Nussbaumer v. United States
| Decision Date | 04 June 1959 |
| Docket Number | No. 2623.,2623. |
| Court | U.S. District Court — Middle District of Tennessee |
| Parties | Japhet NUSSBAUMER, a Resident of Montgomery County, Tennessee, c/b/a Walnut Grove Dairy, v. UNITED STATES of America and James M. Rountree, District Director of Internal Revenue. |
James W. Allen and James W. Allen, Jr., Nashville, Tenn., for plaintiff.
Fred Elledge, Jr., U. S. Dist. Atty., Nashville, Tenn., Stanley F. Krysa, Asst. Atty. Gen., Tax Division, Claims Section, Department of Justice, Washington, D. C., for the United States.
This is an action by the plaintiff, a milk distributor, to enjoin the defendant, the District Director of Internal Revenue, from the assessment and collection of excise taxes in the amount of $1,182.97 plus interest of $146.07, assessed by the Commissioner of Internal Revenue against the plaintiff under Section 4271 (a) of the Internal Revenue Code of 1954, 26 U.S.C.A. § 4271(a). That section provides as follows:
The plaintiff insists that the taxes assessed by the defendant are due and payable from other sources, and that if the defendant is not restrained by the Court from collecting the taxes, the plaintiff will be required to pay a tax which he does not in fact owe and that he will have no adequate remedy at law to recover the amount paid. It is the plaintiff's further insistence that he is not "the person making the payment subject to the tax", but that the persons making such payment are the farmer-producers from whom the plaintiff purchases milk. He argues that he is a non-taxpayer insofar as the tax in question is concerned and that he therefore has no adequate remedy to pay the tax and institute an action for refund, his only remedy being to enjoin the defendant from proceeding against him.
It is alleged in the complaint in substance that the plaintiff is engaged in the operation of a milk distribution plant in Clarksville, Tennessee, under the name of Walnut Grove Dairy. In the operation of the plaintiff's dairy he purchases milk from farmers f. o. b. his receiving platform in Clarksville. No arrangement exists between the plaintiff and the transporters delivering the milk to his plant, although in some instances the truck operators may act as an agent for a farmer and will arrange for the sale of milk to the plaintiff. The plaintiff pays the farmer-producer on a bi-monthly basis and in some instances the amount due to the transporter is deducted from the price of the milk and a separate check is issued to the truck operators. According to the allegations of the complaint this arrangement is merely a convenience to the farmers, and in all cases the hiring of the transporter and the value of his services are determined by the farmer and the transporter, the plaintiff having no control over the employment contract, the payment of charges, or the amount thereof. The Commissioner of Internal Revenue, however, determined from the facts available to him that the plaintiff was the "person making the payment subject to the tax" and consequently assessed the plaintiff with the taxes under the applicable statute.
Section 7421(a) of the Internal Revenue Code of 1954, 26 U.S.C.A. § 7421 (a), provides that "no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court", and under the terms of this statute the Court is without jurisdiction of the present action unless the circumstances of the case are such that the statute is not applicable. The plaintiff argues that the statute is not applicable for the reason that it does not apply to a third party seeking to enjoin a collector from taking his property to pay the taxes of another. For this proposition the plaintiff cites and relies upon the cases of Glenn v. American Surety Company of New York, 6 Cir., 160 F.2d 977; Adler v. Nicholas, 10 Cir., 166 F.2d 674, and Jones v. Kemp, 10 Cir., 144 F.2d 478. An examination of these cases discloses that they are factually distinguishable in a material aspect from the present case. In each of the cases the plaintiff seeking injunctive relief was not the party against whom an assessment had been made for the tax in question. In each case the plaintiff was merely seeking to enjoin the Collector from taking his property to satisfy the tax obligation assessed against another party. In the instant case the plaintiff, whether rightly or wrongly, has been directly assessed with the tax by the Commissioner of Internal Revenue, it being the insistence of the Commissioner that the plaintiff is himself liable for the tax. In the case of Glenn v. American Surety Company, supra, the court held that sureties had the right to enjoin the Government from the collection of a tax from the proceeds of property upon which such sureties had a prior lien, such tax being the admitted obligation of another party. In regard to the statute forbidding a suit to restrain the assessment or collection of...
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