LittletoN, Judge,
delivered thé opinion:
Plaintiff sues to recover $2,489,119.50, income and profits tax and penalties adjudicated by the Board of Tax, Appeals for 1917 to 1920, inclusive, in consent judgments entered pursuant to a settlement agreement with reference to all matters affecting the tax liability of plaintiff and its affiliated corporations, petitioners before the hoard, for these years, and stipulations duly executed by the authorized officers of the United States and the duly authorized representatives of the plaintiff and its affiliated corporations and filed with the board.
The defendant has filed a special answer to the petition and a plea to jurisdiction asking a dismissal of the petition on the ground that the matters upon which the suit is predicated were compromised and settled by a fully executed agreement and that the plaintiff is estopped from maintaining a suit with reference thereto. The plea of the defendant states that more than two years prior to the presentation of its claim by the petition filed herein, the plaintiff "had finally and conclusively settled and disposed of the same by an executed contract as provided in Revised Statutes, section 3229, and/or that by reason of its previous action in relation thereto and the now resultant prejudicial effect therefrom upon the defendant the plaintiff is estopped from maintaining this action."
Present counsel- -for the plaintiff, deny, that the tax liability for the years 1917 to 1920, inclusive, was compromised and settled in the various conferences held between January and March, 1926, and the agreements and stipulations executed pursuant thereto and filed with the Board of Tax Appeals, and deny that plaintiff is estopped by reason of such agreements and stipulations from maintaining this action. It is insisted on behalf of the plaintiff that the .-settlement agreements and stipulations entered into between the taxpayers, petitioners before the Board of Tax Appeals, and the Treasury officials of the United States were confined solely to the items specifically placed in issue before the board, and that plaintiff, having filed claims for refund within four years after the payment of taxes and penalties adjudicated by the board, is entitled to maintain this suit. Plaintiff further insists that the settlement agreements and stipulation's are not effective as a compromise under section 3229, Revised Statutes, for reason that the record herein does not show that an opinion of the Solicitor of Internal Revenue was placed 'on file in the office of the commissioner as required by section 3229.
Upon the facts in this case we are of opinion that all matters affecting the tax liability of the plaintiff and its affiliated corporations for the taxable years 1917 to 1920, inclusive, were finally and conclusively settled by the agreements and stipulations executed and filed with the Board of Tax Appeals and by the consent judgments entered by the board. The facts have been fully stated in the findings and need not be here repeated in detail. The compromise and settlement agreement and the stipulations with which we are here concerned were agreed upon and executed after the Commissioner of Internal Revenue had made his final determinations with reference to the tax liabilities for the years involved and after proceedings with reference thereto had been instituted before the Board of Tax Appeals. The case should not therefore be considered as the usual case of an audit of returns in the Bureau of Internal Revenue. The audits in' these cases had' been finally made and- the commissioner had mailed to plaintiff and its affiliated corporations notices of his final determinations. The corporations instituted proceedings before the Board of Tax Appeals. After the board had-definitely placed the cases upon its calendar for trial, the plaintiff and its affiliated corporations, petitioners before the board, requested the Commissioner of Internal Revenue and his counsel to agree to- a continuance of the trial of the cases and to enter into negotiations with the duly authorized representatives of the taxpayers, with reference to the various questions in the case with a view to arriving at a settlement of the whole case. The board of directors of the plaintiff aiid its affiliated corporations had duly adopted resolutions requesting Mr. E. W. Decker, president of the Northwestern National Bank, of Minneapolis, Minnesota, who was well known to all of the corporations and their officers, to accept the responsibility of settling the case, involving the tax liabilities of the corporations for the years 1917 to 1920, inclusive, with the Government. On December 24, 1925, the board of directors of the-Minnesota & Ontario Paper Company, the principal and parent corporation, and the plaintiff herein, adopted a resolution—
" That E. W. Decker (president of the Northwestern National Bank, Minneapolis) be, and he hereby is, authorized and empowered to agree and stipulate on behalf of this company and its affiliated or subsidiary companies with the Cofnmissioner of Internal Revenue or any other representative of the United States Government, in the controversies new pending before the Board of Tax Appeals with respect to any facts therein or to compromise and settle such controversies or any part thereof, any agreement as to facts or compromise of .such controversies being hereby ratified and confirmed."
After said preliminary agreements the Commissioner of Internal Revenue and other officials of the Treasury Department agreed to enter upon a consideration and- discussion of the matter of the tax liabilities of-the plaintiff and its affiliated corporations for the years involved, then pending, before the Board of Tax Appeals with a view to a final settlement of the cases. At the outset of the negotiations it was made clear to all that unless an agreement could be reached upon all matters and items about which there was any controversy, it .would be necessary to proceed with the trial- of the case before the Board of Tax Appeals. It was with this understanding that the Commissioner of Internal Revenue and the duly authorized representatives of the plaintiff and its affiliated corporations entered into negotiations. More than three hundred separate items affecting the tax liabilities for the years involved were in question, many of which were specifically in issue before the Board of Tax Appeals while others were not, particularly the matter of penalties against the plaintiff and its affiliated corporations for negligent understatements of their.tax in the returns filed. Each item about which there was any dispute or as to which any question arose during the conferences, between the commissioner and the taxpayers was taken up an.d considered separately and finally agreed upon.- The final result arrived at was a compromise settlement of the entire, case in each instance.
During the course of the conferences for -a settlement of all matters about which there was any dispute, the -commissioner frequently discussed the questions under consideration with the Secretary of the Treasury. February 26, 1926, a stipulation embodying, the results of the agreement was reached for all of the years involved which was reduced to writing and signed by the parties. The commissioner took up in person the terms of the compromise settlement of the case with the Secretary of the Treasury, who verbally approved the same.
In our opinion the resolution under which the representative of the plaintiff and its affiliated corporations acted fully authorized him finally to compromise and settle the entire case and it wias with this intent and purpose that the resolution was adopted, the negotiations entered upon and the agreements and the stipulations were entered into. The facts establish that it was the understanding and purpose of the officials of the Treasury Department finally to com promise and settle all matters affecting the tax liability of the petitioners before the Board of Tax Appeals for the-years involved. The facts further establish that this was also-the understanding of the representatives of the taxpayers'. All matters and questions touching the tax and penalty liabilities for the years involved were removed from further dispute by a fully executed contract, compromise, and settlement, and by consent judgments entered by the Board of Tax Appeals. The compromise and settlement agreement, together with the judgments of the board, became effective as a bar to a subsequent suit. Zemurray v. United States, 64 C. Cls. 657. DuPuy v. United States, 67 C. Cls. 348; 68 C. Cls. 574.
The binding effect of the compromise and settlement agreement is not destroyed by the failure of the record to contain the opinion of the Solicitor of Internal Revenue with a statement of the amount of additional tax and penalty imposed by law and the amount- paid in accordance with the terms of the compromise. This provision in section 3229, Revised Statutes, provides for the filing of such an opinion after the compromise has become complete. It is addressed alone to the officer and is directory, and a failure to comply therewith .would..not affect the compromise itself or its validity. Henderson v. United States, 4 C. Cls. 75; Clark v. United States, 95 U. S. 539; 25 R. C. L. 767; Lewis' Sutherland on Statutory Construction (2d ed.), sec. 611; McIlhenny et al. v. Commissioner, 13 B. T. A. 288; 39 Fed. (2d) 356.
Finally it is -contended on behalf of the plaintiff that this case was not finally settled by a closing agreement, as provided by section 1006, revenue act of 1924, first enacted in the revenue act, of 1921, and the case of Botany Worsted Mills v. United States, 278 U. S. 282, is cited.
The provisions of section 1006 of the 1924 act and section 1106 (b) of the 1926 act, have no effect upon the question here involved. Those provisions were not designed to confer authority to compromise already existing, but made possible the accomplishment of that which was not authorized by the compromise section of the Revised Statutes and, therefore, covered a different field. A compromise may enter into or be a part of a closing agreement, but that has no bearing upon the main purpose of the new enactment which was not to repeal section 3229 bút- to provide a means whereby tax liabilities- may be determined and finally settled in the Bureau of Internal Revenue prior to the running of the statute of limitation for filing a claim, making assessments, •and bringing suits. There is no warrant for the assumption that section 3229 of the Revised Statutes was repealed by implication. ' An affirmative act which gives a new right does not destroy an existing statutory right* unless the intention be apparent that the two rights should not coexist; and where two acts are merely affirmative, and the substance such that both may stand together, the latter does not repeal the earlier, but they both have concurrent efficacy.
In our opinion the case of Botany Worsted Mills v. United States, supra, is not in point here. In that case the court pointed out that an informal agreement, not assented to by the Secretary of the Treasury,- made during the course of an audit in the Bureau of Internal Revenue did not constitute a settlement which, in itself, was binding upon the Government or the taxpayer, and stated that " without determining whether such an agreement, though not binding in itself, may when executed become, under some circumstances, binding on the parties by estoppel, it- suffices to say that here the findings disclose no adequate ground for any claim of estoppel by the United States."
The plaintiff has received and retained the benefits flowing to it from the compromise and in our opinion is estopped from repudiating such part'thereof as it contends to have been less favorable to it than was warranted by the facts or the law. It had an election either to pursue its remedy through the Board of Tax Appeals and the courts or to compromise and settle its differences with the- Government and become a -party to a consent decree by the board. It elected the latter course and received therein, and has ever since-retained numerous concessions and benefits. -Estoppels of this character are -to be distinguished from estoppels by misrepresentation: When the plaintiff and its affiliated corporations and the commissioner entered upon negotiations to settle all matters affecting the tax liability for the years involved in the proceeding pending before .the Board of Tax Appeals, the commissioner had finally determined , that the additional tax due was $3,661,188.86. In his answer to the petitions before the board he had made certain affirmative claims for an increase in this amount. In addition to this the petitioners before the board were liable for negligence penalties which, upon the tax-determined and claimed by the United States, amounted to approximately $2,682,-000. This item had not been made an issue before the board. When the parties entered upon their negotiations,, therefore, the commissioner, acting for the United States, was claiming as the result of his final determinations, that the plaintiff and its affiliated corporations owed the United States more than $6,344,000.
In arriving at the compromise and settlement agreement of the tax and penalty liabilities for the years involved to be included by the board in the consent decree, the parties before the board made concessions in order to arrive at a final agreement. Each relied upon the good faith of the other to abide by the agreement. Admittedly the United States, after an agreement had been reached as to the amount of taxes to be paid by the taxpayers, conceded more than $811,126 of a valid claim as to the item of penalties. The foregoing constitutes the very foundation of a rule generally applied by the courts that neither party to a compromise agreement or consent decree will be permitted to repudiate it. We think the full force of the rule is applicable here. The Government was ready and desirous of proceeding with the trial of the cases before the board. It had expended large sums of money in preparing for trial and it was only at the urgent solicitation of the plaintiff and its affiliated corporations that the Government entered into conferences for the purpose of settling the entire case. The United States, by its reliance upon the plaintiff's agreement and its consent to the judgments entered by the Board of Tax Appeals lost its right both prior to the filing of plaintiff's claim for refund and the institution, of this action to assert by counterclaim or otherwise any claim for the recovery of any tax or penalty in excess of the amounts agreed upon and adjudicated by the Board of Tax Appeals. The defendant's right in this case would be purely defensive in character. In Dickerson v. Colgrove, 100 U. S. 578, the court said:
" The vital principle is that he who by his language or conduct leads another to do what he would not otherwise have done, shall not subject such person to loss or injury by disappointing the expectations upon which he acted. Such a change of position is sternly forbidden. There is no rule more necessary to enforce good faith than that which compels a person to abstain from asserting claims which he has induced others to suppose he would not rely on. The rule does not rest on the assumption that he has obtained any personal gain or advantage, but on the fact that he has induced others to act in such a manner that they will be seriously prejudiced if he is allowed to fail in carrying out what he has encouraged them to expect."
In addition to the foregoing we are of opinion that plaintiff and its affiliated corporations are bound by the consent decree entered by the Board of Tax Appeals. The revenue act of 1926 is the charter of the powers and duties of the Board of Tax Appeals and the rights and privileges of the taxpayer and the Government in cases instituted before the board, both before and after the enactment of that act.
Upon the approval of this act the jurisdiction of the board in cases then pending and thereafter instituted included the question whether the tax had been overpaid.
The proceedings instituted by the plaintiff and its affiliated corporations had not been heard at the date of the enactment of the revenue act of 1926. The petitioners and the United States were permitted by proper pleadings prior to the hearing of the case to raise any questions they might have with reference to the tax liability for the taxable years involved, or any overpayment that had been made with respect thereto. The Peruna Co., 11 B. T. A. 1180; Peerless Woolen Mills, 13 B. T. A. 1119. The revenue act of 1926 permitted either party to a proceeding before the Board of Tax Appeals dissatisfied with the decision of the board in a case heard and decided after the enactment of that act, to petition for review thereof in the appropriate appellate court. In proceedings instituted before the board prior to the revenue act of 1926 which were heard and decided by the board after the enactment of that act, the statute, as construed by the court in Old Colony Trust Co. v. Commissioner, 279 U. S. 716, permitted both the filing of a petition for review in the appropriate appellate court and the institution of suit. In our opinion, however, the statute did not and was not intended' to confer any greater right to institute a suit in a trial court than was given to petition for a review of a decision of the board. It is manifest that the statute did not give either party before the Board of Tax .Appeals a right to a review of a compromise or a consent decree by the board as to which no. issue or question remained. The functions of the Board of Tax Appeals are judicial, and since its jurisdiction in the proceedings instituted by the plaintiff and its affiliated corporations included all matters affecting the correct tax and penalty liability of the petitioners for the years involved, the consent decrees entered by the board in the case of plaintiff and its affiliated corporations definitely and finally concluded the rights of the parties, fixed the tax and penalty liability of the petitioners and they are now estopped to question the decision to which they specifically agreed. In Commissioner v. Liberty Bank & Trust Co., C. C. A., Sixth Circuit, decided May 12, 1932, C. C. EL, para. 9273, Yol. III, 1932, the court pointed out that,
" In passing upon matters such as are involved in this case, the board exercises functions similar to those exercised by a trial court in a law case without a jury. When the taxpayer seeks a review before the board of a deficiency assessment, the controversy is between the taxpayer and the Government, as represented by the commissioner, and the commissioner by designation of Congress continues thereafter as the Government's representative to prosecute its claim from adverse decisions of the board. . It is not charged with the duty of assessing or collecting taxes but with deciding controversies between the taxpayer and the authorized representative of the Government.
And in Old Colony Trust Co. v. Commissioner, 279 U. S. 716, the court stated that,
" In the case we have here, there are adverse parties. The United States or its authorized official asserts its right to the payment by a taxpayer of a tax due from him to the Government, and the taxpayer is resisting that payment or is seeking to recover what he has already paid as taxes when, by law, they were not properly due.
A consent judgment in a case of this kind is contractual in its nature. It is largely the act of the parties with respect to the matters involved in the action. Such a decree by consent should only be modified or changed by the same concurring agencies that first gave it form, and whatever has been legitimately and in good faith done in carrying out its provisions should remain undisturbed. The parties to the litigation before the board entered into an agreement compromising their differences with respect to the tax liabilities for the years involved and voluntarily submitted to a final decision by the board embodying the agreement. It appears that in order to arrive at the agreement the plaintiff and its affiliated corporations, through their authorized representatives, and the Government, through its duly authorized officers, renounced what they might otherwise have claimed. In these circumstances, one party to the agreement should not be permitted to repudiate it to the disadvantage of the other. This is the case of the compromise of disputed claims, the parties dealing with each other upon terms of perfect-equality, holding no relations of trust or confidence to each other, and having knowledge, or having the opportunity to acquire knowledge, of every fact bearing upon the question of the validity of their respective claims. Cleaveland v. Richardson, 132 U. S. 318, 319. " Such a settlement ought not to be overthrown, even if the court should now be of opinion that the party complaining of it surrendered rights that the law, if appealed to, would have sustained." Hennessy v. Bacon, 137 U. S. 78. " The policy of the law has always been to promote and sustain the compromise'and settlement of disputed claims. It loves peace, hates broils and dissensions, and discourages the prolongation of litigation and the revival of controversies which have once been closed." Chicago & N. W. Ry. Co. v. Wilcox, 116 Fed. 913.
Counsel for plaintiff has filed a motion to remand this case for proof on all issues of fact raised by the petition and for further proof on defendant's plea in bar. The allegations set forth in the motion contain nothing which, in our opinion, would change our conclusion on the defendant's plea. The motion is therefore denied.
The petition is dismissed. It is so ordered.
Whaley, Judge; Williams, Judge; Green, Judge; and Booth, Chief Justice, concur.