Gunn v. United States

• Decision Date: 20 October 1960
• Docket Number: No. 16496.,16496.
• Parties: C. C. GUNN, Appellant, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

283 F.2d 358 (1960)

C. C. GUNN, Appellant, v. UNITED STATES of America, Appellee.

No. 16496.

United States Court of Appeals Eighth Circuit.

October 20, 1960.

Owen C. Pearce, Fort Smith, Ark., Ralph W. Robinson, Van Buren, Ark., and Bethell & Pearce, Fort Smith, Ark., Owen C. Pearce, Fort Smith, Ark., on the brief, for appellant.

Harry Marselli, Attorney, Department of Justice, Washington, D. C., Charles K. Rice, Asst. Atty. Gen., Meyer Rothwacks, Robert N. Anderson and Lloyd J. Keno, Attorneys, Tax Division, Dept. of Justice, Washington, D. C., and Charles W. Atkinson, U. S. Atty., and Robert E. Johnson, Asst. U. S. Atty., Fort Smith, Ark., Harry Marselli, Washington, D. C., on the brief, for appellee.

Before VAN OOSTERHOUT and BLACKMUN, Circuit Judges, and REGISTER, District Judge.

BLACKMUN, Circuit Judge.

This action is one instituted by the United States against C. C. Gunn, hereinafter called the taxpayer, to collect federal income taxes and penalties for the calendar years 1943 and 1944. The trial court granted the government's motion for summary judgment. United States v. Gunn, D.C.W.D.Ark., 182 F.Supp. 623. The taxpayer has appealed. At issue is the scope and effect of this court's 1957 opinion, reported as Gunn v. Commissioner, 8 Cir., 247 F.2d 359, on an appeal taken by the taxpayer from decisions of the Tax Court. Although the issue now presented to us is narrow, the background facts are detailed and seem complicated. These facts deserve mention so that the case's nature is apparent. They are perhaps best presented chronologically:

1. The taxpayer timely filed federal income tax returns for each of the years 1942 to 1946, inclusive. Thereafter he and the Commissioner executed waiver agreements, where such were necessary, extending to June 30, 1950, the time for assessment of income taxes for those years; these agreements also provided that if a notice of deficiency in tax was properly sent to the taxpayer on or before June 30, 1950, then the assessment time was extended beyond that date by the number of days during which the Commissioner was prohibited from making an assessment and for 60 days thereafter.

2. In March 1950 the Commissioner sent the taxpayer a notice of tax deficiency for 1946. On April 14, 1950, he sent the taxpayer a similar notice of deficiencies for each of the years 1942 to 1945, inclusive; the deficiencies for 1942, 1943 and 1944 were based upon net worth calculations and the notice also asserted, under § 293(b) of the Internal Revenue Code of 1939, 26 U.S.C.A. § 293(b), 50% fraud penalties for those three years. The taxpayer then filed with the Tax Court timely petitions for redetermination of these deficiencies and penalties.

3. The Tax Court on January 27, 1956, issued its findings and opinion not officially reported but found at 15 T.C.M. 115 as Decision 21541(M), which recited in part, "Therefore we find that the fraud penalties for 1942 to 1944, inclusive, were properly determined by respondent, and that petitioner's returns for those years were fraudulent with intent to evade tax". Orders of redetermination were issued April 27, 1956, setting forth the exact deficiencies in the taxpayer's income taxes for 1942 to 1946, inclusive, and the exact fraud penalties for 1942, 1943 and 1944.

4. The taxpayer timely filed a petition for review of these decisions with this court. He did not, however, file the bond required by § 7485 of the Internal Revenue Code of 1954, 26 U.S.C.A. § 7485.¹ The Commissioner, in line with the permission granted him under that section, then chose to make formal assessments of the deficiencies and fraud penalties. This was done on August 31, 1956, and a lien notice was thereafter filed for record in Crawford County, Arkansas.

5. On August 8, 1957, this court issued its opinion concluding with the recital, at page 366 of 247 F.2d:

"For the reason stated, the Tax Court\'s decision as related to the taxable years 1942-1944 is reversed, with remand for further proceedings, and the decision as related to the taxable years 1945-1946 is affirmed."

6. While this remand was pending in the Tax Court the taxpayer instituted an action in the United States District Court for the Western District of Arkansas to enjoin his District Director of Internal Revenue and the Director's collection officers from making any levy under the 1956 assessments; this was on the ground that those assessments had not become final. At that time the taxpayer tendered and paid the amounts necessary to cover the 1945 and 1946 deficiencies and accrued interest thereon. The court denied the government's motion to dismiss and granted a preliminary injunction as to the years 1942-4. Gunn v. Mathis, D.C.W.D.Ark., 157 F.Supp. 169, 175-179. This later was made permanent. A notice of appeal was filed by the government but was withdrawn on December 23, 1958.

7. In the continuing proceedings in the Tax Court that Court, on motion of the Commissioner, ordered the taxpayer to file an amended petition "making a further and better statement with respect to his net worth on December 31, 1941", and on any other dates he felt material, and also disclosing his living expenses and receipt of any nontaxable income. The taxpayer complied with this order. The alleged facts in the amended petition would, if proved, have established by the net worth method that the taxpayer had no income in addition to that which he had originally reported and that no deficiencies existed.

8. Thereafter the taxpayer and the Commissioner entered into a stipulation for use in the Tax Court and reading as follows:

"It is hereby stipulated that without considering the assessments made subsequent to the issuance of the deficiency notice:

"1. There is no deficiency in income tax and no penalty due from the petitioner for the taxable year 1942.

"2. There is a deficiency in income and victory tax in the amount of $5,701.22, penalty under section 293(a) of the Internal Revenue Code of 1939 in the amount of $333.21, claim for which is specifically hereby made, and no penalty under section 293(b) of the Internal Revenue Code of 1939, due from the petitioner for the taxable year 1943.

"3. There is a deficiency in income tax in the amount of $11,130.26 and penalty under section 293(b) of the Internal Revenue Code of 1939 in the amount of $7,691.75 due from the petitioner for the taxable year 1944.

"Effective upon entry of decision pursuant to this stipulation petitioner waives the restrictions, if any, contained in the Internal Revenue Code on the assessment and collection of the deficiencies and penalties plus statutory interest."

The tax amounts so stipulated, exclusive of interest and penalties, in the aggregate were less than half of the total taxes for the 3 years as redetermined by the Tax Court by its 1956 order. The Tax Court on January 21, 1958, issued its decision, pursuant to this stipulation, containing similar references to § 293(a) and (b).²

9. The outstanding assessments of August 31, 1956, so far as they related to the years 1942-4, were abated and new assessments as to 1943 and 1944, in line with the Tax Court's decision and including interest, were made on December 24, 1958, the day following the withdrawal of the appeal in the injunction suit. The taxpayer refused to pay these assessments.

10. The present suit seeking judgment for the amount of these 1958 assessments, less certain credits, was filed in June 1959. The taxpayer has raised the statute of limitations as an affirmative defense and has asserted that the limitation period had expired by the time the 1958 assessments were made and that they were of no legal effect.³ The trial court decided this issue against the taxpayer.

It is clear that if the government had effected its new assessments within 60 days after April 21, 1958, (the expiration of the 3 month period allowed by § 7483 of the 1954 Code, 26 U.S.C.A. § 7483, for the filing of a petition for review of a Tax Court decision), there would be no question, under any theory of computation, as to the timeliness of those assessments. With the assessment having been made only on December 24, 1958, however, the limitations defense raised by the taxpayer could be effective (apart from the question of any further waiver by the stipulation) if, as he claims, the issue of fraud is not res judicata. If this court's opinion in 247 F.2d 359 and the ensuing judgment reversed the Tax Court's decision for the years 1942-44 for all purposes and left open the issue of fraud for determination in the further proceedings in the Tax Court, then, to the extent fraud is not found, § 276(a) of the 1939 Code, 26 U.S.C.A. § 276(a), eliminating any limitation period where fraud is present, does not apply and the December 1958 assessment falls beyond the period specified by the waivers. The issue thus, as has been stated, centers in the effect of this court's prior opinion.⁴

The fact that the Tax Court litigation involved the Commissioner of Internal Revenue, whereas the present action is one instituted by the United States, of course affords no obstacle to the application of the rule of res judicata if its other conditions are met. Tait v. Western Md. Ry. Co., 289 U.S. 620, 53 S.Ct. 706, 77 L.Ed. 1405; United States v. Archer, 1 Cir., 174 F.2d 353, 356; Owens v. United States, 10 Cir., 177 F.2d 692, 693, certiorari denied 338 U.S. 955, 70 S.Ct. 493, 94 L.Ed. 589.

This court has said that upon "the remand of a case for a new trial, the only legal propositions which are ordinarily no longer subject to question are those settled and determined by the appellate court's opinion", Strimling v. Stone, 8 Cir., 194 F.2d 920, 921, and that "the legal propositions which this Court settles and determines on the appeal cannot ordinarily be again questioned", Millers' Mut. Fire Ins. Ass'n of Illinois v. Bell, 8 Cir., 99 F.2d 289, 292. This principle has been applied in tax litigation. Johnson v. Commissioner, 8 Cir., 105 F.2d...