United States v. Damsky, Civ. No. 60-C-535.

• Court: United States District Courts. 2nd Circuit. United States District Court (Eastern District of New York)
• Citation: 187 F. Supp. 404
• Docket Number: Civ. No. 60-C-535.
• Parties: UNITED STATES of America, Plaintiff, v. Bernard DAMSKY, Olga Damsky, a/k/a Ollie Damsky, Henry Birns and Robert W. Franz, Defendants.
• Decision Date: 30 September 1960

187 F. Supp. 404

UNITED STATES of America, Plaintiff, v. Bernard DAMSKY, Olga Damsky, a/k/a Ollie Damsky, Henry Birns and Robert W. Franz, Defendants.

Civ. No. 60-C-535.

United States District Court E. D. New York.

September 30, 1960.

Cornelius W. Wickersham, Jr., U. S. Atty., Eastern Dist. of New York, Brooklyn, N. Y., for plaintiff, Irving L. Innerfield, Asst. U. S. Atty., Brooklyn, N. Y., of counsel.

Linker & Linker, Brooklyn, N. Y., for defendants, Julian G. Linker, Brooklyn, N. Y., of counsel.

ZAVATT, District Judge.

The Government moves to strike the defendants' timely demand for a trial by jury. This is an action brought pursuant to section 7403 of the Internal Revenue Code of 1954, 26 U.S.C. § 7403, to foreclose a tax lien and for further and related relief. Section 7402 of the Code, 26 U.S.C. § 7402, vests jurisdiction in this Court. The complaint alleges nonpayment of income taxes for the years 1945-1949 after due assessment and demand, and that the appropriate notices of liens have been filed. There are four defendants: Bernard and Olga Damsky are husband and wife and the delinquent taxpayers; Henry Birns presently holds the title of record to certain real property formerly owned by Olga and as to which the Government asserts its lien; and Robert W. Franz similarly owns another parcel of real property. Bernard's interest in the foreclosure aspect of this suit arises by virtue of the fact that the taxpayers filed a joint return for the years in question.

Neither side has cited a case that has directly decided the question of whether a jury trial is afforded in an action to foreclose a tax lien. The case of United States v. Comi, D.C.D.Md.1958, 23 F.R.D. 113, cited by the defendants, does hold that certain issues raised by the answer of a nontaxpayer defendant in a foreclosure action may be tried by a jury. There, the Government's lien on the property of the delinquent taxpayer was not perfected against third parties until September, 1956. The Baltimore Police Commissioner, a party defendant, asserted his title to the chattel in question as of October, 1955, when the chattel was allegedly abandoned by the taxpayer. The Police Commissioner's demand for a jury trial on the issue of title was honored. The answers in the case before me now raise no such issues. Nor have the defendants cited a case in which a jury trial was in fact had in an action to foreclose. The closest the defendants have come here is to cite a case in which a jury was had where the Government brought an action pursuant to the predecessor of section 6332(b) of the Code, 26 U.S.C. § 6332 (b), to impose liability on a custodian who had refused to surrender property against which the Government had properly levied. That is the case of United States v. City of New York, D.C.S.D.N.Y. 1935, 12 F.Supp. 169, and obviously, it is not in point. More in point is United States v. Spreckels, D.C.N.D.Cal.1943, 50 F.Supp. 789, cited by the defendants, in which the trial seems to have been to the court without a jury. See also United States v. Royce Shoe Co., D.C.D.N.H. 1956, 137 F.Supp. 786; United States v. Peelle Co., D.C.E.D.N.Y.1955, 131 F. Supp. 341. The negative inference from all this is, of course, that there is no right to trial by jury in the foreclosure of a tax lien.

But negative inferences are not enough and I will therefore consider the defendants' argument which follows this syllogism: The Seventh Amendment to the Constitution guarantees a jury trial at common law.¹ A tax owed is a debt and an action on a debt, whether the debt arises under the common law or statute, is a common law action; therefore, the defendants have a right to trial by jury. The cases of Price v. United States, 1926, 269 U.S. 492, 46 S.Ct. 180, 70 L.Ed. 373, and United States v. Jepson, D.C.D.N.J. 1950, 90 F.Supp. 983, are cited for the intermediate propositions that together form the minor premise, and United States v. Comi, supra, is cited for the conclusion.

Assuming that the defendants' argument is correct for the case where the Government sues only for a personal judgment against the delinquent taxpayer, and this assumption is a big one,² it does not go far enough where, as here, the Government seeks to foreclose a lien on real property. Historically, such an action was cognizable in equity rather than common law (See 1 Pomeroy, Equity Jurisprudence § 167 (5th ed.1941)), and that fact has generally been decisive in determining, under a merged system of law and equity, the applicability of a jury trial guarantee such as that found in the Seventh Amendment. See 5 Moore, Federal Practice 115 (2d ed.1951). This characterization as an equitable action is not changed because a personal judgment for the deficiency is sought in addition. See 5 Moore, op. cit. supra, 306; Note, The Right to Jury Trial Under Merged Procedures, 65 Harv.L.Rev. 453, 462-63 (1952); cf. Pease v. Rathbun-Jones Eng'r Co., 1917, 243 U.S. 273, 279, 37 S.Ct. 283, 61 L.Ed. 715.

It is objected that this particular lien is of statutory origin and not one of the historic equitable liens. This is true enough and there may be instances where a statutory lien is enforced at law because the...