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PRACTICE AND PROCEDURE—Continued.

See also Contracts, XV; Evidence; Res Adjudicata; Taxes, I,

VII, XVII, XVIII, XXXVI.
PROHIBITION ACT.

See Taxes, X.
PROOF.

See Contracts, IV (1), XV; Evidence; Patents (1); Pay, X;

Postal Service, I; Practice and Procedure, I; Taxes, VII,

XVII, XXIII.
RELEASES.

See Estoppel ; Res Adjudicata; Settlement Contracts, I (1), III,

IV; Statute of Limitations, II (2).
RES ADJUDICATA.

A dismissal by this court on motion of plaintiff and upon a show-

ing that all matters involved in suit had been fully settled by
the parties thereto is res adjudicata as to the claim sued on,
the judgment is not invalidated by reason of lack of authority
on the part of plaintiff to make the settlement or to move
dismissal, and a demurrer on the ground of res adjudicata,
interposed in a second suit covering the same subject matter,
must be sustained. Second National Bank of Saginaw, trustee,

166.

See also Jurisdiction, IV; Patents, (1).
RESERVATION OF SUIT.

See Estoppel.
SALARY.

See Pay, VII.
SALE OF SUPPLIES.

Sale “as is”; inspection as a condition of sale; failure to inspect.
Shapiro & Co., 424.
SALVAGE SERVICES.

Plaintiff agreed in writing to salvage a Navy water barge, the

Government to pay “actual expenses of operation whether
successful or not, * provided expenses paid will not be
in excess of $35,000.” In the course of operations the barge was
damaged by a storm and the salvaging ceased. To a radiogram
by plaintiff recommending stripping and abandoning the Secre-
tary of the Navy replied by radio directing that the salvage
stop and the salvaged material be turned in to the district
commandant. Thereupon the plaintiff stripped the wrecked
barge of its apparel and delivered the same to the commandant.
Held, that plaintiff was not authorized to proceed to the strip-
ping and was not entitled to recover the expense thereof in
addition to the sum accepted in settlement of the written con-
tract. Sloan Danenhower & Co., 561.

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SETTLEMENT CONTRACTS.
I. (1) Where work under a contract for the manufacture of

raincoats was suspended in good faith by the Secretary of
War because of the indictment of a member of the con-
tracting firm for alleged bribery and the making of
defective war material in fulfilling the contract, and an
order for raincoats, with terms different from those of
the contract, was substituted by the Government for the
contract, and in settlement of the order, upon its termi-
nation, the contractor gave a full release to the United
States in connection with the order, and made no objection
to the course pursued, the settlement so made is to be taken
as a settlement not only of the order but of the contract,
and the contractor is bound accordingly. (2) Under the
circumstances recited the Secretary of War had authority
to suspend the work. His authority to cancel the contract

not decided. Harris et al., 9.
II. Where an agent of the Government, before the intervention

of Federal control on August 1, 1918, sent messages on
Government business over plaintiff's telegraph lines, and
the plaintiff, claiming the messages were not subject to
Government rates, charged the agent on its oks with the
full commercial rates, and in settlement at the end of
Federal control the account, still unpaid but which the
Government was ready and willing at all times to settle at
the rates prescribed by the Postmaster General pursuant to
section 2 of the act of July 24, 1866, and not otherwise, was
passed back to the plaintiff at its “ face value," the circum-
stances do not establish the validity of the account at the

commercial rate. Western Union Telegraph Co., 38.
III. A release is subject to explanation as to the subject matter of

the accord and satisfaction, and notwithstanding a mutual
release, signed upon cancellation of a contract, is inclusive
in its terms, the intention of the parties to exclude there-
from an item concerning which there was no dispute, will

govern. Packard & Co., 184.
IV. Final settlement between the Director General of Railroads

and the receiver of plaintiff's railroad construed to except
therefrom the claims of third persons. Chicago & Eastern

Illinois Ry. Co., 193.
See also Res Adjudicata.
SOVEREIGNTY.

Sovereignty is a political question, and where the executive and

legislative branches of a constitutional government have ex-
ercised over a territory the right of taxation, the right of
eminent domain, and police powers it is a possession of the
said government and not foreign territory. Luckenbach s. 8.
Co., 679.

SPECIAL JURISDICTION.

See Constitution; Indians, II ; Patents.
STATUTE OF LIMITATIONS.
I. When an order discontinuing experimental work, conducted

under an informal agreement, is given more than six years
prior to commencement of suit against the United States
for value of the services rendered and the goods fur-
nished, the claim is barred by the statute of limitations,
notwithstanding a written order for the work is issued
subsequent to the order of discontinuance and within the

statutory period. Mazer Acoustile Co., 31.
II. (1) Where a cost-plus-profit contract with the Government

provided that the prime contractor should not be required
to make any payment to the subcontractor until the same
was authorized and approved by the construction division
of the Army, the cause of action in the prime contractor,
suing for the use and benefit of the subcontractor for a
contract fee, did not arise and the statute of limitations
did not begin to run before the consti uction division au-
thorized and gave its approval to the payment. (2) Where
the cause of action in the circumstances recited arose after
the court having jurisdiction of receivership proceedings,
the prime contractor having become insolvent, decreed a
judicial release to the United States of all claims arising
out of the contract, the decree did not include release as

to the subcontractor's fee. Hugger et al., 97.
III. Claim for freight transportation furnished the Government

accrues upon rendition of the service, and the statute
of limitations, sec. 156, Judicial Code, runs therefrom.

Atlantic Coast Line R. R. Co., 576.
See also Taxes, XVIII, XXVIII.
STATUTORY CONSTRUCTION.

I. The elimination of a specific provision as first reported to

a branch of the legislature, which, if enacted, would exempt
certain associations from taxation, is very persuasive as
indicating an intention on the part of Congress that they
are not to be exempt and in interpreting the act as passed
the court may consider all prior statutes. Atlantic Coast

Line R. R. Co., 378.
II. Statutes are not to be given a retroactive effect unless the

legislative purpose to do so plainly appears. Luckenbach

S. 8. Co., 679.
III. Where an executive department has construed a statute a

certain way, its reenactment by Congress without change
is an adoption of such construction by Congress. Clark
Distilling Co., 726.

TAXES.

1. A claim for refund of income tax submitted to the

Commissioner of Internal Revenue must, under the
revenue laws and regulations, show the errors com-
plained of, before the taxpayer can maintain suit,
and a claim for refund of 1918 taxes solely on ac-
count of depreciation and depletion, does not have
the necessary particularity for a claim for refund
of 1918 taxes on account of a net loss in the year

1919. Feather River Lumber Co., 54.
II. Where by a deed of trust power to dispose of the

trust estate is to be exercised “by a will duly
made and executed,” without other limitation, the
power of appointment is, within the meaning of sec-
tion 402 of the revenue act of 1921, general, and the
value of the property passing thereunder is to be
included in the testator's gross estate. Minis et

al., executors, 58.
III. The tax imposed by section 900 of the revenue act of

1921, is applicable to the sale of secondhand auto-
mobile trucks of domestic manufacture reimported
into the United States, and notwithstanding an
excise tax has been paid on the original sale by the

manufacturer. Lupfer et al., 134.
IV. The inheritance tax of the State of Massachusetts,

paid by the administrators of an estate, is a charge
against the estate within the meaning of section
203 (a) (1) of the revenue act of 1916, and as such
deductible from the value of the gross estate in
ascertaining the Federal estate-transfer tax. Mer-

rill et al., administrators, 136.
V. Depreciation of the value of patents acquired by

plaintiff, one of them being a reissue under sec.
4916, R. S., determined and found to be not greater
than that allowed by the Commissioner of Internal
Revenue in his assessment of income and excess-
profits taxes for the year 1917. Perfect Windoro

Regulator Co., 147.
VI. Under the statutes of the State of Nebraska the real

property of an intestate, if the personal property be
not sufficient therefor, may be sold for the payment
of family allowance, debts, funeral charges, and ex-
penses of administration, the residue, if any, of the
personal property being distributed to designated
beneficiaries and of the real property descending
thereto in the same proportions, the widow receiv-

ing an interest as in lieu of dower. Held, That the
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TAXES-Continued.

widow's interest is not vested before the intestate's
death, upon the intestate's death is transferred to
her, and is subject to the Federal estate-transfer
tax, imposed by section 402 of the revenue act of
1921, as a part of decedent's gross estate. Nyberg,

administrator, 153.
VII, Expenses for advertising, necessary to the procure-

ment of income-producing contracts, are capital ex-
penditures. An erroneous method of bookkeeping,
whereby such expenditures were charged to current
expenses, does not preclude the taxpayer from ob-
taining refund of income and excess-profits taxes by
calculating them on an amortization over the life of
the contracts so procured. United Profit-Sharing

Corporation, 171.
VIII. Where a club engages in purely social activities that

are a material part of the organization, not merely
incidental to another purpose, it is a social club
within the meaning of the statutes which impose a
tax upon the dues or membership fees of a “social,
athletic, or sporting club or organization." Fisler,

220.
IX. Where a donor was not actuated by a consideration of

death and her motive in making the transfer did not
arise therefrom, her gift was not in contemplation
of death, within the meaning of the revenue acts of
1918 or 1921 providing for the estate-transfer tax.

Safford et al., executors, 242.
X. Where before the effective date of the national pro-

hibition act plaintiff engaged in the business of
distilling alcohol for beverage purposes, had its
alcohol in bond and gauged, and thereafter with-
drew a portion for sale to another company for
the purpose of denaturation, a loss ascertained
upon regauging in excess of the allowable quantity
specified in the Carlisle Act, as amended, was prop-
erly taxable under the internal revenue laws, not-
withstanding section 14, Title III, of the national

prohibition act. Corning Distilling Co., 268.
XI, Where a letter to the Commissioner of Internal

Revenue is merely a request for a special assess-
ment under the relief provisions of the revenue
acts of 1917 and 1918, it is not a claim for refund
within the meaning of section 3226, Revised Stat.
utes, as amended, and on a refund due to such
reassessment no interest is allowable. Stauffer,
Eshleman & Co., Ltd., 277.

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