Stone v. White, 301 U.S. 532 (1937)

CERTIORARI TO THE CIRCUIT COURT OF APPEALS

FOR THE FIRST CIRCUIT

Syllabus

1. A statutory action for a refund of taxes erroneously collected is in the nature of a common law action for money had and received, and like it is governed by equitable principles. P. 534.

2. Where the income from a trust, belonging to the sole beneficiary, was erroneously taxed to and collected from the trustees when it should have been taxed to the beneficiary, in an action by the trustees for a refund, the collector may set up in defense that the Government has the right to retain the money, by way of equitable recoupment, although collection from the beneficiary is barred by the statute of limitations. P. 535.

3. Sections 275(a), 607 and 609, Revenue Act, 1928, limit the collection of a tax, and prevent the retention of one paid after it is barred by the statute. They preclude, in a suit by the taxpayer against the collector or the Government, reliance on a claim against the taxpayer, barred by statute, as a set-off or counterclaim, but they do not deprive the Government of defenses based on special equities establishing its right to withhold a refund from the demanding taxpayer. P. 538.

78 F.2d 136 affirmed.

Certiorari, 300 U.S. 643, to review the reversal of a recovery by the present petitioners in their action against the Collector of Internal Revenue.