Before KALODNER, STALEY and FREEDMAN, Circuit Judges.
This suit for the recovery of money owed for estate taxes has been brought by the United States against Morton M. Rose and Betsy R. Wittenberg, the administrators of the estate of Morris D. Rose, in their individual capacity and against their surety, the Aetna Insurance Company.*fn1 The defendants do not deny liability for the amount sought to be recovered*fn2 but rely solely upon the defense of the statute of limitations applicable to proceedings in court for the collection of a tax.*fn3 The defendant surety admits that if the individual defendants are liable, it is liable. The district court rejected the defense.
The relevant facts are not controverted. On April 3, 1946, the individual defendants in this suit were duly qualified as administrators of the estate of Morris D. Rose and filed a bond in the sum of $180,492.*fn4 The final account of the administrators was filed with the Orphans' Court of Philadelphia County, Pennsylvania, on March 31, 1948. In July of the same year, they were ordered to distribute the assets of the estate in accordance with the account. This they did, retaining only sufficient funds to pay the estate tax. In December 1949, the following petition was presented by the administrators to the Orphans' Court of Philadelphia County.*fn5
"In the Orphans' Court of Philadelphia County
MORRIS D. ROSE, Deceased of 1948
"The petition of Morton M. Rose and Betsy Rose Wittenberg, administrators of the estate of Morris D. Rose, deceased, respectfully represents:
On April 3, 1946, your petitioners were duly appointed administrators of the above named estate and qualified by filing their bond or bonds in the sum of One Hundred Eighty Thousand, Four Hundred Ninety-two Dollars ($180,492.00).
On March 31, 1948, your petitioners filed their first and final account as administrators of the above estate. An adjudication thereon was entered on July 14, 1948, whereby, inter alia, petitioners were directed to make distribution to the heirs of the decedent.
Your petitioners have complied with this order leaving in their custody only funds or property required to pay any outstanding obligation which may be found to be due as federal estate tax to the United States. That matter is now pending.
The maximum federal estate tax that might be assessed will not be in excess of Twenty Thousand Dollars ($20,000.00). The amount of security so heretofore filed is in excess of any amount required to meet any exigency of their trust. The continuance of such amount of security requires the payment of a premium to the bonding company that is acting as surety on such bond and creates an unnecessary hardship and expense to the said estate.
"WHEREFORE, your petitioners pray that the security directed to be entered by them be reduced from One Hundred Eighty Thousand, Four Hundred Ninety-two Dollars ...