Kennedy v. Coyle

• Decision Date: 28 October 1965
• Docket Number: No. 14961.,14961.
• Citation: 352 F.2d 867
• Parties: Rose KENNEDY, Plaintiff-Appellant, v. Eugene COYLE, District Director of Internal Revenue, Charles Cartwright, James Campion and Other Unknown Internal Revenue Agents, Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

352 F.2d 867 (1965)

Rose KENNEDY, Plaintiff-Appellant, v. Eugene COYLE, District Director of Internal Revenue, Charles Cartwright, James Campion and Other Unknown Internal Revenue Agents, Defendants-Appellees.

No. 14961.

United States Court of Appeals Seventh Circuit.

October 28, 1965.

Norman J. Barry, Donald E. Egan, Chicago, Ill., Rothschild, Hart, Stevens & Barry, Chicago, Ill., of counsel, for appellant.

Louis F. Oberdorfer, Lee A. Jackson, Robert A. Maloney, Meyer Rothwack, Burton Berkley, Washington, D. C., Edward V. Hanrahan, Thomas J. Curoe, Chicago, Ill., for appellees.

Before HASTINGS, Chief Judge and SCHNACKENBERG and SWYGERT, Circuit Judges.

HASTINGS, Chief Judge.

Rose Kennedy (taxpayer) brought this action in the district court against Eugene Coyle, District Director of Internal Revenue, Charles Cartwright, James Campion and other, unknown Internal Revenue Agents. She sought thereby to quash an Internal Revenue summons, to enjoin the assessment and collection of federal income tax, and to suppress for all time and to have returned to her evidence in the possession of the Internal Revenue Service relating to her which was secured as the result of an unlawful search and seizure.

Government moved to dismiss the complaint on the grounds of lack of jurisdiction and for failure to state a claim on which relief may be granted. The district court granted such motion and dismissed the action. Taxpayer appealed from this order of dismissal.

The complaint alleged that on February 19, 1964, without a warrant and without taxpayer's consent, officers of the Chicago Police Department forcibly entered taxpayer's home and removed therefrom a substantial sum of money and financial records belonging to her.

On March 24, 1964, in an action brought by taxpayer, the Circuit Court of Cook County, Illinois held that the search of taxpayer's home and the seizure of her property was unconstitutional.

The seized property remains in the joint custody and control of the Chicago police and the Continental Illinois National Bank and Trust Company (in Chicago), subject to the jurisdiction of the Circuit Court of Cook County.

Taxpayer then instituted proceedings in the Illinois state courts to compel the return to her of her property unlawfully seized. This action is presently pending.

It is further alleged that the Internal Revenue Service has had access to the illegally seized evidence. Taxpayer charges that on the basis of this evidence alone, the Internal Revenue Service has investigated taxpayer's tax liability, although there had been no prior investigation thereof; has terminated her taxable period for the year 1963, pursuant to Section 6851 of the 1954 Internal Revenue Code, on the ground of jeopardy to the collection of income tax for 1963; has assessed and declared immediately due $180,000 in federal income taxes for 1963; has asserted liens against her funds not in her possession; and has secured further evidence relating to her criminal and civil tax liabilities.

On April 24, 1964, the Internal Revenue Service issued a summons, served on taxpayer, requiring her to appear and produce for examination certain specified records relating to her tax liabilities for 1962 and prior years.

It is finally alleged that taxpayer is 69 years of age, in poor health and without sufficient financial means necessary to institute and pursue the tax litigation required to obtain a refund.

That part of the complaint which sought to quash the Internal Revenue summons was properly dismissed since taxpayer has an adequate remedy at law. Taxpayer may refuse to honor the summons, thereby compelling the Government to proceed with an enforcement proceeding in the district court pursuant to Section 7604(b) of the Code of 1954, 26 U.S.C.A. § 7402(b). Such an "enforcement action under this section would be an adversary proceeding affording a judicial determination of the challenges to the summons and giving complete protection to the witness." Reisman v. Caplin, 375 U.S. 440, 446, 84 S.Ct. 508, 512, 11 L.Ed.2d 459 (1964).

In Zamaroni v. Philpott, 7 Cir., 346 F.2d 365 (1965), we recently had occasion to review a case with a factual situation similar to the instant case. There plaintiff sought to enjoin the use of information unlawfully seized by state officers as the evidentiary basis for asserting or proving tax deficiencies against plaintiff. The district court had dismissed the action for lack of jurisdiction on the grounds that "* * * It is not within the province of the judiciary to entertain an action which seeks a declaration that certain evidence cannot be utilized by a District Director of Internal Revenue in determining federal tax liability, nor does the Court believe that it has jurisdiction in this action to declare what evidence may or may not be admissible in a future action not yet in being concerning plaintiff's liability for the federal taxes herein involved." Id. at 366.

In Zamaroni, we approved the action by the district court and, relying on the underlying policy manifested by the provisions of 26 U.S.C.A. § 7421(a), which prohibits enjoining the assessment or collection...