establishing this foundational aspect of the doctrine of laches to hold that the defense only applies to defendants with “clean hands”
How later courts described this case
- establishing this foundational aspect of the doctrine of laches to hold that the defense only applies to defendants with “clean hands”
- noting that “the only limitation of § 6502 is that the levy be made or proceeding in court begun against the taxpayer within [ten] years of the assessment” (emphasis added)
- noting that a suit under § 6332 “is not to collect a tax” but “to enforce the personal liability for failure to surrender property after receiving a notice of levy”
- court stating that “[wjhile the general rule ... is that the sovereign is exempt from the operation of statutes of limitations, an exception to that general rule exists when the sovereign (through the legislature) expressly imposes a limitation period upon itself”
Written by the judges who cited it.
The opinion
MERRITT, Circuit Judge,
dissenting.
The government’s tax collection suit is time-barred and should be dismissed.
The relevant words of the applicable statute of limitations are simple:
Where the assessment of any tax . . . has been made . . . such tax may be collected . . . by a proceeding in court, but only if . the proceeding [is] begun . . . within 6 years after the assessment of the tax .... 26 U.S.C. § 6502 .
The facts are also simple. Weintraub owed a debt to Andrews. Andrews owed money to the IRS. The IRS assessed Andrews. Andrews did not pay the assessment. IRS sought to collect the tax from Weintraub by a process of garnishment or attachment of third party indebtedness allowed under § 6332 of the tax code. Upon receiving the garnishment, Weintraub reported to IRS that he owed no debt to Andrews. Nothing happened for thirteen years. Then, thirteen years later, IRS decided to sue Weintraub to collect on its attachment of Weintraub’s debt to Andrews.
The conclusion should be obvious. A tax garnishment attached Weintraub’s debt to Andrews thirteen years before suit was filed. No “proceeding” to collect was instituted for thirteen years. Nothing in the statute of limitations excludes collection of garnishments or purports to limit its application only to a “proceeding” to collect the tax directly from the taxpayer who owes the money. The language of the statute says simply the tax may be collected by a proceeding in court “within 6 years after the assessment.” (Emphasis added.)
The consequences of a contrary conclusion are irrational. Under the Court’s interpretation, the estate of a garnishee in the hands of his great, great-grandchildren must still pay the IRS 100 years after the six-year federal statute of limitations has run on the original tax bill, 100 years after the garnishment was answered and 100 years after the applicable state statute of limitations has run on the original indebtedness owed by the garnishee to the original creditor. The estate of the original creditor, the taxpayer who owed the money to the government in the first place, is free and clear because the six-year statute ran against him long ago, but the poor garnishee — wh¿ (let us assume) religiously paid his own taxes all his life — remains forever liable for the taxes of another.
The Court reaches this anomalous result by holding that the statute, § 6502, only concerns “actions against taxpayers” and “not actions . . . against third parties in possession of a taxpayer’s property or property rights,” although it acknowledges that there is “no case expressly holding that § 6502 is not applicable.” No attempt is made to discuss the irrational consequences of this conclusion. The Court does not even attempt to parse or analyze the language of the statute in order to justify the conclusion. It simply quotes “the rule nullum tempus occurrit regí” (“time does not run against the king”) and combines it with a wonderful legal fiction, the doctrine of “constructive possession” of personal property. The Court says:
Since the notice of levy served on appellant reduced the debt owed to Andrews to the constructive possession of the United States, it would make no sense to impose a time limit upon bringing an action ... to reduce the property right to the actual possession of the United States.
Not even the common law during its darkest days of legal formalism and rigid adherence to fiction and abstraction took the doctrine of “constructive possession” this far. In the famous case of Pierson v. *626 Post, 3 Caines 175 , 2 Am.Dec. 264 (N.Y. 1805), the plaintiff with his hounds was in hot pursuit of a fox, ferae naturae, when the defendant intervened and in the sight of plaintiff shot and carried the fox away. The question was put:
[W]ho would keep a pack of hounds; or what gentelman, at the sound of the horn and at peep of day would mount his steed, and for hours together, ‘sub jove frígido’ . . . pursue the windings of this wily quadruped, if, just as night came on, and his strategems and strength were nearly exhausted, a saucy intruder, who had not shared in the honors or labours of the chase, were permitted to come in at the death, and b^ar away in triumph the object of pursuit? (Livingston, J., dissenting)
After so sympathetically describing the plaintiff’s plight and poring over Justinian, Fleta, Bracton, Puffendorf, Locke, Barbeyrac or Blackstone for enlightenment, the court holds that the doctrine of “constructive possession” does not apply because the “case . . . is one of mere pursuit, and presents no circumstances or acts which can bring it within the definition of occupancy [or control announced] by Puffendorf.” The court concludes that “[h]owever uncourteous or unkind the conduct of Pierson towards Post , in this instance, may have been,” a contrary holding “would prove a fertile source of quarrels and litigation.” In the instant case, the Court’s conclusion means that “quarrels and litigation” over tax claims with an omnipresent government will never end, even if the lifetime of our children’s children unto the seventh generation. If the fox in Pierson v. Post was not in the constructive possession of the pursuer, I do not see so many years later why we should struggle with Shakespearean imagination to locate the money Mr. Weintraub owed to Mr. Andrews in the “constructive possession” of the government. Mr. Weintraub’s fox was invisible, an incorporeal hereditament. If it ever existed, it was killed and skinned long ago. The trial has grown cold. The participants in the hunt who have not already died have grown old and forgotten the facts. After all these years, only the government’s appetite for the chase remains. But in my judgment, they should sound the horn in other fields and send the hounds to follow trails which are not so stale, for lex dilationes semper exhorret (“the law abhors delay”), 2 Coke Inst. 240, is a better rule than nullum tempus occurrit regi.