Booth, Chief Justice,
delivered the opinion of the court:
The Commissioner of Internal Revenue, upon a recom-putation of the plaintiff's tax liabilities for the years 1919,
1920, and 1921, determined that the plaintiff had overpaid its taxes for those years in the aggregate sum of $295,150.59. The Commissioner credited these determined overpayments to the liquidation of deficiency assessments which he had made against the plaintiff for the years 1917 and 1918.
The plaintiff sues to recover the amount of the credit, together with interest thereon.
The plaintiff's books were kept on the basis of a fiscal year ending November 30, and all its tax returns were made upon that basis.
The plaintiff made timely tax returns for the years 1916, 1917, and 1918, and paid the taxes shown to be due thereon for each of those years.
On December 19, 1922, the Commissioner of Internal Revenue wrote the plaintiff that an audit of its tax returns for the years 1916,1917, and 1918 disclosed a deficiency in its tax liability for those years of $349,631.84. The deficiency for the year 1916 was $5,781.35. The statute of limitations for the assessment of the tax for that year having then expired, the plaintiff filed a waiver as to that year.
The Commissioner signed a deficiency assessment list for the years in question on February 8, 1923, and notice and demand for the payment of the taxes so assessed, $349,-631.84, was mailed to the plaintiff on February 23, 1923.
Plaintiff filed timely income and profits tax returns for the years 1919, 1920, and 1921, and the taxes shown to be due on such returns were paid.
T-mme.rliatp.1y upon the receipt of the deficiency assessment notice and demand from the Commissioner for the payment of the additional taxes for the years-1916, 1917, and 1918, the plaintiff prepared, and on March 5, 1923, filed amended tax returns for the years 1919, 1920, and
1921. The nmp.nrlp.ri returns were made upon the same method of computation of its tax liability for those years as the Commissioner had used in his determination of deficiency assessments for the years 1916, 1917, and 1918, and showed'that the plaintiff had overpaid its taxes for the years 1919, 1920, and 1921 in the aggregate sum of $306,- 391.68. Concurrently with the filing of its amended returns for the years in question, the plaintiff filed on form 843 claims for credit for the full amount of the overpayment of its taxes for the years 1919, 1920, and 1921, as shown by its amended returns against the deficiency assessments which the Commissioner had made against it for the years 191T and 1918. The plaintiff in the claim for credit pointed out with particularity the application of the overpayments to the deficiencies for each of the years 191T and 1918, computed precisely the extent to which the credit would liquidate the deficiency assessments for 191T and 1918, and enclosed its check for $3T,458.81 in payment of the balance of the taxes due for those years. It also, on March 6, 1923, paid the $5,T81.35 deficiency assessment for the year 1916. These payments, $3T,458.81 and $5,T81.35, together with the sum of $306,391.68, the total overpayment for the years 1919, 1920, and 1921, as shown by the plaintiff's amended returns, totaled $349,631.84, the exact amount of the deficiency assessments for the years 1916,191T, and 1918.
Upon the receipt of plaintiff's amended returns for 1919, 1920, and 1921 and its requests for credit of overassessments disclosed therein, the Commissioner caused an investigation and audit of these returns to be made, and on May 15, 1924, acting upon the audit of a designated revenue agent filed February 12, 1924, advised the plaintiff by registered mail that its income and profits tax returns for the fiscal years 1919, 1920, and 1921 disclosed an aggregate overassessment of $295,196.T5, and on August 15, 1924, signed and transmitted to the collector a schedule of overassessments, with instructions to the collector to enter all or any portion of said sum as a credit upon outstanding and unpaid taxes of former years. This the collector did by crediting this sum in payment, insofar as it extended, upon plaintiff's unpaid deficiencies for 191T and 1918.
The Commissioner received in due course from the collector the schedule of overassessments and the collector's schedule of refunds and credits, whereupon the Commissioner signed his authorization to the disbursing clerk of the Treasury Department February 19, 1925. This schedule did not list any amount to be refunded plaintiff.
Plaintiff, on April 6, 1925, received tbe Commissioner's-certificates of overassessments for tbe years 1919, 1920, and 1921. The overassessments for these years, after due allowance of abatement and credit claims therefore filed, together with the application of the overassessments as a credit. upon the unpaid deficiencies for the years 1916, 1917, and 1918, left due and unpaid upon plaintiff's tax liability for-the years involved the sum of $11,241.09 on the 1918 tax account, and on February 4, 1925, the plaintiff paid to the collector this sum, with the added legal interest due thereon, without protest or objection.
The plaintiff contends that sections 607 and 609 of the-Eevenue Act of 1928 rendered void the credit made against plaintiff's tax liability for its unpaid deficiencies for the-years 1917 and 1918, and therefore under the Bonwit Teller & Company case, 283 U.S. 258, plaintiff is entitled to recover the full amount, with interest, of the overpayments made-upon its tax returns for 1919,1920, and 1921.
The pertinent provisions of the Eevenue Act of 1928, 45-Stat. 875, 876, are as follows:
" Seo. 607. Any tax (or any interest, penalty, additional, amount or addition to such tax) assessed or paid (whether-before or after the enactment of this act) after the expiration of the period of limitation properly applicable thereto - shall be considered an overpayment and shall be credited or refunded to the taxpayer if claim therefor is filed within,, the period of limitation for filing such claim."
" Sec. 609. EekoNeous Credits.
"(a) CREDIT AGAINST BARRED DEEICIENCX.-Any Credit'. against a liability in respect of any taxable year shall be-void if any payment in respect of such liability would be-considered an overpayment under section 607. $ $ $ ‡ ‡
"(c) Application op section. — The provisions of this section shall apply to any credit made before or after the enactment of this act."
The Commissioner of Internal Eevenue signed the schedule of refunds and credits on February 19, 1925, more than five years subsequent to the date of the filing of plaintiff's - returns for the fiscal years 1917 and 1918, and if this act.. alone determines tbe issne in this ease tbe plaintiff would be entitled to recover. Both parties to tbe suit concede this to be the case.
Tbe defendant, however, contests the right of recovery, and grounds its defense upon two legal propositions: First, it interposes the rule of equitable or ywasi-estoppel, and, secondly, that plaintiff's claims for credit timely filed are tantamount to and have the effect of a consent in writing by the taxpayer to a collection of the tax after the statute of limitations had run; in other words, it is the equivalent of the written consent required by section 250 (d) of the revenue act of 1921, which provides in part that income and profits taxes due under any return made thereunder " shall be determined and assessed within five years after the return was filed, unless both the Commissioner and the taxpayer consent in writing to a later determination, assessment, and collection of the tax."
A great number of cases and authorities are cited in the briefs covering the rule as to estoppel, equitable estoppel and waiver. We need not review them, in view of the fact that this court in a recent opinion had occasion to express its opinion upon this identical subject in the case of Ralston Purina Company v. United States, 75 C. Cl. 525. In this case the court said:
"But for the plaintiff's telegram to the Commissioner the additional tax for- the fiscal year 1918 would have been collected or a distraint proceeding for the collection thereof would have been begun prior to the expiration of the limitation period of five years after the return for 1918 was filed on June 16,1919. When the overpayment of $68,724.90 for the fiscal year 1919 was determined on November 8, 1924, and formally allowed on March 7, 1925, the Government retained $28,846.88 thereof, as the plaintiff had requested and agreed should be done, and the balance of $44,878.02 was duly refunded to plaintiff, together with interest of $17,051.26. Plaintiff was duly notified of the action taken. It made no objection thereto and for more than five years thereafter acquiesced in the action which had been taken. In these circumstances it is our opinion that plaintiff is estopped to assert that the Government had no right to retain that portion of the 1919 overpayment equal to the additional tax due for 1918. In Diekerson v. Colgrove, 100 U.S. 578, 580, the court said:
" 'The estoppel here relied upon is known as an equitable estoppel, or estoppel in pais. The law upon the subject is well settled. 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 aeted. 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.'
" The relief of equitable estoppel is administered in favor of one who has been induced to alter his line of conduct with respect to the subject matter in controversy so as to have foregone some right or remedy which he otherwise would have taken. Under the doctrine of equitable estop-pel, a person is held to a representation made or a position assumed, where otherwise inequitable consequences would result to another, who, having the right to do so under all the circumstances of the case, has, in good faith, relied thereon, of. J. G. Hunt, 45 Fed. (2d) 781; Louis Werner Saw Mill Co., 26 B.T.A. 141, decided May 24, 1932. Although this case is not a suit in equity but is one at law in assumpsit, however, an assumpsit of this kind is of an equitable nature, New York Life Insurance Co. v. Anderson, 263 Fed. 527, and the defendant may rely upon any defense which shows that the plaintiff in equity and good conscience is not entitled to recover in whole or in part. Myers v. Hurley Motor Co., 273 U.S. 18; section 274 (b) of the Judicial Code; Section 398 U.S.C.A. Tit. 28."
In the case of Daube v. United States, 75 C.Cls. 633, the court's opinion in part states:
" The argument made on behalf of plaintiff assumes that the case at bar is one in which the Government, after action to collect the tax was barred, initiated some kind of proceedings to obtain its payment. On the contrary, the plaintiff initiated proceedings to have money which belonged to him and was held by defendant applied on the tax debt. The direction to make the application was made before the expiration of the statute of limitations. It is true that the period of limitation as to a part of plaintiff's taxes had expired when the application was made, but that does not alter the situation. The direction to apply the overpay-ments on the tax still unpaid had not been withdrawn. In the case of Stange v. United States, 282 U.S. 270, the Supreme Court, in affirming the decision of this court (68 C.Cls. 395), held that a waiver filed after the period of limitations had expired was not ineffective, and that by reason of the waiver, money paid on a tax which was barred by the statute of limitations, could be retained by the Government. Such a holding would not have been made if the Supreme Court considered that the debt had been completely extinguished by the statute of limitations."
The facts exhibit that on February 23, 1923, the plaintiff received notice and demand for the payment of the additional taxes assessed upon its 1916, 1917, and 1918 returns. This proceeding was within the statute of limitations; the five-year limitation for the collection of the taxes for 1917 expired March 31, 1923, i.e., one month and eight days after the notice and demand for payment had been served upon the plaintiff, and we are warranted in the assumption that the Commissioner would have proceeded to collect such additional tax if the plaintiff did not take some action to prevent the same.
The plaintiff's response to the Commissioner's demand for payment appears in the amended returns which it filed for the years 1919, 1920, and 1921, showing a reduction in its tax liability for the years 1919, 1920, and 1921, and the claims for credit filed therewith. The amended returns disclosed a reduction in its tax liability for the years 1919, 1920, and 1921 of $306,391.68, and the claims for credits set forth in detail plaintiff's computation of its tax liability for the six years mentioned, and requested that the sum of the overassessments for the years 1919,1920, and 1921 be credited in payment of the deficiencies due and unpaid for the years 1916, 1917, and 1918. Plaintiff's computation of its total tax liability on this date admitted that after allowing credits of its overassessments in payment of deficiency taxes there still remained a balance due the Government of $37,458.81 and in payment of the same enclosed its check with the-amended returns and credit claims. The amended returns. and credit claims were filed on March 5, 1923, twenty-six days prior to the expiration of the five-year period applicable to the 1917 return.
The plaintiff's intervention in the way just narrated •clearly discloses that it was its intention and desire to liquidate its tax liability in the manner requested. Plaintiff did not want the Commissioner within twenty-six days to compel it to pay in cash $260,227.35, with interest thereon, the total amount of its additional taxes determined for the .years 1916, 1917, and 1918, when it claimed and had reason to believe an overassessment for 1919, 1920, and 1921 would .practically absorb this liability by way of credit. The action which the plaintiff took was for the express purpose •of forestalling a forced collection in the way the Commissioner would have proceeded had the plaintiff's credit claims .never been filed. We say this with confidence, for the record .reveals the fact that the plaintiff in the compilation of its amended returns, as to its claimed overassessments and credits, computed its tax liability upon precisely the same "basis and methods of accounting resorted to by the Commissioner in his determination of deficiencies for 1916, 1917, and 1918, and obviously if the method employed to determine a deficiency was sound, the precise method was available to determine overassessments. (See next to last paragraph •of finding XI.) We are to presume the Commissioner would have performed his duty.
It was at the request and demand of the plaintiff that immediate payment of the additional taxes for 1916, 1917, and 1918 was not enforced. The plaintiff's actions and procedure set in motion the indispensable accounting proc•esses of the Bureau, which the plaintiff well knew exacted time in investigation of claims involving such substantial sums. 'The plaintiff was alone concerned over the liquidation of its total tax liability for the years involved, and was seeking a final settlement of the same, irrespective of technical procedure, and was perfectly content to submit the question to the Commissioner upon the terms and conditions set forth fin its claims, without raising or preferring a single objection of any kind or character until more than seven years •thereafter.
The Commissioner did not institute distraint proceedings, for the collection of the additional taxes for 1917 subsequent to plaintiff's action in filing amended returns for 1919, 1920', and 1921 and credit claims concurrently therewith. On the contrary, he caused an investigation and audit to be made of plaintiff's returns for these years by an agent of the Bureau, and on February 12, 1924, the agent reported for the three years an overassessment of plaintiff's taxes in the sum of' $295,196.75, and later by proper and unchallenged procedure this sum of money was duly credited in payment of plaintiff's additional taxes due and unpaid for the years 1917 and 1918. This is not all, for technically the schedule of refund and credit claims prepared by the collector and transmitted by him to the Commissioner finally became effective on February 19, 1925, and of course this schedule,, bearing the authorization of the Commissioner to the disbursing clerk of the Treasury Department, disclosed no-refund due the plaintiff. On the contrary, the certificate-of overassessment mailed the plaintiff showed a balance of $11,241.09 remaining after the credit of the overassess-ments for 1919, 1920, and 1921, due and unpaid by the plaintiff to the Government on its 1918 tax account, and the plaintiff on February 4, 1925, seven months and fourteen days after the statute of limitations for the collection of this sum had expired, paid the full amount without protest or objection to the Commissioner in final liquidation of its tax liability for the years involved, and which sum is not now claimed as a part of the judgment in this case.
On July 31,1930, five years, five months and twenty-seven days after the credits had been made as stated herein, the plaintiff protested and demanded the refund of the sum of' overassessments for 1919,1920, and 1921, on the ground that the statute of limitations precluded the Commissioner from making the same. The refund claim was denied. This suit followed on August 8, 1930, almost five and one-half years after the credits had been entered and allowed.
The facts, we think, bring this case within the doctrine of estoppel or equitable estoppel, established and discussed': in the citations heretofore cited.
The doctrine of equitable estoppel is predicated upon the fact " that it would be unconscionable to permit a person to maintain a position inconsistent with one in which he has acquiesced or of which he has accepted any benefit." If a person is induced by another's acts and conduct to do what he would not otherwise have done; or, as is said, if he abstained from doing what he would have done, the person inducing such conduct may not suddenly change his attitude to the injury of the other.
We are unable to perceive barriers in the revenue acts which preclude the operation of the doctrine of quasi or equitable estoppel. The courts have sustained its application when properly invoked. In this case the plaintiff in every respect acquiesced in the action of the Commissioner as to its tax liability. It could not have done less, for its tax liability was adjusted in the way the plaintiff sought to have it adjusted. There were no protests, no claims for refund of overassessments, no demands for refund filed until just prior to the expiration of the six-year statute of limitation, when the plaintiff suddenly as an obvious afterthought concluded to assert a claim predicated upon the strict letter of the revenue laws without disavowing in the slightest degree that the entire transaction had been long since adjusted and settled in pursuance of mutual and satisfactory proceedings between it and the Commissioner, irrespective of limits of time.
Beyond a doubt the instant case is a conspicuous one for the application of the doctrine, for if the plaintiff recovers, its belated change of position enables it to not only recover $295,150.59, the amount stated in its petition, but interest thereon for a period of many years, during which time it acquiesced in the settlement made and does not now assert or claim that the additional taxes assessed for the years 1916, 1917, and 1918 were unlawfully determined or liquidated in opposition to its request and demand.
The established general procedure of the Bureau of Internal Revenue with respect to claims for credit is not of significance in this case. The plaintiff attempts to show that what was done by it and the Commissioner was in accord with a general procedure uniformly and universally adopted as to all claims for credit by the Bureau, and that no act of the plaintiff diverted the Commissioner from doing what he would have done in any event. The facts of record •do not sustain the contention; the plaintiff not only did the unusual thing of acknowledging at once liability for the deficiency taxes assessed for the years 1917 and 1918, but within the statutory period of limitation forwarded its •check in claimed liquidation of its total tax liability, both •as to deficiencies and over assessments. This could not have •been done under any other theory and for any other purpose, and it could not have had any other effect than to stay the immediate collection by the Commissioner of the deficiencies assessed. One's intention is deducible from conduct, and the position assumed by the taxpayer in this case dearly indicates that it was not only desirable but extremely important from its relationship to a tax liability that the 'Commissioner accept at once its method of discharging the •same, irrespective of established procedure or what might >or might not have been done in the absence of such conduct •upon its part.
If an ea? -parte telegram dispatched by a delinquent taxpayer requesting departure from an established system in the Bureau, which request was granted, is sufficient to invoke the principle of equitable estoppel — and this court has held that it is — it is difficult indeed to withhold the application of the rule in a case where the taxpayer files a more detailed and formal request for credit, which, on its face, acknowledges a tax liability, points out a way in which it can be paid, requesting that the way pointed out be adopted, .and at the same time sends a check for what is an admitted balance due upon the account as stated by the taxpayer itself. We think the taxpayer knew what it did would forestall immediate collection of the deficiencies and that it was •so done for that express purpose. We say this deliberately, for the record discloses that what was done was approved and acquiesced in by the taxpayer for years, and no attempt was made to repudiate the position thus assumed coincident with the transaction, or even afterwards until it had almost passed beyond the six-year statute of limitation.
The facts in this case distinguish it from the principles involved in the case of Bowers v. New York & Albany Lighterage Co., 273 U.S. 346, and the case of Russell v. United States, 278 U.S. 181. The difference, we think, is marked. Herein we have the Government refraining from distraint or suit for the collection of the taxes because of the request of the plaintiff contained in a proposed settlement prior to the expiration of the statute of limitations,, and the additional fact that the plaintiff not only consented to the application of the credit after the expiration of the statute, but voluntarily paid a balance then due but barred by the statute and not included in the judgment herein sought.
In our opinion sections 607 and 609 of the Revenue Act of 1928, heretofore quoted, apply in cases where the Commissioner acts independently of the taxpayer in the absence of a request, or conduct upon the part of a taxpayer, to proceed differently. The sections relied upon are not, we think, conclusive in cases where a taxpayer of his own volition and at his own request seeks and consents within the statutory period to have overassessments credited against deficiencies after the statute has run, and does not thereafter, with full knowledge of his rights, contest the allowance nor challenge the legality of the proceedings until a period of time just preceding his right to prosecute a claim at all.
In Bigelow on Estoppel, 6th edition, page 30, a citation in defendant's brief, appears the following:
" This completes estoppel proper, in substantive law, and brings us to what may be called £ quasi-estoppel.' A party will not be permitted to assume inconsistent positions, and where one has an election between inconsistent courses of' action he will be confined to that course which he first adopts."
In Walker v. Commissioner, 23 B.T.A. 1, 6, the opinion in part states:
" The taxpayers were on a cash basis of accounting, and in line with the statute above quoted, they did return the profits from this sale ' in the gross income for the taxable-year in which received by the taxpayer ', proportioning the profit in accordance with the quoted regulation. Conceding, for the argument, that the statute and regulation, afforded the taxpayers the election, of treating the obligations of the purchaser as the equivalent of cash, the taxpayers otherwise elected; they may not now change thmt election, particularly since the result would be to throw dll of the profit into a year where collection is barred by limitations. Lucas v. St. Louis National Baseball Olub (C.C.A. 8), 42 F. (2d) 984; Rose v. Grant (C.C.A. 5), 39 F. (2d) 340; Alameda Investment Co. v. McLaughlin (C.C.A. 9), 33 F. (2d) 120; Holmes on Federal Income Tax (6th ed.), 1278." (Italics ours.)
The doctrine of estoppel is invoked and commented upon in the case of Pittsburgh Terminal Coal Corporation v. Heiner, Prentice-Hall, 1932, pp. 664, 667. The district judge, in delivering the opinion of the court, said:
" In our opinion the notice given by the Commissioner in the instant matter was a sufficient compliance with section 274 (a) of the act of 1926. But even if we were to admit error in this respect, it still would seem that the complainant is in no position to appeal to a court of equity. By filing its petition for review it affirmed the sufficiency of the notice as to itself. It maintained that position for five years and thus delayed the Commissioner in the collection of the tax due for that period. Had it not filed its petition for review after the notice, or even had it asserted its mistake in filing it within a reasonable time after doing so, the complainant's bill, looking at it only from the standpoint of the equities involved, would have had considerably more weight than at present, but after accepting the notice as sufficient, and thus disarming the Commissioner, and then delaying for a period of five years before alleging the insufficiency of the notice, it plainly should be held to be estopped from assuming a new position and so obtaining further delay."
We desire also to call attention to the opinion of the Supreme Court in Lewis v. Reynolds, 284 U.S. 281, with reference to a matter which has not been presented. In that case an assessment was made, after the expiration of the period of limitations, of an income tax upon the property of an estate in charge of an administrator, and upon this tax the Commissioner applied money received through an overpayment of the taxes by the administrator resulting from certain deductions allowed. The lower court held that the case was controlled by section 322 of the act of 1928, and referring thereto said (48 Fed. (2d) 515, 516):
" The above-quoted provisions clearly limit refunds to overpayments. It follows that the ultimate question presented for decision, upon a claim for refund, is whether the taxpayer has overpaid his tax. This involves a redeter-mination of the entire tax liability. While no new assessment can be made, after the bar of the statute has fallen, the taxpayer, nevertheless, is not entitled to a refund unless he has overpaid his tax. The action to recover on a claim for refund is in the nature of an' action for money had and received, and it is incumbent upon the claimant to show that the United States has money which belongs to him."
The Supreme Court stated that it agreed with the conclusion reached by the court below, as stated in the above 'quotation, and said further:
"While the statutes authorizing refunds do not specifically empower the Commissioner to reaudit a return whenever repayment is claimed, authority therefor is necessarily implied. An overpayment must appear before refund is authorized. Although the statute of limitations may have barred the assessment and collection of any additional sum, it does not obliterate the right of the United States to retain payments already received when they do not exceed the -amount which might have been properly assessed and -demanded."
The only difference between the case at bar and the one from which these quotations are made is that in the Lewis case, supra, the additional assessment was made for the •.same year as that upon which the overpayment had been made. In the case at bar the additional assessment was made for a different year. In both there was a reaudit, .and the assessment and application of the money received from the overpayment were made after the statute of limitations had run. Sections 607 and 609 of the act of 1928 are not referred to in the opinion rendered in the Lewis ease, but it would seem that the Supreme Court regarded money which came lawfully into the hands of the Com.missioner by reason of the original assessment simply as an item of credit on the general account between the taxpayer and the Government and that, although assessment and collection " of any additional sum " might be barred -by the statute of limitations, his taxes could be reaudited -and the overpayment applied thereon.
We think the petition should be dismissed. It is so ordered.
Whaley, Judge/ and Williams, Judge, concur.