United States v. Fidelity & Deposit Co.

This is an action by the United States on a bond given on February 24, 1931, by the Fidelity & Deposit Company of Maryland to the collector of internal revenue to secure the payment of two overdue installments of the internal revenue tax on income, due from the Heilman Investment Company for the calendar year 1929; the tax not having been paid. Judgment was rendered for the defendant on demurrer, from which the government appeals.

The total tax was $235,920.30, the third installment of $58,980.07 was due September 15, 1930, and the fourth installment of the tax was due December 15, 1930. The collector was demanding payment and the taxpayer requested an extension of time to September 15, 1931. This extension was granted in consideration of the execution of the bond in question for the sum of $135,000, running to the United States as obligee, wherein it was agreed that the appellee, hereinafter called the “Surety Company,” would pay the tax in the event that the Heilman Investment Company failed to do so. Having thus secured the desired extension, the taxpayer has failed to pay the tax, and the Surety Company defends upon the ground that the collector had no authority to grant the…