Appeal from the District Court of the United States for the Northern District of Illinois, Eastern Division; Charles Woodward, Judge.
Before EVANS, TREANOR, and KERNER, Circuit Judges.
Plaintiff's appeal is from an order of the District Court dismissing for want of jurisdiction, its action against the Government. In this action plaintiff sought to recover $20,698.20 overpaid as corporate income taxes for the years 1920, 1924, 1925, and 1928. The finding of lack of jurisdiction was predicated on the theory that the cause of action was not one arising under the Tucker Amendment, 28 U.S.C.A. § 41, par. 20.
Plaintiff, a successor of the Chicago Trust Company, received certificates of over-assessment of taxes paid by its predecessor, amounting to $29,587.68.*fn1 It claimed there was also due an additional sum of $12,227.79,*fn2 making a total overpayment of $41,815.47, based on over-assessments It was admitted by plaintiff that it owed the Government deficiencies and interest amounting to $21,117.27.*fn3 The net amount, therefore, which plaintiff now seeks to recover is the difference between the alleged over-assessments and the admitted deficiencies owed the Government, to-wit $20,698.20.
The Government moved to dismiss on two grounds: (1) Plaintiff failed to allege that any claim for refund had been filed, or that plaintiff had complied with Sec. 3226 of the Revised Statutes, 26 U.S.C.A. §§ 1672-1673, and it failed to alleged that the cause of action accrued less than six years ago. (2) The claim sued upon is based on an implied promise of the Government's certificates of overassessment, and being in excess of $10,000, it could not be enforced in a suit in the District Court.
The District Court adopted the second ground, and dismissal was for want of jurisdiction. The court did not consider the claim on its merits, nor did it pass upon sufficiency of allegations to state a valid cause of action.
The validity of the District Court's ruling turns upon the construction and application of Title 28 U.S.C.A. § 41(20), Section 24(20), Judicial Code, which reads:
"The district courts shall have original jurisdiction as follows:
"(20) Concurrent with the Court of Claims, of all claims not exceeding $10,000 founded upon the Constitution of the United States or any law of Congress, or upon any regulation of an executive department, or upon any contract, express or implied, with the Government of the United States, or for damages, liquidated or unliquidated, in cases not sounding in tort, in respect to which claims the party would be entitled to redress against the United States, either in a court of Law, equity, or admiralty, if the United States were suable, and of all set-offs, counterclaims, claims for damages, whether liquidated or unliquidated, or other demands whatsoever on the part of the Government of the United States against any claimant against the Government in said court; and of any suit or proceeding commenced after the passage of the Revenue Act of 1921, for the recovery of any internal-revenue tax alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority or any sum alleged to have been excessive or in any manner wrongfully collected under the internal-revenue laws even if the claim exceeds $10,000, if the collector of internal revenue by whom such tax, penalty, or sum was collected is dead or is not in office as collector of internal revenue at the time such suit or proceeding is commenced. * * * " U.S.C.A., Title 28, § 41, par. 20.
The Government contends that the suit is ex contractu - one that is based on the certificates of over-assessment issued by the Government. Inasmuch as the amount involved exceeds $10,000, jurisdiction of such a claim is lodged solely in the Court of Claims and the District Court is without jurisdiction. Its argument is that the complaint sets forth an agreement arising out of an implied agreement to pay, which in turn is predicated on the Government's certificates of over-assessment. The heart of the argument lies in the assertion that the issuance of the Government's certificates of over-assessment crystallized the taxpayer's claim into a new cause of action - a cause of action based upon contract. Bonwit Teller & Co. v. U.S., 283 U.S. 258, 51 S. Ct. 395, 75 L. Ed. 1018, is relied on. In short, plaintiff's cause of action is not predicated upon a claim of taxes illegally assessed and collected by the Government, which is the only basis for the District Court's jurisdiction where the amount exceeds $10,000, but is one arising out of the Government's implied agreement to pay.
We are of a different opinion. In other words, we are satisfied that Section 41(20) Title 28 U.S.C.A., invested the District Court with jurisdiction of plaintiff's cause of action.
A study of the statute clearly indicates that the Congress intended to give the District Court jurisdiction, concurrent with the Court of Claims, of certain claims arising out of the payment of taxes alleged to have been erroneously or illegally assessed and collected.
The Congress divided claims of which the District Court had jurisdiction into two classes, making the amount involved, determinative in part, of the classification. It gave to the District Court, jurisdiction of all claims not exceeding $10,000 arising out of any law of Congress or upon any contract, express or implied. It likewise gave to the District Court, jurisdiction of claim in excess of $10,000, but attached thereto the condition that they be ...