United States v. Vassallo, Inc., 12973.

• Decision Date: 04 February 1960
• Docket Number: No. 12973.,12973.
• Citation: 274 F.2d 791
• Parties: UNITED STATES of America, v. VASSALLO, INC., Eugene Vassallo, County of New Castle, Delaware, City of Wilmington, Delaware, Domenick Nardo, Intervenor, Appellant.
• Court: U.S. Court of Appeals — Third Circuit

274 F.2d 791 (1960)

UNITED STATES of America, v. VASSALLO, INC., Eugene Vassallo, County of New Castle, Delaware, City of Wilmington, Delaware, Domenick Nardo, Intervenor, Appellant.

No. 12973.

United States Court of Appeals Third Circuit.

Argued January 8, 1960.

Decided February 4, 1960.

Frederick Knecht, Jr., Wilmington, Del. (Joseph A. L. Errigo, Wilmington, Del., on the brief), for appellant.

Rita E. Hauser, Washington, D. C. (Charles K. Rice, Asst. Atty. Gen., Lee A. Jackson, A. F. Prescott, Attys., Dept. of Justice, Washington, D. C., Leonard G. Hagner, U. S. Atty., Wilmington, Del., on the brief), for appellee.

Before McLAUGHLIN, KALODNER and STALEY, Circuit Judges.

STALEY, Circuit Judge.

The primary question presented by this appeal is whether the appellant-intervenor, a transferee of the taxpayer, was bound by taxpayer's execution of Tax Collection Waiver-Form 900, extending the assessment and collection period for corporate taxes beyond the original six-year period of limitations.

This action arose out of the efforts of the government, for at least the last decade, to collect individual and corporate income taxes from Eugene and Georgie Vassallo and Vassallo, Inc. Eugene Vassallo, individually and as sole shareholder and controlling officer of Vassallo, Inc., was found guilty in 1949 of willfully attempting to evade personal and corporate income taxes for the fiscal years ended March 31, 1944, 1945 and 1946. We affirmed the conviction on appeal, United States v. Vassallo, 3 Cir., 1950, 181 F.2d 1006. Jeopardy assessments were made by the Collector of Internal Revenue on November 4, 1949, for income taxes, fraud penalties and interest for the taxable years ended March 31, 1944, through March 31, 1946, against Eugene and Georgie Vassallo and for the taxable years ended March 31, 1942, through March 31, 1946, against Vassallo, Inc. Demands for payment were duly made and notices of federal tax liens on all the taxpayers' property were filed on November 7, 1949, in the office of the Recorder of Deeds for New Castle County, Delaware.

The taxpayers thereafter filed a petition in the Tax Court for redetermination of the tax deficiencies and penalties for the years in question. The Tax Court upheld the determinations in Vassallo v. Commissioner of Internal Revenue, 1955, 23 T.C. 656.

On June 2, 1955, the individual taxpayers, Eugene and Georgie Vassallo, executed Tax Collection Waiver-Form 900, extending to December 31, 1960, the period for collection of the tax due for the fiscal years ended March 31, 1944, 1945, and 1946. In addition, Eugene Vassallo, the president and sole shareholder of Vassallo, Inc., executed a similar waiver relating to the tax liability of the corporate taxpayer.

On March 5, 1957, the United States filed a complaint in the District Court for the District of Delaware for an adjudication of the amount for which the taxpayers were indebted to it and to establish and foreclose all its liens and determine the rights of the other lienors, the County of New Castle, Delaware, and the City of Wilmington, Delaware.

A pre-trial hearing followed at which the taxpayers conceded the correctness of the determined deficiencies and the validity of the United States tax liens. Accordingly, the District Court on November 19, 1958, ordered the foreclosure of the liens for federal taxes by the public sale of taxpayers' property. The proposed notices of sale were approved and the sale was made at public auction on April 21, 1959. The United States on April 30, 1959, moved for confirmation of the sale.

While this motion was pending, on May 4, 1959, Domenick Nardo moved to intervene, pursuant to Rule 24 of the Federal Rules of Civil Procedure, 28 U.S.C., for the purpose of contesting the confirmation of the sale. The court allowed the motion. Vassallo, Inc., moved to set aside the sale of its property on the same day. Nardo's interest in the property is limited to the premises at 105-107 West Seventh Street, Wilmington, Delaware, and to the personal property thereon. On May 12, 1954, he purchased from Vassallo, Inc., all the personal property on those premises and on June 16, 1954, leased the premises for a period of five years with an option of renewal for a further five-year term. These transactions took place within six years after the initial assessment of the tax but prior to the execution of the waiver by Vassallo, Inc.

Following a hearing, the District Court denied the motions of Nardo and Vassallo, Inc., and confirmed the sale as to all the properties.

Although the appellant and the government relied quite heavily, both in their briefs and at oral argument, on various sections of the Internal Revenue Codes of 1939 and 1954 pertinent to the validity of the waiver executed by ...