In this case we are asked to determine whether mandamus is the proper remedy to compel the Commissioner of Internal Revenue to refund taxes, paid by a testamentary trustee on income of the trust, when the amount refunded would inure to the benefit of the cestui que trust, who should have paid the tax, now barred by the statute of limitations.
The testator by his will created a trust to pay over net income to his widow during her life. She elected to take under the will in lieu of the interest otherwise allowed by Pennsylvania law. The refund demanded is for taxes assessed against petitioner, the trustee, and paid by it upon the net income paid over to the beneficiary for the years 1924 to 1926, inclusive, and for the year 1928.
As a result of deficiency proceedings the Board of Tax Appeals has entered final orders determining that the amounts paid by the trustee as taxes for those years are overpayments. The beneficiary paid taxes on the income paid over to her by the trustee for the years 1924 to 1927, inclusive, but these were afterward refunded to her in recognition of the rule then followed by several courts of appeals that in these circumstances the income payments to the widow are annuities purchased by her surrender of her dower interest which are not taxable as income to her, until they equal the value of the dower interest. Warner v. Walsh (C.C.A.) 15 F.(2d) 367; United States v. Bolster (C.C.A.) 26 F.(2d) 760, 59 A.L.R. 491; Allen v. Brandeis (C.C.A.) 29 F.(2d) 363. See Stone v. White, 301 U.S. 532, 57 S.Ct. 851, 81 L.Ed. --, decided this day. She paid no tax on the income for the year 1928.
By our decision in Helvering v. Butterworth, worth, 290 U.S. 365, 54 S.Ct. 221, 78 L.Ed. 365, it was established that the income paid over to the widow is taxable to her and not to the trustee, and in consequence that the tax, which in this case should have been paid by the beneficiary, had been erroneously collected from the trustee. It appears that the total amount of the taxes which the beneficiary should have paid exceeds the amount of the refund demanded of the Commissioner, and that the refund, if allowed, will become a part of the income of the beneficiary.
The present petition for mandamus to compel respondent, the Commission of Internal Revenue, to refund to petitioner the taxes erroneously collected, was dismissed by the Supreme Court of the District. The Court of Appeals affirmed, holding that the petitioner was not equitably entitled to the refund which, if allowed, would inure to the benefit of the widow, whose liability for the tax is barred by the statute of limitations. 66 App.D.C. 64, 85 F.(2d) 230. We granted certiorari, 300 U.S. 643, 57 S.Ct. 610, 81 L.Ed. --, the questions decided by the Court of Appeals being cognate to those considered in Stone v. White, supra.