Mazzella v. Yoke

• Decision Date: 06 February 1947
• Docket Number: Civ. No. 693.
• Citation: 70 F. Supp. 462
• Court: U.S. District Court — Southern District of West Virginia
• Parties: MAZZELLA et al. v. YOKE.

70 F. Supp. 462

MAZZELLA et al. v. YOKE.

Civ. No. 693.

District Court, S. D. West Virginia.

February 6, 1947.

Ashworth and Sanders and Joseph Luchini, all of Beckley, W. Va. (C. C. Sanders, of Beckley, W. Va., of counsel), for plaintiffs.

Leslie E. Given, U. S. Atty., of Charleston, W. Va., Sewall Key, Acting Asst. Atty. Gen., Andrew D. Sharpe and Frederic G. Rita, Sp. Assts. to the Atty. Gen., for defendant.

MOORE, District Judge.

The complaint sets forth the following facts: That plaintiffs have been assessed for certain cabaret taxes pursuant to Title 26 U.S.C.A. Int.Rev.Code, § 1700(e) and distraint is now being threatened upon property belonging to plaintiff Chiara Mazzella; that the property involved is a two-story frame building, consisting of dwelling quarters and a large storeroom; that during the latter part of 1942, plaintiffs occupied the living quarters, and shortly thereafter, Chiara Mazzella leased the storeroom to John Dicicuccio who, after obtaining the necessary license, began the operation of a beer parlor in the storeroom; that Dicicuccio continued the business until July, 1946, during which time plaintiffs were in no way interested in the enterprise as partners; and that plaintiff Nancy Mazzella was employed by Dicicuccio the greater part of said time, but the merchandise used in the business was purchased and paid for by Dicicuccio, who made and filed all tax returns.

The complaint further charges that the defendant erroneously, arbitrarily, and capriciously assessed the cabaret taxes against the plaintiffs; that the plaintiffs were under no duty to collect the taxes, nor have they in fact collected them; that to compel payment by distraint would take away the life earnings of plaintiffs, destroy their means of livelihood and leave them without a place to live; that plaintiff Luigi Mazzella is physically disabled to such an extent that he is no longer able to follow his occupation as a coal loader and is now operating a business in the storeroom which supplies his only income for the support of his family; and that if defendant is permitted to pursue his present course, plaintiffs will be irreparably injured without adequate remedy at law.

Defendant has moved the Court to dismiss the complaint for lack of jurisdiction and to dissolve a temporary restraining order which the Court has entered. The allegations in the complaint for the purpose of decision on this motion must be taken as true. Midwest Haulers, Inc., et al. v. Brady, 6 Cir., 1942, 128 F.2d 496.

The internal revenue statutes have made express provision for enforcement of liability in cases where the tax is collected by one person from another person, primarily liable for the tax.

Sec. 3661. Enforcement of Liability for Taxes Collected: "Whenever any person is required to collect or withhold any internal-revenue tax from any other person and to pay such tax over to the United States, the amount of tax so collected or withheld shall be held to be a special fund in trust for the United States. The amount of such fund shall be assessed, collected, and paid in the same manner and subject to the same provisions and limitations (including penalties) as are applicable with respect to the taxes from which such fund arose." 26 U.S.C.A. Int.Rev.Code, § 3661.

It is to be noted that the complaint avers that plaintiffs were not required to collect any tax and that no collection was in fact ever made by them. Although this factor creates serious doubt as to the applicability of the above statute, the Court will assume, for the purpose of decision, that the statute does cover the situation involved here.

Defendant contends that the Court is without jurisdiction to enjoin the collection of this tax because of the following statute:

Sec. 3653. "Prohibition of suits to restrain assessment or collection

"(a) Tax. Except as provided in sections 272(a), 871(a) and 1012(a), no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court." 26 U.S.C.A. Int.Rev. Code, § 3653.

This is a wise and essential provision, necessary to facilitate the collection of taxes and provide revenue to carry on governmental functions, and it is merely an enactment of the practice followed prior to its existence.

Although the terms of the statute are explicit and appear to prohibit restraint in every case, the courts have not been prone to exclude from relief every possible situation, but have created well recognized exceptions. Relief has been granted in those cases in which exceptional and extraordinary circumstances make the legal remedy clearly inadequate; also where the tax partakes of the nature of a penalty. Miller v. Nut Margarine Co., 284 U.S. 498, 52 S.Ct. 260, 76 L.Ed. 422, 1932; Allen v. Regents, 304 U.S. 439, 58 S.Ct. 980, 82 L.Ed. 1448, 1938; Hill v. Wallace, 259 U.S. 44, 42 S.Ct. 453, 66...