Robert Louis Stevenson Apartments, Inc. v. CIR

• Decision Date: 03 November 1964
• Docket Number: No. 17701.,17701.
• Citation: 337 F.2d 681,10 ALR 3d 112
• Parties: ROBERT LOUIS STEVENSON APARTMENTS, INC., Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent.
• Court: U.S. Court of Appeals — Eighth Circuit

10 ALR 3d 112, 337 F.2d 681 (1964)

ROBERT LOUIS STEVENSON APARTMENTS, INC., Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent.

No. 17701.

United States Court of Appeals Eighth Circuit.

November 3, 1964.

Ronald M. Mankoff, of Durant, Mankoff & Davis, Dallas, Tex., made argument for petitioner and filed brief with Wentworth T. Durant and Robert Edwin Davis, of Durant, Mankoff & Davis, Dallas, Tex.

Lawrence B. Silver, Atty., Tax Div., Dept. of Justice, Washington, D. C., made argument for respondent and filed brief with Louis F. Oberdorfer, Asst. Atty. Gen., and Meyer Rothwacks and Gilbert E. Andrews, Attys., Tax Division, Dept. of Justice, Washington, D. C.

Before VOGEL, VAN OOSTERHOUT and MEHAFFY, Circuit Judges.

VOGEL, Circuit Judge.

By this petition for review Robert Louis Stevenson Apartments, Inc., seeks to have set aside a determination of the Tax Court that compensation paid to the corporation's president and sole stockholder of $7,200 per annum was excessive and that $2,400 was a reasonable allowance therefor.

At the outset we are presented with a motion by the Commissioner asking that the petition for review be dismissed as not having been timely filed. We will consider that motion first.

26 U.S.C.A. § 7483 provides:

"The decision of the Tax Court may be reviewed by a United States Court of Appeals as provided in section 7482 if a petition for such review is filed by either the Secretary (or his delegate) or the taxpayer within 3 months after the decision is rendered. * * *"

A petition filed subsequent to the expiration of the three-month period is unavailing and the Court of Appeals has no jurisdiction to review such determination. Lasky v. C. I. R., 9 Cir., 1956, 235 F.2d 97, affirmed 352 U.S. 1027, 77 S.Ct. 594, 1 L.Ed.2d 598.

The facts upon which the Commissioner's motion to dismiss is predicated are as follows:

On January 3, 1964, the Tax Court filed its Memorandum Findings and Conclusions in this case. On January 6, 1964, three days later, the Tax Court entered its decision. On January 27, 1964, the taxpayer filed in the Tax Court a "Motion to Correct the Court's Memorandum Findings of Fact and Opinion". The motion sought to have stricken from the Tax Court's Findings and Opinion the following statements:

1. "* * * The record is indefinite and unclear as to which of the above businesses and properties Floy Mrs. Randal continued to own and operate during the year in issue and as to how much time she spent in connection with these endeavors."

2. "* * * and especially the extent of Floy\'s Mrs. Randal\'s other activities and the rather inconsiderable amount of time which she spent in connection with petitioner\'s affairs during the year in issue * * *."

The Tax Court denied the motion to correct on February 3, 1964. The instant petition for review of the Tax Court's decision was filed on April 24, 1964. The Commissioner argues that inasmuch as more than three months had elapsed between January 6, 1964, the date of the decision, and April 24, 1964, the date of the filing of the petition for review, such petition was not timely.

Rule 19(e) of the Rules of Practice, Tax Court of the United States, 26 U.S.C.A., provides that motions "for retrial, further trial, or reconsideration" must be filed within thirty days after service of the opinion except by special leave. Rule 19(f) provides that motions "to vacate or revise a decision" must be filed within thirty days after the decision has been rendered except by special leave. The Commissioner points out that nothing was stated in the rules of the Tax Court with respect to the effect on the three-month period for filing petitions for review, of either a motion for reconsideration under Rule 19(e) or a motion to vacate under Rule 19(f). However, he concedes that:

"* * * By judicial decision, however, it has been established that motions which go to the decision, i. e. which seek to overturn the result reached by the Tax Court, will delay the running of the 3 month period. Griffiths v. Commissioner, 50 F.2d 782 (C.A. 7th) (rehearing); Burnet v. Lexington Ice & Coal Co., 62 F.2d 906 (C.A.4th) (vacate); Helvering v. Continental Oil Co. 63 App.D.C. 5, 68 F.2d 750 (C.A.D.C.), certiorari denied, 292 U.S. 627 54 S.Ct. 629, 78 L.Ed. 1481 (rehearing)."

The Commissioner argues that the taxpayer's motion "to Correct the Court's Memorandum Findings of Fact and Opinion" does not fall within the "exceptions" which delay the running of the time for appeal because it did not "go to the decision" of the Tax Court. We believe the Commissioner is incorrect. As will be pointed out in the latter part of this opinion, if the taxpayer's motion, whatever he chose to label it, had been granted, the decision of the Tax Court necessarily would have had to have been revised.

The Commissioner points out that if Tax Court proceedings were governed by the Federal Rules of Civil Procedure the taxpayer would be in no difficulty because Rule 73(a) expressly provides that the time for filing an appeal will run from the date of entry of an order granting or denying a motion to amend findings of fact "whether or not an alteration of the judgment would be required if the motion was granted". We agree with the Commissioner that the Federal Rules of Civil Procedure do not apply to proceedings in the Tax Court. Lasky v. Commissioner, supra; Starr v. Commissioner, 7 Cir., 1955, 226 F.2d 721, 722, certiorari denied 350 U.S. 993, 76 S.Ct. 542, 100 L.Ed. 859; Commissioner of Internal Revenue v. Licavoli, 6 Cir., 1958, 252 F.2d 268, 272; Katz v. Commissioner, 2 Cir., 1951, 188 F.2d 957, 959.

But under our view of this case it is immaterial whether the Federal Rules of Civil Procedure apply because we believe the taxpayer's motion, if granted, would have necessitated a revision of the decision of the Tax Court.

In dealing with a similar problem but under what was then § 8(c) of the Act of February 13, 1925, C. 229, 43 Stat. 940, 28 U.S.C.A. § 230, the Supreme Court, in reversing the Ninth Circuit in Leishman v. Associated Wholesale Electric Co., 1943, 318 U.S. 203, said beginning at page 204, 63 S.Ct. 543, at page 544, 87 L.Ed. 714:

"* * * The Circuit Court of Appeals sua sponte held it had no jurisdiction because the appeal was taken more than three months after the entry of judgment, contrary to 28 U.S.C. § 230, 28 U.S.C.A. § 230. In so holding that court recognized the general rule that where a petition for rehearing, a motion for a new trial, or a motion to vacate, amend or modify a judgment is seasonably made and entertained, the time for appeal does not begin to run until the disposition of the motion. (Cases cited in f.n. 3 omitted here.) But this case was differentiated on the ground that the instant motion was not one to amend the judgment but merely one to amend and supplement the findings and conclusions. 9 Cir., 128 F.2d 204. * *

"We think that petitioner\'s time to appeal did not begin to run until the disposition of his motion under Rule 52(b) on June 9, 1941, and accordingly that his appeal was timely. The motion was not addressed to mere matters of form but raised questions of substance since it sought reconsideration of certain basic findings of fact and the alteration of the conclusions of the court. In short the necessary effect was to ask that rights already adjudicated be altered. Consequently it deprived the judgment of that finality which is essential to appealability. Cf. Zimmern v. United States, 298 U.S. 167, 56 S.Ct. 706, 80 L.Ed. 1118; Dept. of Banking, State of Nebraska v. Pink, 317 U.S. 264, 63 S.Ct. 233, 87 L.Ed. 254. It is immaterial that petitioner did not specifically request the amendment of the judgment, and the distinction based on this failure to request by the court below is artificial and untenable. If the motion had been granted and the requested amended and supplemental findings made, the judgment would have to be amended or altered to conform to those findings and the conclusions resulting from them." (Emphasis supplied.)

In Saginaw Broadcasting Co. v. F. C. C., 1938, 68 App.D.C. 282, 96 F.2d 554, 558, certiorari denied 305 U.S. 613, 59 S.Ct. 72, 83 L.Ed. 391, the court said:

"In the Federal courts the rule is well established that in judicial proceedings the filing of a petition for rehearing, or of a motion for new trial, will suspend the running of the period within which an appeal may be taken, and that this period then begins to run anew from the date on which final action is taken on the petition or motion, whether it be denied or granted. The rule as above stated applies even though a statute fixes the time within which appeal may be taken as a definite period from the entry of judgment. (Citations omitted.)

"This rule has been applied by this court, as well as by other circuit courts of appeals, to proceedings before the Board of Tax Appeals. Helvering v. Continental Oil Co., 1933, 63 App.D.C. 5, 68 F.2d 750; Helvering v. Louis, 1935, 64 App. D.C. 263, 77 F.2d 386, 99 A.L.R. 620; Commissioner of Internal Revenue v. Lincoln-Boyle Ice Co., 7 Cir., 1937, 93 F.2d 26; Burnet v. Lexington Ice & Coal Co., 4 Cir., 1933, 62 F.2d 906; Griffiths v. Commissioner, 7 Cir., 1931, 50 F.2d 782. In these cases the pertinent sections of the Revenue Act provided that the decision of the Board might be reviewed on appeal `within six months after the decision is rendered\' and further, that `a decision * * * shall be held to be rendered upon the date that an order specifying the amount of the deficiency is entered in the records of the Board.\' In each case the appeal was taken more than six months after the order had been entered, but less than six months after the final decision of the Board upon a petition for rehearing. The courts held, nevertheless, that the appeals were timely."

The statements sought to be stricken by the taxpayer's motion in the instant case went to the core of the Tax Court's conclusion. Had the motion been granted,...