Zimmermann v. Wilson

• Decision Date: 11 February 1936
• Docket Number: No. 5951.,5951.
• Citation: 81 F.2d 847
• Parties: ZIMMERMANN et al. v. WILSON, Internal Revenue Agent, et al.
• Court: U.S. Court of Appeals — Third Circuit

81 F.2d 847 (1936)

ZIMMERMANN et al. v. WILSON, Internal Revenue Agent, et al.

No. 5951.

Circuit Court of Appeals, Third Circuit.

February 11, 1936.

Henry S. Drinker, of Philadelphia, Pa., for appellants.

Davis, Polk, Wardwell, Gardiner & Reed, of New York City (Montgomery B. Angell, of New York City, of counsel), for appellees Drexel & Co. and others.

Frank J. Wideman, Asst. Atty. Gen., Sewall Key, M. H. Eustace, and James E. Murphy, Sp. Assts. to the Atty. Gen., and Charles D. McAvoy, U. S. Atty., and Thomas J. Curtin, Asst. U. S. Atty., both of Philadelphia, Pa., for appellees Wilson and Wrigley.

Before BUFFINGTON and DAVIS, Circuit Judges.

BUFFINGTON, Circuit Judge.

In the court below the taxpayers, John E. Zimmermann and his wife, Sarah A. F. Zimmermann, filed a bill in equity, as a case arising under the Revenue Act of 1928, c. 852, 45 Stat. 791, against G. J. Wilson, Internal Revenue Agent in Charge, Internal Revenue Service, Philadelphia, Pa., Edmund J. Wrigley, Special Agent, the partnership of Drexel & Co., and the individual partners thereof. The bill prayed the grant of an injunction to prevent examination by the revenue officers of the taxpayers' bank books and of their dealings with Drexel & Co. as their bankers and brokers. The court granted an ex parte restraining order and set the case for hearing. Thereafter the revenue officers in charge, alleging "the facts set forth in the bill do not constitute a valid cause of action in equity against this respondent," moved the bill be dismissed. On the subsequent hearing, the court dismissed the bill, and this appeal was taken by the taxpayers.

The bill, which is not traversed, shows the taxpayers made their individual income tax returns for 1929 and 1930; that in May, 1931, and in July, 1932, the revenue agents examined such returns and were given "complete access to all the data they deemed relevant". Zimmermann's return was determined to be correct and was accepted as filed. Mrs. Zimmermann's was assessed with an additional tax of $3.15, which she paid. On the similar examination in July, 1932, of the returns for 1930, by the revenue agents, Mrs. Zimmermann's return was found correct, and Mr. Zimmermann was determined to be entitled to a refund of $2,681.29 by reason of his omission to make deductions from income amounting to $16,326.66. He was requested to make claim for such refund, which he did, and received a check therefor, with interest, from the Treasurer of the United States. During the entire two-year period subsequent to the filing of the respective returns — being the limitation period prescribed by the act for the assessment of taxes there on — all the data pertaining to complainant's tax liability for the years in question were available to the revenue agents, including the records of Drexel & Co. and other brokerage and banking houses with whom complainants had had dealings. Neither of complainants executed a written waiver extending the limitation period for the respective taxes. No further examination thereof was made or requested until April 10, 1935, when the Commissioner made written demand on complainants for access to their books and records for the years 1929 and 1930, without any charge that either return had been false or fraudulent with intent to evade tax. Complainants aver they have no knowledge or advice as to any errors or omissions in either of such returns and, on advice of counsel, refused to permit the requested examination; that on May 13, 1935, complainants were advised by defendants Drexel & Co. that they had received a letter from defendant Wilson requesting them to produce, for the inspection and examination of a designated internal revenue agent, all books, records, and papers containing information relative to complainant's accounts and transactions for the years 1929 and 1931, inclusive; that complainants, on May 14, 1935, instructed Drexel & Co. not to produce the same or submit them to representatives of the Bureau of Internal Revenue.

It further appears, as stated in the bill, that on May 23, 1935, there was served on Drexel & Co. and the individual partners thereof a summons with a duces tecum clause, entitled "Summons to Appear, to Testify and to Produce Books, Etc.," signed by defendant Wrigley, purporting to summon defendants Lloyd, Hopkinson, and Drexel & Co. (on pain of liability as prescribed by the law and regulations) to appear and testify before the undersigned agent on May 24, and directing them to bring all books and records maintained in any capacity by or for complainants and having any bearing on their gains, profits, or losses for 1929, 1930, 1932, and for prior periods...