United States v. Scott

• Decision Date: 30 March 1948
• Docket Number: No. 13589.,13589.
• Citation: 167 F.2d 301
• Parties: UNITED STATES v. SCOTT.
• Court: U.S. Court of Appeals — Eighth Circuit

167 F.2d 301 (1948)

UNITED STATES v. SCOTT.

No. 13589.

Circuit Court of Appeals, Eighth Circuit.

February 27, 1948.

Rehearing Denied March 30, 1948.

Harry Marselli, Sp. Asst. to the Atty. Gen. (Theron L. Caudle, Asst. Atty. Gen., Sewall Key, Lee A. Jackson, and C. Moxley Featherston, Sp. Assts. to the Atty. Gen., and Drake Watson, U. S. Atty., of St. Louis, Mo., on the brief), for appellant.

Chase Morsey, of St. Louis, Mo., for appellee.

Before GARDNER, THOMAS and JOHNSEN, Circuit Judges.

JOHNSEN, Circuit Judge.

The question is whether the six-year limitation fixed by 26 U.S.C.A. Int.Rev. Code, § 276(c), 53 Stat. 87, for bringing suits to collect income taxes after their assessment,¹ is controlling of an action by the United States to recover on a contract between a third party and a taxpayer in which the third party, subsequent to a determination by the Commissioner of income tax deficiencies against the taxpayer and a redetermination by the Board of Tax Appeals (now the Tax Court), "assumes and agrees also to pay all of the personal and individual debts and liabilities of the taxpayer now existing".

The redetermination of the taxpayer's income tax deficiencies was entered by the Board on May 26, 1936. The taxpayer died on June 15, 1936.² The contract between the third party and the taxpayer, which was in writing, was executed on June 8, 1936. It was made in Missouri, where both of them resided. This action by the United States against the third party, for the amount of the taxpayer's deficiencies, was instituted on December 26, 1945, in Missouri.³ The statute of limitations in Missouri on "any writing * * * for the payment of money" is 10 years. Mo.R.S.A. § 1013.

The trial court sustained a motion by the defendant to dismiss the complaint, on the ground that the limitation in 26 U.S.C.A. Int.Rev.Code, § 276(c), was controlling of the Government's right to sue the third party on the contract, and that the action therefore was barred as not having been commenced within 6 years after the redetermination of the taxpayer's deficiencies became final. The case is here on the Government's appeal.

We think the six-year limitation in 26 U.S.C.A. Int.Rev.Code, § 276(c), on collecting income taxes after assessment, has reference only to such liabilities for payment as are imposed upon a party by law and not to any liability which a party may voluntarily impose upon himself by contract so as to give the United States an additional and special right of action. Thus, indicatively, in United States v. John Barth Co., 279 U.S. 370, 375, 49 S.Ct. 366, 367, 73 L.Ed. 743, a five-year limitation for bringing a "suit or proceeding" to collect income taxes, contained in the Revenue Acts of 1918, 1921 and 1924, respectively, was held not to have application to an action on a bond which had been executed by the taxpayer and a surety to obtain a temporary stay against the immediate collection of some taxes. The court said: "The making of the bond gives the United States a cause of action separate and distinct from an action to collect taxes which it already had. The statutes now pleaded to bar the suit cannot be extended by implication to a suit upon a subsequent and substituted contract." See also United States v. Rennolds, D.C.S.D.N.Y., 27 F.2d 902; McCaughn v. Philadelphia Barge Co., D. C.E.D.Pa., 27 F.2d 628; United States v. Onken Bros. Co., D.C.Wyo., 23 F.2d 367.

In technical concept, appellee's liability here was not for taxes as such but for damages from breaching his obligation to satisfy a debt of the taxpayer. The provisions of the Internal Revenue Code do not make such an obligor a "taxpayer".⁴ Indeed, the Revenue Code does not even make mention of such a contractual liability, and we can find nothing in its language or purpose to impliedly suggest that Congress intended such independent and voluntary undertakings, which might operate in favor of the Government, to be in any way subject to the prescriptions and limitations of the revenue statutes. Cf. United States v. Bessen, D.C.S.D.N.Y., 8 F.R.D. 75. The contract to pay the taxpayer's debts and liabilities, having been both made and intended to be performed in Missouri, was subject generally to the ten-year limitation of Mo.R.S.A. § 1013. This is true as to the Government's debt the same as to the debts of other creditors.⁵

The cases upon which appellee relies, such as United States v. Updike, 281 U.S. 489, 50 S.Ct. 367, 74 L.Ed. 984, United States v. Motsinger, 4 Cir., 123 F.2d 585, United States v. Weisburn, D.C.E.D.Pa., 48 F.Supp. 393, and United States v. First Huntington Nat. Bank, D.C.S.D.W.Va., 34 F.Supp. 578, are not applicable in the present situation, because they all involve a liability for taxes imposed by law and not an independent and special liability which a party has voluntarily imposed upon himself by contract.

But appellee further argues that the six-year limitation of 26 U.S.C.A. Int. Rev.Code, § 276(c), still should control, because the contract on which the Government bases its suit shows that appellee was to take over all the assets and property of the taxpayer, and he therefore had the status of a "transferee", who was entitled to the benefit of the limitation by virtue of 26 U.S.C.A. Int.Rev.Code, § 311(a) (1).⁶ The Government, however, is not seeking to hold appellee liable as a "transferee", i. e., as one who has taken over property...