Page v. Polk, 1544.

• Decision Date: 17 May 1922
• Docket Number: 1544.
• Citation: 281 F. 74
• Parties: PAGE, Collector of Internal Revenue, v. POLK et al.
• Court: U.S. Court of Appeals — First Circuit

281 F. 74

PAGE, Collector of Internal Revenue, v. POLK et al.

No. 1544.

United States Court of Appeals, First Circuit.

May 17, 1922

Harold A. Andrews, Asst. U.S. Atty., of Providence, R.I., for appellant.

Selden Bacon, of New York City, for appellees.

Before BINGHAM, JOHNSON, and ANDERSON, Circuit Judges.

BINGHAM Circuit Judge.

This is an appeal from a final decree of the District Court for Rhode Island in a suit in equity brought by Frank L. Polk and the United States Trust Company of New York, executors of the estate of Josephine Brooks, against Frank A. Page individually and as collector of internal revenue for the district of Rhode Island, restraining the latter from collecting a tax assessed against the estate.

The complainants are citizens of New York, and the defendant is a citizen of Rhode Island. Josephine Brooks died August 17 1920. The complainants duly filed their return setting forth the value of the estate, and the Commissioner of Internal Revenue assessed thereon a tax of $245,787.67, under title 4 of the Revenue Act of February 24, 1919 (40 Stat.at Large, p 1096). The jurisdiction of the District Court, as a federal court, is based on the ground of diverse citizenship and that the amount involved exceeds $5,000 exclusive of interest and costs; also on the ground that the suit is one arising under the internal revenue laws of the United States.

There is no controversy as to the legality or amount of the tax assessed against the estate. The complainants contend that under section 408 of the act of 1919 (Comp. St. Ann. Supp. 1919, Sec. 6336 3/4i), they are given a year and 180 days after their testatrix's death in which to pay the tax, even though the Commissioner of Internal Revenue had not extended the time of payment under section 406 (section 6336 3/4g) for 180 days after its due date, and that the defendant was not authorized to enforce its collection by distraint or otherwise until after the expiration of 180 days; that, in violation of this right, the defendant, pretending to act in his capacity as collector, on the 28th day of September, 1921, and before the 180 days had expired, notified the complainants that, unless the tax was paid within 10 days, he should proceed to collect the same, with costs, by seizure and sale of property; that, under section 408 of the act of 1919, the collector is prevented from collecting the tax by distraint or otherwise within 180 days; and that the threatened seizure, if carried out, would have been unauthorized and an act not done by him in his official capacity or with color of law. They further contend and allege in their bill that if, to avoid such threatened distraint, they at this time paid the tax, they would be remediless in law, as they had the privilege, under section 406, of paying the tax at any time down to February 13, 1922, without interest. It was also alleged in the bill that the payment of the tax at the time of the commencement of the suit rather than on February 13, 1922, would subject the estate to loss of interest on the money during the interim in excess of $5,000, and would subject the estate to the difficulty of converting the assets into cash for immediate payment of a large sum of money. But it appears in the final decree that it was stipulated in open court that the complainants had, at the time of the commencement of the suit and at the time of entering the decree, assets in their hands sufficient to meet the tax, and that the loss which they would have sustained by the payment would have been the interest on the tax, unless they were able to recover it back from the United States.

It was decreed:

That the payment of the tax was 'not required by law or compellable by distraint until one year and 180 days after the death of Josephine Brooks, which occurred on the 17th day of August, 1920'; that payment of the tax 'at the time of the filing of the original bill herein, instead of in February, 1922, * * * would have subjected the estate * * * to loss of interest on the money so paid during the interim amounting to a sum in excess of $5,000; and that if, to avoid the threatened distraint, the plaintiffs should...