Hoye v. United States

• Decision Date: 17 March 1960
• Docket Number: 16553.,No. 15964,15964
• Citation: 277 F.2d 116
• Parties: Dan O. HOYE, as Controller of the City of Los Angeles, and Dan O. Hoye, Appellants, v. UNITED STATES of America and Robert A. Riddell, Director of Internal Revenue, Appellees. Dan O. HOYE, as Controller of the City of Los Angeles, Dan O. Hoye and The City of Los Angeles, Appellants, v. UNITED STATES of America and Robert A. Riddell, Director of Internal Revenue, Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

277 F.2d 116 (1960)

Dan O. HOYE, as Controller of the City of Los Angeles, and Dan O. Hoye, Appellants, v. UNITED STATES of America and Robert A. Riddell, Director of Internal Revenue, Appellees.

Dan O. HOYE, as Controller of the City of Los Angeles, Dan O. Hoye and The City of Los Angeles, Appellants, v. UNITED STATES of America and Robert A. Riddell, Director of Internal Revenue, Appellees.

Nos. 15964, 16553.

United States Court of Appeals Ninth Circuit.

March 17, 1960.

No. 15964:

Roger Arnebergh, City Atty., Bourke Jones, Alfred E. Rogers, T. Paul Moody, Ralph J. Eubank, Asst. City Attys., Los Angeles, Cal., for appellant.

Charles K. Rice, Asst. Atty. Gen., Davis W. Morton, Jr., Lee A. Jackson, I. Henry Kutz, Joseph Kovner, Attorneys, Department of Justice, Washington, D. C., Laughlin E. Waters, U. S. Atty., Edward R. McHale, Robert H. Wyshak, Asst. U. S. Attys., Los Angeles, Cal., for appellees.

No. 16553:

Roger Arnebergh, City Atty., Bourke Jones, T. Paul Moody, Ralph J. Eubank, Asst. City Attys., Los Angeles, Cal., for appellant.

Charles K. Rice, Asst. Atty. Gen., John Pajak, Robert N. Anderson, Lee A. Jackson, Joseph Kovner, Attorneys, Department of Justice, Washington, D. C., Laughlin E. Waters, U. S. Atty., Edward R. McHale, Robert H. Wyshak, Asst. U. S. Attys., Los Angeles, Cal., for appellees.

Before BARNES, HAMLEY, and JERTBERG, Circuit Judges.

HAMLEY, Circuit Judge.

These appeals bring into question the duties and obligations of a city controller who has received from a director of internal revenue a notice of levy upon unpaid wages of a city employee to secure payment of federal taxes and a demand for payment of the sum levied upon.

On March 19, 1957, Robert A. Riddell, District Director of Internal Revenue for the Los Angeles District served upon Dan O. Hoye, Controller of the City of Los Angeles a notice of levy for unpaid income taxes in the amount of $155.93 owing and unpaid by an employee of the city for the year 1955. In this notice the Controller was advised that pursuant to section 6331, Internal Revenue Code of 1954, 26 U.S.C.A. § 6331, all sums of money or other obligations owing from the city to the named taxpayer were thereby levied upon and seized for satisfaction of the unpaid tax. The notice also contained a demand for the amount necessary to satisfy the tax liability or such lesser sum for which the city might then be indebted to the taxpayer.

On the day such notice was received by the Controller the city was indebted to the taxpayer in the sum of $158.78 for wages. The Controller failed to pay over this sum or any part of it to the United States pursuant to the notice of levy described above. On June 25, 1957, the District Director served upon the Controller a "final demand" giving notice that failure to comply would result in enforcement proceedings as provided in section 6332 of the Internal Revenue Code of 1954, 26 U.S.C.A. § 6332.

On September 10, 1957, the Controller filed in the United States District Court for the Southern District of California, Central Division, a complaint to quash a notice of levy and final demand served on a municipal corporation by the Director of Internal Revenue. The defendants named in this complaint were the United States, Riddell as Director of Internal Revenue, and the taxpayer. The taxpayer was never served and did not otherwise appear in the action.

In this complaint the Controller disclaimed any interest in the sum owing to the taxpayer other than for the purpose of paying it to the parties legally entitled thereto. The Controller asked that in addition to quashing the levy and final demand the court determine that he was bound to pay the money over to the Director only in accordance with California law which would exempt him from personal liability.

It is alleged in the complaint as the sole reason for nonpayment that the United States had not complied with the requirements of section 710, California Code of Civil Procedure. This section provides in part that a judgment creditor may garnish the salary of a municipal employee by filing with the official whose duty corresponds to that of auditor an authenticated abstract or transcript of the judgment together with an affidavit stating the exact amount then due. The official is then required to pay into court the sum levied upon, less certain deductions not here material.

On November 8, 1957, the United States filed a motion to intervene. Appended thereto was a proposed complaint in intervention to recover a penalty under section 6332(b) of the 1954 Internal Revenue Code. On the same day the United States filed a motion to dismiss and a supporting memorandum. The motion to dismiss was made on the ground that the court lacked jurisdiction over the United States and over the subject matter, and because the District Director was not a proper party.

On February 6, 1958, the district court granted the government's motion to intervene.

On the 24th day of the same month the United States filed an amended complaint in intervention. In the amended complaint the government sought not only a foreclosure of its tax lien but also a personal judgment against the Controller, Dan O. Hoye, in the amount of $155.93 and interest. The amended complaint in intervention also named the City of Los Angeles as a defendant in intervention.

On March 10, 1958, the district court granted the government's motion to dismiss the Controller's complaint. The motion was granted on the ground that in his complaint the Controller sought certain injunctive relief which is specifically prohibited by 26 U.S.C.A. § 7421(a), and sought declaratory relief which is specifically prohibited by 28 U.S.C.A. § 2201.

It was recited in the order of dismissal that "this is not a final order under Fed. R.Civ.P. 54(b) 28 U.S.C.A., since the United States of America has filed its complaint in intervention." Seven days later the Controller appealed to this court from the order of March 10, 1958, the cause being docketed here as No. 15964.

The appeal came on for argument before this court on December 3, 1958. On March 2, 1959, an order was entered therein vacating the order of submission. It was further provided in such order that the determination of that appeal would be held in abeyance pending disposition in the trial court of the government's complaint in intervention, and until such time as either an appeal were taken from the judgment in intervention or the time for taking such an appeal had expired.

The government's complaint in intervention thereafter came on for trial, the facts being established by stipulation. The Controller had theretofore voluntarily deposited with the clerk of the court a payroll check payable to the taxpayer.

The basic question dealt with at this trial was whether the collection procedures of the Internal Revenue Service in the collection of monies past due under the internal revenue laws are to be enforced uniformly without regard to conditions prescribed by a state legislature for judgment creditors. Answering this question in the affirmative, the trial court concluded that section 710, California Code of Civil...