Raffaele v. Granger

• Decision Date: 14 May 1952
• Docket Number: No. 10586.,10586.
• Citation: 196 F.2d 620
• Parties: RAFFAELE et al. v. GRANGER, Collector of Internal Revenue.
• Court: U.S. Court of Appeals — Third Circuit

196 F.2d 620 (1952)

RAFFAELE et al. v. GRANGER, Collector of Internal Revenue.

No. 10586.

United States Court of Appeals Third Circuit.

Argued February 18, 1952.

Filed May 14, 1952.

Frederic G. Rita, Washington, D. C. (Theron Lamar Caudle, Asst. Atty. Gen., Ellis N. Slack, A. F. Prescott, Special Assts. to the Atty. Gen., Edward C. Boyle, U. S. Atty., W. Wendell Stanton, Asst. U. S. Atty., Pittsburgh, Pa., on the brief), for appellant.

Henry Kauffman, Pittsburgh, Pa. (Louis Little, Pittsburgh, Pa., on the brief), for appellee.

Before KALODNER and HASTIE, Circuit Judges and HARTSHORNE, District Judge.

HASTIE, Circuit Judge.

This is an appeal by a Collector of Internal Revenue from an order of a district court quashing a warrant of distraint.

Against one who fails upon demand to pay taxes owed the United States, a Collector of Internal Revenue has a statutory remedy of "distraint upon the goods, chattels or * * * bank accounts of the person delinquent".¹ Purporting to exercise this power with reference to property of Antonio Raffaele, a tax delinquent, the Collector who is appellant here issued a warrant of distraint and levied thereunder upon certain deposits standing in banks in the Western District of Pennsylvania to the credit of Antonio Raffaele and his wife, Marietta Raffaele. Thereupon the spouses filed a "petition to quash warrant of distraint" in the United States District Court for the Western District of Pennsylvania. The court required the Collector to show cause why the warrant of distraint should not be quashed. In response, the Collector filed a motion to dismiss the petition challenging the court's jurisdiction and the petitioners' procedure. The motion to dismiss was denied and the petition to quash was granted, D.C., 100 F.Supp. 390.

The Collector urges that the proceeding in the district court was improper both because the purpose and effect of the litigation was to restrain the collection of a tax in disregard of the prohibition of Section 3653(a) of Title 26 of the United States Code and because the court permitted summary procedure not in conformity with the rules governing the institution and conduct of civil actions in district courts.

Both questions must be considered in the light of what the petitioners have claimed and the record reveals concerning ownership of the distrained property. It is alleged that each of the bank accounts upon which the Collector levied was created in the joint names of the husband and wife "as tenants by the entireties". The Collector admits the joint accounts of husband and wife and that the law of Pennsylvania calls the ownership in these cases tenancy by the entireties. Madden v. Gosztonyi Savings & Trust Co., 1938, 331 Pa. 476, 200 A. 624, 117 A.L.R. 904, confirming a long line of adjudicated cases. But he contends that what Pennsylvania says is not really true because the deposits are so established that either spouse may draw upon them. This power of each spouse to withdraw funds, he argues, is inconsistent with the unity of control and singleness of estate fundamental to the conception of tenancy by the entireties and shows that the individual spouse has independent authority over the account and a severable interest in it. The simple answer we think is that Pennsylvania law views this power of each spouse as a power to act for both, and no more. And Pennsylvania carries through with this conception so that the ownership of both attaches to funds withdrawn by either. See Madden v. Gosztonyi Savings & Trust Co., supra.

We think it clear that Pennsylvania has in legal effect created with reference to such bank accounts as these a unity of ownership by the spouses as if they were a single personality.² The interest of neither is severable except by consent of both. Any attempt to deal separately with or dispose of the interest of one is in derogation of the other spouse's ownership of the entire property and, therefore, legally ineffective. It is the inevitability of destruction of property rights which the Pennsylvania law has vested in both spouses which necessarily places title beyond the reach of those claiming solely against either. And it does not matter that a claim against one spouse is being asserted under a federal statute for taxes owed the United States. The United States has no power to take property from one person, the innocent spouse, to satisfy the obligation of another, the delinquent spouse. Cf. Jones v. Kemp, 10 Cir., 1944, 144 F.2d 478; United States v. Hutcherson, 8 Cir., 1951, 188 F.2d 326.

This analysis makes clear the answer to the Collector's contentions, stated at the beginning of this opinion. This court and others have consistently held that Section 3653(a) of Title 26 does not prevent judicial interposition to prevent a Collector from taking the property of one person to satisfy the tax obligation of another. Rothensies v. Ullman, 3 Cir., 1940, 110 F.2d 590; Glenn v. American Surety Co., 6 Cir., 1947, 160 F.2d 977; Long v. Rasmussen, D. C. Mont. 1922, 281 F. 236. And that is what the Collector has attempted to do here, whether his attack be viewed as an invasion of property of the wife or of title vested in "a distinct legal entity, consisting of the unified personalities of the husband and wife". See C.I.T. Corp. v. Flint, supra, note 2.

The other contention of the Collector, that petitioners cannot have summary process without plenary civil action to release their property from illegal distraint, also fails. Distraint is a summary, extra-judicial remedy having its origin in the common law. There, a form of self-help, it consisted of seizure and holding of personal property by individual action without intervention of legal process for the purpose of compelling payment of debt. Relief of...