Routzahn v. Tyroler

• Decision Date: 13 November 1929
• Docket Number: No. 5353.,5353.
• Citation: 36 F.2d 208
• Parties: ROUTZAHN v. TYROLER et al.
• Court: U.S. Court of Appeals — Sixth Circuit

36 F.2d 208 (1929)

ROUTZAHN v. TYROLER et al.

No. 5353.

Circuit Court of Appeals, Sixth Circuit.

November 13, 1929.

C. T. Hendler, Sp. Atty., Bureau of Internal Revenue, of Washington, D. C. (Wilfred J. Mahon, U. S. Atty., and Irene Nungesser, Asst. U. S. Atty., both of Cleveland, Ohio, and C. M. Charest, Gen. Counsel, Bureau of Internal Revenue, of Washington, D. C., on the brief), for appellant.

M. S. Farmer, Jr., of Cleveland, Ohio, and L. F. Cooper, of Washington, D. C. (R. E. Glessner, of Washington, D. C., on the brief), for appellees.

Before DENISON, MACK, and MOORMAN, Circuit Judges.

DENISON, Circuit Judge.

The corporation, in 1920, made its return of income tax for 1919, and paid the tax indicated. In 1925 it retired its preferred stock by paying it off at par. In November, 1925, the Commissioner assessed against the corporation a deficiency tax for 1919. In February, 1927, the Commissioner notified the preferred stockholders that he proposed to assess against them the amount of this deficiency, making such assessments against them as "transferees" under section 280 (a)(1) of the Revenue Act of 1926 (section 1069 (a)(1), tit. 26, USCA), and advising them of their right, within 60 days, to file with the Board of Tax Appeals a "petition for redetermination" (see section 1048, tit. 26, USCA). No such review being asked, he made the proposed assessment, and demanded payment. The stockholders, appellees here, filed a bill in the court below to enjoin collection, claiming that this section 280 (a)(1) is unconstitutional, in that its proposed application would deprive the stockholders of their property without due process of law. The District Court, relying upon Owensboro Co. v. Lucas, 18 F. (2d) 798, overruled a motion to dismiss, and, lacking further pleadings, granted the injunction.

For the purpose of getting at once to what we think the controlling question, but without intimating opinion, we assume that, if section 280 (a)(1) is unconstitutional, the assessment against the stockholders is not such a tax, or tax proceeding, that an injunction is forbidden under Rev. St. § 3224 (section 154, tit. 26, USCA), or section 604, Revenue Act of 1928 (section 2604, tit. 26, US CA).

In the same way, we assume that the question whether "any liability at law or in equity" to pay this deficiency exists against these stockholders is not one inherently incidental to the taxing power, but is a judicial question beyond the power of Congress to transfer to the administrative category — so that the power to decide it with the finality necessary to support a distraint as for taxes, could not be confided to the Commissioner or to the Board of Tax Appeals; and assume also that the remedy given by paying the tax and suing to recover may not be so "adequate" as to bar relief in equity.

Upon the basis of these same assumptions, plaintiffs-appellees urge that the opportunity to be heard by the transferee ended with the Board of Tax Appeals, and that the absence of any further opportunity for hearing constitutes a lack of due process under the Fifth Amendment. We think this argument fails because, in our judgment, the transferee has the right to have the whole matter heard by the Circuit Court of Appeals in the exercise of its power to review (section 1001, Revenue Act of 1926, section 1224, title 26, USCA); and, where a statute expressly gives a right to judicial review of an administrative order before the order can be enforced, there is no room to invoke the "due process" clause. Ben Avon Case, 253 U. S. 287, 289, 40 S. Ct. 527, 64 L. Ed. 908; State of Missouri ex rel. Hurwitz v. North, 271 U. S. 40, 41, 46 S. Ct. 384, 70 L. Ed. 818. It is true that this right of review is expressly given only to the "tax payer" (section 1224, tit. 26, USCA), and that this term is so defined in the act (see section 1262 (a)(9), tit. 26, USCA), that doubt would naturally exist whether it was intended to include the transferee from whom the tax was being collected; but, even as restricted by this definition, the term "tax payer" is not seriously inaccurate when applied to the involuntary payer of the tax debt, and he has before the...