United States v. Gurley

Citation415 F.2d 144
Decision Date30 July 1969
Docket NumberNo. 26099.,26099.
PartiesUNITED STATES of America, Appellant, v. Juanita C. GURLEY, formerly Juanita C. Hill et al., Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)

Mitchell Rogovin, Asst. Atty. Gen., Lee A. Jackson, Crombie J. D. Garrett, Howard M. Koff, Attys., Department of Justice, Washington, D. C., Edward F. Boardman, U. S. Atty., Virginia Q. Beverly, Asst. U. S. Atty., Johnnie M. Walters, Asst. Atty. Gen., Dept. of Justice, Tax Div., Washington, D. C., Richard C. Pugh, Acting Asst. Atty. Gen., Tax Div., Dept. of Justice, Washington, D. C., Harry Marselli, Atty., Tax Div., Dept. of Justice, Washington, D. C., of counsel, for appellant.

Dean Boggs, Mahon & Mahon, Harry B. Mahon, Jacksonville Fla., for appellee, Juanita C. Gurley.

James P. O'Flarity, North Palm Beach, Fla., R. Hudson Olliff, Jacksonville, Fla., W. Warren Cole, Jr., of Black, Cobb, Cole, Crotty & Sigerson, Daytona Beach, Fla., for Gloria M. O'Flarity.

Before JOHN R. BROWN, Chief Judge, AINSWORTH, Circuit Judge, and FULTON, District Judge.

FULTON, District Judge:

This is a complex case involving distribution of interpleaded insurance proceeds. The United States Government has appealed from disposition of the cause in the pleading stage by the granting of a judgment on the pleadings to one defendant and a summary judgment to another.

Background of the Cause

In September of 1965 certain premises and the contents thereof were insured with Commercial Union Insurance Company by Juanita C. Gurley, and the Estate of Harry D. Gurley, Jr. Harry and Juanita Gurley had been divorced about a year and a half before his demise. Some two months after the premises were insured, they were destroyed by fire. This cause was instituted by the insurance company. The Company interpleaded the sum of $63,510, which represented its liability to Mrs. Gurley and to the Estate for the one-half interest each held in the property, plus $510 living expenses for which the Company was liable to Mrs. Gurley under the policy.

The following conflicting claims were made upon the interpleaded fund:

1. Juanita C. Gurley claims $32,010.00, representing her share of the insurance proceeds, plus living expenses due her under the policy.
2. The Estate of Harry D. Gurley, Jr., claims $31,500.00, representing its share of the insurance proceeds.
3. Gloria M. O\'Flarity claims $12,358.22 plus 6% interest, by reason of a 1961 judgment lien against Harry D. Gurley, Jr.
4. The United States Government intervened in the action, claiming the entire fund in payment of tax deficiencies assessed against Juanita C. and Harry D. Gurley, Jr., in the amounts of $39,970.72 and $217,366.67, respectively.

As the case proceeded, O'Flarity and the Government moved for summary judgment, and Mrs. Gurley sought judgment on the pleadings. Upon representation by all parties that there were no disputes as to any material facts in the case, the District Court entered a judgment making the following distribution of the interpleaded fund:

1. Commercial Union Insurance Company:
(a) $4,000.00 attorneys\' fees
(b) $109.50 costs
2. Eugene C. Mitchell, Special Master:
$250.00 compensation
3. Gloria M. O\'Flarity, Judgment Creditor:
$12,358.22, with interest at 6% from June 13, 1961, to be paid from the $31,500.00 set aside for the Estate (approximately $17,000 total).
4. Estate of Harry D. Gurley, Jr.:
$31,500.00, less the amount to be paid O\'Flarity under this Judgment.
5. Juanita C. Gurley:
(a) $510.00 "additional living expenses," under the insurance policy.
(b) $31,500.00 as her share under the insurance policy.
6. United States Government:
Received no part of the insurance proceeds.

This cause was disposed of at the pleading stage, by the granting of a judgment on the pleadings to Juanita C. Gurley and a summary judgment to Gloria M. O'Flarity. Therefore, the first question on this appeal is whether it was positively demonstrated by the pleadings and affidavits before the District Court that there was no genuine issue concerning any material fact remaining in the cause, so that the case was then in a proper posture to be determined by the applications of principles of law. For concise analysis, the cause can be broken into three basic disputes, which are best considered separately.

United States v. Mrs. Gurley

The United States alleged in its intervening complaint that it had prior liens on Mrs. Gurley's share of the interpleaded fund, for unpaid income taxes for the years 1957, 1958 and 1959. A jeopardy assessment for the amounts due and demand for payment thereof was served upon Mrs. Gurley June 15, 1966. Mrs. Gurley answered, admitting notice of the assessments as alleged, but asserting that the assessments were barred by the applicable limitations provision, Int.Rev. Code of 1954, § 6501. This section provides in part, as follows:

(a) General rule. — Except as otherwise provided in this section, the amount of any tax imposed by this title shall be assessed within 3 years after the return was filed (whether or not such return was filed on or after the date prescribed) * * * and no proceeding in court without assessment for the collection of such tax shall be begun after the expiration of such period.

If the assessment is timely made within three years after the return is filed, then, with certain inapplicable exceptions, the tax may be collected by levy or by a court proceeding began within six years after the assessment of the tax. Int.Rev.Code of 1954, § 6502.

It is impossible to determine from this record whether the Government's tax liens are barred by this statute. The parties agree that the assessment was made June 15, 1966, but no proof was offered by either side concerning the date Mrs. Gurley filed her income tax returns for the years 1957, 1958 and 1959. Since she may have filed them years late, the statute may not have run before the 1966 assessments. The District Court utilized a presumption that the returns were filed as required by law. Dick Bros. v. Commissioner of Internal Revenue, 3 Cir., 1953, 205 F.2d 64. United States v. Dubin, D.C.Fla., 1966, 250 F.Supp. 197. However, as a general rule of law, the running of the statute of limitations is an affirmative defense, to be pleaded and proved by the taxpayer. 10 Mertens, Law of Federal Income Taxation (1964 Rev.), Sec. 57.92. This case was pending in the District Court for almost two years. It is unthinkable that in all that time none of the lawyers offered any proof of the filing dates for the tax returns. When questioned by the Court, the lawyers insisted that all pertinent facts had been submitted.

There is a further fact issue in this dispute between the Government and Mrs. Gurley. At the hearing on the motion for judgment on the pleadings, counsel for both sides notified the Court that there might be related Tax Court proceedings pending. If deficiency proceedings are pending in the Tax Court, the statutes of limitation relied upon in this case are tolled until the Tax Court decision becomes final. There is a question of fact in this case of whether Tax Court proceedings were pending at a point in time which would affect the running of the limitations statutes. The Government has attached to its brief a certificate of an Assistant Clerk of the Tax Court indicating that two separate tax cases related to this cause have been pending since 1961 and 1963, and were still pending on August 30, 1968, the date of the certificate. However, since this certificate was not in evidence before the District Court, it may not properly be considered in this appeal.

United States v. Estate

The United States alleged in its intervening complaint that it had prior liens on the share of the interpleaded fund claimed by the Estate of Harry D. Gurley, Jr., for unpaid income taxes for the years 1957 through 1960. Assessments of the amounts due and demands for payment thereof were made on several dates during 1962. Since more than three years may have elapsed between filing of the tax returns for 1957 and 1958, and the filing dates of those returns do not appear of record, it is possible that the statute of limitations discussed with regard to Mrs. Gurley's claim might also operate in favor of the Estate. However, since the statute is an affirmative defense and was not asserted by the Estate, whatever effect it might have has been waived.

Under Int.Rev.Code of 1954, §§ 6321, 6322, a tax lien is valid against all property interests of the taxpayer from the time the assessment is made. The Government made proper assessments against Harry D. Gurley, Jr., for the sums claimed to be due. Therefore, it now has valid tax liens totaling some $217,366.67, with interest, against the Estate. The remaining question is whether these Government tax liens take priority over the judgment lien of Gloria O'Flarity.

United States v. O'Flarity

A brief preliminary outline of proper time sequence will help clarify the issues in this dispute.

                    July 12, 1961            O'Flarity recorded her judgment in the Duval
                                             County Public Records
                    February 7, 1962         O'Flarity docketed her writ of execution
                                             with the Duval County Sheriff
                    April 5, 1962            First Government tax lien attached to the
                                             premises
                    July 2, 1962             Harry D. and Juanita C. Gurley were divorced
                    January 31, 1964         Duval County Sheriff levied on Harry Gurley's
                                             undivided ½ interest in the premises
                                             under O'Flarity's writ of execution
                    February 10, 1964        Harry D. Gurley, Jr. died.
                    July 31, 1964            Duval County Circuit Court held the levy
                                             valid, holding the ½ interest levied upon to
                                             be in the custodia legis for the sale and benefit
                                             of O'Flarity.
                    September 23, 1965
...

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    ...running of the statute of limitations as a bar to the collection of a properly assessed tax deficiency. See, e.g., United States v. Gurley, 415 F.2d 144, 147 (5th Cir.1969); 10 J. Mertens, The Law of Federal Income Taxation § 57.31 (1976 Rev.). The defendant included such a defense in his a......
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