United States v. Mills

• Decision Date: 22 March 1967
• Docket Number: No. 8739.,8739.
• Citation: 372 F.2d 693
• Parties: UNITED STATES of America, Appellant, v. Nell MILLS, Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

372 F.2d 693 (1966)

UNITED STATES of America, Appellant, v. Nell MILLS, Appellee.

No. 8739.

United States Court of Appeals Tenth Circuit.

December 27, 1966.

Rehearing Denied March 22, 1967.

Martin T. Goldblum, Attorney, Dept. of Justice (Mitchell Rogovin, Asst. Atty. Gen., Lee A. Jackson and David O. Walter, Attorneys, Dept. of Justice, on the brief), for appellant.

Jay W. Whitney, Tulsa, Okl. (Robert E. Jones, Tulsa, Okl., on the brief), for appellee.

Before BREITENSTEIN and HILL, Circuit Judges, and KERR, District Judge.

HILL, Circuit Judge.

The government has appealed from a summary judgment rendered against it in an action brought to recover income taxes alleged to have been illegally assessed and collected.

Appellee here, who was the plaintiff below, was divorced from her husband on August 24, 1959. Prior to the divorce, and in contemplation of the husband filing such an action, appellee and her husband entered into an agreement, whereby the husband agreed to pay the total amount of $90,000.00 to appellee, with $30,000 of such amount to be paid at the time a divorce was granted and the sum of $4,000.00 to be paid each year until the full amount is paid. Settlement payments were thus extended over a period of fifteen years beyond the date of the divorce decree. A divorce was granted on October 24, 1959, the $30,000.00 was then paid and the $4,000.00 annual payments were made for the ensuing years 1960 and 1961. Appellee did not include these amounts in her federal income tax returns for those years. The Commissioner, under 26 U.S.C. § 71, determined $9,000.00 of the amount paid in 1959 was returnable income and all the amounts paid in 1960 and 1961 should have been returned. Deficiencies were assessed and paid by appellee, who then filed for refunds. They were denied and this action was brought by the taxpayer.

The government answered and then filed its motion for summary judgment, which was denied by the trial court. The order entered on this motion was denominated "Order Dismissing Defendant's Motion for Summary Judgment" and contained detailed findings of fact and conclusions of law. This order was entered April 30, 1965. On May 4, without any further notice to the parties, the court entered what was purported to be a final judgment adjudicating the merits of the case, making reference therein to the previous findings and conclusions made by the court and gave plaintiff a judgment as she had prayed for. This judgment was thereafter set aside and vacated after the government had so moved and upon agreement between counsel. On the same day the judgment was vacated plaintiff-taxpayer filed a motion for summary judgment and alleged there was no genuine issue as to any material fact. She also stated the motion was based on the pleadings, exhibits and the findings of fact and conclusions of law theretofore entered by the court. Plaintiff's affidavit, setting out certain facts concerning the marital history of plaintiff and her husband particularly with reference to the accumulation of property during the marriage, was filed in support of this motion.

The government resisted the motion by a formal pleading, denying the statement that no genuine material issue of fact existed. After that it filed a second formal pleading opposing plaintiff's motion for summary judgment and supported it with an affidavit signed by plaintiff's former husband controverting many of the facts alleged by plaintiff in her affidavit.

The sole question presented concerns the propriety of the court's action in granting plaintiff a summary judgment and denying appellant the right to an evidentiary hearing on the factual issues involved. We do not propose to go into the merits of the case except insofar as necessary to dispose of the procedural question.

The government's motion for summary judgment under Rule 56, F.R.Civ.P., urged the legal theory that upon a divorce, if the payments to be made by a husband to his wife are extended over a period exceeding ten years, that factor alone makes such payments taxable income to the wife. The trial judge rejected this legal theory and denied the motion because he believed another factor must be considered, i. e., the payments must be in discharge of the husband's obligation of support. In overruling the motion, the court proceeded to make extensive findings of fact covering the crucial, triable facts of the case,¹ which he subsequently relied upon in sustaining the plaintiff's motion for summary judgment.

At the time the government filed its motion for summary judgment a complaint had been filed with certain exhibits attached and the government had answered by specifically denying certain parts of the complaint and admitting other parts. Under such circumstances, a motion for summary judgment is no more than "functionally equivalent to a motion to dismiss for failure to state a claim under Rule 12(b) (6) or a motion for judgment on the pleadings under Rule 12(c)."² No necessity or reason existed for the court to make findings of fact.

No pretrial conference was held in the case, which would have been a worthwhile procedure, so we must look at the entire record to determine what factual issues, if any, existed in the case when the order appealed from was entered. From the record, including the affidavits on file, it is apparent the parties were in factual disagreement as to whether the settlement payments were made as alimony and support or in consideration for...