A decision by the Commissioner of Internal Revenue on an
application for the refunding of taxes collected, authorizing the
same to be refunded, which was made under the authority conferred
upon him by the Act of July 13, 1866, c. 184, § 9, 14 Statutes,
pages 98, 109, 111, Rev.Stat. § 3220, and was reported to the
Secretary of the Treasury for his consideration and advisement July
26, 1871, under the Treasury Regulations then in force, is held by
the Court not to have been a final decision, but to have been
subject to revision by the secretary and to be returned by him to
the successor of the Commissioner for reexamination.
On December 19, 1870, the firm of Harris & Stotesbury
appealed to the Commissioner of Internal Revenue for the refunding
of $67,335.85, internal revenue taxes claimed to have been
erroneously assessed and collected from them. This claim was
examined and rejected, and notice thereof given to the claimants.
An application for a rehearing was made and sustained. On July 26,
1871, the Commissioner, having examined the claim, signed and
transmitted to the Secretary of the Treasury the following
schedule:
"No. 99 --
A schedule of claims for the refunding of taxes
erroneously assessed and paid, which have been examined and
allowed, and are transmitted to the Secretary of the Treasury for
his consideration and advisement in accordance with regulations
dated January 12, 1866."
image:a
"I hereby certify that the foregoing claims for the refunding of
taxes erroneously assessed and paid have been examined and allowed,
and are transmitted to the Secretary of the Treasury for his
consideration and advisement."
"A. PLEASONTON,
Commissioner"
Page 146 U. S. 197
On August 8, 1871, Commissioner Pleasonton resigned, and on the
next day J. W. Douglass, having been duly appointed his successor,
entered upon the discharge of the duties of the office. On that day
the Secretary of the Treasury sent to him this letter:
"Treasury Department"
"Washington, D.C. August 9, 1871"
"Sir: The enclosed refunding claims of Harris & Stotesbury
and Harris, Heyle & Co., transmitted by your predecessor to
this office for approval, would seem to have been passed by a
reversal of the construction of the law relative to sugar
manufactures which obtained during the whole period of its
existence."
"Under these circumstances, I deem it proper to return them to
you for reexamination, declining to consider them unless again
submitted by your office."
"Respectfully yours,"
"GEO. S. BOUTWELL"
"
Secretary of the Treasury"
"Hon. J. W. Douglass, Com'r of Int. Revenue"
And on the 9th of November, 1871, the Commissioner endorsed on
the claim these words: "November 9, 1871. Rejected on
reexamination. J. W. Douglass, Commissioner," notice of which
action was duly given to the claimants. On the wrapper or jacket
enclosing the papers in this claim appear the following
endorsements:
"(Office of Internal Revenue. Rec'd Dec. 19, '70. Div. 1, sec.
3.)"
"Coll'r not'd Dec. 20, '70. J. D. 3395."
"Wrote claimants Nov. 13, '71. J. D."
"12, 21, '70."
"(46) Claim for refunding taxes collected."
"Serial No. 18. No. of draft, ___, $67,335.85."
"Harris & Stotesbury, claimant ___."
"Post office address, Philadelphia."
"Verified by ___ W. J. POLLOCK,
Collector"
"1 district of Penna. "
Page 146 U. S. 198
"Assessed upon sp. tax sugar refiners."
"Basis of claim: Claims that they do not refine sugar."
"Nov. 9, 1871, rejected on reexamination."
"[Signed] J. W. DOUGLASS,
Comm'r"
"Examined and rejected Dec. 19, 1870, by _______"
"[Signed] CHS. CHESLEY"
"Allowed by Commissioner, July 26, 1871."
"[Signed] A. PLEASONTON"
"
Commissioner"
No notice was given to the claimants of the action of
Commissioner Pleasonton, and it does not appear that they were
aware of it until 1880, when, on being informed thereof, they made
application for the payment of the money as having been duly
allowed them by such decision of Commissioner Pleasonton. This
application was denied, but the question of the liability of the
government was transmitted by the Secretary of the Treasury to the
Court of Claims. A petition in that court was filed in the name of
Thomas P. Stotesbury, sole surviving partner of Harris &
Stotesbury, and afterwards, on his death, the suit was revived in
the name of the present appellants, his executors. The decision was
in favor of the government, 23 Ct.Cl. 285, from which decision the
executors brought this appeal.
MR. JUSTICE BREWER, after stating the facts in the foregoing
language, delivered the opinion of the Court.
The Court of Claims decided that the action of Commissioner
Pleasonton did not constitute a final award binding the government,
and whether it was so or not is the question presented to us for
decision.
The law under which the Commissioner acted is found in
Page 146 U. S. 199
Rev.Stat. § 3220
*:
"The Commissioner of Internal Revenue, subject to regulations
prescribed by the Secretary of the Treasury, is authorized, on
appeal to him made, to remit, refund, and pay back all taxes
erroneously or illegally assessed or collected, all penalties
collected without authority, and all taxes that appear to be
unjustly assessed, or excessive in amount, or in any manner
wrongfully collected."
Regulations were prescribed by the Secretary of the Treasury,
the only ones of importance in this case being the 3d 4th, 5th, and
7th, as follows:
"3d. When the appeal has been fully heard and examined, the
Commissioner of Internal Revenue must put into the case a
certificate of his decision or judgment, with the amount in writing
which should be paid back."
"4th. A proper book or docket must be carefully kept in the
office of the Commissioner of Internal Revenue, in which should be
entered, under its proper date, the name of the claimant, with the
amount of the tax which is the subject of appeal, and the final
decision of the said Commissioner."
"5th. When, from time to the, and as the Commissioner of
Internal Revenue in the course of his public duties shall complete
his examination and give his judgment on these appeal cases, he
will transmit a weekly list of them to the First Comptroller of the
Treasury, together with all the vouchers upon which, as evidence,
he rests his decision, as a matter of account, giving upon the list
the proper date, the name of the claimant, and the amount found due
each claimant."
"7th. Where the case of an appeal involves an amount exceeding
two hundred and fifty dollars, and before it is finally decided,
the Commissioner of Internal Revenue will transmit the case, with
the evidence in support of it, to the Secretary of the Treasury for
his consideration and advisement."
It is contended by appellants that the duty of determining
whether any, and, if so, how much, shall be returned to
claimants,
Page 146 U. S. 200
is committed by section 3220 to the Commissioner; that the
secretary has no revising power, and that the regulations which he
may prescribe are in respect to the manner of payment, and cannot
determine the procedure to be followed by the Commissioner in
hearing and deciding upon claims. It may be conceded that the power
of final decision is vested in the Commissioner, and that there is
no appeal from him to the Secretary of the Treasury; but without
inconsistency the power of decision may be vested in one person,
and the ordering of rules of procedure in another. Indeed, in
ordinary litigation the one is given to the judiciary, while the
other is largely prescribed by the legislature. Here, the authority
to the secretary to prescribe regulations is given in full and
general terms, and certainly it is a very reasonable regulation
that the chief financial officer of the government shall be heard
by the Commissioner before a final decision is made.
Further, the original internal revenue act, in which, by section
44, "the Commissioner of Internal Revenue, subject to regulations
prescribed by the Secretary of the Treasury," was authorized to pay
back duties erroneously and illegally collected by the government,
etc., was enacted on June 30, 1864. 13 Stat. 223, 239. These
regulations were prescribed by the Secretary of the Treasury on
January 12, 1866, and on July 13, 1866, the internal revenue act
was amended, 14 Stat. 98, 111, section 44 being amended by striking
out all after the enacting clause, and inserting in lieu thereof
that which now appears as § 3220 of the Revised Statutes. It might
well be held that Congress, having knowledge of the secretary's
regulations of January, 1866, by reenacting in modified form
section 44 approved these regulations, among them the seventh, the
one in question. If that be so, of course, there could have been no
final action by the Commissioner, but only a transmission of the
matter to the secretary for his consideration and advice.
But if this be not so, and the regulation be considered as in
excess of the authority vested in the Secretary of the Treasury, in
that it is an attempt to regulate the procedure before the
Commissioner, still it cannot be held that there was a final
Page 146 U. S. 201
determination by the Commissioner. Whether these regulations
were valid or invalid, the Commissioner acted under them, and
therefore the meaning and scope of his action must be interpreted
by them. The schedule purports to be transmitted to the secretary
for consideration and advisement, in accordance with the
regulations. The certificate made to the secretary repeats the
statement. Read in the light of the seventh regulation, it is as
though the Commissioner said: "I have examined this claim, and
think it should be allowed, but before final decision I await your
consideration and advisement." Certainly if the Commissioner was
waiting for such consideration and advisement, he was not making or
intending to make a final decision. Not only is this the plain
import of the language of the schedule, but the further fact that
the Commissioner did not comply with either the 3d, 4th, or 5th
regulations emphasizes the correctness of such construction. He
made no formal certificate of his decision or judgment, with the
amount in writing which should be paid back; no entry of a decision
appears in any docket, and no list including this award was ever
transmitted by him to the first Comptroller of the Treasury, and
the fifth regulation surely is within the competency of the
Secretary of the Treasury. The facts that he ignored those three
provisions, and that he expressly adopted the seventh regulation as
the guide to his procedure, make it perfectly clear that no final
determination was made or intended by Commissioner Pleasonton.
Therefore the matter was one still pending until the action of
Commissioner Douglass, on November 9, 1871, rejecting the
claim.
The decision of the Court of Claims was right, and its judgment
is affirmed.
*
See the Act of July 13, 1866, 14 Stat. 98, c. 184, p.
98, "to reduce Internal Taxation and to amend
an act to provide
Internal Revenue,'" etc. The provision incorporated into Rev.Stat.
§ 3220 will be found on p. 111 in section 9.
