# Petition for Writ of Certiorari — Diehl v. United States

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1972
- **Citation:** 409 U.S. 982

## Text

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IN THE Orr rt

Py & 3
SUPREME COURT OF THE UNIT STATES
AUG 21 3572

NO. MICHIEL PCOTK ) Pan 4
72-280

KENT B, DIEHL, SR,,

Petitioner,
v6,
UNITED BYATES OF AMERICA,

Reapendent,

PETITION FOR WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
POR THE FIFTH CIRCUIT

Dougal C. Pope

Attorney for Petitioner

502 Houston Piret Savings
Building

Heuston, tavae 17007

—_

Citations to Opinions Below........

INDEX

Sn aceeeoeeeeséososoesvese
Questions Presented.....ccecseccece
Statutes re a
a
ATQUMENE. ccccscccccccvesccsscsecces
1. The Claim for Refund for the
Calendar Year 1957 Which Was
Filed by and Signed by Kent
B. Diehl, Sr., Was Filed for
the Benefit of Beth Koehler
a a a
i. tt eect e ni nemenn ee

Certificate of Service.....ccccccees

12
20
21

LIST OF AUTHORITIES

Cases:

Amarillo National Bank vs. Harrell,
159 S.W. 858, (Court of Civil Appeals
of Texas, 1913), error refused... ..cccce

Aquilino vs. U. S.,
363 U.S. 509, 80 S. Ct. 1277, 5 AFTR
2d 1698, (an 604 eh 6s ebbduuiabiaecaces

Baber vs. Galbraith,
(Court of Civil Appeals of Texas,
1916), 186 S.W. 345, error refused.....

Bothwell, et al, vs. United States,
18 Fed. Supp. 1011, 19 AFTR 650,
(United States Court of Claims, 1937)..

Commissioner vs. The Chase Manhattan
Bank, 259 F., 2d 231, 2 AFTR 2a
6363, (5th Cir. ee ee

Kent B. Diehl, Sr., et al, vs. United
States, 438 F. 24 TOR, CEOTE) on ckccaccs

Ann C. Fields, et al, vs. Commissioner,
32 teGes BOPH660 046 660 b 60666460 bsORE eK eee

Gay vs. Jackman,
254 S.W. 927, (Commission of Appeals
of Texas, BOWel 04068 604 benedsaseecdenas

Howell vs. Bowden, °
(Court of Civil Appeals of Texas,
1963), 368 S.W. 3a 842, error refused,

Bhs ccc ewegeccccccecdecciccccceccaces

RAP LOIRE INR Ps

Cer ee a

oan

LIST OF AUTHORITIES (Continued)

Cases (Continued) :

Iowa Manufacturing Co. vs. Baldwin,
(Court of Civil Appeals of Texas,
1935), 82 S.W. 2a PN tébcbdbeeecKewe 19

Jones vs, Mitchell,
(Court of Civil Appeals of Texas,
1932), 47 S.W. 2a 371, error cefused. 16

Keller vs. Keller,
141 S.W. 2d 308, (Commission of
Appeals of Texas, 1940), opinion
adopted by the Texas Supreme Court... 18

Kemp, et al, vs. United States,
12 F. 2d 7, 5 AFTR 5926, (5th Cir.,
SPOS) vce cccnsecccsccsecccceccceca rc as

Martin, et al, vs. Dial, et al,
57 S.W. 24 75, (Commission of Appeals
of Texas, PO N66 0060 0K CoN be bR bw oc 18

Morgan vs, Commissioner,
309 U.S. 78, 23 AFTR MU iccsseccvcce 3

Owens vs. Drywall and Accoustical
Supply Corp., 27 AFTR 24 71-1085
(United States District Court,
Southern District of Texas, 1971).... 14

Shivel and Stewart vs. Greer Bros.,
(Court of Civil Appeals of Texas,
1909), 123 S.W. SPrdvebtccebkecebe mus 19

United States vs. Durham Lumber CO. ¢
363 U.S. 522, 5 AFTR 24 1703, (1960). 14

FETT RS OT PEN NC ET
: og te

a li

LIST OF

AUTHORITIES (Continued)

Cases (Continued) :

White vs. Tudor,
24 Tex. 639, 76 Am. Dec. 126.........

VERNON'S ANNOTATED CIVIL STATUTES:

Art. 6132b, Sec. ee eeeeeesee

MISCELLANEOUS:

Page on Contracts,
Vol. 3, Sec. 1716, 47 C.J. 1124,

Sec. 794...

Rowley on Partnership,
Sec. 582 (1960 Oe er te ee ee

20 R.C.L. 198

af

17

16

18
16

IN THE
SUPREME COURT OF THE UNITED STATES

KENT B. DIEHL, SR.,
Petitioner,
vs.
UNITED STATES OF AMERICA,

Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT

Petitioner prays that a Writ of Certio-

| rari issue to review the Judgment of the United
States Court of Appeals for the Fifth Circuit
entered in the above entitled cause on March 20,
1972,

-_

CITATIONS TO OPINIONS BELOW:

The opinion of the District Court,
printed in Appendix A of the separate
bound Appendice, apparently is unreported.
The opinion of the United States Court of
Appeals for the Fifth Circuit is printed
in Appendix B of the separate bound Appendice
and is reported at 457 F. 2d 51l. The de-
cision of the Fifth Circuit is an affirmance

without an opinion.

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3.

JURISDICTION

The Judgment of the Circuit Court of
Appeals was dated March 20, 1972, and
it was entered on the same day.

The Order overruling the Motion for
Rehearing was dated May 31, 1972.

The jurisdiction of this Court is
invoked under 28 U.S.C. Section 1346.

Se Steed aa ad ~~ sy ser

a

QUESTIONS PRESENTED

Whether the claim for refund for the
calendar year 1957, which was filed by
and signed by Kent B. Diehl, Sr., was
filed for the benefit of Beth Koehler
Diehl.

STATUTES INVOLVED

The Statute involved is 28 U.S.C. ,Section
7422. This section of the Internal Revenue
Code of 1954 is printed in Appendix C of the

separate bound appendice.

na a ie lat ‘
. . . — eT

'

STATEMENT

This is a civil action for the recovery
of federal income taxes for the calendar year
1957.

Kent B. Diehl, Sr., hereinafter called
Mr. Diehl, and his wife, Beth Koehler Diehl,
hereinafter called Mrs. Diehl, filed their
joint 1957 income tax return with the District
Director of Internal Revenue, Austin, Texas.
The income reported in that return represented
their community income. The income tax lia-
bility on that return was $5,546.21 which
income tax liability was paid from the com-
munity funds of Mr. ‘and Mrs. Diehl. There-
after Mr. Diehl filed a claim for refund for
$5,546.21 for the calendar year 1957. On
September 27, 1962, he filed his complaint
in the Trial Court based on his claim for
refund. The Government filed a timely

answer.

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_—-_~”

On December 17, 1962, the parties filed
a joint motion for an order to stay proceedings
requesting that the Trial Court stay all pro-
ceedings until disposition of the criminal pro-
ceedings then pending against Mr. Diehl for
alleged criminal tax violation and which cause
was pending in the Trial Court. An order to
that effect was entered.

On September 22, 1966, Mr. Diehl died
and thereafter the criminal proceedings against
him were dismissed.

On December 8, 1966, Mrs. Diehl, who at
all times pertinent was a resident of Houston,
Harris County, Texas, filed her motion for
intervention alleging that she and Mr. Diehl
filed a 1957 joint federal income tax return
and paid the sum of $5,546.21 in tax with
respect to that return which amount represented
community property of herself and Mr. Diehl,
She further alleged that she was entitled to

a portion of any income tax refund that may be

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recovered in that action and that she was an

indispensable party to that action. Later
the Trial Court entered an order granting her
motion and permitting her individually to
intervene as one of the Plaintiffs in this
cause. Thereafter she fited her pleading
wherein she adopted any and all of the plead-
ings which were previously filed in this
cause by Mr. Diehl as if she had been a
Plaintiff when the original complaint was
filed.

Later Mrs. Diehl filed a motion that
she as Independent Executrix of the Estate
of Kent B. Diehl, Sr., Deceased, be sub-
stituted as one of the Plaintiffs in place
of Mr. Diehl. That motion was first granted
but later the Trial Court entered an order
that she was not the Independent Executrix
of the Estate of Kent B. Diehl, Sr., and

dismissed her in her representative Capacity.

_—

Later Donald G. Ritter filed a motion
that he be permitted to be substituted in
place of Mr. Diehl as the Temporary Adminis-
trator of the Estate of Kent B. Diehl, Sr.
That motion was approved by the Trial Court
but later the Trial Court entered an order
dismissing the cause of action cr both Mr.
and Mrs. Diehl as well as the counterclaim
which the Government had filed in this cause.

On appeal to the United States Court of
Appeals for the Fifth Circuit, Kent B. Diehl,
Sr., et al, vs. United States of America,

438 F. 24 705, (1971), certiorari denied,

92 S. Ct. 67, the Fifth Circuit held that

the action of the Trial Court in dismissing
Mrs. Diehl in her representative capacity

and Ritter in his representative capacity

was proper. However, on page 71ll of that
opinion, the Fifth Circuit held that the
record was not clear as to whether Mrs. Diehl

had filed a claim for refund because if she

SE Lee ee ee ee PROMS INL NER ARE E> NE TER ROR

—

had then she would be entitled to maintain
suit in her individual capacity for a refund
of one-half (1/2) of any income taxes paid.
The Fifth Circuit gave Mrs. Diehl thirty (30)
days from the receipt of the mandate in the
Trial Court to move for the reinstatement

of the intervention in her persvnal behalf
if such a claim was in fact filed.

Within the thirty (30) day period Mrs.
Diehl filed her motion in the Trial Court for
an order that the claim for refund filed by
Kent B. Diehl, Sr., was filed for her bene-
fit. In her motion, Mrs. Diehl stated that
even though there was only one claim filed
in this matter, which claim was signed by
Mr. Diehl, that since the claim for refund
was for all of the income taxes which had
been paid with that return which represented
| community funds of the parties that the
Claim for refund was filed by Mr. Diehl for

the benefit of both Mr. and Mrs. Diehl.

- 10 -

Even though at the time that the claim for
refund was filed Mr. and Mrs. Diehl were
divorced, the marriage of Mr. and Mrs.

Diehl in Texas was no more than a partner-

ship and Mr. Diehl had authority to act

for Mrs. Diehl in winding up the affairs

for their former partnership. /7.ct the

time that Mr. and Mrs. Diehl were divorced
in 1959, the claim for refund for the year
1957 was not covered by them in any property
settlement.

On May ll, 1971, the Trial Court entered
its memorandum opinion and order dismissing
the personal intervention of Mrs. Diehl in
her individual capacity, Appendix A of the

separate bound appendice.

- ll -

4

PIT STR NU ARI eg UNNI HL NI ALA KSA YUE Ne REN TS. |
:

6 adh i Vy, fale Sh ea a

ARGUMENT

l.

THE CLAIM FOR REFUND FOR THE CALENDAR YEAR
CH S FILED BY AND SIGNED BY NT

- DI _ WAS FILED FOR THE BENEFIT

Mrs. Diehl's position is that even though

the claim for refund involved in this case was
signed only by Mr. Diehl that it was filed for
both her and Mr. Diehl's benefit, since their
marriage was a partnership under the laws of
the State of Texas, that after their divorce
in 1959 that either party, Mr. or Mrs. Diehl,
had the right to wind up the affairs of that
partnership and that would include filing a
claim for refund for overpayment of income
taxes.

A marriage in Texas is no more than a

partnership. In Commissioner vs. The Chase

Manhatten Bank, 259 F. 2d 231, 2 AFTR 2d 6363,
(Sth Cir., 1958), the Court said on page 6368:

= 12 «

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"A few basic principles characterize
the community property system. Their
application here is determinative of
the issues in this case.

"The community property system comes
from the custom of the women of the
Visigoths and other Germanic tribes
sharing the fighting and spoils of
war with their men; it owes its strength
to the civilized view that marriage is
a full partnership. Husband and wife
are eaual partners. Each has a present,
vested half interest in all community
property. All property accumulated
during marriage is community property,
unless it is received by gift, devise
or inheritance. In Texas even income
derived from separate property belongs
to the community including interest
and dividends from separately owned
securities. The husband is the manager
of the community. But this management
is not equivalent to ownership. He
acts as a managing agent or trustee
or managing partner of a limited part-
nership. The husband may sell or
donate community property but not
in fraud of his wife's rights. The earn-
ings of the husband during marriage
are community, and property purchased
with such earnings is also community.
The wife's rights aside from managerial
control, are the same as the husband's,
Thus, on death or divorce the community
is divided equally. . . ."

The determination of property rights is

a question to be decided on under State law.

oe 33 «

In Owens vs. Drywall and Accoustical Suppl

Corp., 27 AFTR 2d 71-1085, (United States Dis-
trict Court, Southern District of Texas, 1971),
the Court said on page 1091:

"The determination of property rights is
a question to be decided under state

law, Aquilino v. U.S., 363 U.S. 509
[5 AFTR 2g 1698] (1960)... ."

In Aquilino vs. U.S., 363 U.S. 509, 80

S. Ct. 1277, 5 AFTR 2d 1698, (1960), this
Court said on page 1699:

"The threshold question in this case, as
in all cases where the Federal govern-
ment asserts its tax lien, is whether
and to what extent the taxpayer had
"property' or ‘rights to property'
to which the tax lien could attach.

In answering that question, both
Federal and State courts must look to
state law, for it has long been the

rule that'in the application of a
federal revenue act, state law controls
in determining the nature of the legal
interest which the taxpayer had in the
property . . . sought to be reached by

the statute.' Morgan v. Commissioner,
309 U.S. 78, 82, [23 AFTR l046]."

See also United States vs. Durham Lumber Co.,

363 U.S. 522, 5 AFTR 2d 1703, (1960), to the

same effect.

«= 14 «

to are

In connection wath whether a consent
extending the statute of limitations is ap-
plicable against 4 taxnayer corporation

which has been dissolved, the Courts look

to the State law to see if those signing
the consents had authority to sign. In

et vs se. i2 F. 24a 7,
5 AFTR 5926, (Sth Cir., 1926), the cuestion
was whether a consent extending the statute
of limitation for the year 1917 was valid
which had been executed by the former presi-
dent and secretary of the taxpayer corporation
which was dissolved at the time that the con-
sent was executed. The Court looked to the
Texas law which in general provided that for
a period of three years after the dissolution
of the corporation that the president and
directors of the dissolved corporation were
trustees of the creditors and the stockholders

| of the corporation with full power to settle
its affairs. See Ann C. Fields, et al, vs.

= 1§ «

Commissioner of Internal Revenue, 32 T.c.
187; and Bothwell, et al, vs. United States,

18 Fed. Supp. 1011, 19 AFTR 650, (United
States Court of Claims, 1937), to the same
effect.

In Texas, on the dissolution of a part-
nership, either partner has the right to
settle outstanding accounts and to do any-
thing else necessary for the winding up of
the partnership affairs. In Jones vs.
Mitchell, (Court of Civil Appeals of Texas,
1932), 47 S.w. 24 371, error refused, the
Court said on page 373:

". « « On the dissolution of the part-

nership existing between appellant

and appellee, either party could settle
outstanding accounts, compromise out-
Standing debts due to the partnership,
complete the performance of contracts

previously entered into, and reduce
the assets to cash or its ecuivalent,

another partner on a new contract, nor
execute notes of the partnership for

ji —

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Appeals of Texas, 1963), 368 S.W. 2d 842, error

refused, N.R.E., the Court said on page 847:

the renewal of a pre-existing firm debt
without the consent of the other member
or members of the firm. White v. Tudor,
24 Tex. 639, 76 Am. Dec. I26; Page on
Contracts, Vol. 3, Sec. 1716, 47 C.J.
1124, Sec. 794; 20 R.C.L. 198, p. 968.
In short, after a dissolution of a part-
nership, none of the partners can do any
act or make any disposition of the part-
nership property or funds in any manner
inconsistent with the primary duty, then
resting upon all of them, of winding up
the partnership."

In Howell vs. Bowden, (Court of Civil

ee Dissolytion does not terminate a

Se peg The relationship continue
uring the winding up period. This is

especially true when one of the parties
is still in charge of the business. He
occupies a fiduciary relationship to

the other partner until the winding up
of the partnership affairs is complete.

It is interesting to note that the Texas Uni
form Partnership Act which went into effect
in 1962, too late to control this case, so

provides. See Art. 6132b, Sec. 30, Vernon's
Annotated Civil Statutes.

-i7 -

7"

"Rowley on Partnership, Sec. 582 (1960
Ed.) says there are three steps in the
termination of a partnership: (1) dis-
solution, (2) winding up, and (3) termin-
ation and accounting. See also Jones v.
Mitchell, Tex. Civ. App., 47 S.W. 2a 371;

Am. Jur. 388, 393; 80 A.L.R. 15; 55

A.L.R. 2d 1424."

In Keller vs. Keller, 141 S.W. 2d 308,

(Commission of Appeals of Texas, 1940), opinio
adopted by the Texas Supreme court, held that
in connection with a divorce that the former
wife would be entitled to 1/2 of the proceeds
of salaries and a loan which were collected by
the husband after the divorce and on which no
property settlement had been made. See also

Baber vs. Galbraith, (Court of Civil Appeals

of Texas, 1916), 186 S.W. 345, error refused,
to the same effect.

The Texas law is that on the death of a
partner that the surviving partners have the
duty of winding up the partnership affairs.

Martin, et al, vs. Dial, et al, 57 S.W. 2d 75,

(Commission of Appeals of Texas, 1963);

- 18 -

ea. |
IP NA TI IN LO RR INE ae

7"

Amarillo National Bank vs. Harrell, 159 S.W.

858, (Court of Civil Appeals of Texas, 1913),

error refused; Iowa Manufacturing Co. vs. Bald-

win, (Court of Civil Appeals of Texas, 1935),

82 S.W. 2d 994; Gay vs. Jackman, 254 S.W. 927,

(Commission of Appeals of Texas, 1923); and

Shivel and Stewart vs. Greer Bros., (Court of

Civil Appeals of Texas, 1909), 123 S.W. 207.
At the time Mr. Diehl filed the claim
for refund he was doing so as one of the part-
ners of his and Mrs. Diehl's former partnership
(marriage) and the clsin for refund is for the
benefit of both Mr. Diehl and Mrs. Diehl.
Since one-half of the income taxes which were
paid for the year 1957 are presumed to have
been paid by Mrs. Diehl, then Mrs. Diehl is
entitled to maintain her suit for the refund
claimed to the extent of one-half of the
amount of the overpayment of income taxes

for the calendar year 1957.

- 19 «

i ial ie » % a Tay AP PORN AU oP FF ren |

CONCLUSION

For the foregoing reasons, Petitioner asks
this Court to reverse the decision of the
United States Court of Appeals and hold that
the claim for refund filed on behalf of Mr.
Diehl was filed for the benefit of Mrs.

Diehl and that Mrs. Diehl should not have
been dismissed by the Trial Court in her
individual Capacity.

Respectfully submitted,

Dougal C. Pope

Attorney for Petitioner

502 Houston First Savings
Building

Houston, Texas 77002

- 20 -

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_—

CERTIFICATE OF SERVICE

I, Dougal C. Pope, the attorney for
Petitioner, hereby certify that on the
15th day of August, 1972, I served copies of
the foregoing Petition for Writ of Certiorari
and the separately bound Appendice on the
several parties thereto as follows:

1. On the United States by Mailing a
copy in a duly addressed envelope with air
mail postage prepaid to the Solicitor General,
Department of Justice, Washington, D. Cc. 20530,
and by mailing a copy in a duly addressed
envelope with air mail postage prepaid to
the Assistant Attorney General, Tax Division,
United States Department of Justice, Washington,

D. C. 20530.

Dougal C. Pope

o 29 w

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