81ST CONGRESS 1st Session } SENATE { REPORT No. 181 R. C. OWEN, R. C. OWEN, JR., AND ROY OWEN MARCH 28 (legislative day, MARCH 18), 1949.-Ordered to be printed Mr. MCCARRAN, from the Committee on the Judiciary, submitted the following REPORT [To accompany H. R. 1036) The Committee on the Judiciary, to whom was referred the bill (H. R. 1036) for the relief of R. C. Owen, R. C. Owen, Jr., and Roy Owen, having considered the same, report favorably thereon, without amendment, and recommend that the bill do pass. The purpose of the proposed legislation is to pay the sum of $8,437.98 to R. C. Owen, R. C. Owen, Jr., and Roy Owen, former partners doing business as R. C. Owen, of Gallatin, Tenn. Such sum represents the amount which they paid to the United States for internal revenue tobacco stamps. Such stamps were completely destroyed on December 24, 1945, when a fire destroyed the tobacco factory, together with the equipment, tobacco, and tobacco stamps therein. STATEMENT It appears that on the night of December 24, 1945, a portion of the manufacturing plant of the Owens, including buildings, equipment, and tobacco, was destroyed by fire. Also destroyed by this fire was a number of internal revenue tobacco stamps. These stamps, which were in various denominations, were valued at $8,437.98, which was the price paid for them by said manufacturer. The Treasury Department requires the manufacturer, through his collector of internal revenue, to always keep a record reflecting the amount of stamps on hand and that a report of this balance be returned to the collector once each month. The collector did not require that the records show the various denominations of the stamps but only their total value. The report to the collector reflected only the total value. These records were properly kept by the Owens and at the time of the fire showed stamps on hand of the value set forth in this bill, which were S. Repts., 81-1, vol. 1-112 completely destroyed by the fire. Not only did the records of the Owens show this but the records of the collector's office at Nashville, Tenn., showed the same thing. Immediately after the fire, R. C. Owen filed claim on Form 843 with the collector of internal revenue, Nashville, Tenn., seeking a refund of the value of the stamps or the stamps themselves replaced, as provided for in sections 156 and 3304, title 26, United States Code Annotated. This claim was filed January 10, 1946. At the time of the fire, the records of R. C. Owen indicated the exact amount of the stamps on hand as well as the amount with which R. C. Owen was charged by the collector of internal revenue. Soon after the fire, Mr. S. C. Willis, a deputy collector for the Nashville, Tenn. office, investigated the fire, acknowledged the loss of these stamps by the fire, and R. C. Owen was given credit against his inventory for these stamps and was no longer charged with them by the collector of internal revenue. The committee note that the Treasury Department in a letter dated April 11, 1947, has objected to the enactment of a similar bill for the relief of this claimant on the theory that internal revenue stamps are in the same category as currency issued by the United States and therefore, "a person having the misfortune of losing an amount of currency through destruction by fire may recover his loss by claim upon the Government only to the extent that the currency can be submitted in recognizable form for replacement. Obviously, that rule is necessary to protect the Government against fraudulent claims. While that rule may seem harsh to the person sustaining the loss, it is nevertheless a sound application of the principle that the interest of a single individual must give way to the interest of the public as a whole." This position taken by the Treasury Depart ment is somewhat mystifying to your committee in view of the fact that in the Eighty-first Congress the Department sought and obtained introduction of a bill (S. 196) for the relief of one of its own employees who was responsible for the total loss of a far more substantial number of internal revenue stamps under circumstances which at least raised the question of gross negligence aside, from the fact that none of the missing stamps were ever recovered nor was there more than a reasonable hypothesis on which to base an explanation of their disappearance. Claimants in this case have suffered an out-of-pocket loss which is definitely determinable, through no fault or negligence on their part, and the Government has correspondingly been unjustly enriched. The letter dated April 11, 1947, referred to above, is attached hereto and made a part of this report. Hon. EARL C. MICHENER, Chairman, Committee on the Judiciary, TREASURY DEPARTMENT, House of Representatives, Washington, D. C. MY DEAR MR. CHAIRMAN: Further reference is made to your letter of Febru ary 24, 1947, transmitting copies of bill H. R. 2129 (80th Cong., 1st sess.), for the relief of R. C. Owen and requesting a report of the facts in the case as disclosed by the files of this Department, together with an opinion as to the merits of the bill. According to the files of this Department, the firm of R. C. Owen is a dealer in leaf tobacco and also a manufacturer of certain tobacco products. The firm operates a tobacco factory in Gallatin, Tenn., which is registered as factory No. 102, district of Tennessee. On the night of December 24, 1945, one of the buildings belonging to the firm, part of which was used as a factory and part as a warehouse, was destroyed by fire. According to affidavits submitted by R. C. Owens, Jr., as member of the firm, by Bert Wallace, chief of police, and by A. P. Lee, assistant chief of fire department, the building, including its contents, was a complete loss. In January 1946, the firm filed a claim with the Bureau of Internal Revenue for refund in the amount of $8,437.98 representing the value of internal revenue tobacco stamps allegedly on hand in the factory at the time of the fire and, therefore, destroyed by the fire on December 24, 1945. The sales of internal revenue tobacco stamps to the firm during the period of about 30 days preceding the fire are reported by the collector of internal revenue as follows: Under date of March 14, 1946, the Bureau of Internal Revenue notified the claimant that there is no authority of law whereby refund may be made for the value of internal revenue stamps destroyed in a bonded factory unless the stamps are submitted to the Bureau in a recognizable condition or are destroyed under the supervision of a deputy collector. Since these conditions could not be complied with, the firm was further advised that the Bureau had no alternative but to reject the claim in full. The claim accordingly was rejected. The instant bill is intended to enable the firm to recover its loss through special relief. The authority for making redemptions of internal revenue stamps which may have been spoiled, destroyed, or rendered useless or unfit for the purpose intended, etc., is contained in section 3304 of the Internal Revenue Code. That section empowers the Commissioner of Internal Revenue to make redemptions of internal revenue stamps upon receipt of satisfactory evidence of the facts. Among other conditions, the statute specifically prescribes that "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, or until satisfactory proof has been made showing the reason why the same cannot be returned." The statute further provides that the finding of facts in and the decision of the Commissioner upon the merits of any claim arising under this section shall, in the absence of fraud or mistake in mathematical calculation, be final and not subject to revision by any accounting officer. Section 261 of title 18 of the United States Code (sec. 147 of the Criminal Code) defines the term "obligation or other security of the United States" as follows: "The words 'obligation or other security of the United States' shall be held to mean all bonds, certificates of indebtedness, * stamps and other representatives of value, * which have been or may be issued under any Act of Congress." * * It will be noted that internal revenue stamps are included within the foregoing statutory definition of "obligation or other security of the United States.' In short, internal revenue stamps are in the same category as currency issued by the United States. For this reason, the Treasury Department in making redemptions or allowances under section 3304 of the Internal Revenue Code with respect to spoiled or destroyed internal revenue stamps has consistently and for a long period of time followed the same rules and principles that are applied in making redemptions or allowances for mutilated or destroyed currency. As is commonly known, a person having the misfortune of losing an amount of currency through destruction by fire may recover his loss by claim upon the Government only to the extent that the currency can be submitted in recognizable form for replacement. Obviously, that rule is necessary to protect the Government against fraudulent claims. While that rule may seem harsh to the person sustaining the loss, it is nevertheless a sound application of the principle that the interest of a single individual must give way to the interest of the public as a whole. Moreover, the Government does not assume the obligation of an jnsurer at the time of selling internal revenue stamps to a taxpayer for subsequent use in payment of a particular excise tax. At most, the Government can only assure the taxpayer that the stamps will be valid for payment of tax, or that they may be redeemed upon surrender for redemption within the time allowed by law. Therefore, in any case in which the stamps are lost or are destroyed by fire, the taxpayer is not in a position to make claim against the Government for recovery of the amount paid for the stamps. In this respect, the position of the Treasury Department conforms with that of the Post Office Department in regard to postage stamps. As you are aware, the Government makes no allowances or redemptions in the case of unused postage stamps lost by the owner or destroyed by fire or other causes. The instant bill, if adopted, would by special legislation grant relief to the firm in a matter in respect of which other persons similarly circumstanced are denied relief. The firm would thus be given special treatment in discrimination against taxpayers generally. In view of the foregoing, this Department is not in favor of the enactment of H. R. 2129. In the event that further correspondence relative to this matter is necessary please refer to IR:MT:T-CST:84-582. The Department has been advised by the Bureau of the Budget that there is no objection to the submission of this report to your committee. Very truly yours, 81ST CONGRESS 1st Session } SENATE { REPORT No. 182 MRS. WESLEY BERK (FORMERLY MRS. RUTH CAMERON) MARCH 28 (legislative day, MARCH 18), 1949.-Ordered to be printed Mr. MCCARRAN, from the Committee on the Judiciary, submitted the following REPORT [To accompany H. R. 1043] The Committee on the Judiciary, to whom was referred the bill (H. R. 1043) for the relief of Mrs. Wesley Berk (formerly Mrs. Ruth Cameron), having considered the same, report favorably thereon without amendment and recommend that the bill do pass. The purpose of the proposed legislation is to reimburse Mrs. Berk for damages sustained by her by reason of her loss of stored equipment at the hands of Army personnel. STATEMENT For some years prior to 1941 Mrs. Ruth Cameron had been associated with her husband, Mr. C. L. ("Tex") Cameron, in the operation of numerous eating concessions at various fairgrounds in the State of California. Mr. Cameron died in June 1941 and Mrs. Cameron continued the operation of the so-called Cameron Concessions. Upon the conclusion of the season on September 28, 1941, in accordance with a custom of many years' standing and pursuant to a written agreement with the Los Angeles County Fair, Pomona, Calif., she stored all of her restaurant equipment in a locked storage area located in the basement of building No. 20 on the fairgrounds, the building in which the fair cafeteria was located. On December 14, 1941, a large part of the Los Angeles County fairgrounds was leased by the United States Army. Excluded from the lease was the major portion of the cafeteria building, including the storage area previously leased to Mrs. Cameron. There is no record available of the exact date upon which the Army entered into possession of the fairgrounds, but it is known that construction work was commenced on March 1, 1942, that various Army organizations were |