Reporter's Statement of the Case it should realize, say, $150,000, the debt would be liquidated; and the surplus proceeds of, say, $37,500 would become distributable pro rata among the creditors of Frothingham; and the estate would be entitled to its pro rata share for application on the amount of Frothingham's general indebtedness. Now it may be stated that the executors have continued to remain the involuntary custodians of this collateral since they were compelled to intervene. It represents the stock of a private manufacturing corporation. The book value of the security, whatever such value may be, seems quite irrelevant to the present inquiry. Whatever else may be said, the executors may certify to the Department that they have hitherto been quite unable to dispose of any of this stock; that there exists, so far as they have been able to discover, no demand for it; and that, as matters now stand, if offered in the open market, the stock would probably elicit but a nominal bid. We have no wish or desire to reflect upon the standing of the corporation; but the Government is entitled to be informed as to the facts in regard to the present possibility of marketing the stock to advantage. As a matter of fact under present conditions, there exists no such possibility, so that for the present at least and until conditions change, the executors will be obliged to retain it in their custody unsold; and it follows that the specific inquiries of the Department along the lines which you have indicated are not at present answerable. The entire situation, so far as ultimate adjustments are concerned, still remains and, for the present must continue to remain, a purely speculative proposition. On the occasion of an early hearing in Washington we received the impression that under the circumstances the Government would be disposed to waive the question of the ultimate application of the collateral if the debt to the Chatham & Phenix Bank was not pressed as a deduction; or, in other words, that the estate be considered as having been repaid; and we had presumed that the item would be subject to disposition upon some such basis. We are still willing that the matter be disposed of in this way so as to reduce in so far as possible the element of contingency. If this is not to be done, however, but one alternative would seem to present itself; and that would be to provide that the deduction, if any, to be allowed with respect to the debt and the application of any possible equity in the collateral be suspended pending the actual determination of the amount of the Reporter's Statement of the Case estate's liability. The Department may take notice that this disposition of the matter was suggested in the executors' return. Thereafter, upon consideration of this item in connection with the audit of the return, the Commissioner on September 17, 1924, in making a partial refund of $27,365.71 as hereinbefore mentioned definitely decided the estate's claim with reference to a deduction on account of the Frothingham note which had been endorsed by the decedent and paid shortly thereafter by the estate, and advised the estate of his decision thereon in connection with the statements contained in the executors' affidavit of June 25, 1924, mentioned above, as follows: 1,820 shares Old Reliable Motor Truck Corporation which is determined as having a value of $182,000 at the date of the decedent's death. This, however, was held merely as collateral security and inasmuch as the bankruptcy proceedings have been vacated and this estate may at some later time participate with other creditors should a sale thereof prove to be in excess of the estate's equity of $112,500, no value is placed thereon at this time but a supplemental return should be filed and tax paid thereon at a future date if the estate realizes anything thereon, in excess of $125,000____ Returned Determined 00.00 00.00 9. On May 2, 1930, when the liability of the estate with reference to the claims against it by Rockefeller and others was settled and finally determined in the amount of $582,681.48, and the executors' fees and commissions had been determined and allowed by the Surrogate's Court in the amount of $123,640.70, the estate filed with the Commissioner a formal claim on Treasury Form 843 for a refund based on the correct amount to be allowed as deductions on account of these items and, also, on account of the Frothingham note and accrued interest, totaling $113,440.68. The grounds set forth in this formal claim were as follows: I. The contingent liability of decedent for payment of demand promissory note set forth in Schedule I, contingent liabilities, item B, in the Executor's main affidavit in the sum of $112,500 with interest has been determined on July 10, 1927, as an actual liability for Reporter's Statement of the Case $113,440.68. (Reference is made to affidavit of John Sherman Hoyt verified April 8th, 1930, hereto annexed and made part hereof.) II. The claims of P. A. Rockefeller and others set forth in Schedule I, contingent liabilities, item C, in the Executor's main affidavit in the sum of $850,000 have been determined on May 23, 1929, as an actual liability for $582,681.48. (Reference is made to affidavit of John Sherman Hoyt verified April 8th, 1930, hereto annexed and made part hereof.) III. Proceedings for a judicial settlement of the accounts of the Executors have been had, and on November 15, 1929, Executors' fees in the amount of $123,640.70 were allowed by the Surrogate on said account. (Reference is made to affidavit of John Sherman Hoyt verified April 8th, 1930, hereto annexed and made part hereof.) The determination of the deduction to be allowed with respect to said items having been suspended pending the determination of the amount of those items, request is now made for refund of tax as follows: Net estate (Department's letter Sept. 25, 1925)-- $2,690, 172. 69 Schedule I, Item B-- $113, 440. 68 Schedule I, Item C----- 582, 681. 48 145, 949. 17 Tax upon the transfer of $1,870,409.83_ Amount to be refunded as per foregoing 112, 175. 01 To this claim for refund was attached a lengthy affidavit by the executor calling attention to the claims made in Schedules H and I of the return with reference to these Reporter's Statement of the Case items, to the correspondence which had passed between the estate and the Commissioner, to the various affidavits filed, and to the conferences held and the discussions and understandings had as to the refunds theretofore made by the Commissioner from time to time, all of which were, by reference, made a part of the formal claim, No. 843, of which such affidavit was a part. The facts with reference to the deductions made the basis of this formal claim for refund which had theretofore been brought to the attention of the Commissioner were again set forth in detail in such affidavit of the executors attached to the formal claim for refund. The refund claim was rejected December 29, 1930, and the estate was advised as to the reasons for such rejection as follows: Your claim is based upon the contention that certain contingent liabilities of the decedent which were disallowed as deductions from the gross estate have since been paid, together with executors' commissions amounting to $123,640.70, making a total deduction of $819,762.86, thereby resulting in a refund as claimed by the estate of $112,175.01. The records of this Bureau show that the claim was filed on May 2, 1930, and that tax was paid in the amount of $300,028.57 on January 4, 1922, and $161.00 on February 28, 1922, which was more than four years prior to the date of the filing of your claim for refund. Under the provisions of Section 3228 of the Revised Statutes of the United States, as amended, the tax having been paid more than four years prior to the filing of the claim, no part of the tax paid is subject to refund. Therefore, in view of the foregoing provisions, your claim for refund is rejected in its entirety. The statement in the above rejection letter, that the claim was based upon the contention that certain contingent liabilities of the decedent had been disallowed as deductions, was erroneous, except as to the Frothingham note item. The asserted deductions for claims against the estate by Rockefeller and others and for executors' fees and com Opinion of the Court missions had not been specifically disallowed by the Commissioner in any decision previously rendered. The court decided that the plaintiff was entitled to recover with respect to the first and third items mentioned in the introductory statement and not entitled to recover with respect to the second [Frothingham note] item. LITTLETON, Judge, delivered the opinion of the court: In principle this case is like that of Bourne v. United States, 76 C. Cls. 680, 2 F. Supp. 228, and Jones, et al. v. United States, 78 C. Cls. 549, 5 F. Supp. 146. Compare Night Hawk Leasing Co. v. United States, 84 C. Cls. 596, 18 F. Supp. 938; American Cyanamid Co. v. United States, 78 C. Cls. 313, 4 F. Supp. 937. On the facts disclosed by the record when considered in the light and in the manner in which they were considered and treated by the taxpayer and the Bureau of Internal Revenue, there was no fatal departure from the requirements of the statutes relating to claims for refund, nor was there a material departure from the requirements and the procedure authorized by the rules and regulations of the Bureau of Internal Revenue with reference to bringing the matters in controversy to the attention of the Commissioner and to disclosing the grounds and the facts upon which the Commissioner might intelligently act in the premises. The only departure from the perfect procedure upon which counsel for defendant insists was merely a matter of form and not of substance. Had the estate typed upon a printed Treasury Form, 843, the written statements concerning the items of the claims against the estate and the administration expense involved in this suit or prepared on such a printed form the subsequent sworn statements concerning these items and the grounds and the facts disclosed in such sworn statements with reference to the propriety and legality of the claimed treatment of such items in the determination of the tax liability of the estate for any refund to which it might be entitled, a demand for refund within the meaning of the statutes and the regulations would not, in substance, have been more definitely as |