suit and exclusive jurisdiction is conferred upon this court sitting as a District Court, and not as a Court in Bankruptcy.
The argument interposed in this regard is directed at a highly technical view, since the acceptance of the Government's conclusion would merely necessitate the filing of an additional pleading of which the court might make disposition sitting in the capacity of the District Court.
Nevertheless, it is my judgment that this court is vested with jurisdiction to entertain said petition while sitting as a Court in Bankruptcy.
I advert to the following provision of law which has application to proceedings in reorganization:
'Claims which have been allowed may be reconsidered for cause and reallowed or rejected in whole or in part according to the equities of the case, before but not after the estate has been closed.' 11 U.S.C.A. § 93, sub. k.
The agreement on the part of the Reorganization Trustees and the Secretary of the Treasury, authorizing and directing the Reorganization Trustees to pay the same, and the payment thereof on December 15, 1950, were based on a mutual mistake that legal liability existed for interest on taxes involved from the date of the commencement of the reorganization proceedings to the date of the payment.
The Government does not dispute the retrospective operation of the Supreme Court's determination that interest is not collectible beyond the date a petition in reorganization is filed. Recognizing the broad retroactive application of treasury regulations and their amendments in evaluating taxable obligations as accepted practice by the Treasury Department of the United States and approved by the courts, I am satisfied that the ruling of the United States Supreme Court must be related back to the date of payment when said settlement was consummated. Helvering v. Wilshire Oil Co., 308 U.S. 90, 60 S. Ct. 18, 84 L. Ed. 101; Manhattan General Equipment Co. v. Commissioner, 297 U.S. 129, 56 S. Ct. 397, 80 L. Ed. 528; Eastman Kodak Co. v. United States, 48 F.Supp. 357, 99 Ct.Cl. 569.
Since the Government has failed to produce any evidence to establish that payment of statutory interest was a moving factor in effectuating the agreement, and upon detailed examination of the language of the agreement, I am satisfied that the phrase 'with statutory interest to the date of payment' was incidental to said agreement and was automatically invoked on the basis of a mutual misapprehension of the law resulting, no doubt, from the confused state of the law at the time of settlement.
In the application of equitable principles, I cannot but help conclude that a payment made to the United States premised upon a mutual mistake constitutes an unjust enrichment, and in all good conscience restitution thereof should be made.
Petitioner's request for payment of legal interest from the date of payment, December 15, 1950, is not well taken. Since the determination of the question that legal interest ceases to run on tax claims upon the commencement of a reorganization proceeding was not finally adjudicated by the Supreme Court of the United States until January 14, 1952, and since subsequent thereto, possible legal doubt may have existed as to the duty of the Government to make automatic restitution of the same, I do not believe that the interests of justice would be subserved in requiring the United States of America to pay legal interest from the date of payment.
An appropriate order is entered together with order of judgment.
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