United States District Court, Northern District of Illinois, E. D
February 17, 1967
UNITED STATES OF AMERICA, PLAINTIFF,
HARRIS TRUST AND SAVINGS BANK ET AL., DEFENDANTS.
The opinion of the court was delivered by: Campbell, Chief Judge.
MEMORANDUM AND ORDER
The government brings this action for the collection of
federal estate taxes previously assessed and allegedly due
from the estate of Gertrude Witbeck Hanlin (hereinafter
referred to as "decedent"). Defendant, Harris Trust and
Savings Bank (hereinafter referred to as "Harris"), is the
executor of the estate and trustee of five trusts created by
the will of the decedent. The other defendants are surviving
beneficiaries of the trusts and legatees under the will.
Relief is sought against these individual defendants only to
the extent of the value of the property received by each of
them from the estate.
The decedent died on April 11, 1952. On August 23, 1956, the
District Director made an assessment of $92,459.63 plus
interest of $17,287.42 on federal estate
taxes allegedly due from the estate. This amount represented
estate taxes on certain real estate owned by the decedent at
the time of her death which was not included in her gross
estate. The nature of her interest in that property and
whether it should have been included in her estate for federal
estate tax purposes gave rise to this controversy.
On August 3, 1960, defendants submitted an Offer in
Compromise in the amount of $1,000 in full settlement of the
claim. This Offer was rejected by the Internal Revenue Service
in June, 1961. Suit was filed June 16, 1964, almost 8 years
after the original assessment, and 3 years after the Offer in
Compromise was rejected.
Defendants move to dismiss*fn1 the suit alleging that it is
barred by the applicable statute of limitations, 26 U.S.C. § 6502(a)
which provides that any collection proceeding in court
must begin within 6 years after the assessment of the
The government argues that the statute of limitations in
this case had been extended until June 22, 1964, and the suit
was therefore timely filed. The government's contention is
premised upon the provisions contained in the Offer in
Compromise submitted by Harris on a printed Treasury
Department form, (Form 656). There appears in paragraph 6 on
the first page of that form an express waiver and suspension
of the statute of limitations for the period in which the
Offer is pending, and one year thereafter. Above the
signatures of the parties to the Offer, i. e. Harris and the
District Director, there also appears the statement that:
"Waiver of statutory period of limitations is hereby accepted
by the undersigned."
Neither of these references to the waiver or suspension of
the statute of limitations has been deleted or modified on the
form. However, a typewritten rider attached to the form and
submitted with the Offer as a part thereof reads in part, as
"The taxpayer does not by this offer admit the
validity of the assessment in this case, or waive
any defense thereto, including any statute of
limitations or other restriction upon assessment
or collection of the challenged tax."
It is well settled that when there is a conflict and
inconsistency between a printed provision and a typewritten
provision inserted by the parties, the typewritten language
will prevail. Corbin, Contracts § 548 at 181-183; Restatement
of the Law, Contracts § 236(e); 17A C.J.S. Contracts § 310, pp.
This rule establishing the priorities of typewritten and
written matter over printed forms is intended to assist in
accurately ascertaining the intentions of the parties. It has
been assumed, and I believe correctly so, that specific
additional clauses drafted in the particular language of the
parties which are added to forms more clearly and definitively
reflect the desires and intentions of the parties. This was
well expressed in H & B American Mach. Co. v. United States,
11 F. Supp. 48, 81 Ct.Cl. 584, a case somewhat similar in its
facts to this case, wherein a taxpayer added a
typewritten time limitation on a government form containing a
printed waiver or suspension of the statute of limitations.
"The reason for this rule is that written words
are the immediate language and terms selected by
the parties themselves for the expression of
their meaning, while the printed form is intended
for general use without reference to particular
objects and aims. The plaintiff undoubtedly had
some object in view in adding the typewritten
words to the formal printed language of the
waiver, otherwise we think it must be assumed he
would have signed the waiver in the form in which
it was prepared by the government."
"The fact that the waiver was a unilateral
instrument, voluntarily given by the plaintiff,
only emphasizes the importance that must be given
to the added typewritten provision in construing
the intent and meaning of the waiver as a whole.
This provision consciously and purposely altered
preceding provisions of the regular printed form
of the waiver, and unless it be entirely ignored
and regarded as meaningless, it must be held to
be a clause of limitation on the preceding
printed provisions, and controlling as to the
effective life of the waiver." (11 F. Supp. at
The government does not challenge the soundness of the rule,
but argues that the differences here can be reconciled. The
only question raised by defendant's motion is whether the
typewritten provision of the rider is in fact inconsistent and
in conflict with the printed waiver or suspension of the
statute of limitations as found in Treasury Form 656. If
inconsistent, the typewritten provision retaining statutory
protection prevails and the suit is barred by the Statute of
In attempting to reconcile the statements the government
points out that the "statement attached" or "rider" was
submitted with the Offer in Compromise primarily to detail
"factual background to show why the offer should be accepted,"
and was so captioned. As noted by the government, reference is
made to the rider at paragraph 5 of the printed form which
paragraph calls for background information to show why
taxpayer's Offer should be accepted. There is no reference to
the rider at paragraph 6, which deals with the waiver or
suspension of the statute of limitations.
While reference to the rider at paragraph 6 might have been
more appropriate and would have eliminated any question of
consistency, I still find the statements inherently in
conflict and irreconcilable. The typewritten language selected
by the taxpayer must therefore prevail and the suit is
accordingly barred by § 6502(a).
To adopt the government's suggestion that the statements may
be reconciled by construing the statement in the rider as
meaning that the taxpayer did not waive the defense of statute
of limitations "as extended by paragraph 6 of the printed
form", or that the rider referred to some statute of
limitations other than the limitations for bringing suit,
would defeat the obvious and clear intent of Harris when it
submitted the Offer in Compromise. Further, if the
interpretation of the provision waiving the statute of
limitations was uncertain or ambiguous, though I find that it
is not, it should be liberally construed in a manner most
favorable to the taxpayer. United States v. Updike,
281 U.S. 489, 50 S.Ct. 367, 74 L.Ed. 984; United States v. Morgan,
D.C., 213 F. Supp. 137.
I am unimpressed with the government's argument that the
taxpayer must have waived the statute because the Internal
Revenue Service is prohibited by regulation from considering
an Offer unless the taxpayer has waived the statute of
limitations. Whether the Offer submitted by Harris complied
with Internal Revenue Regulations is not here at issue.
I am likewise unimpressed by the plea that the Service faces
an enormous administrative burden if it must closely
examine the many Offer forms filed each year to see that the
attachments do not conflict with or modify the Treasury
Defendants' Motion for Summary Judgment is granted and the
Complaint of Plaintiff is hereby dismissed.