United States v. Zimmerman, No. 72-1148.

CourtUnited States Courts of Appeals. United States Court of Appeals (7th Circuit)
Writing for the CourtCASTLE, Senior Circuit , and KILEY and PELL, Circuit
Citation478 F.2d 59
PartiesUNITED STATES of America, Plaintiff-Appellee, v. Abraham Frank ZIMMERMAN and Sylvia Zimmerman, Defendants-Appellants.
Docket NumberNo. 72-1148.
Decision Date30 April 1973

478 F.2d 59 (1973)

UNITED STATES of America, Plaintiff-Appellee,
v.
Abraham Frank ZIMMERMAN and Sylvia Zimmerman, Defendants-Appellants.

No. 72-1148.

United States Court of Appeals, Seventh Circuit.

Argued February 26, 1973.

Decided April 30, 1973.


Anna R. Lavin, Joseph M. Solon, Chicago, Ill., for defendants-appellants.

Scott P. Crampton, Asst. Atty. Gen., Murray S. Horwitz, Atty., Tax Division, Department of Justice, Washington, D. C., James R. Thompson, U. S. Atty., William T. Huyck, Asst. U. S. Atty., Chicago, Ill., for plaintiff-appellee.

Before CASTLE, Senior Circuit Judge, and KILEY and PELL, Circuit Judges.

CASTLE, Senior Circuit Judge.

On October 29, 1971, the district court entered its decision reducing to judgment certain assessments for unpaid income taxes against Abraham Zimmerman for the years 1923 to 1931, and holding Abraham and Sylvia Zimmerman

478 F.2d 60
jointly and severally liable for income tax liabilities for the years 1959 through 1962. On this appeal Sylvia Zimmerman seeks relief from the joint liability imposed upon her for 1959-1962 taxes because of the amendment of the internal revenue statute upon which her liability was originally based

Apparently the Zimmermans filed suits in the Tax Court of the United States during 1966 for a determination of their tax liabilities. (Cases Nos. 1374-66 and 1375-66.) While these suits were still pending, the United States filed an action in district court pursuant to 26 U.S.C. § 7402(a) (1964) which sought to reduce certain tax assessments against the Zimmermans to judgment. Count I of the government's complaint alleged deficiencies for the years 1923 through 1931, and Count II alleged unpaid liabilities for the years 1959 and 1961. The Zimmermans filed their answer denying the allegations of these two counts, and they asserted the statute of limitations and the alleged failure of Counts I and II to state a cause of action. The district court litigation then became drawn out due to a series of postponed pretrial meetings, continuances, and motions for partial summary judgment. In the meantime, the Tax Court rendered a decision in cases Nos. 1374-66 and 1375-66 on July 8, 1970 "pursuant to agreement of the parties." The decision in 1374-66 determined that the deficiencies in the income tax payments of Abraham Zimmerman for 1959, 1960, 1961 and 1962 amounted to $26,441.98, $54,096.48, $62,216.32 and $5,073.80 respectively, and that he also owed the government various additional sums for the years in question pursuant to 26 U.S.C. § 6653(b). The decision in 1375-66 found Sylvia Zimmerman liable for the same deficiencies and penalties owed by her husband for the years 1959-1962.

On August 12, 1970 the government moved to amend its complaint in the district court action "to permit all issues between the interested parties to be litigated in one action thus saving unneccessary litigation." Its motion granted, the government struck Count II and alleged that the July 8 Tax Court decision had determined the assessments against the Zimmermans for 1959-62 and that the Zimmermans had refused to pay these assessments. The prayer of relief for the amended Count II sought an adjudication that:

. . . the defendants, Abraham F. and Sylvia Zimmerman, are jointly and severally liable and indebted to the plaintiff, United States of America, for unpaid taxes, penalties and interest assessed against them in the amount of $304,233.56, plus interest according to law.

The Zimmermans then filed their answer to the amended Count II and admitted that they owed $304,233.56 to the government. Their answer also admitted "that the United States of America is entitled to the relief prayed under . . . Count II of the Complaint."

After a trial on only the first count of the complaint (the liability for taxes for 1923 to 1931), the district court adjudged that the government was entitled to the relief it asked for in both Count I and Count II. Regarding Count II of the complaint, the Trial Court found:

13. The taxpayers, Abraham F. Zimmerman and Sylvia Zimmerman, cannot relitigate the taxes assessed against them on July 13, 1970 for the years 1959, 1960, 1961, 1962. These liabilities are the result of decisions of the Tax Court of the United States, which are res judicata as to the question of the liability of the defendants. On this appeal Sylvia Zimmerman1
478 F.2d 61
asserts that her tax liability as determined by the Tax Court and confirmed in the district court was based on a statute which subsequently has been significantly modified. Prior to January 12, 1971, a husband and wife filing a joint return were automatically jointly and severally liable for income tax deficiencies and fraud penalties incurred even though the deficiencies and penalties were due to misstatements by one spouse and the other spouse was innocent. 26 U.S.C. §§ 6013 and 6653 (1964). Public Law 91-679 amended §§ 6013 and 6653 to allow an innocent spouse to escape joint liability under certain specified circumstances. These amended statutes became effective on January 12, 1971, six months after the Tax Court decision against Sylvia Zimmerman was rendered, and at least three months before the trial of the district court action. Appellant submits that the judgment of the district court on Count II should be reversed and remanded because of this intervening change of law between the dates of the Tax Court and district court decisions. She has also attacked the finding by the district court that the prior Tax Court decision is res judicata and prevents a relitigation of her tax liabilities for 1959 through 1962.

We find that the two arguments advanced by appellant are interrelated, for she cannot avail herself of the protection of the amended statutes if the 1970 Tax Court decision is res judicata as to her tax liability for 1959 through 1962. In enacting the amendments to §§ 6013 and 6653, Congress provided:

This bill, of course, does not open a year which has been closed by the statute of limitations, res judicata or otherwise.

S.Rep.No. 91-1537, 91st Cong., 2d Sess. 4 (1970), U.S.Code Cong. & Admin.News, p. 6093. If the Tax Court decision is res judicata as to her tax liabilities, the amended statutes are inapplicable to her liability.

Appellant argues that the determination of her tax liability for 1959 through 1962 cannot be res judicata because the doctrine applies only to points or questions actually...

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2 practice notes
  • Hopkins, In re, No. 97-15936
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • 17 Junio 1998
    ...a settlement agreement, United States v. Bryant, 15 F.3d 756, 758 (8th Cir.1994), with the parties' consent, United States v. Zimmerman, 478 F.2d 59, 61-62 (7th Cir.1973), or by stipulation, United States v. Dioguardi, 350 F.Supp. 1177, 1179...
  • General Electric Credit Corporation v. Grubbs, No. 29961.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • 14 Mayo 1973
    ...say, we cannot accept the trial court's award of $20,000 as a blanket recovery for "destruction of Grubbs' business." The evidence tended 478 F.2d 59 to show that Grubbs had been operating at a loss prior to the events giving rise to the instant suit, and that it was only a matter of time u......
2 cases
  • Hopkins, In re, No. 97-15936
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • 17 Junio 1998
    ...a settlement agreement, United States v. Bryant, 15 F.3d 756, 758 (8th Cir.1994), with the parties' consent, United States v. Zimmerman, 478 F.2d 59, 61-62 (7th Cir.1973), or by stipulation, United States v. Dioguardi, 350 F.Supp. 1177, 1179...
  • General Electric Credit Corporation v. Grubbs, No. 29961.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • 14 Mayo 1973
    ...say, we cannot accept the trial court's award of $20,000 as a blanket recovery for "destruction of Grubbs' business." The evidence tended 478 F.2d 59 to show that Grubbs had been operating at a loss prior to the events giving rise to the instant suit, and that it was only a matter of time u......

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