# Petition for Writ of Certiorari — Shahadi v. United States > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385602_0503%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1965 - **Citation:** 381 U.S. 903 ## Text = Cttice-Supreme Court, U.S. oy FILED * MAR 15. 1965 JOHN F. DAVIS, CLERK IN THE : Supreme Court of the United States Cctober Term, 1964. No. 989 ALBERT N. SHAHADI: JOSEPHINE SHAHADI: GUAR- ANTEE BANK AND TRUST COMPANY OF ATLAN- TIC CITY, NEW JERSEY: COUNTY OF ATLANTIC, NEW JERSEY and FRANK S. FARLEY. Treasurer of the County of Atlantic. ALBERT N. SHAHADI, Petitioner, vs. UNITED STATES OF AMERICA, Respondent. PETITION FOR ALLOWANCE OF WRIT OF CERTIO- RARI TO THE UNITED STATES COURT OF AP- PEALS FOR THE THIRD CIRCUIT AND APPENDIX. GeEorGE P. WALKER, 427 Cooper Street, Camden 2, New Jersey, Rosert M. Tay or, 2215 Land Title Building, Philadelphia 2, Pa., Attorneys for Petitioner. Huntzinger Printing Corp., Appellate Printers, Camden, N. J. woe TABLE OF CONTENTS OF PETITION PAGE SE CE a ha) peace cawe nck wen ve tiene rers 1 I ea Geen are dA aah eee Rees Oa) 2 Question Presented for Review .................... : 2 Statement of the Case ............. aig ede eee sane 2 Reasons for Allowance of the Writ .................. 4 Avge ......... ee tee te ek ee PE 6 IED)... 5 iy ean be One e Heer aeea sc eee ene 2e TABLE OF CITATIONS CASES: Bartmer Automatic Self Service Laundry, Inc. v. a eo Sy re 22 Bowers v. .:ew York and A. Lighterage Co., 71 U. S. Supreme Court Reports, page 676 ............ 25 Emery v. Commissioner, 166 F. 2d 27,1 A. L.R. 2d 409 23 Holy Trinity Church v. U. S., 143 U. S. 457 ....... 23 Iacone, Estate of v. Commissioner, decided April 13, Sg Re ee err er ree 22 Markham v. Cabell, 326 U. S. 404 ................ 23 Mutual Lumber Co. v. Poe, 66 F. 2d 904 ........... 22 TABLE OF CONTENTS PAGE Old Colony R. R. Co. v. Com., 284 U.S. 552 ......... 25 Peter Pan Fabrics, Inc. v. Martin Weiner Corp., 2 BR ae 22 United States v. American Trucking Association, 310 ON NE Oe lla Pee Ae 25 United States v. Barber, 24 F. Supp. 229 ........... 21 United States v. Covel, decided April 4, 1961 ....... 22 United States v. O’Connor, 291 F. 2d 520 .......... 5 United States v. Shepard’s Estate, 196 F. Supp. 281 .. 22 Untrep STATES JUDICIARY CODE: le Te Me cs NE UE io odd kw cdccccudanoans 2 INTERNAL REVENUE Cope or 1939: et eens 2, 21 es Ce eh pve kaa aa atin 6s 8, 12 I oa ie cc dnau ctiaweyy cds ane 12, 23 AAS A ap oe ae pe re 2,7, 11,21 a te et es 21 ie. : ice Uln ue lees bh eceae eo haw ee ee 2 EE RS BR GI mance ER eae ee Oy my ina 2, 13 EES are, Se USN ME Mar See Sv 6 Section 277 .......... 2, 6, 10, 12, 13, 14, 15, 21, 22, 23, 24 DER bl d,s caaNnas aes dui uiuctuaseuiaes 14 AEN a oa es alo ep ge Es Oe 11 TABLE OF CONTENTS AUTHORITIES: PAGE Congress House Report No. 2, 70th Cong., Ist Sess., 23-24 (1939-1 Cum. Bull. (Part 2) 384, 539-400) 24 Mertens Law of Income Taxaticn (Vol. 10, Par. Ss SS bic onaekeakesacnolscvatdas 15, 19, 21 TABLE CF CONTENTS OF APPENDIX PETITION FOR ALLOWANCE OF WRIT OF CERTIO- RARI TO THE UNITED STATES COURT OF AP- PEALS FOR THE THIRD CINCUIT. TO THE HONORABLE, THE CHIEF JUSTICE AND AS- SOCIATE JUSTICES OF THE SUPREME COURT OF THE UNITED STATES: The petitioner, Albert N. Shahadi, prays your Honorable Court for allowance of a writ of certiorari to review the order and judgment of the United States Court of Appeals for the Third Circuit entered January 8, 1965 affirming the judgments of March 6, 1964 and March 10, 1964 of the United States District Court for the District of New Jerse, and in support thereof, submits the following data and argument: OPINION BELOW. The opinion of the Court of Appeals for the Thira Cir- cuit filed January 8, 1965 is not as yet reported. A copy of same is contained in the appendix hereof at page 2a. Copies of the District Court’s opinion of March 6, 1964 and March 10, 1964 respectively are contained on pages 7a-9a in the petiticner’s appendix. JURISDICTION. The statvtory provision conferring jurisdiction on this honor2ble Supreme Court of the United States to review said judgment and decision by writ of certiorari is that invoked under Section 1254 of the United States Judiciary Code, 28 U. S.C. A., Section 1254. QUESTION PRESENTED FOR REVIEW. I. Did the lower appellate court misinterpret, miscon- strue or misapply the proper interpretations to be given Sections 272(a), 273, 275. 276 and 277 as found in the Internal Revenue Code of 1939? STATEMENT OF THE, CASE. On January 7, 1954, pursuant to the Internal Revenue Code of 1939, Section 273, jeopardy assessments were made by the Commissioner of Internal Revenue against the petitioner, Albert N. Shahadi, for income taxes for the years 1944 through 1949, inclusive. Petitioner filed no bond to stay collection on said jeopardy assessments at any time. On February 11, 1954. the Commissioner maiied statutory notices (a breakdown of the jeopardy as-«ss- ments). Within the time allotted by statute, the petitioner filed petitions for redeterminations on said jeopardy assess- ments with the .ax Court (May 10, 1954). The Commis- sioner during all this time proceeded to collect by distraints and levies on said jeopardy assessments and, as a result of same, did collect a substantial amount of said assessments. 3 In addition, he liened and levied (but did not sell) stocks owned by the petitioner, which were «her and are now held by a bank as collateral for a loan which it had made to petitioner some time ago. At the time the Commissioner liened and levied on said stocks, there was a substantial equity in the stocks above the loan which the -bank had made to the petitioner. Neither the Commissioner nor his agents have been able to give any explanation as to why the Commissione: 0: his agents failed to proceed and sell said stocks and apply the proceeds thereof to the jeopardy assessments as was being done regarding all other assets of the petitioner, including his salary as a County Solicitor of Atlantic County, New Jersey. The Commissioner, as a result of his constant and con- tinued levies and distraints, did collect approximately $60,- 000.00. However, because of the fact that he failed to sell - the stocks upon which he had already made a levy, there has been inflicted upon the petitioner an additional $42,- 000.0. in interest. Had the Commissioner sold the stocks under the levy, there would przctically be no tax due, if any, a nominal amount. On June 2, 1961, the Commissioner filed, his complaint in the instant case and asked for a money judgment on the balances of said jeopardy assessments. In his complaint, he failed to set up any exception or reason for the suit hav- ing been brought more than six years after the date of the jeopardy assessments, and no amendment to his com- plaint was made at any time either during the arguments or the trial below. A motion for summary judgment was made by the plain- tiff and a cross-motion for summary judgment was made by the petitioner, together with an oral motion to dismiss the action of the plaintiff because of its failure to plead an ex- ceptior to the running of the statute of limitations. Judg- ment was entered for the plaintiff. During the course of the oral argument before the lower appellate court, counsel for the Commissioner was con- 4 stantly asked whether he could give any reason as to why the petitioner’s stocks had not been sold. He could not give any reason. Although the lower appellate court kept constantly questioning this tremendous increase of interest and the fact that same was caused by the Commissioner sitting or his hands as it were, the Commissioner through his counsel could give no reason for its omission in not proceeding to an immediate sale of said petitioner’s stocks. REASONS FOR ALLOWANCE OF THE WHIT. We believe the question involved herein is one of great importance and will have importance far beyond the par- ticular facts and parties involved herein, and it is therefore vital that the question should be decided finally by this honorable Supreme Court. The statute of limitations as applied to the 1939 Revenue Code and the 1954 Code has had conflicting interpretations applied by the various cir- cuit courts. In most of the instances, the circuit courts have adopted a position of treating the sovereign as one distinct and separate from the average citizen appearing in those courts. This we say runs contrary to the general principles as established in law and equity. There has as yet, in our opinion, not been set forth, a decent and legal logical yardstick for measuring the proper application of the statute of limitations and jeopardy assessments in taxing matters. There should not be a sovereign distinction as in our opinion is clearly demonstrated by the various decisions forthcoming from the circuit courts and as is clearly demon- strated in the instant case. We feel that this case should once and for all decide that the Commissioner of Internal Revenue with respect to a taxpayer is no different than the creditor and debtor and the general principles of law and equity that apply to creditor and debtor situations should 5 be adhered to regardless of who the creditor or debtor is. We further feel that when the Courts are called upon to interpret a fair meaning of a statute, they are bound to take into deep consideration any resultant injustice which might occur as a result of said interpretation and said Courts should not rule as in this case, that regardless of the injustice done to a party, they must take a position of pure protection of the sovereign’s revenue. The instant case reflects an admission by the lower ap- pellate court that an injustice was done by an omission on the part of the creditor in increasing to a tremendous amount an interest accumulation, but they take the position that they are without judicial power to rectify this situa- tion because they might, as they say, have to declare a cer- tain portion of the statute a nullity. This runs counter to the general rules of interpretation and is brought about only because the so called creditor happens to be the sovereign. We feel that under all these circumstances a clear and definitive measuring rod should be set up by this honorable Court for conditions such as these, to take effect in preventing injustices, which no court hesitates to do in ordinary circumstances involving creditors and debtors. We also set forth the fact that this certiorari should be allowed because there is a conflict existing between the third cir- cuit and the second circuit in that the second circuit in the case of United States v. O'Connor, 291 F. 2d 520, did hold in its findings of fact, in a case similar on all points and facts to the one at hand, that the statute of limitations ap- plies to a jeopardy assessment even though there was pend- ing a petition in the Tax Court requesting a redetermina- tion and said petition for redetermination did suspend the running of the statute as in other cases. We quote from the above case as foliows: “On September 12, 1951, the Commissioner made jeopardy assessments against Raymond O’Connor and his wife Bertha for deficiencies in income taxes under 273(a), Int. Rev. Code of 1939. Thereafter taxpayers 6 filed a petition in the Tax Court requesting a redeter- mination. No bond to stay collection of the tax was filed. The Commissioner answered and taxpayers re- plied. “On August 23, 1957, just before the six-year statute of limitations would have run on the O’Connor assess- ments, the Government brought this action under 7403.” (Emphasis added.) We submit that the above cit»1 case in which Judge Friendly made the quoted finding of fact was not probably on a point argued, but none the less, all of the judges did agree as to the finding of fact as quoted and it did appear that it was clear to them that the jeoparcy assessment under those circumstances ran out after six years. ARGUMENT. It is apparent that the most important and probably the sole issue of argument in this case is the interpretation that is to be given to section 277 of the 1939 Code and its applica- bility to the present facts. Petitioner herein submits pertinent excerpts of the statutes involved from which argument will be made con- cerning the history of Section 277 of the 1939 Code. Section 276, Subparagraph (c) of the Internal Revenue Code of 1939 provides as follows: “(c) Collection after assessment. Where the assessment of any income tax imposed by this chapter has been made within the perio’ of limita- tion properly applicable thereto, such tax may be col- lected by distraint or by a proceeding in Court, but only if begun (1) within six years after the assessment of the tax, or (2) prior to the expiration of any period for collection agreed upon in writing by the Commis- 7 sioner and the taxpayer before the expiration of such six year period. The period so agreed upon may be extended by subsequent agreements in wriiing made before the expiration of the period previously agreed upon.” Section 273 of the Internal Revenue Code of 1939 pro- vides as follows: “Jeopardy Assessments. (a) Authority for making. If the Commissioner be- lieves that the assessment or collection of a deficiency will be jeopardized by delay, he shall immediately assess such deficiency (together with all interest, addi- tional amounts, or additions to the tax provided for by law) and notice and demand shall be made by the collector for the payment thereof. (b) Deficiency letters. If the jeopardy assessment is made before any notice in respect of the tax to which the jeopardy assessment relates has been mailed under Section 272(a), then the Commissigner shall mail a notice under such subsection within sixty days after the making of the assessment. (f) Bond to Stay Collection. When a jeopardy assessment has been made the tax- payer, within 10 days after notice and demand from the collector for the payment of the amount of the assessment may obtain a stay of collection of the whole or any part of the amount of the assessment by filing with the collector a bond in such amount, not exceeding double the amount as to which the stay is desired, and with such sureties, as the collector deems necessary, conditioned upon the payment of so much of the amount, the collection of which is stayed by the bond. as is not abated by a decision of the Board which has become final, together with interest thereon as pro- J 8 vided in Section 297. If any portion of the jeopardy assessment is abated-by the Commissioner before the decision of th« Board is rendered, the bond shall, at the request of the taxpayer, be proportionately reduced. (g) Same further conditions. if the bond is given before the taxpayer has filed his petition with the Board under Section 272 (a), the bond shall contain a further condition that if a petition is net filed within the period provided in such subsec- tion, then the amount, the collection of which is stayed by the bond will be paid on notice and demand at any time sfter the expiration of such period, together with the interest thereon at the rate of 6 per centum per annum from the date of the jeopardy notice and demand to the date of notice and demand under this subsection. (h) Waiver of stay. Upon the filing of the bond the collection of so much of the amount assessed as is covered by the bond shall be stayed. The taxpayer shall have the right to waive such stay at any time in respect of the whole or any part of the amount covered by the bond, and if as a result of such waiver any part of the amount covered by the bond is paid, then the bond shall, at the request of the taxpayer, be proportionately reduced. If the Board dciermines that the amount assessed is greater than the amount which should have been assessed, then when the decision of the Board is rendered the bond shall, at the request of the taxpayer, be proportionately reduced.” Section 272 of the Internal Revenue Code of 1939 pro- vides as follows: “(a) (1) Petition to Board of Tax Appeals. If in the case of any taxpayer, the Commissioner determines that there is a deficiency in respect to the tax imposed by this chapter, the Commissioner is au- 9 thorized to send notice of such deficiency to the tax- payer by registered mail. Within ninety days after such notice is mailed (not counting Sunday or a legal holiday in the District of Columbia as the ninetieth day) the taxpayer may file a petition with the Board of Tax Appeals for a redetermination of the deficiency. No assessment of a deficiency in respect of the tax im- posed by this chapter and no distraint or proceeding in court for its collection shall be made, begun or prose- cuted until such notice has been mailed to the taxpayer, nor until the expiration of such ninety day period, nor, if a petition has been filed with the Board, until the decision of the Board has become final. Notwithstand- ing the provisions of Section 3653(a) the making of such assessment or the beginning of such proceeding or distraint during the time such prohibition is in force may be enjoined by a proceeding in a proper court...” (2) Cross References. Fer exceptions to the restrictions imposed by this subsection, see subsection (d) of this section, relating to waivers by the taxpayer; subsection (f ) of this section relating to notifications of mathematical errors appearing on the face of the return; Section 273, relat- ing to jeopardy assessments; Section 274, relating to nXankruptey and receiverships; and Section 1145, re- jJating to assessment or collection of the amount of the deficiency determined by the Board pending Court review. ‘“(c) Failure to file petition. If the taxpayer does not file a petition with the Board within the time prescribed in subsection (a) cf this section, the deficiency, notice of which has been mailed to the taxpayer, shall be assessed, and shall be paid upon notice and demand from the collector. “(d) Waiver of Restrictions. The taxpayer shall at any time have the right, by a 1¢ signed notice in writing filed with the Commissioner, waive the restrictions provided in subsection (a) of this section on the assessment and collection of the whole or any part of the deficiency. “(f) Further deficiency letters restricted. If the Commissioner has mailed to the taxpayer notice of a deficiency as provided in subsection (a) of this section, and the taxpayer files a petition with the Board within the time prescribed in such subsection, the Commissioner shall have no right to determine any additional deficiency in respect of the same taxable year, except in the case of fraud, and except as pro- vided in subsection (e) of this section, relating to as- sertion of greater deficiencies, before the Board, or in Section 273(c), relating to the making of jeopardy assessments. If the taxpayer is notified that, on account of mathematical error, such notice shall not be con- sidered (for the purposes of this subsection, or of sub- section (a) of this secticn, prohibiting assessment and collection until notice of deficiency has been mailed, or of section 322(c) prohibiting credits or refunds after petition to the Board of Tax Appeals) as a notice of a deficiency, and the taxpayer shall have no right to file a petition with the Board based on such notice, nor shall such assessment or collection be prohibited by the provisions of subsection (a) of this section.” Section 277 of the Internal Revenue Code of 1939 pro- vides as follows: “Suspensio., of running of statute. The running of the statute of limitations provided in Section 275 or 276 on the making of assessments and the beginning of distraint or a proceeding in court for collection, in respect of any deficiency, shall (after the mailing of a notice under Section 272(a) ) be suspended for the period during which the Commissioner is pro- 11 hibited from making the assessment or beginning dis- traint or a proceeding ir court (and in any event, if a proceeding in respect of the deficiency is placed on the docket of the Board until the decision of the Board becomes final), and for sixty days thereafter.” Section 1145 of the Internal Revenue Code of 1939 pro- vides as follows: “Bond to Stay Assessment and Collection. Notwithstanding any provision of law imposing re- strictions on the assessment and collection of deficien- cies, the review under Section 1142 shall not operate as a stay of assessment or collection of any portion of the amount of the deficiency determined by the Tax Court unless a petition for review in respect of such portion is duly filed by the taxpayer, and then only if the taxpayer (1) on or before the time his petition for review is filed has filed with the Tax Court a bond in a sum fixed by the Tax Court not exceeding double the amount of the portion of the deficieney in respect of which the petition for review is filed, and with surety approved by the Tax Court, conditioned upon the pay- ment of the deficiency as finally determined, together with any interest, additional amounts, or additicys to the tax provided by law, or (2) has filed a jeopardy bond under the income or estates tax laws. If as a re- sult of a waiver of the restrictions on the assessment and collection of a deficiency any part of the arnount determined by the Tax Court is paid after the tiling of the review bond, such bond shall, at the request of the taxpaver, be proportionately reduced.” The petitioner herein contends that jeopardy assessments were made by the Commissioner for all the years involved, and said Commissioner did send notices of same to the pe- titioner informing him that he made said assessments under authority of Section 273 of the 1939 Code. Section 273 of 12 the 1939 Code is an exception to the making of an assess- ment as stated under Section 272(a). The exception is clezcly spelled out in Section 272(a)(2). This is a most important provision as it appears in the aforementioned Section 272(a) (2) because it clearly excepts any and all jeopardy assessments from the provisions of the making of an assessment on a deficiency, as is more fully stated in Section 272(a). It is then clear that Congress, by the very wording of the exception, never interded a jeopardy assess- ment to be included in the suspension as stated in Section 277. Without a doubt, under the sections of the Code as above discussed, the Commissioner was not prohibited from collecting on the jeopardy assessments even though the case concerning said assessment was docketed with the Tax Court. in fact, the Commissioner, under his jeopardy as- sessments, could not be restrained, prohibited, or prevented in any manner from collecting on the assessment or from bringing an action in the proper district court for judgment on same; this, despite the fact that the matter was already in the Tax Court. The only time, as set forth in the Code, that the Commissioner can be prevented from proceeding on the jeopardy assessment is when the taxpayer puts up a bond in double amount of the assessment. his specific purpose being to stay collection. In such a cass, it is in- teresting to note that the Commissioner has a double ad- vantage; first, he has actual cash in the form of the bond; second, he would have a contract for payment and a new period for collection on the contract which would run from the day of default. Despite the allegations and arguments of the petitioner as above, the lower court took the position as set forth by the respondent, namely that Section 277 applies, more specifi- cally, the parenthetical portion of Section 277 [and in any event * * * ] and makes no distinction between a jeopardy assessment and a deficiency notice as such. It is the petitioner’s contention that there is no reported decision which can be termed as authority upon the prob- 13 lem involved herein. All the cases as cited by the respond- ent in his brief below, in the opinion of the petitioner, were not dispositive of the present question. Said cases were differen. in facts in that they concerned waivers, assess- ments and not collections, and the particular problem herein was not advanced so that serious consideration could be given same and in many instances, it was not touched upon at all. In the two or three cases which apparently dealt with the question on hand, the lower court (Tax Court) merely leaned over backwards and gave an “Alice in Wonderiand” approach to the interpretation of the words [in any event * * * ]. Petitioner will discuss the cases in detail later on. Section 277, without a doubt, creates an exception to the running of the statute of limitations as set forth in Sec tion 276. It suspends the runniig of the statute of limita- tions during the time the Commissioner’s hands are tied or prohibited from collecting. The parenthetical portion upon which the respondent rests his case treats solely with the docketjng of a case in the Tax Court. It was put there for one purpose only—to pro- tect the Commissioner as to the running out of his time for the making of an assessment (not collection). The legisla- tive history, which will be discussed later on, clearly shows the purpose as outlined herein. Assuming arguendo at this ~ int that this is so, it would be correct then to say that the Commissioner would have no stake in this part of the sec- tion when his problem is one of collecting, not of assessing. In this instant case, the appellant has never challenged the assessment. His contention is that the period for collecting has run out. To read the parenthetical portion otherwise would produce a ludicrous result, for anyone versed in tax laws knows that you can only get to the Tax Court for re- determinaticn if there is no assessment and the redeter- mination is only on a deficiency which is a propcsed assess- ment. The only exception to this proviso insofar as the Tax Court is concerned is a jeopardy assessment which is made, 14 as in this case, prior to there ever having been « deficiency created. How could the Commissioner be ever concerned with the running out of time on a jeopardy assessment? He can always proceed for collection on the jeopardy regard- less of the Tax Court and in fact, he can always start suit to reduce to judgment the jeopardy assessment. The only manner in which the taxpayer can stay or tie his hands would be, as said before, to put up a bond in double the amount. Further, it is quite evident that the Commissioner as to a jeopardy assessment, even though review of same is being had in the Tax Court, can start proceedings to reduce said jeopardy assessment to a judgment in the proper district court or he can dijstrain for collection. It is interesting to note further that even if a district court were to issue an injunction against the Commissioner from proceeding on a jeopardy assessment, he can still proceed to file a complaint to reduce same to a judgmer“ if he feels that the statute is about to run out. We respectfully submit that all of the above would clearly show that the Commissioner could have no stake in the parenthetica! section of 277(b) with respect to collection. His only stake in same is a protection for assessing. A legal interpretation of this parenthetical section must clearly show that, in effect, this parenthetical section with respect to the Tax Court actually extends the statute of limitations by adding sixty days; and with rela- tion to suspension of the statute, one would have to go back outside of the parenthetical section to the regular wording of Section 277, namely, when the Commissioner is pro- hibited from proceeding, etc., etc. (hands tied). The respondent would have you understand that [in any event * * * | means not only a deficiency that is docketei but also a jeopardy assessment—this, despite the fact that the reason for the insertion in the s2ction was made clear by the legislative history covering same. As was said above, Congress could not mean what the respondent con- tends because the language used does nothing for the Com- 15 missioner that he cannot already do and has done. In view of the above, the petitioner contends that the entire Section 277 must be ruled in favor of the taxpayer. To completely understand the meaning of Section 277 of the Internal Revenue Code of 1939, and varticularly to its wording (and in any event, if a proceeding in respect of the deficiency is placed on the docket of the Board, until the de- cision of the Board becomes final), and for sixty days there- after, it is necessary to trace the legislative history of the addition of this provision in Section 277. Mertens Law of Income Taxation (Vol. 10, 2ar. 57.73), Ist Ed., gives the following background of this section, to wit: “The Internal Revenue Code, the 1938, 1936, 1934, 1932 and 1928 Acts provide, ‘the running of the statute of limitations provided in Section 275 or 276 on the making of assessments and the begii.: ing of distraint or a proceeding in Court for collection, in respect of any deficiency, shall (after the notice of a mailing of a notice under section 272 (a)) be suspended for the period during which the Commissioner is prohibited from making the assessment or beginning distraint or a proceeding in Court (and in any event, if a proceed- ing in respect of the deficiency is placed on the docket of the Board, until the decision of the Board becomes final), and for sixty days thereafter.” There are three periods of suspension provided for in the 1928, 1932 and 1934 Acts for income taxes for 1928 and subsequent years: (a) during the period of prohibition and in any event (b) until the decision of the Board be- comes final, where an appeal is filed, and (c) in either case (a) or (b) for 60 days after the end of the suspension period so provided. Where no appeal is filed the period is there- fore extended 120 days under the 1932, 1928 Acts and 150 days under the Internal Revenue Code, the 1938, 1936 and 1934 Acts from the date of inailirs the deficiency notice. 16 The 1928 Act amended the 1926 Act, making it read the same as the 1928 Act, except for paragraph references. This amendment affected only cases in which the period of limitations had not expired prior to the enactment of the 1928 Act. The 1926 Act, as originally enacted, provided: “(b) The running of the statute of limitations pro- vided in this section or in section 278 on the making of assessments and the beginning of distraint or a pro- ceeding in Court for collection, in respect of any de- ficiency, shall (after the mailing of a notice under sub- division (a) of section 274) be suspended for the period during which the Commissioner is prohibited from making the assessment or beginning distraint or a pro- ceeding in Court, and for 60 days thereafter.” Provision was also made in the 1926 Act for adding to tae period of suspension in the case of taxes imposed by prior acts, the time during which the Commissioner was prohibited from making the assessment or beginning dis- traint or proceeding in Court prior to the enactment of the 1926 Act. It was provided: “In the case of any income, war-profits, or excess profits tax imposed by prior Act of Congress, in com- puting the period of ‘limitations provided in section 277 or 278 of this Act on the making of assessments and the beginning of distraint or a proceeding in Court, the running of the statute of limitations shall be consid- ered to have been suspended (in addition to the period cf suspension provided for in subdivision (b) of sec- tion 277) for any per:od prior to the enactment of this Act during which the Commissioner was prohibited from making the assessment or beginning distraint cr proceeding in Court.” The 1924 Act provided: 17 “The period within which an assessment is required to pe made by subdivisior (a) of this section in re- spect of any deficiency shall be extended (i) by 60 days if a notice of such deficiency has been mailed to the taxpayer under subdivision (a) of section 274 and no appeal has been filed with the Board of Tax Appeal, or (2) if an appeal has been filed, then by the number of days between the date of the mailing of sich notice and the date cf the final decision by the Board.” Acts prior to the 1924 Act contained no provision ex- tending or suspending the statute oi limitations other than those with respect to waivers or consents. The sections above quoted indicate a legislative attempt to correct in later Acts defects in the earlier legislation. It will be noted that the 1924 Act provided simply, when a deficiency notice was sent and no appea! was filed for an extensior. of 69 days from the date when the assessment against the taxpayer would have been required if no de- ficiency notice had been mailed, or if an appeal were filed, an extension equal to the number of days between the date of the mailing of the 60 day notice and the date of the final decision by the Board. These provisions of the 1924 Act were subject to several objections. The Commissioner was required, if an appeal were filed, to assess the tax before the expiration of time after the final decision of the Board equal to the period of time between the sending of the 60- day letter and the expiration of the normal statutory period of limitations. Another objection was that an extension of time in eacess of 60 days was provided for only in the event that “an appeal has been filed.” “In the case of an invalid or ineffectua’ appeal the extension provided for was non- operative because there was no appeal.” Frequently the invalidity of the appeal was not discovered until after the normal period of limitations had run. The 1926 Act partly remedied these defects. It provided for the “suspension of tne statute”, as distinguished from 18 the “extension of the statute”, for the period during which the Commissioner is prohibited from making the assess- ment or beginning distraint or a proceeding in Court and for 60 days thereafter. This provision gave the Commissioner two extensions—one equal to the period in which he was “prohibited” from acting and a further extension at the end of such extended period of an additional 60 days. This covered one of the defects in the 1924 Act noted above. The suspension of the statutory period when an appeal was taken to the Board was still a matter of doubt, since the Commissioner was by other sections of the Act pro- hibited from assessing “if a petition has been filed with the Board.” It was extremely doubtful whether the statute was suspended in the event an improper or ineffective peti- tion were filed. The important change made by the 1928 Act was the provision (contained in the parentheses) that the statute should be suspended “in any event, if a proceeding in re- spect to the deficiency is placed on the docket of the Board, until the decision of the Board becomes final.” These pro- visions were designed to avoid a technical defect of collec- tion by a dismissal of the petition after the expiration of the ordinary statutory period. As previously indicated, this provision was applied retro- actively to the 1926 Act, where the period of limitation hed not expired prior to the enactment of the 1928 Act. Of course, in computing the limitation period where there was no effective appeal or petition, no time is added fcr the period during which the “appeal” was docketed with the Board, except, however, that where the limitation period has not expired (disregarding any such extension) at the time of the 1928 Act, the statute will be suspended for the entire period, both before and after the enactment of the 1928 Act, during which the appeal was docketed. The result of these changes in the 1928 Act is that the Commissioner is not forced at his own risk to determine the validity of petitions and appeals. The “appeal” must, 19 however, have been made by the taxpayer. The statute is not extended by an “appeal” filed by a non-interested party or an interloper. Mertens further states, page 242, fo ote 87: “The basis for such dismissal might be that the peti- tion was not filed within the 60-day period, or because the paper filed was not sufficient to constitute a peti- tion, or because the required bond was not filed with the petition for review, or because a waiver filed by the taxpayer was found to be invalid. In Ways and Means Committee Report No. 2, 70th Cong., Ist Sess. p. 23, it is said in explanation of this provision: ‘Under existing law and under the provisions of the bill, the running of the limitation period on assessments is suspended while an appeal is pending before the Board, subsequently the Board may dismiss the appeal on the ground that the petition was not filed within the 60-day period, or for example, because the paper filed within the period was not sufficient to constitute a petition. The deci- sion dismissing the appeal may not be made until months after the proceeding * was begun and there is some question whether in such cases the statute of limi- tations on assessment is actually suspended during the pendency of the proceeding. It is specifically provided in s2ction 277 that the limitation period shall be sus- pended, if any proceeding is placed on the docket of the Board, until the decision of the Board in respect thereof becomes finai and for 60 days thereafter. “This provision also takes care of any uncertainty as to the suspersion of the statute where, after the decision of the Board, a petition for review is filed without the required bond. It also provides for the situation where a taxpayer files a waiver of the restrictions on the Commissioner as to assessment or collection where the legal sufficiency of the waiver may not be determined for a considerable period of time after it is filed. “It seems obvious that the enforcement of a decision 20 of the Board which has become final shoulda not be thwarted, and that the decisior: of the above matters should not be forced into injunction proceedings. Ac- cordingly, in all the foregoing cases the limitation on assessment is definitely suspended by section 277 until the decision of the Board has become final and for 60 days thereafter. “There is a similar provision ir Section 311(d) with respect to the period of limitation on assessment of the liability of a transferee or fiduciary. “It was suggested to the Committee that language be inserted to show that the running of the statute should be suspended not only when the Commissioner is under the prohibition of Section 272(a) but also when he is restricted by order of Court from making assessment or collection, The Committee feels the language of the present statute is perfectly definite on this point aad no clarificatior: iz necessary. The state- ment of the conferees in connection with amendment No. 83 to the Revenue Act of 1926 was specific on the point and clearly indicated that the intention was to suspend the running of the statute for the period dur- ing which, for any reason at all, the Commissioner’s hands were tied. See to the same effect Finance Com- mittee Report No. 960, 70th Cong., Ist Sess., p. 31.” (Emphasis supplied.) A studied reading of the Congressional background and reasoning fer the additional wording in the section can only jead to one conclusion and that is, the phrase (and in any event, if a proceeding in respect to the deficiency is placed on the docket of the Board until the decision of the Board becomes final) refers only to procedural operation and coes not have the broad meaning that the statute of limitations is suspended whether the Commissioner’s hands are or are not tied as to collection where a jeopardy assessment is involved and no bong to stay collection has been filed. 21 That it referred only to cases where the Commissioner was prohibited from assessing and not to cases where there were jeopardy assessments involved. As Section 277 refers to 272(a) it is well to study and dissect that section. As shown in the 1939 Internal Rev- enue Code this section 272(a) is divided into parts (1) and (2), and purt (2) refers to cross references which indicates that there are five exceptions to the restrictions imposed by this subsection which exception, No. 3, includes section 273, relating to jeopardy assessments. It is interesting to note that these exceptions referred in section 272(a) (2) are the same exceptions contained in section 274(a) of the Revenue Act of 1926, and subsequent acts. Referring again to Mertens Law of Federal Income Tax- ation, Vol. 10, Ist Edition, page 91—, it states, “The re- strictions imposed by the Code upon the assessment and collection of the tax by the Commissioner do not apply to ‘jeopardy assessments’.” A jeopardy assessment is a means whereby the Commissioner may assure the collection of the tax in cases which he believes that the use of the usual methods of assessment and collection, with their consequent delay, may result in the failure of ultimate collection. Sec- tion 273 therefore gives the Commissioner the immediate right to assess and collect without hindrance. Mertens further states on pages 92 and 93, “If a jeopardy assessment is made before a notice of deficiency (..e., 90- day letter) has been sent in respect to the tax to which the jeopardy assessment relates, the Commissioner is required to mail a notice of deficiency within sixty days after the making of the assessment.” This notice is in every respect like an ordinary notice of deficiency and the taxpayer may appeal to the Board within 90 days after it is mailed, for a redetermination of the tax. If the Commissioner fails to send the notice by registered mail within the 60-day period, the assessment is nullified and the tax cannot be collected. In the case of United States v. Barber, 24 F. Supp. 229, the Government reiterates all of the above history as it 22 pertains to Section 277. See footnotes therein. Plaintiff below has cited cases which apparently, at first blush, are dispositive of the prob.ems at hand, such as Bartmer Auto- matic Self Service Laundry, Inc. v. Commissioner, 35 T. C. 317; Iacone, Estate of v. Commissioner, decided April 13, 1961 (Tax Court); Mutual Lumber Co. v. Poe, 66 F. 2d 904; United States v. Covel, decided April 4, 1961; United States v. Shepard’s Estate, 196 F. Sup. 281. As to the Bartmer case, it is not dispositive either as to the facts or the law. There is no discussion or reasoning of the exception re a jeopardy assessment. The Honorable Judge therein takes for granted the meaning of the words of Section 277 and does not read same in connection with the entire section. The case concerns a transferee liability and the exception, as the petitioner discusses in this matter, was never even raised by the parties therein. As to the Tacone case, here again the learned Tax Court Judge made an “Alice in Wonderland” approach and declared the words [in any event * * *] taken by themselves as being clear and meaning just what she wanted them to mean without even a discussion respecting the exception of a jeopardy assessment. It would appear that in all of the other cases, the learned judges completely overlooked proper statutory interpretation and the significant Congressional intent in- volved. In each case, it is apparent that the words [in any event * * *] were given judicial blessing without a thought to the exception in the jeopardy assessment. In above cited cases, each of the Judges gave a literal interpretation to the words “in any event” and declared same to be clear despite any comparisons with the rest of the statute. All of said Judges were silent as to the voice of Congress as set forth in the legislative history pertain- ing to Section 277. We respectfully submit that their in- terpretation was erroneous and should have been as was so ably stated by Judge Learned Hand in the case of Peter Pan Fabrics, Inc. v. Martin Weiner Corp., 2 Cir., 274 Fed. 2d 487-489: 23 “It is commonplace that literal interpretation of the words of a statute is not always a safe guide to its meaning. Indeed, in extreme situations this doctrine has been carried so far that language inescapably cov- ering the situation has been disregarded when it de- feats the manifest purpose of the statute as a whole.” Holy Trinity Church v. U. S., 143 U. S. 457; Markham v. Cabell, 326 U. S. 404. “The legislative intent is to be determined not by taking the word or clause involved in a taxing statute from its setting and viewing it apart, but by consider- ing it in connection with the context, the general pur- pose of the statute, the occasion and circumstances of its use and other appropriate tests for ascertaining legislative will.” Emery v. Commissioner, 166 F. 2d 27,1 A. L. R. 2d 409. ‘It is interesting to note that the lower circuit court in making its interpretation of Section 277, takes a parenthet- ical part of a total section and in effect says that the paren- thetical part restricts and practically overrules the entire meaning of the whole section. We respectfully submit that this is having the tail wag the dog and we further submit that had Congress intended this to be so, they could and would have created a total new section. It is apparent that the lower circuit court refuses the persuasion as set forth by the brief of the petitioner on the ground that if they accepted same, they would have to declare the parenthet- ical section of 277 a nullity and this they refuse tn do. We respectfully submit that this is not so. The lower circuit court could just as well and should have found the paren- thetical section as one which is not a resiricticn upon the total section, but rather an additional explanation with re- gard to the suspension of the statute in the making of an assessment particularly with regard to a situation involv- ing the nullity of a petition which would have been filed 24 in the Tax Court. The lower circuit court refers to a Con- gressional Committee Report as being most helpful in ar- riving at its decision (Congress House Report No. 2, 70th Cong., Ist Sess., 23-24 (1939-1 Cum. Bull. (Part 2) 384, 399-400) ) and upon a close reading of said so-called help- ful Committee Report, we see clearly that the argument as set forth throughout by the petitioner with respect to the distinction between assessment and collection under 277 is clearly brought out by said Committee Report. We quote from said Report as set forth in the opinion of the lower circuit court: “Under existing law and under the provisions of the bill, the running of the limitation period on assess- ments is suspended while an appeal is pending before the Board. Subsequently the Board may dismiss the appeal on the ground that the petition was not filed within the 60-day period or, for example, because the paper filed within the period was not sufficient to con- stitute a petition. The decision dismissing the appeal may not be made until months after the proceeding was begun and there is some question whether in such cases the statute of limitations on assessment is actu- ally suspended during the pendency of the proceeding. It is specifically provided in section 277 that the limita- tion period shall be suspended, if any proveeding is placed on the docket of the Board, until the decision of the Board in respect thereof becomes final and for 60 days thereafter.”’ We respectfully submit that the lower Circuit Court of Appeals fell into error in believing that a fair interpreta- tion of this Committee Report in any way gives meaning to the words in any event as meaning under any circum- c.ances. We further respectfully submit that the words in any event under Section 277 should not be given the broad scope as declared by the lower circuit court, where to do so would fly in the face of traditional American notions of fair play. We say to subject a taxpayer to additional interest 25 running into as high as 80 or 90%, caused by the creditor sitting on its hands, and in addition, its omission to act by virtue of its power of levy and lien, prevent the taxpayer from use of its own money or property so that he could do something with regard tc defeating the tremendous in- creases of additional tax caused by said omission on the part of the respondent, is a k ‘each of fair play. Bowers v. New York and A. Lighterage Co., 71 U. S. Supreme Court Reports, page 676; Old Colony R. R. Co. v. Com., 284 U. S. 552; United States v. American Trucking Association, 310 U. S. 534-543, “Sections of a statute should not be inter- preted literally if the result would be plainly at variance with the legislative intent as a whole.” We respectfully submit that all of the cases as cited by the lower circuit court are not dispositive and are clearly distinguishable by the present facts. We will not burden this court with the distinctions invoi.ed, because we feel that the present issue is of sufficient importance and has for the first time been clearly set forth, for a clarification as requested, in this case. CONCLUSION. It is respectfully submitted that in consideration of the foregoing reasons and in the interest and pursuit of equity and justice, the petition of Writ of Certiorari should be granted by this Honorable Court. It is certified that this petition is not filed for delay. WHEREFORE, Petitioner prays that a Writ of Certiorari be granted. Respectfully submitted, GEORGE P. WALKER, z 427 Cooper Street, — Camden 2, New Jersey, ROBERT M. TAYLOR, 2215 Land Title Building, Philadelphia 2, Pa., Attorneys for Petitioner. . = bie oe oe es & wee ail 0 ’ Appendix UNITED STATES COURT OF APPEALS. For THE THIRD CIRCUIT. No. 14873. UNITED STATES OF AMERICA Vv. ALBERT N. SHAHADI; JOSEPHINE SHAK4DI: GUARANTEE BANK AND Trust COMPANY OF ATLANTIC City, NEW JERSEY; County or ATLANTIC, NEW JERSEY and FRANK S. Far- Ley, Treasurer of the County of Atlantic. ‘ ALBERT N. SHAHADI, Appellant. On APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE District OF NEW JERSEY. Argued November 19, 1964. Before: STALEY, GANEY and FREEDMAN, Circuit Judges. OPINION OF THE COURT. (Filed January 8, 1965.) By STALEY, Circuit Judge. This appeal requires us to decide whether under the In- ternal Revenue Code of 1939 the six-year statute of limita- tions on suits for collection based on jeopardy assessments is tolled while the determination of liability underlying the assessment is under consideration in the Tax Court. The district court found that the statute was suspended and that the proceediny for collection before it on complaint by the United States was therefore timely. The correct:.ess of that decision is the only question before us on this appeal. The operative facts were stipulated in the district court and can be summarized as follows. Jeopardy assessments, based on asserted liabilities of the taxpayer for the years 1944 through 1951 and of his wife for 1950 and 1951 were made on January 7, 1954. A notice of deficiency (90-day letter) was mailed on February 11, 1954. On May 10 of the seme year, a petition for redetermination of liabiJivy was filed with the Tax Court.1 The Tax Court rendered its decision by judgment on July 31, 1958. Shanadi v. Commissioner, 29 T. C. 1157 (1958). This court affirmed. 266 F. 2d 495 (1959). A petition for a writ of certiorari to the Supreme Court was denied on October 26, 1959. 361 U. S. 874. 1 The petition filed on this date concerned tax liability for all years named except 1947.