202 F.2d 508 (4th Cir. 1953), 6497, Yoke v. Mazzello

Docket Nº:6497.
Citation:202 F.2d 508
Party Name:YOKE, Collector of Internal Revenue, v. MAZZELLO et al.
Case Date:February 03, 1953
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit

Page 508

202 F.2d 508 (4th Cir. 1953)

YOKE, Collector of Internal Revenue,



No. 6497.

United States Court of Appeals, Fourth Circuit.

February 3, 1953

Argued Nov. 14, 1952.

George F. Lynch, Sp. Asst. to the Atty. Gen. (Charles S. Lyon, Acting Asst. Atty. Gen., Ellis N. Slack, Robert N. Anderson and Maryhelen Wigle, Sp. Assts. to the Atty. Gen., and A. Garnett Thompson, U.S. Atty., Charleston, W. Va., on the brief), for appellant.

Joseph Luchini, Beckley, W.Va. (Carl Sanders, Beckley, W. Va., on the brief), for appellees.

Before SOPER and DOBIE, Circuit Judges, and BARKSDALE, District Judge.

SOPER, Circuit Judge.

This appeal is taken from an order of the District Court overruling the Collector's motion to dismiss taxpayers' complaint which sought an injunction against the collection of a jeopardy assessment for income taxes for taxable years 1943 to 1950 inclusive, totaling $8, 748.65 plus fraud penalties in the amount of $5, 973.36. The complaint alleged the following pertinent facts:

Luigi Mazzello is 73 years of age and Chiara, his wife, is 62. Late in 1941 Chiara was deeded a piece of land in Beckley, West Virginia, fronting on a main highway, and in 1942 she completed construction of a two-story building on the lot, consisting of dwelling quarters and a large storeroom. Late in 1942 taxpayers moved into the dwelling quarters and shortly thereafter Chiara leased the store to one John Dicicuccio, who began to operate a restaurant and beer parlor on the premises in January, 1943, under the name 'The Blue Star' after obtaining the requisite licenses in his name from federal, state, and county authorities. Dicicuccio operated the establishment until about June 30, 1946, and during this time the taxpayers had no interest in the enterprise except that their daughter worked for Dicicuccio for a time as an employee. See Mazzella v. Yoke, D.C., S.D.W.Va., 70 F.Supp. 462, in which

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the District Court enjoined the collection from the taxpayers of cabaret taxes which accrued during Dicicuccio's tenancy.

From July 1, 1946, when Dicicuccio gave up the premises, until July, 1950, Luigi Mazzello operated 'The Blue Star' and paid taxes on all income earned during that period. From July, 1950 to July, 1951, the business was run by taxpayers' son-in-law, and at the date of the complaint was run by Chiara Mazzello, her husband being physically unable to do so.

On January 29, 1952, the taxpayers received notice from the Collector advising them of jeopardy assessments for alleged deficiencies for the years 1943 to 1950, and making demand for immediate payment, and stating that if payment was not made within ten days a warrant of distraint would be issued. A similar notice was received on February 19, 1952. Thereafter, on March 10, 1952 a warrant of distraint for each of the years in question was issued and placed in the hands of the Deputy Collector to be levied upon the property of the taxpayers.

On March 11, 1952, the taxpayers filed a bond to stay the collection of the alleged deficiency in a sum double the amount of the assessment with personal sureties owning unencumbered real estate of a value in excess of $36, 000; but the Collector 'arbitrarily and capriciously' refused to accept t e bond, stating that the surety on the bond was not satisfactory, and that under the policy of his office for many years the only acceptable bond was the delivery of personal property having a fair market value of at least the amount required in the bond, or a surety bond from a recognized bonding company in an amount equal to not less than double the assessment. In explanation the Collector said that personal bonds had been found to be insecure in so many cases that they were no longer accepted.

The taxpayers further alleged that they had no assets with which to pay the taxes except the property described above and other real estate, worth in all $18, 000, and that if the distraint should be executed they would be ruined financially since they would lose their home, their business and their life savings, and would not be restored...

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