Spector v. Comm'r of Internal Revenue
| Decision Date | 13 April 1964 |
| Docket Number | Docket No. 94867. |
| Citation | 42 T.C. 110 |
| Parties | RAYMOND SPECTOR AND SELMA SPECTOR, PETITIONERS, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT |
| Court | U.S. Tax Court |
OPINION TEXT STARTS HERE
Morris W. Primoff, for the petitioners.
Edward Hance and W. T. Holloran, for the respondent.
Petitioners' representative negotiated a settlement stipulation with Government counsel, which was filed with this Court. Petitioners thereafter retained new counsel who sought to set aside the stipulation. Held, no valid grounds for setting aside the stipulation have been established.
This is a proceeding on an order to show cause, as more fully hereinafter set forth.
The Commissioner determined certain deficiencies in income tax against petitioners, husband and wife, for the years 1955-58, and they filed a petition in this Court contesting those deficiencies on October 30, 1961. On November 1, 1961, Jack A. Rothenstein, a member of the bar of this Court, entered his appearance for the petitioners. Thereafter, on December 10, 1962, the clerk of this Court served notice setting the case for trial in New York on March 18, 1963.
As a result of four separate settlement conferences between Rothenstein and representatives of the Government, a settlement agreement was entered into and signed by Rothenstein for the petitioners and by (or on behalf of) the Chief Counsel of the Internal Revenue Service for the Government. In that agreement it was stipulated that ‘the Court may enter’ a decision the terms of which were set forth in full in the document containing the stipulation. That stipulation was received by the Court on March 8, 1963, the decision, agreed upon by counsel, was signed by Judge Tietjens of this Court, and that decision was entered March 11, 1963. That decision read as follows:
Pursuant to agreement of the parties in the above-entitled case, it is
ORDERED and DECIDED: That there are deficiencies in income taxes due from the petitioners for the taxable years 1955, 1956 and 1957 in the amounts of $58,995.79, $850.31 and $232.00, respectively, and that the following statement shows the petitioners' income tax liability for the taxable year 1958:
+--------------------------------------+
¦Tax liability ¦$12,662.17¦
+---------------------------+----------¦
¦Tax assessed and prepaid ¦1,554.01 ¦
+---------------------------+----------¦
¦Deficiency (to be assessed)¦11,108.16 ¦
+--------------------------------------+
(Signed) NORMAN O. TIETJENS, Judge.
On May 13, 1963, a ‘Motion to Vacate Decision’ was filed on petitioners' behalf, signed by Morris W. Primoff, a member of the bar of this Court, who, on June 5, 1963, entered his appearance. That motion alleged, inter alia, that ‘the respondent was not aware of all the pertinent facts,‘ particularly those relating to a claimed 1958 net operating loss carryback which would have eliminated the deficiency for 1955. It alleged also that there was a net operating loss for 1959 which was not taken into account as a carryback in determining liability for the years 1956-58. The motion further alleged that the Government representatives were not aware of the 1959 net operating loss carryback and that petitioners' representative had not imparted to them any information concerning that issue.
On June 5, 1963, Rothenstein moved to withdraw as counsel, indicating an understanding that petitioners ‘have other counsel representing them.’ That motion was granted June 6, 1963.
On June 10, 1963, Judge Tietjens entered the following order:
For cause appearing of record, it is
ORDERED that the decision entered in this case on March 11, 1963, is hereby vacated and it is further
ORDERED that the parties shall show cause at 10:00 A.M., July 10, 1963, at Washington, D.C., why the Court should not enter a decision in accordance with the stipulation of the parties and the proposed decision received by the Court on March 8, 1963.
(Signed) NORMAN O. TIETJENS, Judge.
After several continuances, requested by the parties, a hearing was had on March 3, 1964, in New York1 on the matters covered by the order to show cause. Petitioners' present counsel, Morris W. Primoff, presented evidence in support of petitioners' position, and the Government presented evidence in opposition thereto. We heard oral testimony and received certain exhibits in evidence.
We are fully satisfied that there is no basis for setting aside the agreed settlement heretofore filed with the Court on March 8, 1963, that the decision entered in accord therewith on March 11, 1963, was proper, that the order to show cause which vacated that decision on June 10, 1963, should be discharged, and that the proposed decision received by the Court on March 8, 1963, should be entered in accordance with the stipulation.
The evidence presented to us persuades us that counsel for the parties were not laboring under any misapprehension or mutual mistake of fact when they executed the settlement agreement. One of the witnesses at the hearing was petitioner's former representative, Rothenstein. We are satisfied that he and Government counsel were fully aware of the matters that petitioners' new counsel seeks to press upon us as a basis for invalidating the settlement agreement. These matters, particularly the possible carryback from 1958, were taken into account by them in reaching the settlement agreement.
As to that possible carryback from 1958, counsel were...
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