The opinion of the court was delivered by: Marovitz, District Judge.
Cross-Motions for Summary Judgment
This is an action for the refund of certain federal excise
taxes on telephone service. The Complaint consists of three
counts. Count I was brought by Robert C. Agron, a subscriber to
the telephone services of the Illinois Bell Telephone Company
(IBT), against the United States, and challenged the legality
of the assessment of federal telephone excise taxes on that
portion of a subscriber's telephone bill which is attributable
to state and local taxes. On October 16, 1970, this Court
granted summary judgment to plaintiff and against the
Government, holding that assessments due to state and local
taxes could not be considered in that basis from which the
federal telephone excise tax was calculated, 319 F. Supp. 418.
Count II of the Complaint is brought as a class action by
plaintiff on behalf of all telephone subscribers similarly
situated. IBT is joined as a defendant in this count. Count III
is brought not only on behalf of all IBT subscribers, but also
on behalf of IBT. Presently before the Court
are the Government's motion to dismiss Count II and III, IBT's
motion for summary judgment on Counts II and III, and
plaintiff's motion for a class action determination and for
summary judgment on Counts II and III.
While extensive and involved briefs have been submitted by
all parties, the complete, if short, answer to the basic issue
raised in Count II is that plaintiff's class action for tax
refunds may not be maintained. An action for the refund of
federal taxes may only be commenced after an administrative
claim has been filed and disallowed. 26 U.S.C. § 7422(a);
United States v. Wells Fargo Bank, 393 F.2d 272, 273 (9th Cir.
1968); Mulcahy v. United States, 388 F.2d 300, 302 (5th Cir.
1968); England v. United States, 261 F.2d 455, 456 (7th Cir.
1958). Plaintiff has not alleged that any, much less all, of
the tens of thousands of claimants on whose behalf he allegedly
brings this action have exhausted their available
administrative remedies. Plaintiff does allege that he filed an
administrative tax refund claim on behalf of himself and all
telephone subscribers similarly situated and that said claim
was rejected. Complaint ¶ 23, Ex. 4. We find that attempt at
satisfying the administrative prerequisites to this kind of
civil suit to be unsatisfactory. By failing to name the
claimants and the amounts due to each, plaintiff's claim on
their behalf falls far short of the detail required by federal
regulations. 26 C.F.R. § 301.6402-2. See Herrington v. United
States, 416 F.2d 1029, 1031-1032 (10th Cir. 1969).
Essentially, an unauthorized agent may not "claim an
unspecified refund for unknown principals." Harkins v. United
States, 66-2 U.S.T.C. ¶ 9543, at 86,702 (E.D.Okla. 1966),
aff'd. on other grounds, 375 F.2d 239 (10th Cir. 1967).
Consequently, the only party of whom we are aware that has
standing to bring this action under 28 U.S.C. § 1346(a)(1), is
the named plaintiff, Agron, who, at best, may be said to
constitute a class of one. McConnell v. United States,
295 F. Supp. 605, 606 (E.D.Tenn. 1969); Lipset v. United States, 37
F.R.D. 549, 551-552 (S.D.N.Y. 1965), appeal dismissed,
359 F.2d 956 (2d Cir. 1966).
Once the class aspects of Count II are disregarded, the only
difference between it and Count I is that IBT is named as a
party defendant. IBT was allegedly joined as a party defendant
under Rule 19, F.R.Civ.P., because it was needed for a just
adjudication. Complaint, ¶ 20. The Government persuasively
contends that the attempted joinder of a private litigant in a
tax refund action is improper. See 28 U.S.C. § 1346 (a)(1);
26 U.S.C. § 7422(f); Lazier v. United States, 77 F. Supp. 241, 243
(D.N.D. 1948); DeVan v. United States, 50 F. Supp. 992, 995
(D.N.J. 1943); see also, United States v. Sherwood,
312 U.S. 584, 588, 61 S.Ct. 767, 85 L.Ed. 1058 (1941); Berkeley v.
United States, 276 F.2d 9, 12, 149 Ct.Cl. 549 (1960).
Since the relief to which plaintiff is entitled may occur
without the involvement of IBT, the company is obviously not
necessary in order to achieve a just adjudication. In view of
this fact and the rules dealing with the relevant joinder in
question, IBT ought to be and is hereby dismissed as a party
defendant in Count II.
Summarizing, this Court finds that the only party entitled to
bring this action is the named plaintiff, Agron, and that
summary judgment is granted to both defendants and denied to
plaintiff as to Count II.
Count III is in the nature of a class derivative action
brought on behalf of IBT, plaintiff's theory being that IBT
breached its fiduciary duty to the class to prevent its
subscribers from being overcharged. Much of what has already
been stated with respect to propriety of Count II applies here
as well. In addition, since the challenged federal tax,
26 U.S.C. § 4251, is imposed on telephone customers, not
companies, IBT had no claim to press against the Government. It
was not the person assessed, nor was it the authorized agent of
such a person, 26 C.F.R. § 301.6402-2(e). Neither was IBT
eligible to pursue a claim under
26 U.S.C. § 6415(a) which permits tax collectors to obtain
credits or refunds under certain circumstances not alleged to
be present in the instant action. The obligation which IBT was
bound to perform was not litigation on behalf of its
subscribers, but the collection and holding of certain tax
revenues according to federal statutes, 26 U.S.C. § 4291, 7501
(a), and policy. In short, IBT has no corporate claim to press,
so there are no shoes in which plaintiff can stand. See Agron
v. Illinois Bell Telephone Co., 67 C 2041 (N.D.Ill. Aug. 4,
1969), per Napoli, J. Defendants are entitled to summary
judgment on Count III.
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