Brooks v. Driscoll, 7087.

• Decision Date: 19 August 1940
• Docket Number: No. 7087.,7087.
• Citation: 114 F.2d 426
• Parties: BROOKS v. DRISCOLL.
• Court: U.S. Court of Appeals — Third Circuit

114 F.2d 426 (1940)

BROOKS v. DRISCOLL.

No. 7087.

Circuit Court of Appeals, Third Circuit.

August 19, 1940.

Brooks, Curtze & Silin, of Erie, Pa. (Isaac J. Silin and Roger M. Brown, both of Erie, Pa., of counsel), for plaintiff-appellant.

George Mashank, Acting U. S. Atty., and Elliott W. Finkel, Asst. U. S. Atty., both of Pittsburgh, Pa., Samuel O. Clark, Jr., Asst. Atty. Gen., and Sewall Key and John J. Pringle, Jr., Sp. Assts. to Atty. Gen., for appellee.

Before BIGGS, MARIS, and JONES, Circuit Judges.

JONES, Circuit Judge.

The appellant plaintiff complains of the judgment entered against him by the court below, a jury trial having been waived, in his suit against a Collector of Internal Revenue for the recovery of taxes. The plaintiff alleges that the taxes were illegally assessed and collected, (1) because he had no notice of and was unrepresented at the hearing on his appeal to the Board of Tax Appeals from the Commissioner's notice of proposed assessment, and (2) because the assessment against him was made after the statute of limitations had run.

The Commissioner of Internal Revenue determined a deficiency in income and excess profits taxes due by Strand Amusement Company, a corporation, for the years 1917 to 1920, inclusive. The corporation duly filed its petition with the Board of Tax Appeals for a redetermination of the proposed assessment. After hearing, the Board filed its findings of fact, opinion and decision redetermining deficiencies in tax due by Strand Amusement Company for the years 1919 and 1920. Appeal of Strand Amusement Co., 3 B.T.A. 770. In due course, the Commissioner entered deficiency assessments against Strand Amusement Company in accordance with the Board's decision.

The date of the Commissioner's assessments against Strand Amusement Company was October 1, 1926. Within a year thereafter, to wit, on July 8, 1927, John B. Brooks, the present appellant, received a letter from the Commissioner proposing to assess him, as a transferee of assets of Strand Amusement Company, on account of the taxes due by Strand under the deficiency assessments. Brooks duly filed his petition with the Board of Tax Appeals for a redetermination of the proposed assessment against him. Some four years later, the Board of Tax Appeals fixed a time and place for a hearing on Brooks' appeal. Brooks testifies that he received no notice of the hearing and was not represented thereat either personally or by counsel. At the time of filing his petition with the Board, Brooks was represented therein by Charles H. English, an attorney and former law partner of Brooks. The latter asserts, however, that English had ceased to be his counsel in the matter some several years before the Board's hearing of the appeal and that English was not authorized to represent him and, particularly, was not authorized to enter into the stipulation of facts in behalf of Brooks whereon the Board based its later disposition of his appeal. English denies that he ever ceased to be Brooks' representative in the proceeding before the Board. In any event, so far as the record discloses, no notice of any change of counsel by Brooks was ever given the Board of Tax Appeals, at least, not prior to the Board's concluding the matter of the appeal.

English duly received notice of the time and place of the hearing of Brooks' appeal and, in anticipation thereof and as a result of a rule taken out by counsel for the Commissioner for the production of certain books and papers material to the appeal, English, purporting to represent Brooks, entered into a stipulation of facts with counsel for the Commissioner. At the ensuing hearing before the Board of Tax Appeals, Brooks did not appear either personally or by counsel. The Commissioner who appeared by counsel, offered the stipulation in evidence. Thereafter, the Board, expressly predicating its decision upon the stipulation, found Brooks liable, as a transferee of Strand Amusement Company's assets, for an assessment on account of the unpaid taxes due by Strand.

The decision of the Board of Tax Appeals holding Brooks liable as a transferee was filed October 18, 1932. No petition for a review of the Board's decision having been filed, the Commissioner of Internal Revenue entered a transferee assessment against Brooks on February 11, 1933 in accordance with the decision of the Board of Tax Appeals. Brooks testifies that he "didn't realize * * * until in 1935" that he was being held liable as a transferee for taxes originally assessed against Strand Amusement Company. On June 7, 1935, distraint notices were delivered to Brooks by the Collector of Internal Revenue demanding payment of the transferee assessments for the years in question. Upon receipt of these distraint notices, Brooks protested the attempted collection of the transferee assessments, his protests being made to the Collector of Internal Revenue at Pittsburgh and to the Commissioner of Internal Revenue at Washington, as well as to their deputies, agents and employees. On February 25, 1936, execution upon the distraints then being threatened, Brooks paid the assessments under protest, and on January 20, 1937 filed with the Collector of Internal Revenue at Pittsburgh his claims for refund which were disallowed by the Commissioner of Internal Revenue on May 24, 1937, whereof Brooks was notified by letter of the Commissioner bearing the same date. The plaintiff's suit against the Collector for the recovery of the taxes paid by him was filed in the court below on April 14, 1938.

It is the appellant's contention that the collection of the taxes assessed against him pursuant to the decision of the Board of Tax Appeals deprived him of property without due process of law, the contention being based upon the assumption that the hearing on the taxpayer's appeal to the Board was without notice to him. The basis for the appellant's argument in such regard completely dissolves in the light of the finding of fact made by the court below that "Charles H. English, a practicing attorney at Erie, appeared for and represented John B. Brooks, the plaintiff in this case in the proceedings by Brooks before the United States Board of Tax Appeals". This finding is supported by the evidence and is the natural deduction from the undisputed facts that English was Brooks' chosen representative for the taking of the appeal and that no notice of any termination thereafter of English's representation of Brooks was given to the Board. See Restatement of the Law, Agency, § 129. No clear error appearing therein, the finding is conclusive upon us. Rule 52, Federal Rules of Civil Procedure, 28 U.S. C.A. following section 723(c). The jurisdiction of the Board of Tax Appeals having been thus competently invoked, it was not thereafter ousted by any supposed lack of notice to the petitioner due to a change in his representative whereof he did not inform the Board. From the time the Board's jurisdiction attached upon petition of the appellant, it endured unimpaired throughout. The court below refrained from making any finding "as to whether or not English was duly authorized to represent Brooks in the proceedings before the Board of Tax Appeals", etc. The court so acted because it was of the expressed opinion that it was "without authority to pass on that matter". We think that the court below rightly so concluded. The court having found that English represented Brooks in the proceedings before the Board of Tax Appeals, any question as to the extent of English's authority to act for Brooks would immediately involve the competency of the stipulation of facts entered into by English and upon which the Board based its decision. Thus, the appellant would bring on for review by the District Court the basis for the decision of the Board of Tax Appeals, notwithstanding that jurisdiction to review the Board's decisions is committed by statute, exclusively, to the Circuit Courts of Appeals and the Court of Appeals of the District of Columbia, whose judgments are final save for possible review thereof by the Supreme Court upon certiorari. § 1003 of the Revenue Act of 1926, 26 U.S.C.A.Int.Rev. Acts, page 313.

Moreover, the court below, by reason of express statutory inhibition, was without jurisdiction to entertain the appellant's suit. § 284(d) of the Revenue Act of 1926, 26 U.S.C.A.Int.Rev. Acts, page 220, provides that where any taxpayer, after the enactment of that Act, files his petition with the Board of Tax Appeals, within the time prescribed, for a redetermination of the Commissioner's notice of deficiency "no suit by the taxpayer for the recovery of any part of such tax shall be instituted in any court" except under certain specified circumstances, none of which obtain here with respect to the question now under consideration. After the enactment of the Revenue Act of 1926, namely, on September 3, 1927, the appellant filed his petition with the Board of Tax Appeals in respect of the Commissioner's notice of the proposed transferee assessment. Having thus resorted to Board action for the redress of his complaint, the appellant thereby put an end to what would have been his opportunity otherwise to institute a suit in court for the recovery of the taxes whereof he complained. Thenceforth, a court was without jurisdiction, save for the excepted instances not presently material, to entertain a suit for the recovery of the taxes assessed pursuant to the decision of the Board of Tax Appeals. Warren Mfg. Co. v. Tait, D. C. Md., 60 F.2d 982; Green v. MacLaughlin, D. C., E. D. Pa., 55 F.2d 423; Brampton Woolen Co. v. Field, 1 Cir., 56 F.2d 23. In Warren Mfg. Co. v. Tait, supra, it was held that the restriction upon a court's jurisdiction under § 284(d) of the Revenue Act of 1926 was effective even where the petitioning taxpayer moved the dismissal of his petition by the Board with the acquiescence of the Commissioner, and the Board, in dismissing, expressed its inability to...