United States v. Sullivan

• Decision Date: 15 April 1966
• Docket Number: Civ. A. No. 2986.
• Citation: 254 F. Supp. 254
• Parties: The UNITED STATES of America, Plaintiff, v. Eugene J. SULLIVAN, Jr., and James A. Higgins, Co-administrators, c.t.a. of the Estate of Robert G. Holt, Defendants.
• Court: U.S. District Court — District of Rhode Island

254 F. Supp. 254

The UNITED STATES of America, Plaintiff, v. Eugene J. SULLIVAN, Jr., and James A. Higgins, Co-administrators, c.t.a. of the Estate of Robert G. Holt, Defendants.

Civ. A. No. 2986.

United States District Court D. Rhode Island.

April 15, 1966.

Frederick W. Faerber, Asst. U. S. Atty., Providence, R. I., Levon Kazarjian, Dept. of Justice, Tax Div., Washington, D. C., for plaintiff.

Eugene J. Sullivan, Jr., James A. Higgins, Providence, R. I., for defendants.

DAY, District Judge.

In this action the United States of America seeks to obtain a judgment against the defendants as co-administrators, c. t. a. of the estate of Robert G. Holt, deceased, for the amount of unpaid tax liabilities incurred by the decedent during his lifetime together with interest thereon as provided by law.

From the evidence adduced at trial it appears that the decedent died on March 9, 1960 and that the defendants were duly appointed co-administrators, c. t. a. of his estate on or about March 29, 1960, by the Probate Court of the Town of Johnston, in the State of Rhode Island.

The specific taxes and the dates of the assessments thereof are stipulated by the parties to be as follows:

                (1) Assessment of April 25
                      1958 F.U.T.A. tax-year
                      1957                                    $    2.23
                (2) Assessment of April 1
                      1960 income tax with-held
                      — second month of
                      1960                                       279.36
                

                (3) Assessment of May 20
                      1960 income tax with-held
                      — third month of
                      1960                                       110.02
                (4) Assessment of October 7
                      1960 decedent's income
                      tax — year 1958                      474.17
                (5) Assessment of October 7,
                      1960 decedent's income
                      tax — year 1959                       22.07
                (6) Assessment of February
                      3, 1961 — penalty assessment
                      against decedent
                      as the responsible
                      officer of Molding Corporation
                      of America —
                      for income taxes not
                      withheld — first and
                      second quarters of
                      1958 and third to eleventh
                      month, both inclusive,
                      of 1959                                  8,831.33
                                                              _________
                                                              $9,719.18
                

The parties have stipulated that interest and penalties are not included in the aforesaid sum of $8,831.33, the amount of said assessment made on February 3, 1961. No question as to the validity or amount of any of said assessments is raised by the defendants.

The parties have also stipulated that pursuant to the statutory law of Rhode Island the first notice to creditors of the estate of said Robert G. Holt was published in the Providence Journal on April 13, 1960; that the period for filing claims against said estate provided under the provisions of Section 33-11-5 of the General Laws of Rhode Island, 1956, expired on October 13, 1960; that the plaintiff failed to file any of its claims for said taxes, except its claim for items (2) and (3) listed above, within the time prescribed by the provisions of said Section 33-11-5; that thereafter plaintiff by its duly authorized officer, on or about January 13, 1961, filed in said Probate Court of the Town of Johnston a petition for leave to file out of time its claims for all of said taxes, pursuant to the provisions of said section; that said petition was heard and denied by said Probate Court on February 16, 1961, and a decree denying said petition was duly entered; and that, although plaintiff had a right to appeal from said decree, it failed to do so.

The parties have further stipulated that the estate of Robert G. Holt was insolvent at the time of his death and still remains insolvent. The instant action was commenced on August 15, 1962.

Plaintiff seeks judgment in its favor in the sum of $9,719.18, the amount of said assessments hereinbefore set forth, plus interest on said assessments as provided by law.

Defendants contend that plaintiff is barred from maintaining this action because it failed to take an appeal from the decree of said Probate Court denying its petition for leave to file its claims for the taxes involved herein after the expiration of the time prescribed by statutory law of Rhode Island for the filing of claims against the estates of decedents and because this action was not commenced within the period of limitations provided by Section 33-11-50¹ of the General Laws of Rhode Island, 1956.

In support of this contention the defendants cite the cases of United States v. Muntzing, 1946, D.C.W.Va., 69 F.Supp. 503 and United States v. Pate, 1942, D.C. Ark., 47 F.Supp. 965. Although support for the defendants' contention is to be found in the opinions of those cases, I am of the opinion that it is authoritatively settled that whether the United States sues in its own courts or in state courts, it is not subject to or bound by local statutes of limitations. United States v. John Hancock Mutual Life Insurance Co., 1960, 364 U.S. 301, 81 S. Ct. 1, 5 L.Ed.2d 1; United States v. Summerlin, 1940, 310 U.S. 414, 60 S.Ct. 1019, 84 L.Ed. 1283; Phillips et al., Executors v. Commissioner of Internal Revenue, 1931, 283 U.S. 589, 51 S.Ct. 608, 75 L.Ed. 1289; United States v. Rose, 1965, 3 Cir., 346 F.2d 985.

I conclude therefore that this action is not barred by the denial of said petition for leave to file said claims out of time or by the provisions of said Section 33-11-50 of the General Laws of Rhode Island, 1956.

Defendants, in the alternative, contend that in any event, the plaintiff is not entitled to recover interest on its claims for unpaid taxes after March 9, 1960, the date of the death of the decedent. They base this contention on the fact that his estate was at the time of his death and is still insolvent and rely upon the provisions of Section 33-11-34 of the General Laws of Rhode Island, 1956, which reads as follows:

"33-11-34. Interest on claims against insolvent estates. — In case of insolvent estates the commissioners shall allow interest to the death of the testator or intestate on claims drawing interest, and on claims not due at the decease of the testator or intestate they shall ascertain their value as of the date of the death of the decedent."

In my opinion this contention is without merit in view of the priority accorded to debts due the United States under the provisions of Title 31 U.S.C. § 191 which provides in pertinent part as follows:

"§ 191. Priority established

Whenever any person indebted to the United States is insolvent, or whenever the estate of any deceased debtor, in the hands of the executors or administrators, is insufficient to pay all the debts due from the deceased, the debts due to the United States shall be first satisfied; * * * R.S. § 3466."

It is well settled that when any debtor is insolvent Congress by the enactment of said Section 191 has given priority to the payment of indebtedness owing to the United States. United States v. City of New Britain, 195...