239 F.2d 107 (5th Cir. 1956), 16145, Perry v. Allen

Docket Nº:16145.
Citation:239 F.2d 107
Party Name:George M. PERRY, Sr., Appellant, v. Marion H. ALLEN, Collector of Internal Revenue, Appellee. United States of America, Intervener.
Case Date:November 30, 1956
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit

Page 107

239 F.2d 107 (5th Cir. 1956)

George M. PERRY, Sr., Appellant,


Marion H. ALLEN, Collector of Internal Revenue, Appellee.

United States of America, Intervener.

No. 16145.

United States Court of Appeals, Fifth Circuit.

Nov. 30, 1956

Page 108

R. Lamar Moore, Waldo DeLoache, Moore, Gibson, DeLoache & Gardner, Moultrie, Ga., for appellant.

Karl Schmeidler, Atty., Dept. of Justice, Charles K. Rice, Asst. Atty. Gen., Lee A. Jackson, A. F. Prescott, Attys., Dept. of Justice, Washington, D.C., Frank O. Evans, U.S. Atty., Macon, Ga., for appellee.

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Before TUTTLE, CAMERON and JONES, Circuit Judges.

CAMERON, Circuit Judge.

This appeal presents the question whether the Court below was required by Rule 25(a)(1) of the Federal Rules of Civil Procedure, 28 U.S.C.A., to dismiss the action brought by George M. Perry, Sr., Appellant, against the Collector of Internal Revenue, where the Collector died and W. Samuel Edwards, Administrator of his estate (appellee) was not substituted as a party within two years after the Collector's death. Appellant had filed suit for refund of a partial payment made by him of income taxes assessed for the year 1944, and the Court below denied appellant's motion to substitute the administrator of the dead Collector's estate, and granted a motion by the administrator to dismiss the action on the ground that the administrator was not substituted within two years of the death under the requirements of Rule 25(a) F.R.C.P. 1 The Court's action was grounded upon its opinion that it was 'mandatory upon the Court to deny the substitution after the expiration of the two year limitation.'

The attorneys for the Government, appearing for the administrator, seek to support that decision with the contention that 'Rule 25(a) operates both as a statute of limitations upon revivor and as a mandate to dismiss the action if not revived within the two year period, and its provisions are specific and admit of no variation.' In their view the Supreme Court's decision in Anderson v. Yungkau, 1947, 329 U.S. 482, 67 S.Ct. 428, 91 L.Ed. 436, sustains this position completely.

Appellant, on the other hand, argues that the Rule is nothing but a rule of procedure and cannot be given the effect of a statute of limitations, and is invalid if construed as such; and that Yungkau was based upon a statute of limitations then in force but since repealed, and that the construction there placed upon the Rule was in reality the application of the statute as enforced by the Rule. We agree with appellant.

The terms of the Rule 2 are mandatory, but they merely tracked and made operative the provisions of the existing Statute of Limitations 3 which established the fixed limits which the Rule enforced. This statute applied to all parties

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and to all suits whether in equity, admiralty or law, and vested United States District Courts with jurisdiction to substitute fiduciaries only within two years from the date of the death of the party and provided the estate had not been settled and distribution made. It was within the competence of Congress to enact statutes of limitation applying to cases in the federal courts 4 as it was within the competence of state legislature to pass similar statutes effective within the respective states. 5

When the Supreme Court enacted Rule 25(a)(1) there was, therefore, a Federal Statute of Limitation, and the Rule essayed merely to provide the means of enforcing it, -- mainly by providing substitution by motion rather than by the more cumbersome procedures of Scire facias. When Yungkau was decided, the Statute was the law of the land and the Supreme Court merely enforced its mandatory provisions. A reading of Yungkau 6 will reveal clearly that the Court was basing its decision upon the statute as the foundation of the Rule. Its language was directed to the Rule because the contention before it was that Rule 6(b) invested the Court below with discretion to relax the fixed limitations spelled out in Rule 25(a)(1).

The Court decided that the Rule required the dismissal of the action where substitution had not been made within the two year period. That was because the statute had vested in the District Court jurisdiction to permit the substitution only within two years. There is nothing in the language of the Supreme Court, and certainly nothing in the basic facts underlying it, justifying the argument that Rule 25(a)(1) would have been given the meaning and effect ascribed to it by appellee unless the Rule and the Statute were being applied as a unitary scheme, the Statute providing the substance and the Rule providing the mechanics.

But the Statute was repealed by the Revision Act of 1948 and, at the time the action before us was begun, there was no Federal Statute of Limitations. There have been no authoritative decisions since Yungkau, 7 and we are called upon to decide, without the aid of controlling precedents, the effect and validity of the

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Rule standing alone and without any statutory support. 8

We are unable to agree with the position of appellee that 'Rule 25(a) operates * * * as a statute of limitations upon revivor * * *.' A 'statute' must, under well settled principles and as the word connotes, be the act of a legislative body. 9 The placing of an absolute time limit upon the assertion of a right goes to the substance of the right even though such an Act is catalogued as relating to remedy alone. 10 Such a limitation may be placed solely by the legislature and is beyond the competence of a court exercising its power to formulate rules of procedure.

The Supreme Court spelled out its own concept of the rule-making power many years before the steps culminating in F.R.C.P. had their inception. Washington Southern Navigation Co. v. Baltimore, etc. Steamboat Co., 1924, 263 U.S. 629, 635, 44 S.Ct. 220, 222, 68 L.Ed. 480:

'The function of rules is to regulate the practice of the court and to facilitate the transaction of its business. This function embraces, among other things, the regulation of the forms, operation and effect of process; and the prescribing of forms, modes and times for proceedings. Most rules are merely a formulation of the previous practice of the courts. Occasionally, a rule is employed to express, in convenient form, as applicable to certain classes of cases, a principle of substantive law which has been established by statute or decisions. But no rule of court can enlarge or restrict jurisdiction. Nor can a rule abrogate or modify the substantive law. * * *' 11

The language of the Rule-Making Statute of 1934, 12 investing the Supreme Court with power to enact rules of procedure, contains a recitation of the categories which may be covered and a caveat as to those which may not:

'The Supreme Court shall have the power to prescribe, by general rules, the forms of process, writs, pleadings, and motions, and the practice and procedure of the district courts of the United States * * *. Such rules shall not abridge, enlarge or modify any substantive right * * *.'

It is plain that these Rules are designed to provide the machinery for the administration of justice, the modes of proceeding by which legal rights are enforced; and do not purport to deal

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with the law which gives or defines such rights, or their character, or the existence or boundaries of the remedies vouchsafed for the establishment of those rights; and that the procedures they provide are only means to the end of achieving substantial justice and are not ends in themselves.

The Supreme Court has placed such an estimate on its rule-making power created by that Statute in Sibbach v. Wilson & Co., 1941, 312 U.S. 1, 10 et seq., 655, 61 S.Ct. 422, 424, 85 L.Ed. 479:

'Hence we conclude that the Act of June 19, 1934, was purposely restricted in its operation to matters of pleading and court practice and procedure. Its two provisos or caveats emphasize this restriction. The first is that the court shall not 'abridge, enlarge, nor modify the substantive rights', in the guise of regulating procedure. * * *

'The test must be whether a rule really regulates procedure, -- the judicial process for enforcing rights and duties recognized by substantive law and for justly administering remedy and redress for disregard or infraction of them. * * *'

Under these tests, we hold that Rule 25(a)(1) is not a Statute of Limitations and is invalid insofar as it attempts to abridge appellant's substantive right to bring his civil action to trial on its merits, by placing a categorical and inflexible time limit upon his right to substitute the collector's administrator. Such an attempt is outside the mandate and inside the caveat of the Act of Congress. 13

For the substantive law of limitations upon the right of substitution, we must look to the general law, federal or state, governing such matters. We are dealing here with a federal matter 14 and the applicable rule of limitations will be determined by the nature of appellant's action, whether it belongs to law or to equity. 15 It is settled that a suit against the collector such as this one is equitable in its nature. 'While a suit against a collector for the refund of taxes illegally paid is in the nature of an action for money had and received and therefore in form a law action, it is, nevertheless, governed by equitable principles.' 16

'Suits against collectors are maintainable on the theory of money had and received. In such suits the plaintiff may recover only such money as he is in equity entitled to recover, and as defendant is not entitled to retain.' 17

In Hartwell Mills v. Rose, 5 Cir., 1932, 61 F.2d 441, 443, we said: 'This is a suit for money had and received,...

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