U.S. v. Mellon Bank, N. A.

• Citation: 521 F.2d 708
• Decision Date: 28 August 1975
• Docket Number: No. 74-2220,74-2220
• Parties: 75-2 USTC P 9690 UNITED STATES of America v. MELLON BANK, N. A., Respondent. Appeal of Milton F. MEISSNER, Intervenor-Respondent.
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

Page 708

521 F.2d 708

75-2 USTC P 9690

UNITED STATES of America v. MELLON BANK, N. A., Respondent.

Appeal of Milton F. MEISSNER, Intervenor-Respondent.

No. 74-2220.

United States Court of Appeals, Third Circuit.

Argued May 16, 1975.

Decided Aug. 28, 1975.

Scott P. Crampton, Gilbert E. Andrews, Crombie J. D. Garrett, Carleton D. Powell, Tax Div., Dept. of Justice, Washington, D. C., Richard L. Thornburgh, U. S. Atty., Pittsburgh, Pa., for appellee.

R. Kenly Webster, Kennedy & Webster, Edward C. Schmidt, Rose, Schmidt & Dixon, Pittsburgh, Pa., for Milton F. Meissner.

Before STALEY, ROSENN and HUNTER, Circuit Judges.

OPINION OF THE COURT

JAMES HUNTER, III, Circuit Judge:

This is an appeal from an order permitting the government to enter a safe deposit box and seize the contents in satisfaction of a jeopardy assessment against the lessors of the box.

The United States, acting pursuant to 26 U.S.C. § 7402, instituted suit against Mellon Bank to enforce a jeopardy assessment against the assets of the taxpayers in the Bank's possession. The district court granted the lessor of the box, appellant Milton Meissner, leave to intervene and contest the government's petition. Meissner raised several arguments in opposition to the motion and pressed for discovery. The district court denied Meissner's discovery motions and ruled further that the Anti-Injunction Act, 26 U.S.C. § 7421, divested it of jurisdiction to consider Meissner's counterclaim. In summary fashion, the district court granted the government's motion to enter the safe deposit box and seize the contents.

We conclude that the Anti-Injunction Act does not divest the district court of jurisdiction over counterclaims when the court has jurisdiction over an enforcement petition filed by the United States under 26 U.S.C. § 7402. Accordingly, we reverse the decision of the district court and remand the matter for additional proceedings.

I

On April 9, 1974, the Internal Revenue Service issued jeopardy assessments ¹ against Milton Meissner ² on the basis of alleged deficiencies for the tax years 1970 and 1971. When notices of the levy and seizure were received by Mellon Bank on April 10, 1974, Meissner's safe deposit box was sealed. The government, in its petition in the district court, alleged that notice of the assessments and demand for payments had been made in letters sent to Meissner, in care of his accountants; despite these notices, the taxpayer allegedly continued in his refusal to pay. ³

On July 26, 1974 the United States filed the instant suit in the district court. Over the government's objection, Meissner was granted leave to intervene. ⁴ Meissner urged in his answer to the government's motion, that the petition be dismissed (1) because the opening of the box would threaten his fifth amendment rights against self-incrimination, ⁵ (2) because the tax deficiencies were not due and owing, (3) because the government failed both to give proper notice of the levy, and to comply with the statute and regulation concerning jeopardy assessments, and (4) because the order sought by the government was unnecessary and therefore beyond the district court's power to issue under 26 U.S.C. § 7402. ⁶

By discovery motions Meissner sought to inspect all Internal Revenue Service documents relevant to his case. The motion was denied. ⁷

The district court granted the government's petition to open the safe deposit box. The instant appeal followed.

II

26 U.S.C. § 7402(a) ⁸ gives the district court jurisdiction to issue orders "necessary or appropriate for the enforcement of the internal revenue laws." When the United States attorney petitioned the district court for an order seeking to open Meissner's safe deposit box, the district court clearly had jurisdiction under § 7402(a). The order the government sought was necessary and appropriate to enforce the government's jeopardy assessment under 26 U.S.C. § 6861 ⁹ against a third party bank in possession of the taxpayer's property. ¹⁰

The district court had discretion to allow Meissner to intervene. ¹¹ Having granted Meissner's petition to intervene in a suit over which the court had jurisdiction under § 7402, the court also had jurisdiction over any challenges to enforcement of the jeopardy assessment Meissner might raise. ¹²

The district court erred in concluding that it was without jurisdiction to consider Meissner's counterclaims on the basis of the Anti-Injunction Act. 26 U.S.C. § 7421 ¹³ divests the district court of jurisdiction over any "suit for the purpose of restraining the assessment or collection of any tax." Meissner did not sue to enjoin the assessment or collection of any tax. In fact he filed no suit at all. He attempted merely to raise a defense against an affirmative action in which the government sought judicial enforcement of a jeopardy assessment. In none of the cases cited by the government was § 7421 applied to bar a taxpayer from raising a defense in a case where the court had jurisdiction over an Internal Revenue Service enforcement petition. ¹⁴

Having allowed Meissner to intervene in a suit over which the court had jurisdiction under 26 U.S.C. § 7402, the court also had jurisdiction to consider Meissner's challenge to that motion.

III

Although the district court had jurisdiction to consider any challenge Meissner might raise, we have doubts abut the appropriateness of at least some of the claims he has raised. ¹⁵ As such we do not suggest what procedures, ¹⁶ if any, would be required in the district court on remand.

Upon remand, the district court is directed to consider the merits of taxpayer's challenges. If the district court concludes that taxpayer has raised no issue which could be considered an appropriate challenge to the instant enforcement petition, it would not be an abuse of discretion to grant the government's motion in summary fashion.

IV

For the foregoing reasons, the judgment of the district court is reversed and the matter remanded for further proceedings not inconsistent with this opinion.

1 26 U.S.C. § 6861 gives the Internal Revenue Service power to make jeopardy assessments. That section provides in relevant part:

(a) Authority for making.--If the Secretary or his delegate believes that the assessment or collection of a deficiency, . . . will be jeopardized by delay, he shall, notwithstanding the provisions of section 6213(a), immediately assess such deficiency . . . and notice and demand shall be made by the Secretary or his delegate for the payment thereof.

(b) Deficiency letters.--If the jeopardy assessment is made before any notice in respect of the tax to which the jeopardy assessment relates has been mailed under section 6212(a), then the Secretary or his delegate shall mail a notice under such subsection within 60 days after the making of the assessment.

After notice was received, a petition for review of the jeopardy assessment was filed in the tax court by Meissner's attorney pursuant to 26 U.S.C. § 6213 which gives a taxpayer 90 days (or 150 days if he is outside of the country) from the date on which a deficiency letter is received to file a petition with the tax court for redetermination of the deficiency. Except where a jeopardy assessment has been entered, no levy can be made until the tax court has acted on the redetermination petition.

On March 3, 1975, the tax court stayed its proceedings on the petition for review of Meissner's 1970 and 1971 deficiencies, on the ground that Meissner was the subject of a criminal investigation and that continuation of the civil suit might require Meissner's fifth amendment rights against self-incrimination to be jeopardized.

No additional information concerning the pending criminal investigation has been made available to this court.

2 The deficiency notice, jeopardy assessments and levy were made against Meissner and his wife Lula Ann with whom he had filed a joint return.

The safe deposit box was rented by Meissner and his wife jointly.

Meissner's wife did not seek to intervene and was not represented by counsel in this matter.

3 Attorneys for the intervenor taxpayer and the government stipulated to certain facts. Stipulations were reached concerning the government's claim that it sent notice to Meissner's accountants, whose address had been listed by Meissner in the 1970 and 1971 tax returns.

In addition, taxpayer Meissner contends that he has been a non-resident of the United States since 1970. Although no stipulation concerning this assertion was reached the government concedes that Meissner is presently outside of the United States.

4 The government characterizes Meissner as a fugitive since he did not appear before a federal grand jury in New York investigating securities violations. On the basis of his alleged status as a fugitive for failure to comply with that subpoena, the government would have us deny Meissner access to this forum. Even if we were to assume that we could deny access to a litigant labeled as a fugitive by another jurisdiction, we would decline to deny Meissner access to this forum in this case. The government has simply presented us with no factual basis for judging whether Meissner is a fugitive.

5 In the district court Meissner gave no factual basis for the assertion that his fifth amendment privilege against self-incrimination would be jeopardized by an order directing that the box be opened. Presumably, he is concerned that information which might be contained in the box would jeopardize his position in the pending criminal investigation. Meissner, however, failed to articulate this or any other connection between the criminal investigation and his fifth amendment rights. He also failed to apprise the district court or this court of the status of that investigation.

6 In his answer in the district court Meissner contended that the opening of the safe deposit box was unnecessary and inappropriate at this time. The government revenues could not be jeopardized, he asserted, since the safe...