue Act of 1932, in Section 501, 26 U.S.C.A.Int.Rev.Acts, page 580, imposed a tax on gifts, whether in trust or otherwise, and in Section 502 provided how the tax should be computed. Section 504 provided:

“Sec. 504. Net Gifts

“(a) General Definition. The term net ‘gifts’ means the total amount of gifts made during the calendar year, less the deductions provided in section 505.

“(b) Gifts Less than $5,000. In the case of gifts (other than of future interests in property) made to any person by the donor during the calendar year, the first $5,000 of such gifts to such person shall not, for the purposes of subsection (a), be included in the total amount of gifts made during such year.”

Article 11, Treasury Department Regulations 79 (1936 Edition), relating to the exclusions under Section 504(b), supra, is as follows:

“Art. 11. Future interests in property.— No part of the value of a gift of a future interest may be excluded in determining the total amount of gifts made during the calendar year. ‘Future interests’ is a legal term, and includes reversions, remainders, and other interests or estates, whether vested or contingent, and whether or not supported by a particular interest or estate, which are limited to commence in use, possession, or enjoyment at some future date or time. * * * But a future interest or interests in such contractual obligations may be created by the limitations contained in a trust or other instrument of transfer employed in effecting a gift. For valuation of future interests, see subdivision (7) of article 19.”

There were five children and nine grandchildren alive at the time the gifts here in question were put into the trust. If the interests of the fourteen beneficiaries were not future interests, then the donor, the plaintiff, was entitled to take a deduction of $5,000 for each of them, or $70,000 in all, in computing the amount of his gifts in that year for gift-tax purposes. If the interests of the beneficiaries were future interests, only one deduction of $5,000, that on the gift to the trustees, could be taken. The plaintiff, pursuant to a deficiency notice from the Commissioner of Internal Revenue, paid a gift tax on the basis of only one deduction of $5,000, and sues here to recover the difference between that payment and what he would have paid if he had been allowed fourteen deductions of $5,000 each.

Paragraph 5 of the trust instrument, quoted in finding 3, named the plaintiff’s five children individually, but only designated the grandchildren as a group. It directed the trustee, subject to the power given in paragraph 7, to' provide for the welfare of the plaintiff’s wife out of income or principal, to “allocate” the net income of the trust, 50% to the five named children and 50% to the grandchildren-— “and as often and in such amounts as the trustees shall deem advisable disbursement thereof shall be made in the manner following: Fifty percent (50%) thereof shall be divided equally among grantor’s five children, if living, and fifty (50%) percent thereof shall be distributed equally among grantor’s grandchildren as a group.” The paragraph then provided that if at any time prior to the termination o-f the trust a child died, that child’s children should take the amounts which the child “would have received if living” but if the child died without issue such amounts should be paid to the grandchildren as a group. It made the same provision for the case of the death of a grandchild during the life of the trust. It provided that distribution of income or principal to grandchildren as a group should be made, not per stirpes, but share and share alike, and said — “if hereafter issue are born to any of grantor’s children such future born issue shall be entitled to participate in the same manner and to the same extent as if now living.”

Paragraph 6 provided that the trust could be terminated by the unanimous action of the trustees at any time after ten years, and should in any event terminate at the end of 21 years; and that at termination all remaining principal and income should be distributed among the children and grandchildren in the manner provided in paragraph 5 for the distribution of income. Paragraph 7, as we have said, gave the trustees power “if a condition shall hereafter arise which, in the opinion of the trustees, makes it necessary or desirable that provision be made for the maintenance or welfare of” the grantor’s wife, to use income or principal “to provide adequately” for her. Paragraph 8 was as follows:

“8. The respective interests of beneficiaries in the trust fund created hereby shall in no case vest in such beneficiaries until they respectively, shall become entitled to receive and demand, absolutely and forthwith, the income or principal of the said trust fund to which they, respectively, may be entitled hereunder, and such beneficiaries shall have no control whatsoever over, or interest in, said trust fund, except as herein provided; and they shall have no right or authority to assign or anticipate any income or share to which they may be entitled under the provisions of this agreement, and the interests of said beneficiaries and each of them, either in the principal or the income, shall not be liable in any manner or to any extent for the obligations or liabilities, voluntary or involuntary, of the said beneficiaries, or either of them, of whatsoever character.”

Paragraph 9 provided that whenever payments were to be made, except final distribution at the termination of the trust, to any minor beneficiary, they might be made, in the sole discretion of the trustees, to the minor, either of his parents, his guardian, persons with whom he resided, or to persons who had furnished services or property or maintenance or support to the minor. Paragraph 10 directed the trustees to render an annual account to each adult beneficiary. Paragraph 16 directed the trustees to keep proper accounts, and to allow them to be inspected by any adult beneficiary.

We think the gifts here involved were gifts of future interests. As to the corpus of the property given, we do not understand the plaintiff to' contend otherwise. Who would get the corpus at the termination of the trust was, and will be until that termination, uncertain. Those of the children, and of the grandchildren living at the creation of the trust, and of other grandchildren born since that time, who are alive at the time of the termination, will get the corpus. The gift is, as to each, contingent upon the existence of a state of affairs at a future time. It is a future interest, by any definition.

The gift of income was, at the time the property was put into the trust, likewise future and uncertain. The Government claims that, under the trust, the income could have been accumulated by the trustees until the termination of the trust. If so, its status would be just like that of the corpus. The plaintiff, on the other hand, urges that the direction in paragraph 5 of the trust instrument that the trustees should allocate the income, if and when received, one-half to the five children, and one-half to the grandchildren, gave the beneficiaries present interests in the income. But the trust instrument, after directing the allocation, continued “and as often and in such amounts as the trustees shall deem advisable disbursement thereof shall be made in the manner following: Fifty (50%) percent thereof shall be divided equally among grantor’s five children, if living, and fifty (50%) percent thereof shall be distributed equally among grantor’s grandchildren as a group.” The instrument then directed the substitution of issue of children or grandchildren who died, to. take “the amount or amounts which such deceased (child or grandchild) would have received if living.” Under this provision it would be difficult for a spouse or creditor or devisee of a deceased child or grandchild to get a part of the income, even if it had. been “allocated” to the deceased before his death, if it had not in fact been paid to him. Only by reading out of the instrument the express language providing for disbursements “as often and in such amounts as the trustees shall deem advisable” could we say that “allocation” by the trustees created an interest which was not uncertain as to when, if ever, any particular beneficiary would get possession of the subject of it. The language of paragraph 8 fortifies this view by saying that the interest of a beneficiary shall not “vest” until he “becomes entitled to receive and demand, absolutely and forthwith, the income or principal” in question. When the grantor used both the language of paragraph 5 giving discretion to the trustees as to the time and amounts of distribution, and the language of paragraph 8 just quoted, one must conclude that he meant that a presumptive beneficiary should have no right to demand or transfer his prospective share in the income until the trustees decided to make a disbursement. If not, his interest was uncertain as to when, if ever, he would get any of the income. It was a future interest.

The plaintiff urges that that grantor could not have meant what we think he said and meant because one of his daughters was thirty-eight years old at the time of the gift, and he cannot be supposed to have intended that she should get nothing out of the gift until, if the trust ran for the full term of twenty-one years, she was fifty-nine. But the grantor was one of the three trustees, and another was of the same name as, and was, probably, one of the grantor’s children, a beneficiary of the trust. The grantor may well have supposed that he could lodge discretion in such trustees without danger that they would, in fact, refuse to disburse the income with due consideration for the beneficiaries. We do not have the benefit of any construction of the trust instrument by the Utah courts. We are not told whether the trustees, of whom the plaintiff was one, did in fact distribute the income as soon as it was allocated, as the plaintiff here contends was their duty. Their method of allocation of the income during the years 1939-1943, and their return of it as income taxable to the trust, and not to the beneficiaries, as shown in finding 8, seems to show that their counsel did not think the beneficiaries had any right to demand disbursement of it.

Even if we are wrong in concluding that “allocation” of the income on the trustees’ ledger did not give0 the beneficiaries present interests in the income, we would still conclude that the gift of income, when made, was a gift of a future interest. When, on December 26, 1936, the plaintiff transferred the large amount of stock to the trustees, no one of the fourteen presumptive beneficiaries living at that time obtained any assured interest in the future income of - that stock. Each one had to live at least to the date of “allocation” to be entitled to a share. His interest, even to a share in one year’s income, was both future and uncertain. And if he survived the date of the first allocation, his interest in any further income later received would be both future and uncertain, as to each amount of income received by the trustees and allocated to the beneficiaries from time to time during the period of the trust. The grantor, by the language of paragraph 8 of the trust instrument, made that clear. The complexities of computation which were sought to be avoided by the statutory denial of exemption to gifts of future interests, Fondren v. Commissioner, 324 U.S. 18, 65 S.Ct. 499, would be present to a considerable degree.

We have not discussed the effect of the provision in paragraph 7 of the trust instrument directing the trustees to use principal and income of the trust, if necessary or desirable, to make provision for the grantor’s wife. Thinking, as we do, that the gifts in question were gifts of future interests, regardless of the effect of paragraph 7, we have not considered its effect, since whatever effect it might have would only tend to fortify the conclusion which we have reached independently of it.

The petition will be dismissed.

It is so ordered.

WHALEY, Chief Justice, and WHITAKER and LITTLETON, Judges, concur.

JONES, Judge, took no part in the decision of this case.

       month.


author: WHITAKER, Judge.

text:
    LEITMAN v. UNITED STATES.
    No. 45498.
    Court of Claims.
    May 7, 1945.

      William M. Aiken, of Washington, D. C. (Charles A. Horsky, of Washington, D. C., Joshua Sprayregen, of New York City, and Covington, Burling, Rublee, Acheson & Shorb, of Washington, D. C., on the brief), for plaintiff.
    John B. Miller, of Washington, D. C., and Francis M. Shea, Asst. Atty. Gen., for defendant.
    Before WHALEY, Chief Justice, and LITTLETON, WHITAKER, JONES, and MADDEN, Judges.
   WHITAKER, Judge.

This is a suit for the recovery of the difference in the price at which plaintiff offered in writing to furnish an amount of helmet linings and the price at which he agreed to furnish them in subsequent telegrams, sent before the time for opening the bids, but received thereafter.

The defendant, through the Commanding Officer, Rock Island Arsenal, Illinois, invited bids for helmet linings in blocks of 50,000 up to 400,000 and an additional block of 100,000 for any amount that might be ordered between 400,000 and 500,000. Bids were to be opened at 9:00 a. m. on July 25, 1940.

On July 23, 1940, plaintiff submitted a bid of $1,690 per thousand for linings on quantities up to 50,000, the price being progressively lowered for blocks of 50,000 down to $1,440 per thousand for quantities amounting to between 400,000 and 500,000. In making this bid plaintiff had figured that it would require 2% feet of leather for each helmet lining. But early in the morning of the day the bids were to be opened plaintiff’s representative made further calculations of the amount of leather necessary to be used, and having concluded that less than 2% feet per helmet would be required, he sent the Commanding Officer of the Rock Island Arsenal a telegram reducing all prices by $70.00 per thousand, and still later he sent another telegram reducing the prices by $100.00 per thousand.

The first telegram was sent at 9:19 a. m. Eastern Standard Time (8:19 a. m. Central Standard Time — Rock Island is on Central Time). The second telegram was sent at 9:31 a. m. Eastern Standard Time (8:31 a. m. Central. Standard Time).

The first one was received in the office of the Postal Telegraph Company at Rock Island, Illinois at 8:35 a. m. Central Standard Time, and the second one was received at its office at 8:55 a. m. Central Standard Time. However, they were not received at the Rock Island Arsenal until 10:40 a. m. Central Standard Time, an hour and forty minutes after the time set for the opening of the bids.

Plaintiff arrived at his office at about 12:00 o’clock on the morning of July 25, 1940, when he learned of the sending of the telegrams. Two or three hours later he inquired at the Postal Telegraph office as to the time the telegrams had been delivered. The following day the telegraph company informed him that they had been delivered at 10:40 a. m. on July 25. On that day or the following day Leitman called the Rock Island Arsenal by long distance telephone and stated to Joseph Curley, the Chief of Procurement at the Arsenal, that he thought the telegrams had been sent in error, but that he assumed they would not be considered since they had arrived after the time for the opening of the bids. Curley told him that they probably would be considered since it appeared on the face of the bids that plaintiff was the low bidder, but that all papers had been sent to Washington for final determination of the low bidder and the question of whether or not the telegrams would be considered.

Plaintiff did not withdraw his telegraphic offer nor demand that they not be considered. However, he did send to Washington Arthur A. Gardner, his contact man with Government agencies. Gardner conferred with General Drewry and Frank J. Jervey, head Ordnance Engineer, and together they made computations to determine the low bidder. At this time Gardner made no demand that the telegrams be disregarded but after he had been advised that plaintiff’s written bid was the lowest, he then said that the telegrams were based upon an erroneous calculation and that they had arrived after the time for the opening of the bids. He did not, however, even at this time, demand that they be disregarded. Instead, upon being advised by defendant’s representatives that the two-day limit for acceptance of plaintiff’s bid had expired and that, therefore, it was possible to reject all bids and readvertise, Gardner stated that plaintiff would prefer to run the risk of loss rather than to have a readvertisement. Gardner thereupon handed defendant’s representative a letter signed by plaintiff, dated July 29, 1940, extending the period for acceptance until August 5, 1940.

Plaintiff’s bid was accepted by telegram on July 31, 1940, and 428,045 helmet linings were ordered. The price to be paid was not stated in defendant's telegram because the Department in Washington had under consideration the question of whether or not plaintiff’s telegrams should be considered.

On August 10, 1940, plaintiff received a formal written contract for 428,045 helmet linings at the price of $1,340.00 per thousand, which was the price stated in the last telegram. At no time prior thereto had plaintiff ever demanded that the telegrams be disregarded, although he had had several conferences with Curley, the Chief of Procurement at Rock Island, and, through his representative, with the Department in Washington. However, upon receipt of this contract plaintiff protested that his telegrams were based upon an error, that they had been received too late, and that the contract should be based upon the original bid. He stated, however, that he had placed his orders for materials and was proceeding to carry out the contract, but requested that a new contract based upon the prices stated in the original bid be sent to him for signature.

Defendant refused to modify the price and refused to pay plaintiff for deliveries until the original draft of the contract had been signed and vouchers based upon the prices stated therein should be submitted. Since plaintiff was unable to borrow the money to finance the carrying out of the contract, and in order to secure payment from the defendant for deliveries made, plaintiff on January 20, 1941, executed the contract upon the basis of the prices stated in the last telegram. He did this, however, under protest, claiming that he was entitled to a contract upon the basis of the prices stated in his original bid. Subsequent to the execution of the contract plaintiff submitted vouchers upon the basis of the prices stated therein, but all of these were sub-, mitted under protest.

Had there been no advertisement for bids in this case, but had the defendant asked only the plaintiff to submit an offer to furnish it with these helmet linings, and had plaintiff first submitted an offer in writing and then modified it by the two telegrams which he sent, there would be no doubt that plaintiff would have been obligated to furnish the linings at the price stated in the last telegram.

Plaintiff never withdrew the telegraphic modification of his bid. He allowed the offer to stand, without protest, until it had been determined that he was the low bidder anyway. Then, and only then, did his representative, whom he had sent to Washington, state that the offer made in the telegrams had been based upon a miscalculation. We have no doubt that plaintiff wanted the telegrams to be considered if this was necessary in order to make him the low bidder. Only when he learned that he was the low bidder did he intimate that he would like to have the telegrams disregarded, and, even then, when the suggestion was made that there might be a re-advertisement, he did not demand that the telegrams be disregarded, but said he would’ prefer to run the risk of loss. His offer to furnish the helmet linings at the prices stated in the telegrams remained in effect up until the time that he was notified that he was the successful bidder and that the contract would be awarded to him. When he received this notification he still did not demand that the telegrams be disregarded, although he had been notified that they might be taken into consideration in determining the price to be paid. The offer remained in effect until accepted.

If plaintiff is to be relieved from the offer made in the telegrams, it is only because of the provision of a War Department regulation, which was included in the instructions to bidders. This reads as follows :

“Unless specifically authorized, telegraphic bids will not be considered, but modifications by telegraph of bids already submitted will be considered if received prior to the hour set for opening.”

Manifestly, the reason for the condition placed upon the consideration of a telegraphic modification was to put all bidders on an equal basis and to prevent any bidder from obtaining an advantage over others by permitting him to modify his bid after securing information as to other bids submitted. United States v. Brookridge Farm, 10 Cir., 111 F.2d 461, 463; 21 Op.A.G. 547-548. Therefore, where the bid submitted in time is the low bid, the reason for the rule against considering telegraphic modifications of it after the time for the opening of the bids does not exist, and in such case the rule should not be applied.

The limitation on the consideration of telegraphic modifications was not for plaintiff’s benefit but to prevent plaintiff from obtaining an unfair advantage. If defendant, therefore, elects to consider a telegraphic modification received after the time for the opening of the bids, plaintiff cannot complain, nor can the other bidders, because plaintiff was already the low bidder.

There can be no possible reason why a low bidder cannot voluntarily decrease the amount of his bid. Plaintiff did decrease the amount of his bid before he had any information as to other bids submitted, and even after he learned that he was the low bidder he did not withdraw his offer. Even when he was advised that the time for acceptance of his offer had expired, and when, therefore, he could have withdrawn his bid with impunity, he did not do so, but extended the time for acceptance so as to make it a binding offer.

Plaintiff’s defense that there was a mistake in his calculations, upon the basis of which the telegrams were sent, cannot be sustained. No showing whatsoever was made to support his statement that there had been a miscalculation.

Plaintiff’s offer to furnish the linings at the prices stated in his last telegram remained in full force and effect until accepted by the defendant; plaintiff, therefore, was bound to furnish the linings at the price stated therein. He has been paid this price and, therefore, is not entitled to recover. His petition will be dismissed. It is so ordered.

WHALEY, Chief Justice, and MADDEN and LITTLETON, Judges, concur.

JONES, Judge, took no part in the decision of this case.


author: WHALEY, Chief Justice.

text:
    NORCUTT v. UNITED STATES.
    No. 46293.
    Court of Claims.
    May 7, 1945.

      Arthur C. Norcutt, per se.
    Horace G. Marshall, of Chicago, 111., and Francis M. Shea, Asst. Atty. Gen., for defendant.
    Before WHALEY, Chief Justice, and LITTLETON, WHITAKER, JONES, and MADDEN, Judges.
   WHALEY, Chief Justice.

The plaintiff brings this suit as the father of Roger T. Norcutt, deceased, and as his legal representative, although there is no allegation that papers have been taken out as administrator of the estate of the deceased.

It appears that while Robert T. Norcutt was an enrollee of the Civilian Conservation Corps, he became a patient at the Station Hospital, Fort Robinson, Nebraska. It is alleged that he met his death on July 17, 1937, as the result of improper medical care and treatment at the hands of Richard L. Ivins, M. D., a contract physician in the employ of the Army and stationed at Fort Robinson, Nebraska. There is an admission in the petition that the deceased was afflicted with mastoiditis, prior to his enlistment in the Civilian Conservation Corps, and that when he entered the hospital his illness had been diagnosed as “Mastoiditis, chronic, suppurative, moderately severe, right, cause undetermined.”

The petition alleges further that, although the deceased was so suffering at the time of his death, the immediate causes of his death were improper medical attention, and an unskilled, illegal and experimental operation performed upon the brain of the deceased by Dr. R. L. Ivins, a contract physician. There are further allegations of improper and negligent care of the body in preparation for burial and shipment, and also of mutilation of the body, failure to embalm it at Crawford, and the necessity of the family having the body properly embalmed after shipment to Ogallala, Nebraska.

As a result of the alleged wrongful, improper, tortious acts, plaintiff seeks damages for “mortification, mental shock, and chagrin,” together with the loss of the earnings of the son, extra funeral expenses, expenses of preparing suit, subsequent expenses, and the right of support of plaintiff during his old age.

Plaintiff filed a claim for compensation with the United States Employees’ Compensation Commission in April 1938, which was denied because the evidence failed to show that the death was occasioned by traumatic injury resulting from an accident.

A bill was introduced and passed by the Congress for payment of the claim, but this bill never became a law because of the veto by the President on December 18, 1943, on the ground that the law did not permit payment in the case of injury in the Civilian Conservation Corpá unless the disability resulted from a traumatic injury.

The petition alleges a case of tort on the part of the doctor performing the operation. It is admitted by the plaintiff in his brief submitted to the court that the conduct which he alleges is a tort and an intentionally malicious act for which criminal action should be brought.

No matter how vicious or malicious a tort, this court is without jurisdiction in cases sounding in tort. Judicial Code Sec. 145, 28 U.S.C.A. § 250; Persful v. United States, 102 Ct.Cl. 232.

Plaintiff’s petition, not stating a cause of action within the jurisdiction of the court, must be dismissed.

There is a second reason which bars recovery. Plaintiff alleges that his son died on July 17, 1937, and the cause of action, if any, accrued then. The petition was not filed until January 23, 1945, which is more than six years thereafter. The statute of limitations permits a suit to be brought within six years after the cause of action has accrued. Judicial Code, Sec. 156, 28 U.S.C.A. § 262.

The petition having been filed more than six years from the time the cause of action accrued, the Court has no jurisdiction under the statute.

Defendant’s demurrer is sustained and plaintiff’s petition is dismissed. It is so ordered.

MADDEN, WHITAKER, and LITTLETON, Judges, concur.

JONES, Judge, took no part in the decision of this case.


text:
    ZAGURSKI v UNITED STATES.
    No. 46205.
    Court of Claims.
    May 7, 1945.
    William T. Hannan, of Washington, D. C. (Louis J. Roma, Jr., of Philadelphia, Pa., on the brief), for plaintiff.
    Clay R. Apple, of Washington, D. C., and Francis M. Shea, Asst. Atty. Gen., for defendant.
    Before WHALEY, Chief Justice, and LITTLETON, WHITAKER, JONES, and MADDEN, Judges.
   WHITAKER, Judge.

This case is before us on defendant’s motion to dismiss the petition.

Plaintiff, alleging that he was unlawfully discharged from his position as an electric craneman in the Philadelphia Navy Yard, sues for the salary of which he alleges he has been unlawfully deprived.

He alleges that he was discharged on March 5, 1941, because, as stated in the letter to him enclosing his discharge card, which is attached as an exhibit to his petition, “you definitely knew that you were born in a foreign country and intentionally and wilfully falsified concerning your name and place of birth and citizenship when you filed your application, and, in addition, that you gave the same false information when you joined the U. S. Army in 1919.” He alleges that he remained unemployed until June 5, 1941, when he was employed by the Pennsylvania Forge Company, and that he worked with this company, at wages less than he had been receiving with defendant, until May 4, 1943, when he was reemployed by defendant at the Philadelphia Navy Yard in his former capacity as an electric craneman. He sues for the loss of wages in the interim.

The defendant defends on several grounds among which is that plaintiff had been guilty of laches in asserting his claim.

The petition shows that after receipt of the letter of March 5, 1941, enclosing his discharge card, plaintiff complained thereof to the Secretary of the Navy, who referred him to the Civil Service Commission. He does not allege that he got in contact with that commission, but it is inferable that he did not, since he alleges that commission had no jurisdiction of the matter. The next action which he alleges he took was on May 29, 1944, more than three years later, when he again wrote the Secretary of the Navy requesting a hearing, and was again referred to the Civil Service Commission. His suit was filed on August 11, 1944.

Thus, for a period of over three years and a half, plaintiff took no action to secure the rights of which he claims he has been deprived. It, therefore, must be held, under the authority of Arant v. Lane, 249 U.S. 367, 39 S.Ct. 293, 63 L.Ed. 650; Norris v. United States, 55 Ct.Cl. 208; 257 U.S. 77, 42 S.Ct. 9, 66 L.Ed. 136; and Nicholas v. United States, 257 U.S. 71, 42 S.Ct. 7, 66 L.Ed. 133, that plaintiff has been guilty of laches and is not entitled to recover.

In the Arant case plaintiff had protested against his removal and refused to relinquish his position or to give up the property in his charge until he was forcibly ejected and his papers seized. He waited for about 20 months to take action in court to secure his rights. The Supreme Court said [249 U.S. 367, 39 S.Ct. 294]:

“When a public official is unlawfully removed from office, whether from disregard of the law by his superior or from mistake as to the facts of his case, obvious considerations of public policy make it of first importance that he should promptly take the action requisite to effectively assert his rights, to the end that if his contention be justified the Government service may be disturbed as little as possible and that two salaries shall not be paid for a single service.

■ “Under circumstances which rendered his return to the service impossible, except under the order of a court, the relator did nothing to effectively assert his claim for reinstatement to office for almost two years. Such a long delay must necessarily result in changes in the branch of the service to which he was attached and in such an accumulation of unearned salary that, when unexplained, the manifest inequity which would result from reinstating him renders, the application of the doctrine of laches .to his case peculiarly appropriate in the interests of justice and sound public policy.”

In Norris v. United States, 257 U.S. 77, 42 S.Ct. 9, 66 L.Ed. 136, plaintiff delayed for a period of 11 months to bring suit for the salary of which he had been deprived. This delay, the court held, prevented him from recovering.

In Nicholas v. United States, 257 U.S. 71, 42 S.Ct. 7, 66 L.Ed. 133, plaintiff delayed three years to bring suit for the wages to which he alleged he was entitled, and the court held that he was barred by laches, on the principle set out in the quotation from the Arant case.

It is unnecessary to discuss the other defenses raised in defendant’s motion to dismiss, since we are of opinion that plaintiff is clearly barred from recovery by his long delay in suing on his claim. Defendant’s motion is sustained and plaintiff’s petition is dismissed. It is so ordered.

WHALEY, Chief Justice, and MADDEN and LITTLETON, Judges, concur.

JONES, Judge, took no part in the decision of this case.


author: LITTLETON, Judge.

text:
    NEWPORT INDUSTRIES, Inc., v. UNITED STATES.
    No. 45527.
    Court of Claims.
    May 7, 1945.

      John P. Lipscomb, Jr., of Washington, D. C. (Ellsworth A. Alvord and Floyd F. Toomey, both of Washington, D. C., on the brief), for plaintiff.
    John W. Hussey, of Washington, D. C., and Samuel O. Clark, Jr., Asst. Atty. Gen. (Robert N. Anderson and Fred K. Dyar, both of Washington, D. C., on the brief), for defendant.

      Before WHALEY, Chief Justice, and LITTLETON, WHITAKER, JONES, and MADDEN, Judges.
   LITTLETON, Judge.

On the facts we are of opinion that the depreciation schedules prepared by-plaintiff did not constitute an informal claim for refund filed within three years from the time the return was filed on March 15, 1937, or within two years from the last payment on the 1936 tax on December 17, 1937. Moreover, if it could be assumed that the depreciation schedules prepared in October 1939 for the revenue agent for use in connection with his audit amounted to an informal claim for refund, such claim had been rejected as insufficient by the Commissioner in October 1940 when he refused to make a refund for 1936, and plaintiff had been notified on December 10, 1940, by the agent in charge that any refund for 1936 was barred before plaintiff undertook by a formal claim of January 8, 1941, to amend or perfect this alleged informal claim. A refund claim, informal or formal, cannot be amended or perfected as a matter of right after it has been denied or rejected, and after the period of limitation has expired. Sugar Land Railway Company v. United States, 48 F.2d 973, 71 Ct.Cl. 628, 635; Cuban-American Sugar Company v. United States, 27 F.Supp. 307, 89 Ct.Cl. 215, 225. Cf. B. Altman & Co. v. United States, 40 F.2d 781, 69 Ct.Cl. 721.

We cannot say that the preparation of the depreciation schedules requested by the agent was considered or intended by plaintiff at the time as a claim for refund. The evidence indicates that it did not regard these schedules as an informal claim for refund until after the statute of limitations had run. At that time, October 1939, plaintiff did not know whether an overassessment or a deficiency would result for 1936 from the audit and the depreciation schedules furnished. If plaintiff had believed at that time that it had made an overpayment on the basis of the additional depreciation shown on the schedules it could and probably would have asserted its right to a refund, either in such schedules or separately. Subsequently in February 1940 plaintiff signed a waiver of the statute of limitation on assessment of any deficiency that might be found to be due, and again did not assert an overpayment. • Also, in February, plaintiff instead of asserting that the tax had been overpaid added $5,000 to its reserve for taxes in anticipation of an additional assessment for 1936. Since the object and purpose of a claim for refund are to put the Commissioner on notice that it is believed by the taxpayer that the tax has been overpaid, so as to enable him to correct errors made by the taxpayer in the return, or by him in his audit thereof, a document relied upon to constitute an informal claim for refund must at least contain a statement that is sufficient to be regarded as an assertion by the taxpayer that he believes the tax has been overpaid. We think the documents relied upon did not meet this test.

The facts show that the first intimation plaintiff had that its tax for 1936 had probably been overpaid was on June 14, 1940, when the revenue agent requested it to sign Form 873 accepting the proposed overassessments as shown in his audit report for 1936 and 1937 (finding 6). At that time the statute of limitation on a refund of three years from the filing of the return and two years from the date of the last payment had run.

We do not think in the circumstances that the depreciation schedules prepared in October 1939 amounted to an informal claim for refund. Plaintiff is therefore not entitled to recover, and the petition is dismissed. It is so ordered.

WHALEY, Chief Justice, and MADDEN and WHITAKER, Judges, concur.

JONES, Judge, took no part in the decision of this case.


author: LEDERLE, District Judge.

text:
    LONGYEAR REALTY CORPORATION v. KAVANAGH, Collector of Internal Revenue.
    No. 3833.
    District Court, E. D. Michigan, S. D.
    May 8, 1945.
    Angelí, Turner, Dyer & Meek, of Detroit, Mich., for plaintiff.
    John C. Lehr, U. S. Atty., and Arnold W. Lungerhausen, Asst. U. S. Atty., both of Detroit, Mich. (Samuel O. Clark, Jr., Asst. Atty. Gen., and Andrew D. Sharpe, Lester L. Gibson, and R. O. Carlsen, Sp. Assts. to Atty. Gen., on the brief), for defendant.
   LEDERLE, District Judge.

Findings of Fact.

I. This is a suit for recovery of income taxes paid by plaintiff, Longyear Realty Company, to defendant, Giles Kavanagh, Collector of Internal Revenue for this District.

2. At the pre-trial hearings held in accordance with Rule 16, 28 U.S.C.A. following section 723c, the material facts were agreed upon and incorporated in a formal stipulation of facts, which is hereby adopted as part of these findings. The following brief summary is all that is necessary for a determination hereof.

3. In 1931 stock of The Barrows Corporation, owned by plaintiff, became worthless. No deduction therefor was claimed in plaintiff’s 1931 income tax return. If plaintiff had done so, its tax would have been $1,842.60 less than the amount plaintiff paid. No claim for refund of 1931 tax was filed.

4. Plaintiff claimed a deduction for worthlessness of this stock in its 1934 income tax return, and the Commissioner disallowed the same, levied a deficiency assessment, which plaintiff paid in 1938 in the amount of $2,584.13. In 1940, plaintiff filed a claim for refund of this amount, claiming alternatively either that the 1934 deduction was proper, or, if not, that the amount of the resulting overpayment for the year 1931 should be refunded to plaintiff as an equitable recoupment, the statute of limitations having barred a direct claim 'for a 1931 refund. Upon disallowance of this refund claim plaintiff instituted this action within the statutory period allowed therefor.

5. , During the course of the instant case plaintiff abandoned its contention that the stock became worthless in 1934 and its corresponding claim for recovery of $2,-584.13 allegedly overpaid on that basis. This leaves remaining plaintiff’s claim for repayment of $1,842.60 admittedly overpaid on the 1931 income tax return, on which no timely claim for refund was filed. Plaintiff claims that recovery should be allowed on the theory of equitable recoupment against the taxes paid for the year 1934, despite the fact that no timely claim for refund of 1931 taxes was filed.

6. Plaintiff’s failure to claim a refund for this 1931 stock loss, deduction for which was omitted from its 1931 income tax return, did not arise out of the same ■transaction as its payment of tax deficiency ■on its 1934 income. The 1931 tax was paid for a different year on different items of income than involved in its 1934 taxes.

Conclusions of Law.

1. This is a suit for recovery of income taxes paid by plaintiff to defendant Collector, and, as such, is an action arising under a law providing for internal revenue, over which this court has jurisdiction. 28 U.S.C.A. § 41(5).

2. The finding of the Commissioner is prima facie correct, and the burden is on a contestant to disprove it. Weber v. Kavanagh, D.C.1943, 52 F.Supp. 619.

3. Where a taxpayer has failed to prove that a tax payment in a later year arose out of the same transaction as a tax payment in an earlier year, there is no basis for claiming application of the doctrine of equitable recoupment referred to in the case of Bull v. United States, 1935, 295 U.S. 247, 55 S.Ct. 695, 79 L.Ed. 1421.

See also articles in: Sec. 58.39, Mertens Law of Federal Income Taxation; 28 Virginia Law Review, 577 (1942); 109 A.L.R. 1354, supplemented by 130 A.L.R. 838, and 154 A.L.R. 1052, reviewing cases to date on this subject.

4. A refund of any portion of an internal revenue tax would be erroneous if made after the period of limitation for filing claim therefor, unless within such period claim was filed. 26 U.S.C.AJnt. Rev.Code § 3774(a).

5. A credit of an overpayment in respect of any tax would be void if a refund would be erroneous under the last cited section. 26 U.S.C.A.Int.Rev.Code, § 3775(b).

6. The provision for adjustment for a tax paid where an item of deduction was erroneously omitted from the gross income of the taxpayer for another taxable year applies only to taxable years beginning after January 1, 1932, which was the year following plaintiff’s 1931 return here involved. 26 U.S.C.A.Int.Rev. Code, § 3801(f); Lynchburg Coal & Coke Co. v. United States, 1942, 47 F.Supp. 916, 97 Ct.Cl. 517.

7. No credit or refund can be made for a stock loss in 1931 unless claim, therefor was filed within three years from the time the return was filed or within two years from the time the tax was paid, which was not done in this case. 26 U.S. C.A.Int.Rev.Code, § 322(b) (1).

Unfortunately, neither party cited the 1942 and later amendments, extending to seven years from date for filing return the period for claiming refund on account of deductibility of worthless securities and bad debts. Such amendments do not apply to the years and tax payments in question, as they apply only to taxable years commencing after December 31, 1937, and plaintiff’s claim for refund was filed more than seven years after filing date of its 1931 return. But, the amendments indicate to me a Congressional recognition that difficulties arising from determining date of deductibility of these types of losses impelled Congress to provide a longer period for claiming adjustment thereof. Such a statutory extension would have been unnecessary if Congress recognized as tenable plaintiff’s position here, namely, that in any year that a taxpayer decides to claim a stock loss, if it be determined that the loss should have been claimed in an earlier year, no matter how distant, the taxpayer can claim the right of adjustment on the theory of equitable recoupment against taxes owing on income for the year he has made his first claim of deductibility, thus avoiding the general limitation period for claiming refund, namely, two years from time of payment or three years from time for filing return. 26 U.S.C.A.Int.Rev.Code § 322(b) (5).

See also: McEachern v. Rose, 1937, 302 U.S. 56, 58 S.Ct. 84, 82 L.Ed. 46; American Light & Traction Co. v. Harrison, 7 Cir., 1944, 142 F.2d 639.

8. It therefore follows that judgment of no cause of action must be entered in favor of defendant and against plaintiff, and this is being done simultaneously herewith.


author: DAWKINS, District Judge.

text:
    UNITED STATES v. DAULONG.
    No. 11010.
    District Court, W. D. Louisiana, Monroe Division.
    May 7, 1945.
    Albert E. Bryson, Asst. U. S. Atty., of Shreveport, La., for plaintiff.

      Ronald Lee Davis, of Monroe, La., and Floyd Terral, of Little Rock,. Ark., for defendant.
   DAWKINS, District Judge.

Defendant was indicted under the Act of February 14, 1917, 18 U.S.C.A. § 89, penalizing those who make threats against the life of the President of the United States. The bill consists of two counts and the language alleged to have been used is as follows:

(First Count) “If someone does not kill him (the President) he, the defendant, had a notion to do it himself ,* * * ” ; and

(Second Count) “He hoped somebody gets him (the President) tonight, and if somebody did not, he, the defendant, felt like going up there and doing it himself”.

Defendant has moved to quash both counts for the reason, it is contended, the indictment “does not charge a crime against the United States * * * ”.

The argument is, of course, that the language thus quoted does not in either case, constitute a threat of present intention to now or in the future take the life of the President.

Threat has been defined as follows (Webster’s New International Dictionary):

“1. To press; urge; also to oppress; esp., to compel; maltreat; vex; trouble; reprove; chide. Obs.

“2. To threaten; to menace. Archaic and Dial.”

(The Century Dictionary) :

“A declaration of intention or a determination to inflict punishment, loss or pain on another.”

2 Bouv.Law Diet., Rawle’s Third Revision, p. 3270:

“A menace of destruction or injury to the person, character, or property of those against whom it is made.

“A declaration of an intention or determination to injure another by the commission of some unlawful act.”

If the accused had merely said “I have a notion to kill the President” without the preliminary statement that if someone else did not do it, would the expression have constituted a threat; and, if not, did those additional words add anything to make the statement any more of a threat than it would otherwise have been? If the defendant had simply said that someone should or ought to kill the President, with no declaration or other indication that the speaker intended or would commit the act, it seems clear 'that this would not amount to a threat, and the adding it to what the accused expressed as being in his mind, does not constitute a threat unless the two together can under the rule of strict construction applicable to all criminal statutes, be said to amount to a threat. Webster’s New International Dictionary defines “notion” in the sense it was evidently used by the accused in this case, as “(2) view, theory, belief, or the like;” and “(3) an inclination or fancy; whim; as, a notion to do it”.

All these fall considerably short of an expression of determination or intent to do the act itself, that is, to take the life of the President. The same may be said about the second count. It, too, does not express the intention or purpose to kill the President presently or in the future. In effect, it says that the speaker feels like doing it, if someone else does not, but here again, this can not be construed as an intention, determination or purpose to perform the deed. The statute does not penalize the imagining, wishing or hoping that the act will be committed by someone else. It was intended to prevent persons, whether with serious intention to carry them out or not, from making actual threats against the Chief Executive, even without communicating them to him, as being calculated to inspire or encourage the hearers to attempt such acts. It is hardly necessary to say that this law was passed to protect the President because of his high station and great value to the nation, but unlike certain sins denounced in the Bible, the offense is not committed by the mere thinking, imagining, or wishing to do the things involved. Here, there must be the positive expression of intent and purpose, presently or in the future, to do the thing denounced.

The motion to quash will be sustained.

Proper decree will be entered.


author: McVICAR, District Judge.

text:
    BLUM v. POSTAL TELEGRAPH, Inc.
    No. 2003.
    District Court, W. D. Pennsylvania.
    April 23, 1945.
    See, also, 54 F.Supp. 898.
    E. B, Goldsmith and C. J. Tannehill, both of Pittsburgh, Pa., for plaintiff.
    Henry O. Evans, of Pittsburgh, Pa., for defendant.
    Edw. Schreiner, of Pittsburgh, Pa., for Postal Telegraph Cable Co. of Pennsylvania.
   McVICAR, District Judge.

This is an action to recover damages against Postal Telegraph, Inc., by reason, of personal injuries alleged to have been caused by the negligence of Postal Telegraph, Inc., April 15, 1940. This action was brought in the Court of Common Pleas of Allegheny County, April 7, 1942, about one week before the statute of limitations had run. In plaintiff’s statement of claim he alleged that defendant, the Postal Telegraph, Inc., “is a corporation organized and existing under the laws of the State of Delaware.” The action was removed by Postal Telegraph, Inc., to this court.

The action was before this court April 26, 1944 (see opinion filed on that date, 54 F.Supp. 898) on two motions, the first being the motion of defendant to dismiss the action; the second, was the motion of plaintiff to amend his statement of claim or complaint, so as to make the name of the defendant read “Postal Telegraph Cable Company of Pennsylvania.” The motion of the defendant to dismiss the action was refused, as was also the motion of the plaintiff to amend the name of the defendant. Plaintiff filed another motion in this court, January 26, 1945, wherein he prayed that the defendant be named “Postal Telegraph, Inc. and Postal Telegraph Cable Company of Pennsylvania.” A rule to show cause was granted against the Postal Telegraph Cable Company. Notice of this rule was served by one of the attorneys for the plaintiff upon a person named as Superintendent of the Western Union Telegraph Company, successor to the Postal Telegraph Cable Company. Notice was also served upon the attorney for Postal Telegraph Cable Company specially appeáring for said company, for the purpose of objecting to the jurisdiction of this court, vacating the rule to show cause and the service thereof, and of raising the question of the statute of limitations arid res adjudicata. Postal Telegraph Cable Company, by its attorney, filed a written motion, February 15, 1945, in which it objected to the jurisdiction of this court and moved the court to set aside the service made on Postal Telegraph Cable Company of Pennsylvania, and objected to the proposed amendment to have the name of the defendant read, “Postal Telegraph, Inc. and Postal Telegraph Cable Company of Pennsylvania.”

The defendant, against which this action was brought, Postal Telegraph, Inc., is a corporation of the State of Delaware. The additional defendant, which the plaintiff now seeks to add, is the Postal Telegraph Cable Company of Pennsylvania, a Pennsylvania corporation. The effect of plaintiff’s motion, if granted, would be to name two persons or corporations parties defendant. If plaintiff desired by his petition to have the Postal Telegraph Cable Company of Pennsylvania named as a party defendant, then he would be required to comply with Rules 3 and 4 of the Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c. These rules require the issuing of a summons by the Clerk, delivery of the same for service to the Marshal and the service of the summons by a U. S. Marshal, his deputy or by some person specially appointed by the court for that purpose.

It is evident that the statute of limitations has run as against the Postal Telegraph Cable Company of Pennsylvania; that the granting of plaintiff’s motion by naming a Pennsylvania corporation as a party defendant would divest this court of jurisdiction, it being a Pennsylvania corporation and the plaintiff, also, being a citizen of Pennsylvania.

The question raised by the plaintiff’s petition was, in substance, decided by the former order of this court made April 26, 1944; therefore, the motion of the Postal Telegraph Cable Company should be granted.


author: BARD, District Judge.

text:
    MOTOR FREIGHT EXPRESS v. UNITED STATES et al.
    No. 3905.
    District Court, E. D. Pennsylvania.
    April 30, 1945.
    Charles E. Cotterill, of New York City, and Harold S. Shertz, of Philadelphia, Pa., for plaintiff.
    Edward Dumbauld, Sp. Asst, to Atty. Gen., Wendell Berge, Asst. Atty. Gen., and Gerald A. Gleeson, U. S. Atty., of Philadelphia, Pa., for the United States.

      Allen Crenshaw, of Washington, D. C., and Daniel W. Knowlton, Chief Counsel, of Washington, D. C., for Interstate Commerce Commission.
    Before BIGGS, Circuit Judge, and KALODNER and BARD, District Judges.
   BARD, District Judge.

Defendants move to dismiss this action for lack of jurisdiction. Plaintiff instituted the action to annul and enjoin enforcement of (1) an order of the Interstate Commerce Commission entered March 14, 1944, denying plaintiff’s application for a certificate of authorization for certain suburban area services, and (2) an order of the Commission entered July 26, 1944, denying a petition for reconsideration which sought dismissal of the application for the reason that a certificate authorizing these services was unnecessary. Plaintiff’s chief complaint concerning this second order is that the Commission dismissed the petition for reconsideration without comment and that in the order the Commission did not state affirmatively that a certificate authorizing these additional services was unnecessary.

Plaintiff, a Pennsylvania corporation, operates as an interstate motor common carrier under a “grandfather certificate.” This certificate authorizes interstate motor carrier operations to and from Harrisburg, Lancaster, Reading and York, Pennsylvania, and suburban areas thereof within fifteen miles; Pottsville, Pennsylvania, and within five miles thereof; New York City, and within twenty-five miles thereof; Philadelphia, Pennsylvania and Baltimore, Maryland without the inclusion of any surrounding suburban area.

Plaintiff is a wholly owned subsidiary of the Baltimore Transfer Company, another interstate common carrier by motor vehicle, operating under a Commission certificate. This certificate authorizes, inter alia, operations in, to and from Philadelphia, and within five miles thereof, and Baltimore, and within ten miles thereof. The parent and subsidiary corporations operate interlocking terminals at Philadelphia and Baltimore under a system whereby the pick-up and delivery service for plaintiff in these cites is handled by the Baltimore Transfer Company. This operation requires no appreciably greater expense to plaintiff than might be incurred in a single line transfer operation with pick-up and delivery service. However, plaintiff must exercise care to re-bill each consignment to and from the parent corporation, so that pick-up and delivery operations in Philadelphia and Baltimore are, at all times, under the billing of the Baltimore Transfer Company. Those instances where plaintiff fails to re-bill the merchandise to or from the Baltimore Transfer Company in conjunction with pick-up and delivery service in the named areas, plaintiff fears, may be in technical violation of its certificate of authorization and may subject it to criminal or civil penalties under the Act.

On August 14, 1943 plaintiff filed an application with the Commission under Section 206(a) of the Act, 49 U.S.C.A. § 306(a), to obtain a certificate authorizing trucking service in suburban areas within five miles of Philadelphia and within ten miles of Baltimore. After hearings, the Commission denied the application because plaintiff failed to prove the proposed extension of service would be required by public convenience and necessity.

Plaintiff then filed a petition for reconsideration which, in essence, admitted plaintiff’s failure to prove the requisite public convenience and necessity. Plaintiff asserted, however, that it had a right, as a matter of law, to serve the suburban areas surrounding its terminals under the original “grandfather certificate” and asked that upon reconsideration the Commission ■dismiss the application for the extension certificate on the ground that no new certificate was required. This petition for reconsideration was denied without comment by order of the Commission.

Plaintiff now files this complaint to annul and enjoin these orders under the Urgent Deficiencies Act, October 22, 1913, c. 32, 38 Stat. 219, 28 U.S.C.A. § 41 (28). Contention is made that the refusal of the Commission to determine whether the original certificate authorized pick-up and delivery operations in suburban areas surrounding the Philadelphia and Baltimore terminals is, in effect, a negative order forbidding operations in those areas and, therefore, within the purview of review by this court. .

The position taken by the Commission is undoubtedly correct. The power of the Commission to grant certificates is limited by Section 207(a) of the Act, 49 U.S.C.A. § 307(a), to instances where the proposed service “is or will be required by the present or future public convenience and necessity.” When application for a certificate is made, the Commission is entitled to assume that the application is properly made by a carrier who, under the provisions of the Act, requires a certificate, and the Commission need then pass only on the question of the necessity to the. public of the additional service sought. The Act does not require the Commission to determine, under its authority to grant certificates, whether an original certificate will sustain additional operations proposed by a carrier. .

The tests controlling judicial review of administrative orders under the Urgent Deficiencies Act, 38 Stat. 208, 219, were defined by the Supreme Court in United States v. Los Angeles & S. L. R. Co., 273 U.S. 299, 309, 310, 47 S.Ct. 413, 414, 71 L.Ed. 651, 655. The Court there held: “* * * there are many orders of the Commission which are not judicially reviewable under the provision now incorporated in the Urgent Deficiencies Act. * * * The so-called order here complained of is one which does not command the carrier to do, or to refrain from doing, any thing; which does not grant or withhold any authority, privilege, or license; which does not extend or abridge any power or facility; which does not subject the carrier to any liability, civil or criminal; which does not change the carrier’s existing or future status or condition; which does not determine any right or obligation.” The tests for review, thus announced, are not satisfied in the instant case. The gravemen of plaintiff’s complaint is the refusal of the Commission to pre-determine the scope of plaintiff’s “grandfather certificate.” This order of the Commission did not deny plaintiff’s right, if there be any, to operate in the suburban areas but merely refrained, in the proceeding then before the Commission, from an affirmative declaration that such right existed. It is true the order refuses to relieve plaintiff of possible liability under Section 222 of the Act for exceeding the scope of its certificate authorization. But this imposes no greater burden on plaintiff than is imposed on other carriers who must operate, at their peril, if they exceed the limits of authorized service.

Since the order of the Commission does not, of itself, adversely affect any present right of the plaintiff it is, therefore, a “negative order” of an administrative body without the scope of review by this court. Rochester Telephone Corporation v. United States, 307 U.S. 125, 59 S.Ct. 754, 83 L.Ed. 1147. The Commission may, if it wishes, institute civil or criminal proceedings under Section 222 of the Act, to determine the legality of suburban operations by the plaintiff under the certificate which plaintiff now holds. Such action by the Commission will squarely place in issue the contention which plaintiff here asserts. To determine that issue in this action would be nothing more than an advisory opinion. Such suits are considered beyond the province of this court to which the Constitution granted “* * * judicial Power [to determine] Cases [and] Controversies * * Art. Ill, Section 2, United States Constitution. United States v. Ferreira, 13 How. 40, 14 L.Ed. 42.

The Commission was not required to determine plaintiff’s request, noff does this court have jurisdiction to provide an answer in the present action. The motion to dismiss for want of jurisdiction is granted.

       Interstate Commerce Act, February 4, 1887, c. 104, Part II, § 208(a), as added August 9, 1935, c. 498, 49 Stat. 551, and last amended September 18, 1940, c. 722, Title I, § 20(e), 54 Stat. 923, 49 U.S.C.A. g 308(a).

       49 U.S.C.A. § 322.