61 et seq.; Comp. St. § 7834 et seq.)) governed the movements of the vessels before and at the time of the collision. So far as is material to this inquiry those rules may be briefly stated as follows. A steam vessel is required to carry the regulation red and green side lights and a white light on the fore part of the vessel at a height above the hull of not less than 20 feet, and she may carry, but is not required to carry, range lights or a stern light in line with the masthead at an elevation of at least 15 feet higher. Sailing vessels under way must carry regulation side lights, but are prohibited from carrying the white lights of a steamer. A vessel which is being overtaken, except a steamer carrying regulation white range lighter, must exhibit from her stern to the overtaking vessel a white light showing all around the horizon, and, if necessary in order to attract attention, in addition to the regular lights, may show a flare-up light. When a steam vessel and a sailing vessel are proceeding in such directions as to involve risk of collision, the steam vessel must keep out of the way of the sailing vessel, and, on approaching her, if necessary, must slacken her speed or stop or reverse; and any overtaking vessel must keep out of the way of the overtaken vessel. Article 24 of the Rules provides that any vessel coming up with another vessel from any direction more than two points abaft of her beam; that is, in such a position with reference to the vessel she is overtaking that at night she would be unable to see either of that vessel's side lights, shall be deemed to be the overtaking vessel.

[3] With reference to the application of these rules, the situation of the two ships immediately before the collision was this: The Copperfield was practically helpless in the light breeze, with barely steerage way, could not have answered her helm promptly, and could not have made any maneuver to avoid the collision. She observed the steamer approaching and exhibited a white lantern on her stern, which she had the right to do, as she at that time was almost directly ahead of the Dea and in practically the same position as an overtaken vessel. She was guilty of no fault in showing the lantern.

[4] With regard to the Dea, the second officer was in command and on the bridge at the

time of the collision. He testified that about 8:50 he saw a dim white light about three points off the starboard bow, which he took to be a steamer's light. He looked at it a while and then went into the chart room and took out his binoculars. He observed the light some time longer through the binoculars and then lost it. He then became frightened and thought it might be a sailing vessèl, because in that locality schooners and small craft without side lights were often met. He gave a long blast of his whistle. Just as he let go the whistle string, he heard a cry from the Copperfield. Then he saw the sails of the schooner. He knew there would be a collision, and he gave an order to put the wheel hard astarboard, and signaled the engines for full speed astern, but they had not been reversed when the collision occurred. He fixed the time elapsing between first seeing the light and the collision at from three to five minutes. Making due allowance for inaccuracies in estimating time, it is reasonably certain from the second officer's testimony that at least three minutes elapsed between the time he first saw the light on the Copperfield until the collision occurred. The Dea was making a speed of about 8 knots at the time, so was at least a half a mile away.

The officer in charge of the steamer saw the light on the schooner in ample time to have avoided the collision had he taken the slightest precaution to do so. The light was sufficiently in his course to advise him of the probable danger of the collision, and the very fact that he did not see the side lights was an additional warning. Furthermore, he expected to find sailing vessels and small craft in that vicinity without side lights. It was his duty to keep out of the way of sailing vessels and any vessels he was overtaking, and the light exhibited should have conveyed the message to his mind that a vessel was in fact being overtaken. Had he slowed down his engines when he first saw the light, or altered his course slightly, he could have avoided the collision, but he did not do so. There was nothing the schooner could have done to avoid it. In these circumstances we think the District Court was right in holding the Dea solely responsible for the collision and awarding damages accordingly. Affirmed.

2. Internal revenue25-Additional assessment upon income from Ford stock sale after numerous confirmations of original assessment, based on 1913 valuation, held unauthorized (Revenue Act 1918, § 250b [Comp. St. § 6336/stt(b)]; Revenue Act 1924, §§ 280, 1006 [Comp. St. §§ 6336zz(7), 63715%h]).

Where income tax was assessed in 1919 under Revenue Act of 1918 on profits from sale of Ford Motor Company's stock based upon fair value of stock in 1913, and such assessment and valuation were approved and confirmed by the then commissioner of internal revenue and by his successors, held that commissioner was without authority under Revenue Act 1918, § 250b (Comp. St. § 6336 tt(b), Revenue Act 1924, §§ 280, 1006 (Comp. St. §§ 6336zz(7), 6371%h), to revoke such assessment and reassess an additional tax upon a new valuation resulting from a "matured and better judgment;" there being no claim of fraud or mistake, clerical or otherwise.

In Error to the District Court of the

United States for the Eastern District of Michigan; Benjamin C. Dawkins, Judge.

Action by Alice G. Kales against Fred L. Woodworth, Collector of Internal Revenue. Judgment for plaintiff on a directed verdict, and defendant brings error. Affirmed.

John A. Baxter, Asst. U. S. Atty., of Detroit, Mich., C. M. Charest, General Counsel, Bureau of Internal Revenue, of Washington, D. C., and Earl J. Davis, Herbert W. Clark, W. Hall Trigg, and A. W. Gregg, Sp. Asst. Attys. Gen., for plaintiff in error.

Beaumont, Smith & Harris, of Detroit, Mich., and Charles E. Hughes, of New York City, for defendant in error.

John W. Davis, of New York City, Sidney T. Miller, of Detroit, Mich., Joseph E. Davies, of Washington, D. C., Arthur J. Lacy and Clarence E. Wilcox, both of Detroit, Mich., Herbert Pope, of Chicago, Ill., and Luman W. Goodenough, of Detroit, Mich., amici curiæ.

Before DENISON, MOORMAN, and KNAPPEN, Circuit Judges.

DENISON, Circuit Judge. The court below directed a verdict in favor of the plaintiff, Mrs. Kales, in her suit against the collector to recover that part of her income tax for 1919 which she had paid under protest. The critical question-one of factwas as to the fair value on March 1, 1913, of certain Ford Motor Company stock which Mrs. Kales had then owned, and which she sold in 1919.1 The trial court thought each one of three grounds to be sufficient to support the directed verdict. They were: (1) That, upon a fixing of this value by the commissioner and a sale by Mrs. Kales in reliance on that valuation, an estoppel arose in her favor as against the later attempted revaluation; (2) that the assessment of the tax which the commissioner made upon the return of 1919, and which was based upon this 1913 valuation, and the later approvals of that assessment by the commissioner (and his successors), established that valuation beyond the power of that officer-except for a good cause non-existent here to reopen and reconsider, and this by analogy to a thing adjudicated; and (3) that the deficiency assessment of 1925 which had required the payment now in dispute was void for lack of jurisdictional basis. While we rest our affirmance upon the second of these grounds, the three are not without effect upon each other; and they require a fuller statement of facts including not only those stated in the declaration, but some things assumed as true by all counsel in the case. Blodgett v. Holden, 275 U. S. 142, 146, 48 S. Ct. 105, 72 L. Ed. -.

In 1919 Mrs. Kales owned stock in the

Ford Motor Company, and was asked to sell it for $12,500 per share. She would have to pay as an income tax about two-thirds of whatever taxable profit she realized on the sale; and the amount of such profit would depend upon the fair value as of March 1, 1913. Hence whether the offer should be accepted would depend largely upon that fair value. There had been in 1913 no market

1 After the trial before a jury was entered

upon, counsel for the defendant admitted the

truth of everything well pleaded in the declaration; and hence the basis of the court's action is to be found in the recitals of the declaration, modified if at all, by the consideration whether they are well pleaded as fact allegations. This concession did not include any statement of the actual 1913 value of the stock, if such stateprice; and so it was evident that the antedated valuation as of this earlier period would depend upon what should then have been considered the reasonable prospect of future earnings, and that six years later the best that could be done would be to make an honest and intelligent estimate of the 1913 value. In this situation, the buyers applied to Commissioner of Internal Revenue Roper, and requested official inquiry and action, fixing the 1913 valuation for the guidance of those who were asked to sell. Accordingly, and (it may be assumed) after such inquiry by the experts of the Department as he thought proper, he fixed upon a figure of about $9,500 per share as the fair 1913 value. Mrs. Kales was informed of this action, and, relying thereon, sold her stock, and included in her 1919 return a profit of about $3,000 per share. She filed this return on March 25, 1920, and paid one-quarter of the tax shown by the whole return, which included also other items. Later that year the return was examined and the tax assessed by (acting) Commissioner Meyers upon the $3,000 basis, a notice of such assessment was by him given to her, and she paid the remaining installments. In January, 1921, the return was further examined, and a deficiency assessment was levied by Commissioner Williams, based upon some other items of income. The assessment which included the Ford stock sale was not disturbed, but the correctness of the return in this respect was approved and confirmed by this commissionLater in 1921, the return was again examined by the agents of the department. A report was made approving the stock valuation which had been fixed by Commissioner Roper, and the correctness of the return and the resulting income in this respect was again approved and confirmed by Commissioner Williams. Once more, in 1922, the return was further examined by Commissioner Blair, and a deficiency assessment levied as to other items, but the correctness of the return as to this item was again confirmed. Mrs. Kales' claim of abatement as to this second deficiency assessment was denied and, after payment, a refund was refused, but in both cases Commissioner Blair confirmed and approved the return based upon the Ford stock sale and its 1913 valuation.

er.

On March 13, 1925, Commissioner Blair (by deputy) levied a further deficiency assessment upon the income from this Ford stock sale, and upon the theory that the fair value of the stock in March, 1913, had been about $2,500 per share thus indicating an

additional profit of about $7,000 per share.2 This 1925 assessment was made without notice or hearing, but in claimed pursuance of the statute which permits so-called jeopardy assessments (section 274d, Revenue Act of 1924; Comp St. § 6336%zz(1) (d), but there was no theory or claim of jeopardy, or any jeopardy in fact, except that the fiveyear statute of limitations was about to expire. It also appears that as to the first valuation by Commissioner Roper, as well as to the subsequent confirmations thereof, there is no claim of fraud or misleading or of new evidence, or of mistake of law or of specific fact, but that the new estimate of value is only a variant inference from the same evidential facts upon which the earlier estimate was founded-the language of counsel for the Government stating the only claim of justification for the reassessment to be that it was "a new and better view of the same facts" based upon a "matured and better judgment."

This 1925 deficiency assessment was paid, and this suit was brought.

We pass without consideration the theory of estoppel, intimating no opinion. The full exercise of the governmental power of taxation doubtless requires that the authority of the taxing officer to do tax limiting acts should itself be limited; but, however that rule of limitation should be here applied, the same considerations which are urged to make out estoppel have also much force in deciding as to the finality of an assessment once made.

[1] Where the Revenue Act itself determines the essential elements of the tax liability and leaves to the officers only the duties of computing and collecting, there would be no finality, if they leave these ministerial acts half done or wrongly done; but, where the ascertaining of an essential fact is left to their discretionary judgment, where they exercise that discretion in good faith, and where thereupon the tax is computed and paid, it seemingly must be the theory of normal operation that the matter is closed. If not closed, it must be for some reason which makes the case abnormal. When assessing of ficers fix the value of real estate as a basis for ad valorem taxation, and the tax is paid, may they, after one or two years, reassess, and then again and again? When they ascertain and fix the value of property as a basis of an inheritance tax, and the tax is computed and the estate closed, may they much later reopen and reassess? They may; but on one condition only-that the statutes give them authority therefor; and it is obvious, we think, that the authority must be by express words or by clear implication, in order to confer a power so extraordinary and so pregnant with danger of official oppression.

*

[2] Coming to the present case, we must observe that the question of authority is much narrowed. When this return was filed, it was the duty of the commissioner to "examine as soon as practicable." Section 250b of the Revenue Act of 1918, 40 Stat. p. 1082 (Comp. St. § 6336%tt(b). The whole section seems to contemplate an assessment by the commissioner, and subdivision (d) expressly provides that the "amount of tax due under any return shall be determined and assessed by the commissioner." If he had done nothing except to receive without objection the payment tendered, we would have a broader question not now involved. According to the admitted

facts, he examined the return and assessed the tax based upon the return; and this assessment necessarily approved and confirmed the $9,500 valuation. It may be of importance that this assessment was not merely pro forma, by a hasty acceptance of the return. It may, we think, rightly be assumed that the commissioner then had in his files the report of his experts upon this exact question, and that this gave him knowledge of every essential foundation fact which has even yet been thought to be important. It is not to be supposed that any return -much less this one would be approved and adopted as the basis of assessment without as thorough an examination as the commissioner thought proper. No reason can be suggested why, in this case and after the filing of the return, he should do the valuation work over again, or why he might not adopt as and for his examination and appraisal subsequent to the return those which he had made in anticipation of it. The legal effect of Commissioner Meyers' action is at least as important as if, after return filed, he had made this study and appraisal, and thereupon "determined and assessed the tax."

The question of the authority to make the 1925 assessment may be, for the purposes of this case, still further narrowed by the repeated approvals and confirmations; certainly the authority remaining in the commissioner in 1925 is not thereby increased. The same considerations apply to the lack of identity between successive commissioners. The power of a successor officer to vacate his predecessor's order may well be less than his power to vacate his own (a subject hereafter further mentioned); if so, the successor's authority here involved is thereby lessened.

The question of authority is made still narrower, and in a most important aspect, by the concession that in the earlier appraisal and its confirmations there was no fraud, no misleading, no mistake of law, no mistake of computation, and no mistake of specific fact.

We come then to inquire what statutory authority is claimed for the right to reopen and re-examine this question of the 1913 fair value of this stock, and then, upon a reexamination of the same evidence, to reach a different result, flowing not from the discovery of any fraud or mistake, clerical or otherwise, in any fundamental fact or matter of law, but resulting only from a "more matured judgment." It is not claimed that the authority can be found granted by any express words in any statute; but it is said