McDonald v. Phinney, 18558.

• Decision Date: 05 January 1961
• Docket Number: No. 18558.,18558.
• Citation: 285 F.2d 121
• Parties: Sam G. McDONALD, Appellant, v. Robert L. PHINNEY, Director of Internal Revenue, First District of Texas, and the United States, Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

285 F.2d 121 (1961)

Sam G. McDONALD, Appellant, v. Robert L. PHINNEY, Director of Internal Revenue, First District of Texas, and the United States, Appellees.

No. 18558.

United States Court of Appeals Fifth Circuit.

January 5, 1961.

Frank L. Scofield, Austin, Tex., for appellant.

C. Moxley Featherston, Lee A. Jackson, Dept. of Justice, Washington, D. C., Charles K. Rice, Asst. Atty. Gen., Russell B. Wine, U. S. Atty., San Antonio, Tex., A. F. Prescott, Norman H. Wolfe, Attorneys, Department of Justice, Washington, D. C., K. Key Hoffman, Jr., Asst. U. S. Atty., San Antonio, Tex., for appellees.

Before TUTTLE, Chief Judge, and JONES and BROWN, Circuit Judges.

TUTTLE, Chief Judge.

Notice was served by mail on appellant on November 29, 1955, as to certain deficiencies in federal income tax payments for 1946, the deficiency claimed by the United States being in the amount of $44,997.26, plus fraud penalties of $22,498.63, under the Internal Revenue Code of 1939, § 293(b), 26 U.S.C.A. § 293(b), and additional penalties for a substantial underestimation of tax of $2,709.24 under Section 294(d) (2), 26 U.S.C.A. § 294(d) (2).

On February 20, 1956, appellant filed a petition in the Tax Court in order to obtain a redetermination of the alleged deficiency. The issues raised in that petition did not, however, come to trial but were settled on a stipulation of counsel. The settlement contemplated a deficiency of $6,500 plus an additional sum of $325, as provided by section 293(a) of the Code of 1939. On February 3, 1958, the Tax Court entered judgment against appellant on the basis of this stipulation between the parties. No appeal was taken from the judgment so entered.

On October 2, 1959, appellant filed a complaint in the district court by which he prayed for an injunction to prohibit the assessment of taxes, penalties or interest due against him for 1946 and to further prohibit any levy against his property. In support of his petition he alleged that the assessment and collection of the claim are barred by the statute of limitations, and, further, that he lacked sufficient funds to pay the sum alleged to be owing to the government and that to allow the government to collect such sums would be to subject his property to a forced sale by reason of which he would suffer irreparable damage. On this basis appellant claimed that he was entitled to equitable relief because he could not, without considerable damage to himself, pursue his legal remedy, that of making payment of the sums alleged to be owed the government and of bringing suit for a refund. The effect of this situation, claimed appellant, was to make a legal remedy unavailable to him.

A temporary injunction was granted by the district court on November 17, 1959, but the district court refused to make the injunction permanent and on December 4, 1959, on the motion of the District Collector and the government, the court dismissed the complaint under the provisions of 26 U.S.C.A. § 7421, 28 U.S.C.A. § 2410, and 28 U.S.C.A. § 2201. This cause was dismissed on April 18, 1960, and it is from that judgment of dismissal that this appeal is pursued.

We think that the trial court acted properly in dismissing the complaint. Section 7421 clearly prohibits suits to restrain assessment or collection of taxes except in certain cases not relevant to the present inquiry. While it is true that, notwithstanding the statutory prohibition against such suits, they have been allowed under certain circumstances, ...