Damsky v. Zavatt

Decision Date03 April 1961
Docket NumberNo. 26641.,26641.
Citation289 F.2d 46
PartiesBernard DAMSKY, Olga Damsky and Henry Birns, Petitioners, v. Honorable Joseph C. ZAVATT, United States District Judge for the Eastern District of New York, Respondent.
CourtU.S. Court of Appeals — Second Circuit

Linker & Linker, Brooklyn, N. Y., for petitioners.

Cornelius W. Wickersham, Jr., U. S. Atty., Brooklyn, N. Y., for the United States.

Before CLARK, MOORE and FRIENDLY, Circuit Judges.

FRIENDLY, Circuit Judge.

Bernard Damsky, his wife, Ollie Damsky, and Henry Birns, defendants along with Robert W. Franz in an action relating to federal income taxes brought by the United States in the District Court for the Eastern District of New York, seek a writ of mandamus directing Judge Zavatt to vacate an order, 1960, 187 F. Supp. 404, striking their demand for a jury trial. The government does not dispute that mandamus should issue if petitioners are in fact entitled to such a trial, Beacon Theatres, Inc. v. Westover, 1959, 359 U.S. 500, 511, 79 S.Ct. 948, 3 L.Ed.2d 988; Goldblatt v. Inch, 2 Cir., 1953, 203 F.2d 79; Parissi v. Foley, 2 Cir., 1953, 203 F.2d 454; this, however, it contests. We have concluded that the writ must issue as to so much of the complaint as seeks a personal judgment against Bernard Damsky on the taxes for 1946, 1947 and 1955, which were assessed solely against him, but that otherwise the jury demand was properly struck.

The complaint of the United States asserts "This is a civil action to enforce federal tax liens on real property, and to obtain judgment for unpaid federal taxes," of which the District Court had jurisdiction under 28 U.S.C. § 1340. It alleges the making of assessments and the filing of notice of tax liens for 1946, 1947 and 1955 against Bernard, for 1945 and 1946 against Ollie, and for 1948, 1949, 1952 and 1953 against Bernard and Ollie jointly. The complaint further alleges that as of the dates on which the various assessments were made and the notices of liens filed, Ollie owned two parcels of real estate in Brooklyn and that on or about April 29, 1955 (a date prior to the filing of any notices of liens on the assessments made solely against Ollie and all but one of the notices of liens against Bernard and Ollie jointly), Ollie conveyed one parcel to defendant Birns and the other to defendant Franz with intent to hinder, delay or defraud creditors or, in the alternative, without a fair consideration, Ollie then being or being rendered insolvent. The complaint concludes with an allegation that "On information and belief, each of the defendants may claim to have some interest in the real properties referred to in paragraph 16 hereinabove, on which the plaintiff seeks to enforce its tax liens." The United States prayed that the court adjudge Bernard and Ollie liable for the various taxes, penalties and interest assessed, plus interest; determine that the United States has valid tax liens on the real properties prior to any liens, claims and interests of the defendants or, in the alternative, determine that the real properties were transferred in fraud of creditors and set such transfers aside; and decree a sale of the real properties and distribution of the proceeds to the United States in satisfaction of its tax liens.

Petitioners answered and made a timely demand for a jury trial. This the government moved to strike. Judge Zavatt granted the government's motion; the petition for mandamus followed.

The parameters of decision are readily stated. F.R.Civ.Proc. 38(a), 28 U.S.C., prescribes that "the right of trial by jury as declared by the Seventh Amendment to the Constitution or as given by a statute of the United States shall be preserved to the parties inviolate." The pertinent statutes of the United States, 28 U.S.C. § 1340; I.R.C. (1954) §§ 6502, 7401, 7402 and 7403, 26 U.S.C. 6502, 7401-7403, make no specific provision for or against jury trial. The Seventh Amendment directs that "in Suits at common law, where the value in controversy shall exceed $20, the right of trial by jury shall be preserved * * *." The common law referred to is the common law of England as of 1791, Baltimore & Carolina Line, Inc. v. Redman, 1935, 295 U.S. 654, 657, 55 S.Ct. 890, 79 L.Ed. 1636. If a jury demand includes issues as to which a party is not entitled to a jury trial, the court ought not to strike the demand altogether but should limit it to the issues on which a jury trial was properly sought, F.R.Civ.Proc. 39(a) (2).

Plain as these principles are, their application here presents some difficulties. The considerations pertinent to various claims in the complaint differ; hence it will be necessary to examine these separately. It will be convenient to take first, Section I, the claims as to which we think jury trial was required; next discuss, Sections II and III, those as to which it clearly was not; and end, Sections IV and V, with the claims we deem most debatable. If some of the discussion that follows may seem to reek unduly of the study, a sufficient answer is that the Seventh Amendment, like other provisions of the Bill of Rights, "is derived from history," Mr. Justice Frankfurter dissenting in Green v. United States, 1957, 355 U.S. 184, 199, 78 S.Ct. 221, 230, 2 L.Ed.2d 199, and we must turn to history to give it content and meaning.

I. The claims asserted solely against Bernard.

As to so much of the complaint as sought a judgment against Bernard for taxes, penalties and interest for which he was solely liable, the action was for a money judgment and nothing more. Although the complaint contained a general prayer that the court determine "that the United States has valid and subsisting tax liens on the real properties" formerly owned by Ollie, the tax liens filed against Bernard individually were not liens against Ollie's property, I.R.C. § 6321, 26 U.S.C. § 6321, and the vague allegation that Bernard might claim to have some interest in the properties was not enough to make the action one to establish and foreclose a lien on any property of Bernard's, — at least in a state such as New York where, since 1930, spouses do not have even an inchoate interest in each other's property but only certain rights to share in such property as the spouse may own at death, Decedent Estate Law, McKinney's Consol.Laws, c. 13, §§ 18, 82, 83; Newman v. Dore, 1937, 275 N.Y. 371, 9 N.E.2d 966, 112 A.L.R. 643. Hence I.R.C. § 7403, which we quote below, footnote 4, does not apply.

Study of the history of the Court of Exchequer shows that, under the common law of England in 1791, an action by the Crown to recover a judgment for taxes was a suit at common law in which the right of jury trial existed. This was the result of a long evolution.

The Exchequer of the twelfth century was "a compound institution, in part a judicial tribunal, in part a financial bureau." 1 Pollock & Maitland, The History of English Law (2d ed. 1889), 191-93. It was "a specialized body devoted to the purposes of Audit"; its function was the collection and management of the King's revenue. Selden Society Series, Vol. 48, Select Cases in the Exchequer of Pleas (1931), pp. xiv, xxviii (Jenkinson's introduction). In the course of collection legal disputes inevitably arose and were adjudicated, Select Cases, supra, at p. xxviii; 1 Holdsworth, A History of English Law (3d ed. 1922) 43, 44, "according to the customs and usages of the exchequer"; its functioning has been likened to that of "an administrative tribunal," 1 Pollock & Maitland, supra, at 192.

By the end of the thirteenth century "the judicial side of the department was beginning to be more definitely separated from the administrative side," Holdsworth, supra, at 232; the Exchequer had become not merely an executive department but a revenue court trying cases brought by the King to collect his debts, Plucknett, A Concise History of the Common Law (5th ed. 1956) 159-60. As a revenue court it "decided questions between the crown and the taxpayer, and between the crown and accountants to the crown," Holdsworth, at p. 238; however, in this period, cases of the latter sort must have predominated since the taxes were collected mainly by distraint — a procedure the prevalence of which is attested by c. 9 of Magna Carta — and taxpayers "were practically never ordered to appear and account to the exchequer or the special exchequer," Mitchell, Taxation in Mediaeval England (1951), pp. 101, 110.1

By the time of Lord Coke the Exchequer was established as a third court of common law, Plucknett, supra, at 171. It was divided into distinct departments concerned with "judicial accounts" and with "the receipt of the exchequer." IV Institutes 103. Coke described the Exchequer as a court "for the profit of the king," id. at 112. Its business in part was to adjudicate with respect to "lands, rents, franchises, hereditaments, debts, duties, accounts, goods, chattels, and other profits, and benefits whatsoever due to the king." Ibid. Blackstone's description of the Exchequer in the following century is similar, 3 Commentaries, 43-45; in addition to its administrative functions, the King sued there "to adjust and recover his revenue * * * as the withholding and non-payment thereof is an injury to his jura fiscalia."

In a number of cases the Court of Exchequer entertained informations of debt for nonpayment of customs and other duties. Attorney General v. Tooke, Hardres 334, 145 E.R. 484 (15 Charles II); Attorney General v. Weeks, Bun. 223, 145 E.R. 654 (1726); Attorney General v. Jewers & Batty, Bun. 225, 145 E.R. 655 (1726); Attorney General v. Hatton, Bun. 262, 145 E.R. 668 (1728); Attorney General v. ______, 2 Anst. 558, 145 E.R. 966 (35 Geo. III). Nor were such actions unknown to the King's Bench, Salter v. Garraway & Malapert, 1 Rolle 383, 81 E.R. 551 (1675): "Dett sur statute 1 Ja. pur nient paieing de customes." Commentators also recognized that an action of debt might be maintained to...

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