Gregory v. United States, 45570.

• Decision Date: 04 December 1944
• Docket Number: No. 45570.,45570.
• Parties: GREGORY v. UNITED STATES.
• Court: U.S. Claims Court

57 F. Supp. 962

102 Ct. Cl. 642

GREGORY v. UNITED STATES.

No. 45570.

Court of Claims.

December 4, 1944.

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John W. Townsend, of Washington, D. C., for plaintiff.

J. W. Hussey, of Washington, D. C., and Samuel O. Clark, Jr., Asst. Atty. Gen. (Robert N. Anderson and Fred K. Dyar, both of Washington, D. C., on the brief), for defendant.

Before WHALEY, Chief Justice, BOOTH, Chief Justice (retired; recalled), and LITTLETON, WHITAKER and MADDEN, Judges.

LITTLETON, Judge.

Plaintiff's first claim that the special act of May 9, 1941, concedes liability cannot be sustained. Special jurisdictional acts such as this one are to be strictly construed, and they are never construed to concede liability unless the language of the act in that regard is very clear. Sioux Tribe of Indians v. United States, 97 Ct. Cl. 613, 663-665. The reports of the Claims Committees of Congress on the act disclose no intention to concede liability. A bill, S.1591, was first introduced in the Senate in 1937 to pay plaintiff $23,000 plus interest in settlement of his claim for damages which he alleged were occasioned by the levying of the tax lien without his having been given a hearing on the matter of his tax liability. This bill was not enacted, but in December 1939 a bill to confer jurisdiction upon this court was introduced in the House which resulted in the enactment of the act quoted in finding 1, on May 9, 1941, H.R. 4063, 55 Stat., Part 2, 904. The bill as originally introduced and as finally enacted conferred upon this court jurisdiction, notwithstanding the lapse of time or any provision of law to the contrary, to hear, determine and render judgment upon the claim of plaintiff "for damages alleged to have been sustained by him as a result of the loss of and on certain property, * * * due to liens filed against such property, in the year 1931, * * *." In submitting his report to Congress on the proposed jurisdictional act, the Secretary of the Treasury stated that "Unless the proposed legislation is enacted, the claim for damages in question would come without the jurisdiction of the Court of Claims in that the alleged cause of action is in the nature of a tort and for the further reason that the action would be barred by the statute of limitations." In his petition to Congress that it enact the jurisdictional act plaintiff stated: "He now prays that the Congress will pass a bill to refer his claim to the Court of Claims that they may give said Gregory his day in court and make findings on the merits of case according to the law and the evidence." The Congressional Committees in recommending passage of the act set forth that "The present bill merely confers jurisdiction upon the Court of Claims of the United States and in view of the complete testimony which has been presented by the claimant, your committee is of the opinion that he should be given his day in court." There was clearly no concession of liability.

The ground of plaintiff's claim on the merits for damages is that the Commissioner's Office in Washington was guilty of gross official carelessness in denying him an opportunity to be heard before assessment by mailing the 60-day deficiency notice of March 11, 1931, to plaintiff at an alleged improper address, i. e., to the Marion Hotel, Little Rock, Ark., instead of to his "last known address" at 2014 Glendon Avenue, Westwood Hills, Los Angeles, California, as mentioned in his letter of January 1931 written from the Marion Hotel, Little Rock, Ark. It is also claimed that failure to mail the deficiency notice to the proper "last known address" rendered the assessment illegal and void.

A study of the record and the facts as set forth in the findings discloses that plaintiff was dilatory and negligent in not properly handling his tax controversy from the beginning and in not giving the Commissioner proper or definite information as to his regular or permanent residence or address, either in or outside of Arkansas. Plaintiff filed his return in Arkansas and the Commissioner had a right to assume that plaintiff had his permanent residence in Arkansas, and Little Rock was the only address he had. The income tax statute (section 53(b) (1), Revenue Act of 1928, 26 U.S.C.A. Int.Rev.Acts, page 367, as well as corresponding sections of all prior acts) provided that, in case of individuals, "Returns * * * shall be made to the collector for the district in which is located the legal residence or principal place of business of the person making the return, or, if he has no legal residence or principal place of business in the United States, then to the collector at Baltimore, Maryland." The return for 1928 filed with the Collector at Little Rock, Ark., was prepared by an agent (the auditor for the Gregory Bus Lines, Inc.) and showed the address in Memphis, Tenn., of the agent and the Bus Lines. It disclosed no address of plaintiff in Arkansas, and stated that Gregory was "temporarily residing in California." This return, which was forwarded to the Commissioner by the Collector at Little Rock, Ark., disclosed income by plaintiff, as president of the Gregory Bus Lines, Inc., with principal office at Memphis, Tenn., and also the sale by plaintiff of all the stock of the Bus Lines to the Consolidated Utilities, Inc., May 29, 1928. The return was therefore sent to the Internal Revenue Agent in Charge at Nashville, Tenn., for investigation and audit. The audit was made and a report thereof was submitted to the Commissioner October 31, 1930, and a copy was furnished to plaintiff. In the meantime plaintiff and his wife separated while they were temporarily residing in California, and, as a result of litigation between them, a receiver in Memphis, Tenn., took possession of certain of plaintiff's property (see finding 5). As a result, the Commissioner made a jeopardy assessment against plaintiff December 11, 1930, under the receivership provision of section 274(a), Revenue Act of 1928, of an additional tax of $13,973.61 shown by the audit above mentioned, and claim therefor was filed with the receiver. Plaintiff received due notice of this additional tax and interest assessment, together with a full explanation of the computation thereof, and protested it in a letter to the Commissioner written from 2645 Oakview Terrace, Maplewood, Mo., and asked for a hearing at Memphis, Tenn. This letter was acknowledged and plaintiff was informed that he would be advised as early as practicable with reference to the hearing at Memphis. In the meantime plaintiff wrote the Commissioner the letter of January 19, 1931, from the Marion Hotel, Little Rock, Ark., quoted in finding 5, and thereafter received, in California, the Commissioner's reply of January 26, also quoted in finding 5. Plaintiff did not go to Nashville for a hearing.

On March 3, 1931, the Commissioner upon finding that a receiver in Tennessee had not been appointed to take over all the property of plaintiff, withdrew and cancelled the jeopardy assessment which had been made under the receivership section, 274 (a), because that section was not applicable in the circumstances, and so notified plaintiff in care of the receiver at Memphis, but the Commissioner did not withdraw and there was nothing in this notice which plaintiff received, or elsewhere, to indicate to plaintiff that the Commissioner intended to eliminate or withdraw the Government's claim against plaintiff for the additional tax for 1928. The matter was then entirely open to plaintiff, as it had been since December 11, 1930, to make a proper showing by submission of proper proof that the claimed additional tax was excessive. Plaintiff did not do this and he did nothing further until he received on June 6, 1931, at Clayton, Mo., through his attorney, Wilfred Jones, notice and demand from the collector at Little Rock, Ark., for the additional tax assessed in May 1931 of $13,973.61 and interest of $1,848.73. On June 22, 1931, plaintiff wrote the collector at Little Rock stating that he did not owe the tax, and further stating that "Some time ago I requested your Nashville, Tenn., Agent to permit me to appear before them and protest against such assessment as was claimed as I told them at that time that I had paid all that was due and that I did not owe this and they said they would notify me when they would hear me on the matter, to date this is the first I have heard." Plaintiff must have had reference to his letter to the Commissioner of December 29, 1930 (finding 5), for there is no evidence that he subsequently wrote the Nashville, Tenn., office in an endeavor to have a hearing before the Agent in Charge at Nashville.

Subsequent events and the filing of the lien August 13, 1936, are sufficiently detailed in findings 7 to 12, inclusive. Plaintiff wrote a number of letters from various places, as the findings show, but in none of them except the letters of October 2 and 14, 1931, did he present any proper evidence or facts to the Commissioner or the Agent in Charge in support of his assertion that the additional tax for 1928 was excessive, or advise the Commissioner where the facts relied on could be found. It was his duty to properly prosecute his claim and to protest by submitting evidence of the value of the stock and notes of the Consolidated Utilities, Inc., which he knew at all times after December 11, 1930, were the basis of the claimed additional tax.

The claim of "gross official carelessness" or negligence on the part of the Commissioner's Office will first be discussed. If plaintiff has failed to establish by the greater weight of the evidence that the Commissioner's Office was negligent or careless in connection with the mailing of the deficiency notice, he cannot recover. The claim is one sounding in tort, and the limitation on our...