Brannon's of Shawnee, Inc. v. Comm'r of Internal Revenue
| Decision Date | 28 March 1978 |
| Docket Number | Docket No. 10546-75. |
| Parties | BRANNON'S of SHAWNEE, INC., PETITIONER v. COMMISSIONER of INTERNAL REVENUE, RESPONDENT |
| Court | U.S. Tax Court |
OPINION TEXT STARTS HERE
Petitioner, an Oklahoma corporation, merged into another Oklahoma corporation on Sept. 25, 1972. Respondent issued a notice of deficiency to petitioner on Sept. 10, 1975. On Dec. 10, 1975, petitioner filed a petition with this Court. On Dec. 22, 1976, the parties agreed to a stipulated decision which was entered on that day. On Nov. 28, 1977, petitioner filed a motion to vacate the decision on the ground that we lacked jurisdiction over the original proceeding. Held, petitioner's motion for special leave to file a motion to vacate our decision entered on Dec. 22, 1976, granted. Tom G. Parrott, T. Ray Phillips III, and Donald C. Gaston, for the petitioner.
James D. Thomas and Leroy Boyer, for the respondent.
On November 28, 1977, petitioner filed, pursuant to Rule 162, Tax Court Rules of Practice and Procedure, a motion for special leave to file a motion to vacate a decision entered on December 22, 1976. Arguments on petitioner's motion were heard in Oklahoma City, Okla., on January 30, 1978, and the motion was taken under advisement.
We must decide whether we have jurisdiction, after a decision has become final under section 7481,1 to vacate the decision on the ground that we lacked jurisdiction in the original proceeding.
Petitioner alleges in its motion that on September 25, 1972, it was merged, under the laws of Oklahoma, into Brannon's No. 7, Inc., and that both corporations were organized under the laws of Oklahoma.
On September 10, 1975, a statutory notice of deficiency was mailed to petitioner which determined the following deficiencies:
+-------------------------+
¦Aug. 31— ¦Deficiency ¦
+------------+------------¦
¦1967 ¦$12,327.18 ¦
+------------+------------¦
¦1968 ¦8,298.39 ¦
+------------+------------¦
¦1970 ¦2,510.51 ¦
+------------+------------¦
¦1971 ¦19,870.41 ¦
+-------------------------+
On December 10, 1975, petitioner, through its counsel, filed its petition requesting a redetermination of the proposed deficiencies.
On December 22, 1976, petitioner, through its counsel, agreed to the deficiencies as set forth in the September 10, 1975, notice of deficiency and this Court entered a decision, on the same date, reflecting the agreements of the parties.
Respondent argues that this is a court of limited statutory jurisdiction and that once our decision becomes final under section 7481 we lack jurisdiction to entertain a motion to vacate. Petitioner asserts that an exception must be made to the finality of our decisions where we did not originally have jurisdiction of the case. We agree with petitioner.
Although we find no specific rule of procedure in our Tax Court Rules of Practice and Procedure governing the disposition of final decisions, rule 60(b) (4) of Federal Rules of Civil Procedure provides in pertinent part: “On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order, or proceeding for the following reasons: * * * (4) the judgment is void.” In applying that rule, the Federal courts have determined that when a court lacks jurisdiction over the subject matter or the defendant, any judgment rendered is void; a legal nullity. Jordon v. Gilligan, 500 F.2d 701, 704 (6th Cir. 1974), cert. denied 421 U.S. 991 (1975); Hicklin v. Edwards, 226 F.2d 410, 413 (8th Cir. 1955). Jordon v. Gilligan, supra at 704, noted that a judgment entered without jurisdiction is void and “is a legal nullity and a court considering a motion to vacate has no discretion in determining whether it should be set aside.” Moreover, as noted in Misco Leasing, Inc. v. Vaughn, 450 F.2d 257, 260 (10th Cir. 1971), there is no time limit on the attack on a judgment as void under rule 60(b)(4) of Federal Rules of Civil Procedure. United States v. Sotis, 131 F.2d 783, 787 (7th Cir. 1942), related:
where a decree or judgment is void for want of jurisdiction of the person of the defendant, it is a nullity and may be expunged from the records of the court at any time. It is universally conceded that a judgment void for want of jurisdiction over the person of a defendant may be vacated on motion, irrespective of lapse of time.
Rule 1(a), Tax Court Rules of Practice and Procedure, provides in pertinent part: “Where in any instance there is no applicable rule of procedure, the Court or the Judge before whom the matter is pending may prescribe the procedure, giving particular weight to the Federal Rules of Civil Procedure to the extent that they are suitably adaptable to govern the matter at hand.” Since we find no applicable rule of procedure specifically governing the disposition of void decisions in this Court, we think rule 60(b)(4) of Federal Rules of Civil Procedure should be accorded significant weight. Even though we are a court of limited statutory jurisdiction, a decision entered without jurisdiction is nonetheless void; a legal nullity. Rule 60(b)(4) of Federal Rule of Civil Procedure merely provides a means of disposing of void decisions and in the absence of a controlling procedural rule of our own treating void decisions, we believe that, under the authority of Rule 1(a), Tax Court Rules of Practice and Procedure, we should apply rule 60(b)(4) of Federal Rules of Civil Procedure through our motion to vacate found in Rule 162, Tax Court Rules of Practice and Procedure. In our opinion, the Court should exercise its discretionary power under Rule 162 and not apply the 30-day period in this case where the motion to vacate attacks jurisdiction.
We do not rest our decision to accept jurisdiction on this point alone however. Kenner v. Commissioner, 387 F.2d 689 (7th Cir. 1968), cert. denied 393 U.S. 841 (1968), and Toscano v. Commissioner, 441 F.2d 930 (9th Cir. 1971), expressly held that this Court had the jurisdiction to reopen and vacate a final decision.2 Both decisions relied upon fraud on the court in reaching their decisions but we think the power to vacate discussed in those cases is certainly no less present here where we lacked jurisdiction when we reached a decision. Toscano v. Commissioner, supra at 933, stated the following with respect to our jurisdiction to vacate a final decision on the ground of fraud on the Court: “a decision obtained by fraud on the Tax Court can be set aside by it at any time because it is not a decision at all.” Kenner v. Commissioner, supra at 691, stated that “a decision produced by fraud on the court is not in essence a decision at all, and never becomes final.” Since a decision reached without jurisdiction is considered a legal nullity, we think that it is also not a decision at all and never becomes final. Moreover, as we stated in Wheeler's Peachtree Pharmacy, Inc. v. Commissioner, 35 T.C. 177, 179 (1960): “This Court being a court of limited jurisdiction, questions of jurisdiction are fundamental and whenever it appears that this Court may not have jurisdiction to entertain the proceeding that question must be decided.” Accordingly, we hold that we do have jurisdiction to consider a motion to vacate a final decision on the ground that we lacked jurisdiction in the original proceeding. We must therefore determine whether petitioner has shown facts to properly question our jurisdiction in the original proceeding. If so, its motion for special leave should be granted.
Petitioner argues that since its corporate existence was terminated by merger under Oklahoma law on September 25, 1972, it had no legal capacity under Rule 60(c), Tax Court Rules of Practice and Procedure, to file a petition on December 10, 1975. As a result, relying on Condo v. Commissioner, 69 T.C. 149 (1977), it asserts for the first time that we lacked jurisdiction over the proceeding and, therefore, our prior stipulated decision of December 22, 1976, is void. Respondent, relying on Oklahoma Statutes Annotated title 18, section 1.167(4) (West 1953), contends that petitioner's existence was continued for the purpose of filing the petition and resolving the issue of its tax liability for the years stated in the notice of deficiency. As such, he argues we had jurisdiction over the proceeding to enter our decision.
Jurisdiction of this Court depends upon the issuance of a notice...
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...have jurisdiction to determine whether we have jurisdiction. Hazim v. Commissioner, 82 T.C. 471 (1984); Brannon's of Shawnee, Inc. v. Commissioner, 69 T.C. 999, 1001 (1978). Section 6213 confers jurisdiction on this Court, upon the issuance of a statutory notice of deficiency and the timely......
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...newly discovered evidence, fraud, or other reason justifying relief. See, e.g., Fed.R.Civ.P. 60(b); Brannon's of Shawnee, Inc. v. Commissioner, 69 T.C. 999, 1978 WL 3327 (1978). Importantly, an intervening change in the law can warrant the granting of both a motion to reconsider and a motio......
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Smith v. Comm'r of Internal Revenue (In re Estate of Smith) , 19200–94.
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