The petitioner, a corporation, brought suit against the respondent, a collector of internal revenue, to recover income and profits taxes alleged to have been wrongfully collected. A demurrer by the collector was sustained in the District Court upon two grounds: First, that the payment of the taxes had been made without protest; and, second, that the original claim for refund filed with the Commissioner was defective, and that amendment came too late. The Circuit Court of Appeals upheld the decision upon the second ground without passing on the first. 61 F.(2d) 605. The case is here on certiorari. 289 U.S. 714, 53 S.Ct. 522, 77 L.Ed. -.
On April 1, 1918, the petitioner filed its return for the year 1917, disclaiming any tax liability. The Commissioner of Internal Revenue, auditing the return, found a tax liability in the sum of $6,871.18, and assessed a tax accordingly. The respondent, after notice of the assessment, made demand upon the taxpayer, giving notice that there would be distraint and sale unless payment was made within ten days. On November 5, 1923, the taxpayer yielded to the demand, moved by the desire to avoid the seizure of its property, but without protest to the collector that the tax was illegal, either wholly or in part. Four years later, on November 5, 1927, if filed a claim for refund with the Commissioner, and on November 13, 1928, an amended claim, amplifying and making more specific the statements of the first one. The claims were rejected by the Commissioner, though a revenue agent had reported that a refund was due in the sum of $4,551.01. The petitioner alleges that the payment was excessive to that extent, and sues the collector for the moneys overpaid.
1. At common law, and for many years under the federal statutes, protest at the time of payment was a condition precedent to the recovery of a tax. Elliott v. Swartwout, 10 Pet. 137, 153, 9 L.Ed. 373; Curtis's Adm'x v. Fiedler, 2 Black, 461, 17 L.Ed. 273; Chesebrough v. United States, 192 U.S. 253, 24 S.Ct. 262, 48 L.Ed. 432; United States v. N.Y. & Cuba Mail S.S.C.o., 200 U.S. 488, 26 S.Ct. 327, 50 L.Ed. 569. The rule persisted till 1924, when it was abolished by the Revenue Act of that year, with a proviso that pending suits should be unaffected by the change. Revenue Act of 1924, c. 234, 43 Stat. 253, 343, § 1014, amending R.S. § 3226; 26 U.S.C. § 156 (26 USCA § 156). This suit was not begun till March, 1931, and is thus outside of the proviso. Even so, the payment to be recovered was made in 1923, when protest was still necessary. The petitioner contends that the new rule applies to all suits begun after the adoption of the amendment. The government contends that the old rule survives if the payment was before the amendment, though the suit was begun afterwards.
We think the intention of the Congress was to remove the requirement of protest in any suit thereafter brought, irrespective of the date of the underlying payment.
The tokens of intention are within the statute and outside of it.
