Jones v. Tower Production Co., 2728.

• Decision Date: 13 December 1943
• Docket Number: No. 2728.,2728.
• Citation: 138 F.2d 675
• Parties: JONES, Collector of Internal Revenue, v. TOWER PRODUCTION CO. et al.
• Court: U.S. Court of Appeals — Tenth Circuit

138 F.2d 675 (1943)

JONES, Collector of Internal Revenue, v. TOWER PRODUCTION CO. et al.

No. 2728.

Circuit Court of Appeals, Tenth Circuit.

November 4, 1943.

Rehearing Denied December 13, 1943.

John E. Garvey, Atty., Dept. of Justice, of Washington, D. C. (Samuel O. Clark, Jr., Asst. Atty. Gen., Sewall Key, Helen R. Carloss, and Lyle M. Turner, Sp. Assts. to Atty. Gen., and Charles E. Dierker, U. S. Atty., of Oklahoma City, Okl., on the brief), for appellant.

Paul G. Darrough, of Oklahoma City, Okl. (Valjean Biddison, of Tulsa, Okl., on the brief), for Tower Production Co.

Before PHILLIPS, HUXMAN, and MURRAH, Circuit Judges.

PHILLIPS, Circuit Judge.

The Tower Production Company¹ brought this action against H. C. Jones, as Collector of Internal Revenue for the District of Oklahoma, and the Anderson-Prichard Refining Corporation.²

In its complaint Tower alleged that it is the owner of an undivided interest in three oil and gas leases covering certain blocks in Oklahoma City, Oklahoma, and certain funds derived from the sale of oil from such leases; that on December 2, 1932, A. C. Alexander, the then Collector of Internal Revenue for the Western District of Oklahoma, filed in the office of the county clerk a lien statement numbered 1279, stating that there were additional 1930 income taxes due and owing from Ben Wofford individually; that on November 25, 1932, a distraint warrant was issued by Alexander; that on April 19, 1938, Jones, who had become Collector of Internal Revenue for the Western District of Oklahoma, filed a levy against an undivided one-half interest in the leases and the funds referred to above, asserting that such interest and funds were subject to the lien; that the Refining Corporation is a pipe-line company which had been and is regularly running the oil produced from the leases; that upon the filing of the levy it withheld and still withholds sufficient funds accruing from the sale of oil from the leases to satisfy the asserted lien and that it will continue to hold such funds until determination has been made of the conflicting claims thereto; that Jones, as Collector, threatens to and will, unless enjoined, enforce such lien against Tower's interest in the leases and funds; that Wofford never owned any interest in such leases and funds; that Wofford held an undivided one-half interest in the leases solely as trustee for the Wofford Drilling Company, Inc.³; that prior to the filing of the lien statement a receiver was appointed for the Drilling Company in the United States District Court for the Western District of Oklahoma; that such receiver took charge of such interest as the owner thereof and continued to exercise ownership of such interest until a proceeding was filed in such District Court for the reorganization of the Drilling Company; that Harry J. Brown, as trustee for the Drilling Company, succeeded to all the right and title to such interest of Brown, as receiver, and transferred such interest to Tower, and that Tower is now the owner and holder thereof.

That on November 26, 1932, Wofford entered into a contract with Albert S. Clinkscales and Brown by which he agreed to assign and transfer all his interest in the leases to the Drilling Company; that such agreement was made for the benefit of the Drilling Company, and that thereafter Wofford assigned and transferred to the Drilling Company all his right and title to such interest.

That the United States acquired no lien on or interest in the leases or the minerals produced therefrom or the proceeds thereof; that the levy made by Jones, as Collector, is void and that the warrant of distraint should be quashed, in so far as it affects the property of Tower; that the value of the property sought to be taken under the levy is in excess of $3,000; that Tower has no adequate remedy at law and will suffer irreparable injury, unless Jones, as Collector, is enjoined from enforcing the lien.

Tower praved that Jones, as Collector, be enjoined from enforcing the lien and the warrant of distraint and from attempting to enforce the payment of the taxes owing by Wofford from the property of Tower, and that the warrant and levy be quashed, and that the Refining Corporation be decreed and directed to pay over all funds in its hands belonging to Tower, and for general relief at law or in equity.

In his answer, Jones set up that the United States was the real party in interest and had not given its consent to be sued; that the judgment in a prior action brought by Tower against the Refining Corporation, Jones, as Collector, and the United States was a bar to the instant action under the doctrine of res judicata. He denied Tower's claims of title.

From a decree enjoining Jones from attempting to enforce the alleged tax lien against Tower's interest in the leases and the funds, and adjudging that the warrant should be quashed, and that the Refining Corporation should pay the funds withheld by it over to Tower, Jones has appealed.

This controversy was before this court in a prior action brought by Tower against the Refining Corporation, Jones, as Collector, and the United States. See Jones v. Tower Production Company, 10 Cir., 120 F.2d 779. In that case, we held that the suit could not be maintained...