Bashara v. Hopkins

• Decision Date: 01 January 1921
• Citation: 290 F. 592
• Parties: BASHARA v. HOPKINS, Collector of Internal Revenue.
• Court: U.S. District Court — Northern District of Texas

290 F. 592

BASHARA v. HOPKINS, Collector of Internal Revenue.

United States District Court, N.D. Texas, Dallas Division.

January 1, 1921

N. A Dodge, Sp. Asst. U.S. Atty., of Fort Worth, Tex., for the motion.

Weeks Morrow & Francis, of Wichita Falls, Tex., opposed.

ATWELL District Judge.

The plaintiff, M. J. Bashara, filed his bill against George C Hopkins, collector of internal revenue, alleging that for the revenue year of 1917 he had paid a tax of $6,904.81 believing that was all he owed; that thereafter, on March 17, 1923, the Commissioner of Internal Revenue notified him that his total tax liability for the year 1917 had been increased in the sum of $2,522.64, and that an immediate assessment of a tax in that amount would be made; that on April 2, 1923, the defendant, collector of internal revenue, made a written demand upon him for the payment of said sum, demanding the same within 10 days from that date; that on the 12th of April, 1923, the collector made a second demand upon the plaintiff for said sum of $2,522.64, plus $126.10 penalty, and interest in the sum of $8.40, making a total of $2,656.54; that said sum must be paid, in order to avoid seizure and sale of property, not later than April 22d; that by the terms of section 250 of the Revenue Act of 1921 (42 Stat. 265) the time within which a collector could bring any suit or proceeding for the collection of a tax which might be due under the Revenue Act of 1916 or the Revenue Act of 1917 was limited to 5 years from the time the return, or report of the taxpayer, was filed, and that by virtue of said provision the defendant collector had no right or authority to restrain, or seize, or sell, or attempt to restrain, or seize, or sell, any of the plaintiff's property in the attempt to collect said sum, and that the government was barred by the statute of limitation provided for in said act, to wit, five years; that notwithstanding said bar the defendant was threatening and intending to issue warrants of distraint, and was intending to seize, and cause to be seized, plaintiff's property, and to appropriate the proceeds thereof to the payment of said sum; that if said seizure and sale and collection was made it would be entirely without authority of law, and contrary to the express inhibition of the statute, and would constitute a trespass and an unlawful invasion of the plaintiff's rights, and would work great and irreparable injury to the plaintiff.

A temporary restraining order was prayed pending the hearing of the bill, so as to prevent his bank account from being seized, and so as to prevent the title to his property from being clouded by distraint. A temporary restraining order was issued, after notice, returnable June 19th. Thereafter the defendant filed a motion to dissolve the order and to dismiss the bill.

Section 3224 of the Revised Statutes of the United States (Comp. St. Sec. 5947) provides:

'No suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court.' This provision is one of a series of provisions wherein, under sections 3220, 3226, and 3227 R.S.U.S. (Comp. St. Secs. 5944, 5949, 5950), the taxpayer is afforded remedies for the return to him of such moneys as are 'erroneously or illegally' assessed or collected.

It is contended by the plaintiff that section 3224 does not, in all cases, prohibit the bringing of a suit to enjoin the collection of a federal tax, and cites Hill v. Wallace, 259 U.S. 44, 42 Sup.Ct. 453, 66 L.Ed. 822, decided by the Supreme Court on May 15, 1922, wherein Mr. Chief Justice Taft, who delivered the opinion, said:

'It has been held by this court in Dodge v. Brady, 240 U.S. 122, that section 3224 of the Revised Statutes does not prevent an injunction in a case apparently within its terms in which some extraordinary and entirely exceptional circumstances made its provisions inapplicable. See, also, Dodge v. Osborn, 240 U.S. 118.'

In Dodge v. Osborn, 240 U.S. 118, 36 Sup.Ct. 275, 60 L.Ed. 557, the court said, with reference to section 3224:

'While it is obvious that the statute plainly forbids the enjoining of a tax unless by some extraordinary and entirely exceptional circumstances its provisions are not applicable.'

In Du Pont v. Graham (D.C.) 283 F. 300, it was said:

'It is evident that Congress intended by the provisions of section 250(d) of the act of 1921 to provide a definite five-year limitation for the beginning of suits or proceedings for the collection of the taxes enumerated. If the revenue officers should unduly delay the assessment of the taxes and the commencement of proceedings for collection, Congress has determined that five years after the due date of the return is a reasonable time to bring to an end the right to collect.'

It is contended that the provisions of section 250 can be enforced by no other method than by injunction, if the officers of the revenue department do not obey and observe the limitation provision. When the case of Graham v. Du Pont reached the Supreme Court, that court (43 Sup.Ct. 567, 67 L.Ed. . . .), speaking through Mr. Chief Justice Taft, classified the case of Hill v. Wallace, with others, as belonging in the same group as Lipke v. Lederer, 259 U.S. 557, 42 Sup.Ct. 549, 66 L.Ed. 1061, which permit the enjoining of a penalty in the form of a tax, declaring that the 'extraordinary and entirely exceptional' circumstances in those cases rendered section 3224 inapplicable.

It would seem that Graham v. Du Pont, supra, overruling both the Circuit Court of Appeals and the District Court, rules the instant case, because, in the last paragraph of that opinion we find the following:

'This conclusion renders it unnecessary for us to consider whether section 252 of the Revenue Act of 1921, in connection with section 3226, Revised Statutes, as amended by the same Revenue Act of 1921 (42 Stat. 314, Sec. 1318), barred complainant's right to pay the tax and sue to recover it back at the time of filing his bill, as held by

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