Nehf v. United States

• Decision Date: 27 October 1967
• Docket Number: No. 66 C 1260.,66 C 1260.
• Citation: 278 F. Supp. 444
• Parties: Sol NEHF et al., Plaintiffs, v. UNITED STATES of America and E. C. Coyle, District Director, Defendants.
• Court: U.S. District Court — Northern District of Illinois

278 F. Supp. 444

Sol NEHF et al., Plaintiffs, v. UNITED STATES of America and E. C. Coyle, District Director, Defendants.

No. 66 C 1260.

United States District Court N. D. Illinois, E. D.

October 27, 1967.

Max Reinstein, Chicago, Ill., for plaintiffs.

Edward V. Hanrahan, U. S. Atty., Chicago, Ill., Thomas J. Curoe, Asst. U. S. Atty., for defendants.

MEMORANDUM OPINION

MAROVITZ, District Judge.

Defendants' Motion for Summary Judgment.

Plaintiffs seek the enforcement of an alleged agreement entered into on December 13, 1961 between themselves and Harold All, then the District Director of the Internal Revenue Service, wherein the Director agreed to pay $15,814.58 to the plaintiffs.¹ The District Director apparently had received that amount pursuant to a levy served upon the Chicago Land Clearance Commission.

The agreement apparently provided that if the government did not prevail in the pending case of United States v. Crest Finance Co., 291 F.2d 1 (7th Cir. 1961), plaintiffs would be entitled to the money, since they would hold a lien position superior to the above-mentioned levy. Although unrelated factually to this case, Crest presumably presented a legal issue of lien priority identical to the dispute between plaintiffs and the Government. The Government lost the Crest case, and plaintiffs contend that the rule of law enunciated therein supported the priority of their liens on file with the Chicago Land Clearance Commission, and required the Internal Revenue Service to pay over to them the aforesaid sum, under the terms of their agreement. The defendants named herein are the United States and E. C. Coyle, currently the District Director of Internal Revenue.

The Government filed its answer, in which it denied any liability, claimed that a portion of the alleged agreement was the result of mutual mistake, and insisted that this Court lacks subject matter jurisdiction herein. The Government then served the instant motion for summary judgment to test its contention that we are without jurisdiction in this cause.

In the complaint, jurisdiction is hinged upon 28 U.S.C. Sec. 1331², the general federal question jurisdictional statute. However, under the doctrine of sovereign immunity, suits against the United States may not be maintained without an express grant of statutory authority. Land v. Dollar, 330 U.S. 731, 67 S.Ct. 1009, 91 L.Ed. 1209 (1947). Section 1331 does not confer such authority.

The Government maintains that this is an action upon an express contract, and is correct in its assertion that under 28 U.S.C. Sections 1346(a) (2), and 1491, the United States Court of Claims has exclusive jurisdiction over contract actions against the Government exceeding $10,000 in amount.³ Since the complaint herein seeks more than that amount, the Government contends that this case properly belongs in the Court of Claims.

The plaintiffs apparently realize the validity of the Government's position. In their brief opposing the instant motion, they seek leave to add Sections 1340, 2410, and 2463 of Title 28, as "additional and further bases for the jurisdiction of this Court."⁴ Section 1340 provides:

"The district courts shall have original jurisdiction of any civil action arising under any Act of Congress providing for internal revenue, or revenue from imports or tonnage except matters within the jurisdiction of the Customs Court."

Even assuming arguendo that this action arises under a federal statute providing for internal revenue, Section 1340 is merely a grant of general jurisdiction, and is not a waiver by the United States of its immunity from suit. Jurisdiction against the United States under Section 1340 must be supported by some other statute which specifically waives the sovereign's immunity. Falik v. United States, 343 F.2d 38, 40 (2d Cir. 1965); Cooper Agency, Inc. v. McLeod, 235 F. Supp. 276 (D.C.S.C.1964), affirmed 348 F.2d 919 (4th Cir. 1965); Quinn v. Hook, 341 F.2d 920 (3d Cir. 1965). To supply the necessary consent, plaintiffs evidently rely on Section 2410(a), which states:

"Under the conditions prescribed in this section and section 1444 of this title for the protection of the United States, the United States my be named a party in any civil action or suit in any district court, or in any state court having jurisdiction of the subject matter, to quiet title to or for the foreclosure of a mortgage or other lien upon real or personal property on which the United States has or claims a mortgage or other lien."

Although it appears that a Government levy was seemingly responsible for the Government's current possession of the monies in dispute, we do not think that plaintiffs may rely upon Section 2410(a) to sustain jurisdiction, in view of the posture of the pleadings herein.

At first blush, it may appear that the government's possession constitutes a cloud upon plaintiff's title to the property. However, in Remis v. United States, 172 F.Supp. 732, 733 (D.Mass.1959), affirmed 273 F.2d 293 (1st Cir. 1959), Judge Aldrich cogently put the quietus to the argument that Section 2410(a) is to be literally interpreted without reference to its legislative history. In Remis, the purchaser of real estate at a mortgagee's sale sought to quiet his title as against the United States which had asserted junior liens against the property. Judge Aldrich pointed out that Sec. 2410(a) was designed to allow parties to join the United States in a limited class of cases, as provided in the statute, and stated: (at 733)

"Taking this history as a whole, I think it reasonably apparent that what concerned Congress was admitting the government into actions as an additional party when necessary for complete relief, and not the creation of new jurisdiction in the federal courts for the special purpose of suing the government."

Subsequent cases have rejected various taxpayers' attempts to use Section 2410 (a) to question the amount of taxes due or to enjoin the enforcement of tax liens. Falik v. United States, 343 F.2d 38 (2d Cir. 1965); Cooper Agency, Inc. v. McLeod, 235 F.Supp. 276 (E.D.S.C.1964), affirmed 348 F.2d 919 (4th Cir. 1965); Quinn v. Hook, 231 F.Supp. 718 (E.D.Pa. 1964), affirmed 341 F.2d 920 (3d Cir. 1965); Seff v. Machiz, 246 F.Supp. 823 (D.Md.1965).

The instant plaintiff seemingly would have this court invoke Section 2410(a) to compel enforcement of an alleged contract with the Government which stems from the parties' respective positions as lienors upon certain property once held by the Chicago Land Clearance Commission. Although plaintiffs claim that the "case is not founded upon contract but upon an interpretation of the Internal Revenue Laws relative to priorities of liens," their own complaint belies their argument. The following illustrative excerpts from the complaint are indicative of the true nature of this action:

"1. That on the 13th day of December, 1961, an Agreement was entered into between Harold R. All, the then District Director of Internal Revenue at Chicago, Illinois, and the plaintiffs, wherein the Director of Internal Revenue agreed to pay over to the plaintiffs the sum of $15,814.58 * * *

* * * * * *

"3. That the final disposition of the Crest case supported the priority of the liens which the plaintiffs had on file with the said CHICAGO LAND CLEARANCE COMMISSION and, accordingly, required the Office of the Director of Internal Revenue, under the terms of said Agreement, to pay over to the plaintiffs * * *

* * * * * *

"5. * * * the attorney for the plaintiffs * * * made demand * * for the payment to the plaintiffs of the $15,814.58, which was due them under the terms of said contract, as aforesaid * * *

"7. The defendants have refused to acknowledge the terms of the contract entered into by them * * *" (All emphasis added)

It becomes apparent that plaintiffs have attempted to restyle their lawsuit so as to cast it in a stance cognizable by this court. However, the very words of their complaint make it clear that they are suing upon an express contract, which incidentally arose from a lien priority dispute between themselves and the Government.

In Remis v. United States, 273 F.2d 293 (1st Cir. 1960), cited above for Judge Aldrich's opinion in the District Court, the Court of Appeals dealt swiftly with the allegation that jurisdiction was present under Sections 1340 and 2410(a) because "there is inherent in the complaint a controversy as to the validity of tax liens arising under the Internal Revenue Code." The plaintiff therein complained that the Government's junior liens were invalid as to him. The court held:

"The short answer to this contention is that the complaint contains no allegation controverting the fact that valid federal liens

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