United States v. Saxe

• Citation: 261 F.2d 316
• Decision Date: 19 November 1958
• Docket Number: No. 5359,5360.,5359
• Parties: UNITED STATES of America, Plaintiff, Appellant, v. Hyman G. SAXE et al., Executors, et al., Defendants, Appellees (two cases).
• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)

261 F.2d 316 (1958)

UNITED STATES of America, Plaintiff, Appellant, v. Hyman G. SAXE et al., Executors, et al., Defendants, Appellees (two cases).

Nos. 5359, 5360.

United States Court of Appeals First Circuit.

Heard October 7, 1958.

Decided November 19, 1958.

I. Henry Kutz, Atty., Dept. of Justice, Washington, D. C., with whom Charles K. Rice, Asst. Atty. Gen., and Lee A. Jackson and Fred E. Youngman, Attys., Dept. of Justice, Washington, D. C., Anthony Julian, U. S. Atty., and Andrew A. Caffrey, Asst. U. S. Atty., Boston, Mass., were on the brief, for appellant.

Harry Bergson, Boston, Mass., with whom Maurice Wolf, Harry Bergson, Jr., and Bergson & Wolf, Boston, Mass., were on the brief, for appellees.

Before MAGRUDER, Chief Judge, and WOODBURY and HARTIGAN, Circuit Judges.

WOODBURY, Circuit Judge.

The only question presented on this appeal is whether a document entitled "Claim of the United States for Taxes" filed in the Massachusetts Probate Court for Norfolk County in the Estate of David Saxe, deceased, constituted "a proceeding in court" within the meaning of that phrase as used in § 276(c) of the Internal Revenue Code of 1939, Revenue Act 1938, 52 Stat. 540, 26 U.S.C. § 276 (c), quoted in material part in the margin.¹

The following essential facts are not in dispute.

In March, 1948, the Commissioner of Internal Revenue made assessments of income tax deficiencies, which with penalties and interest thereon amounted to more than $50,000, against the decedent, David Saxe, for the years 1942 through 1945. Lists covering these assessments were received by the Collector of Internal Revenue at Boston in the same month and he immediately issued notices thereof and demanded payment, which it is alleged "were then and there and thereafter refused." The Collector filed notices of liens on December 10, 1948.

David Saxe died testate on November 18, 1951, and in regular course thereafter his will was admitted to probate in Norfolk County Massachusetts and the defendants-appellees, Hyman G. Saxe and Saul A. Shuman, were appointed executors of his estate. They have never represented that the estate would probably prove insufficient for the payment of the decedent's debts and they are still administering it.

On December 4, 1952, within one year from the time the executors gave bond for the performance of their trust, the United States filed in the Probate Court for Norfolk County in the David Saxe estate a claim for the taxes allegedly due to it from the estate. This document, entitled as set out earlier herein, consists in the words of the District Court 159 F.Supp. 222 "* * * of a sworn statement by the Director of Internal Revenue to the effect that the decedent was indebted to the United States in the sum of $74,720, describing the nature of the indebtedness; that no portion of the same had been paid; that the United States did not have any security, other than statutory liens; that the indebtedness was presently due, and that it had certain statutory priorities. It concluded as follows: `Attention is also called to the provisions of Section 3467 of the Revised Statutes 31 U.S.C.A. § 192, with respect to the personal liability of every executor, administrator, or other person who fails to pay the claims of the United States in accordance with their priority.'"

Nearly five years later, on September 12, 1957, the United States filed its complaint in the court below in the instant case wherein it asked not only for a money judgment against Saxe and Shuman as executors for alleged deficiencies in income taxes due from their decedent, but it also asked for similar judgments against the two individually for asserted deficiencies in their respective personal income taxes. As executors, the defendants-appellees moved for a summary judgment dismissing the complaint as to them in their fiduciary capacity on the ground that the government's suit so far as they were concerned in that capacity was barred by the statute of limitations. The court below ruled that the action would have to be dismissed as against the defendants as executors and on the same day that it filed its opinion, January 24, 1958, it entered an order allowing the defendants' motion to dismiss. The United States filed a timely notice of appeal from this order. But in the meantime the defendants had moved for judgment under Rule 54(b), Fed.Rules Civ. Proc. 28 U.S.C. and the court below on March 5, 1958, in compliance with the motion, entered a final judgment in accordance with that Rule directing the entry of a judgment dismissing the complaint as against the defendants as executors with a determination that there was no just reason for delay. The United States filed a timely notice of appeal from this judgment.

The appeal from the order allowing the defendants-appellees' motion for summary judgment must be dismissed on the ground that failure to comply with the requirements of Rule 54(b) makes that order not appealable.² There can be no doubt, however, that the appeal from the judgment of March 5, 1958, presents the merits of this case for our consideration.

It is conceded that the Massachusetts statute limiting the time within which an executor or administrator may be held to answer to an action brought by a creditor of the deceased does not apply to actions like this. Taylor v. United States, 1949, 324 Mass. 639, 88 N.E.2d 121, certiorari denied 1950, 338 U.S. 948, 70 S.Ct. 487, 94 L.Ed. 585. The limitation imposed by the federal statute quoted in footnote 1 above applies, and it is evident that while the "claim" of the United States for income taxes was filed in the appropriate Probate Court of the Commonwealth within the six year period therein specified, its suit to collect the unpaid taxes alleged in its complaint to be due from the executors was not brought until long thereafter.

Thus the question squarely presented is whether the "claim" filed by the United States in the Probate Court in the David Saxe estate was "a proceeding in court" within the meaning of § 276(c), supra, for if it is not, then obviously the United States cannot maintain its present action.

The District Court held that under the Massachusetts statutes and interpretive decisions the filing of the claim by the United States could not be said to constitute the commencement of a suit in the Probate Court to recover the taxes for the reason that under the law of Massachusetts the place for suits against execu...