Bershad v. Wood

• Decision Date: 02 May 1961
• Docket Number: No. 16933.,16933.
• Citation: 290 F.2d 714
• Parties: Sophie BERSHAD, Appellant, v. Wilson B. WOOD and Samuel L. Berger, Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

290 F.2d 714 (1961)

Sophie BERSHAD, Appellant, v. Wilson B. WOOD and Samuel L. Berger, Appellees.

No. 16933.

United States Court of Appeals Ninth Circuit.

May 2, 1961.

McRae, Elliott & Thompson and Howard F. Thompson, Phoenix, Ariz., for appellant.

Charles K. Rice, Asst. Atty. Gen., Lee A. Jackson, A. F. Prescott and Sharon L. King, Attys., Dept. of Justice, Washington, D. C., Jack D. H. Hays, U. S. Atty., and Ralph G. Smith, Jr., Asst. U. S. Atty., Phoenix, Ariz., for appellee.

Before POPE and HAMLIN, Circuit Judges, and JAMESON, District Judge.

HAMLIN, Circuit Judge.

Sophie Bershad, appellant herein, filed an action in the Superior Court of the State of Arizona against Wilson B. Wood and Samuel L. Berger, appellees herein, seeking general and punitive damages. The appellees petitioned for removal to the United States District Court for the District of Arizona on the ground that they were officers of the United States and the Internal Revenue Service, Treasury Department, and the petition was granted. In the district court the appellees moved that the action be dismissed "because the complaint fails to state a claim upon which relief can be granted." This motion was granted, and an appeal was taken to this court. Jurisdiction in the district court was by reason of 28 U.S.C.A. §§ 1442(a) (1) and 1446, and jurisdiction is in this court by reason of 28 U.S.C.A. § 1291.

The complaint alleges the following: Appellee Wood was the duly appointed and qualified District Director of Internal Revenue District of Arizona, Treasury Department, United States of America; and appellee Berger was a duly appointed and qualified collection officer of the Internal Revenue Service, District of Arizona, Treasury Department, United States of America. Appellees caused to be served upon the Farmers and Stockmens Bank, Phoenix, Arizona, a notice of levy by the terms of which said bank was notified that there was due, owing, and unpaid from Leo Bershad to the United States the sum of $56,190.74 for internal revenue taxes. The notice of levy contained the following typewritten statement on the Treasury Department form:

"You are further advised that all monies in accounts now standing in the name of Sophie Bershad, also known as Sophie Keller, also known as Sophie Zicari, also known as Sophie Montelbano, are in truth and in fact the property of Leo Bershad * * * and demand is hereby made for these monies in an amount sufficient to satisfy this levy."

The notice of levy also stated that demand had been made upon the "taxpayer" for the amount set forth and that such amount was still due, owing and unpaid from this "taxpayer" and "that the lien provided for by Section 6321, Internal Revenue Code of 1954, now exists upon all property or rights to property belonging to the aforesaid taxpayer." The notice of levy further notified the bank that all property "belonging to this taxpayer * * * and all sums of money * * * owing from you to this taxpayer are hereby levied upon and seized for the satisfaction of the aforesaid tax * * * to be applied as a payment on his tax liability." The bank, in pursuance to the said notice of levy, withheld from appellant's personal account in said bank funds which were the sole and separate property of appellant, in the amount of $30,626.08. On November 9, 1956, the United States of America, as plaintiff, filed a complaint for the foreclosure of tax liens against Sophie Bershad, Leo Bershad and the Farmers and Stockmens Bank. The complaint alleged in part that the said bank was a depositary, in the name of Sophie Bershad, wife of defendant Leo Bershad, of a sum amounting to $30,626.08 which was in part or in total sum the property of defendant Leo Bershad. The complaint further prayed in part that the "court determine, adjudge and decree that the funds in possession of the bank in the account of Sophie Bershad, belonged to the defendant Leo Bershad and were his funds and not those of his wife." On December 3, 1956, the bank by written stipulation with the United States of America deposited in the registry of the United States District Court for the District of Arizona the sum of $30,626.08, said sum being the balance of appellant's funds on deposit the date the levy was served. The action brought by the United States on November 9, 1956, was tried in June, 1958, and the district court determined, adjudged and decreed that the funds on deposit in the name of Sophie Bershad were her sole and separate property and that the United States of America had no claim of lien against said fund. Judgment was granted to Sophie Bershad for the said sum of $30,626.08.

The complaint¹ in the instant case also contained the following paragraph:

"Defendants Wilson B. Wood and Samuel L. Berger, in levying upon the funds of Sophie Bershad, acted wrongfully, maliciously, without probable cause, and in willful disregard of the rights of plaintiff herein; said defendants well knew or should have known that the lien or claim of the United States Treasury Department, Internal Revenue Service, against the property of Leo Bershad, was as against plaintiff herein a pretended and unfounded lien or claim which in truth and in fact did not exist against the funds of plaintiff."

Sophie Bershad had been required to employ attorneys to represent her to prevent the foreclosure of the government's "pretended and unfounded lien or claim"; she suffered certain loss by reason of being required to dispose of some interest in a business of hers through lack of funds; and the complaint stated that "the acts and conduct of defendants as aforesaid were malicious and plaintiff is entitled to punitive damages in the sum of $30,000."

Appellees contend that the action of the district court in dismissing the action was proper because they were officials of the United States Government and because they were at all times acting within the scope of their official powers.

The statute and regulations involved are § 6331 of the Internal Revenue Code of 1954, 26 U.S.C.A. § 6331, and the Treasury Regulations on Procedure and Administration of the 1954 Code, which are set out in the margin.²

In considering the propriety of the district court's order dismissing the action, the allegations contained in the complaint must be considered true. Sidebotham v. Robison, 9 Cir., 1954, 216 F.2d 816.

Appellant, in her brief, "recognizes the general rule that judicial officers, quasi judicial officers, judges, prosecuting attorneys, executive and other officers of the government are immune from civil suit for acts committed by them while acting within the scope of their authority and in the performance of their official duties." Yaselli v. Goff, 2 Cir., 1926, 12 F.2d 396, 56 A.L.R. 239; Spalding v. Vilas, 1896, 161 U.S. 483, 16 S.Ct. 631, 40 L.Ed. 780; Cooper v. O'Connor, 1938, 69 App.D.C. 100, 99 F.2d 135, 118 A.L.R. 1440; Gregoire v. Biddle, 2 Cir., 1949, 177 F.2d 579.³

Appellant, however, contends that this case does not come within the rule of the above cases. She contends that appellees acted beyond the scope of their authority, and that by reason of their acting beyond the scope of their authority, they are liable to her in damages.

Section 6331, Internal Revenue Code 1954, authorizes a levy where the person liable to pay any tax neglects or refuses to pay within ten days after notice and demand. Here the levy on the bank, drawn upon a Treasury Department form, stated that Leo Bershad owed taxes in the sum of $56,190.74 and that moneys in the bank standing in the name of Sophie Bershad were in fact the property of Leo. Demand was made that these moneys be seized to be applied to the tax liability of Leo to the United States. No claim was made personally by appellees to any of the moneys; it was seized for the United States. Whatever appellees did was done by them as officers of the Internal Revenue Service, for the benefit of the United States, and by reason of their authority as officers of the Internal Revenue Service. In Gregoire v. Biddle the court said:

"What is meant by saying that the officer must be acting within his power cannot be more than that the occasion must be such as would have justified the act, if he had been using his power for any of the purposes on whose account it was vested in him."⁴

In Cooper v. O'Connor the complaint alleged that the defendant appeared before a grand jury and falsely, maliciously and without probable cause accused appellant of having committed crimes. The court said:

"It is not necessary — in order that acts may be done within the scope of official authority — that they should be prescribed by statute; or even that they should be specifically directed or requested by a superior officer. It is sufficient if they are done by an officer `in relation to matters committed by law to his control or supervision\'; or that they have `more or less connection with the general matters committed by law to his control or supervision\'." Citations omitted⁵

"* * * if the act complained of was done within the scope of the officer\'s duties as defined by law, the policy of the law is that he shall not be subjected to the harassment of civil litigation or be liable for civil damages because of a mistake of fact occurring in the exercise of his judgment or discretion, or because of an erroneous construction and application of the law." Footnotes omitted⁶

We hold that the appellees in this case were acting within the scope of their official authority. They were in error in stating that money in Sophie's name was actually Leo's; for in a later action the district court found in favor of appellant on this issue, and the money seized was returned to her. But neither this fact nor the allegation of the complaint that appellees "acted willfully, maliciously, without probable cause" or that they "well knew or should have known that the lien * * * of the United States Treasury Department" was as against Sophie "a pretended and unfounded...