The opinion of the court was delivered by: BEEKS
The above-entitled cause came on regularly for trial on September 8, 1965, before the undersigned judge of the United States District Court for the Western District of Washington, Northern Division, sitting without a jury. The plaintiff was represented by his counsel, Gordon N. Cromwell, 1510 I.B.M. Building, Seattle, Washington, and Maurice R. McMicken, 656 Central Building, Seattle, Washington, and defendant was represented by its counsel, Bruce A. Koppe, appearing on behalf of the Department of Justice. The cause was submitted for decision upon an agreed statement of facts incorporated in the pretrial order entered August 11, 1965, together with a supplemental stipulation of facts and two exhibits filed September 8, 1965, and the court having considered the matter, together with the briefs filed by counsel, and having rendered its Memorandum Decision on September 13, 1965, which is incorporated herein by reference, does hereby enter herein its findings of fact and conclusions of law, as follows:
1. Jurisdiction is vested in this Court by virtue of the following facts admitted by the parties:
(a) This is an action under Section 1346(a)(1), Title 28, United States Code, for the refund of income taxes (with statutory interest) paid by plaintiff for the calendar years 1958, 1959, 1960 and 1961.
(b) Plaintiff, J.R. Tolmie, an unmarried man, was at all times material to this action and still is a resident of Seattle, Washington. He filed individual income tax returns for 1958, 1959, 1960 and 1961 with the District Director of Internal Revenue at Tacoma, Washington.
(c) On April 13, 1962, plaintiff filed with said District Director timely claims for refund of taxes paid because of the inclusion of pension payments hereinafter referred to in his reported income, in the following amounts: 1958, $862.75; 1959, $1,039.05; 1960, $1,124.98; and 1961, $1,203.29.
(d) On January 14, 1963, said District Director notified plaintiff by certified mail of the disallowance in full of each claim for refund filed for said years. The complaint herein was filed on December 14, 1964.
2. The plaintiff was born March 19, 1897. He was employed by the Pacific Telephone and Telegraph Company (now known as Pacific Northwest Bell Telephone Company) for thirty-one years prior to March 19, 1956, on which date plaintiff became 59 years old.
3. On March 16, 1956, plaintiff became ill and upon the advice of his own physician was hospitalized approximately one month. On the eighth day of his illness, application was made by his supervisor for sickness disability benefits under the company's Plan for Employees Pensions, Disability Benefits and Death Benefits. As a result, from March 26, 1956, he began receiving sickness disability benefits in the amount of $725.00 per month, which, because of plaintiff's length of service with the company, represented full pay. Because plaintiff had more than twenty-five years' service, he was at the time of his illness entitled to receive sickness disability benefits for a period of 52 weeks under the Pacific Telephone and Telegraph Company's Plan for Employees' Pensions, Disability Benefits and Death Benefits.
4. On April 3, 1956, the secretary of the Employees' Benefit Committee charged with administering the Plan for Employees' Pensions, Disability Benefits and Death Benefits, filed a report with plaintiff's supervisor, authorizing sickness disability payments to plaintiff of $725.00 per month for the period from March 26, 1956 to March 24, 1957, providing his disability continued. In the same report, plaintiff's supervisor was requested to have plaintiff's physician furnish the company a medical report on July 30, 1956, if his condition did not sooner permit him to resume work, giving full particulars regarding his condition and information to justify the payment of further benefits.
5. On August 21, 1956, some five months after plaintiff started receiving sickness benefits, he was examined by the Pacific Telephone and Telegraph Company doctor who reported plaintiff was suffering from cerebral arteriosclerosis, that his condition was expected to be progressive, and that although plaintiff wanted to go back to work, the doctor recommended to the company that it not return plaintiff to work. On September 10, 1956, plaintiff's doctor examined him and filed a report with the Pacific Telephone and Telegraph Company declaring plaintiff to be suffering from nervous exhaustion and beginning arteriosclerosis, and that because of such illness, plaintiff had slowed up considerably both mentally and physically and that there was little chance of him improving beyond his then present level of ability.
6. On March 19, 1957, plaintiff became 60 years old. Effective as of March 25, 1957, the day following the expiration of his maximum sickness benefits, plaintiff was put on a service pension by Pacific Telephone and Telegraph Company because of permanent disability resulting from arteriosclerosis. Under the pension plan plaintiff received $198.79 per month. The pension has continued to be paid since then, except that the ...