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United States v. American Tobacco Co., 166 U.S. 468 (1897)

United States v. American Tobacco Company

No. 742

Submitted March 29, 1897

Decided April 12, 1897

166 U.S. 468


The tobacco company purchased from an internal revenue officer of the United States revenue stamps to the amount of $1100.10, to be put upon its tobacco as manufactured. April 2, 1893, its factory in New York and all the contents were destroyed by fire. Among the contents were the stamps so purchased. Of these, stamps to the value of $1356.63 had not been used, and stamps to the value of $2743.47 had been put upon packages of tobacco which were still in the factory, unsold. The property

Page 166 U. S. 469

was insured. In settling with the insurers, the latter paid the tobacco company the value of the destroyed stamps, and it was understood that the insurers were entitled to whatever might be received or recovered from the government under the provisions of the statute amending the laws relating to internal revenue. Act of March 1, 1879, c. 125. The company, under the provisions of that act, applied to the Treasury Department for the return of the destroyed stamps. The rules of the department required the applicant for such repayment to make oath that he had not theretofore presented a claim for the refunding of the amount asked for, and that its amount or any part thereof had not been received by him. Instead thereof, the company filed an oath that the amount had not been claimed of the government, and that no portion of it had been received from the government. The department having refused payment, the company thereupon brought this action in the Court of Claims.


(1) That the action was properly brought in the name of the insured for the use of the insurers.

(2) That payment by the insurer to the company did not bar the right of the latter to recover from the United States.

(3) That, by recovering from the United States, the company would become the trustee of the insurers, who were its equitable assignees.

(4) That, upon the facts found by the Court of Claims, the action could be maintained, as the payment by the insurers constituted no bar.

(5) That there was a substantial compliance with the Treasury regulation concerning the oath when the oath was filed on the part of the company of the fact of the destruction, and that no claim for refunding had been presented to the government, and no portion of the claim had been paid by it.

(6) That the company had an insurable interest in the stamps destroyed.

(7) That it was too late to set up for the first time in this Court that the government had the election to reimburse the claimant by giving stamps instead of by payment in cash.

This action was brought in the Court of Claims for the purpose of recovering the value of certain internal revenue stamps alleged to have been destroyed by fire before they had been used. The action is founded upon the provisions of § 3426 of the United States Revised Statutes, as amended by chapter 125 of the Laws of 1879, 20 Stat. 327, 349, the first paragraph of § 17 of which reads as follows:

"The Commissioner of Internal Revenue may, upon receipt of satisfactory evidence of the facts, make allowance for or redeem such of the stamps issued under the provisions of this title, or of any internal revenue act, as may have been

Page 166 U. S. 470

spoiled, destroyed, or rendered useless or unfit for the purpose intended, or for which the owner may have no use, or which, through mistake, may have been improperly or unnecessarily used, or where the rates or duties represented thereby have been excessive in amount, paid in error or in any manner wrongfully collected, and such allowance or redemption shall be made either by giving other stamps in lieu of the stamps so allowed for or redeemed or by refunding the amount or value to the owner thereof, deducting therefrom, in case of repayment, the percentage, if any, allowed to the purchaser thereof; but no allowance or redemption shall be made in any case until the stamps so spoiled or rendered useless shall have been returned to the Commissioner of Internal Revenue or until satisfactory proof has been made showing the reason why the same cannot be so returned, provided that nothing herein shall be held as authorizing redemption of or allowance for any of the stamps allowance for which is prohibited by the provisions of 'An act relative to the redemption of unused stamps,' approved July twelfth, 1876."

On the 27th of May, 1895, the American Tobacco Company filed its petition in the Court of Claims, in its own name, for the use of certain insurance companies named in the petition, to recover the value of the stamps destroyed by fire in its factory. The facts as to the loss and destruction of the stamps were set forth, and judgment asked for the value thereof. The usual general denial of all the allegations of the petition was filed by the Attorney General on behalf of the United States, and the case went to trial, and after the evidence had been submitted, the court found the following facts: that the tobacco company was a manufacturer of tobacco, occupying a building in New York City, which was established solely as a manufactory, no sales of tobacco being made at the factory, the shipments therefrom being made in bulk after the tobacco had been stamped according to law. On the second of April, 1893, the factory and its entire contents were destroyed by fire. Among those contents were internal revenue stamps of the United States of the face value of $4,100.10. These stamps had been purchased by the company from the

Page 166 U. S. 471

United States collector of internal revenue for use in the factory. Some of the stamps were unattached to packages of tobacco, and had never been used, and they were of the face value of $1,356.63. The balance of the stamps, of the face value of $2,743.47, had been attached to packages of tobacco which had not been sold or offered for sale or removed from the factory for sale. The tobacco company had purchased and paid for these stamps, which were totally destroyed, and there were no unsettled claims against the company on behalf of the United States.

The court also found the following facts:

"IV. On or about the 1st day of November, 1893, the claimant filed with the Treasury Department, under the rules and regulations of said department, a claim for the redemption of said stamps so destroyed, with proof of said loss, which claim was examined and certified as true and correct by the United States internal revenue collector for said district, but without recommendation of payment, for the reason, stated by the collector, 'that the claimant had been paid by the insurance companies for the value of the stamps,' and on the 14th day of February, 1894, the department rendered its decision upon said application, declining to allow the same for the reason"

"that satisfactory evidence has been furnished to this office that you have received reimbursement of the value of said stamps by the recovery of insurance thereon."

"V. Thereafter, on or about the second day of April, 1895, the claimant, by its attorneys, filed an amended petition for the redemption of said stamps, and asked for a rehearing, and on April 10, 1895, the Treasury Department rendered a decision declining to grant a rehearing, and this suit was brought."

"VI. The contents of said factory were insured to the American Tobacco Company, by the insurance companies for whose use this suit is brought, in the full sum of $139,500. The total loss by fire, as adjusted and settled with said claimant, was $78,635.47, which sum said companies have paid to the American Tobacco Company in proportions as the face of their several policies bears to the whole sum insured. The

Page 166 U. S. 472

face value of said United States internal revenue stamps destroyed as aforesaid, namely, $4,100.10, was a part of the sum so paid by said insurance companies."

"VII. In the adjustment of the losses and the payment thereof, it was understood between the claimant and the insurance companies that the insurance companies were entitled to have and should receive, in the proportions their several policies bore to the entire amount insured, the amount of the redemption money for the destroyed stamps to be recovered upon the application aforesaid, or in this suit."

"VIII. This suit was brought by the claimant, for the use of said insurance companies in the proportions aforesaid, to recover the value of said stamps so destroyed."

"IX. By an existing regulation of the Commissioner of Internal Revenue, made June 12, 1873, by authority of the Act of June 30, 1864, section 11, afterwards reenacted as Revised Statutes, section 3426, all claims arising under that section were required to be made upon a certain printed form, called 'Form 38;' and ever since sometime in 1875, and probably earlier, all claimants under the said section have been required to make oath, upon Form 38, that they have 'not heretofore presented any claim for the refunding of the above-mentioned amount, or any part thereof,' and"

"that the value or reimbursement of the value of said stamps, or any portion thereof, has not heretofore been received by claimant, directly or indirectly."

"X. In presenting the claim as stated in finding 4, the claimant's general manager did not make the oath referred to in finding 9 in the form required by the Commissioner of Internal Revenue, but, instead of taking the required oath, he made oath that the claimant had 'not heretofore presented any claim to the government for the refunding of the above-mentioned amount, or any part thereof,' and"

"that the value or reimbursement of the value of said stamps, or any portion thereof, has not heretofore been received by claimant, directly or indirectly, from the government."

As a conclusion of law, the court found that claimant was entitled, for the use of the companies, to recover the sum of

Page 166 U. S. 473

$4,100.10. Judgment pursuant to the finding of the court was entered, from which an appeal was taken to this Court.

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