Appendix — United States v. Mitchell (No. 798)
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IN THE
Supreme Cont of the United States
OCTOBER TERM, 1970
No. 798
UNITED STATES OF AMERICA and
COMMISSIONER OF INTERNAL REVENUE,
Petitioners,
—V.—
ANNE GOYNE MITCHELL, FRANCES ANGELLO, ET AL.
ON WRIT OF CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE FIFTH CIRCUIT
INDEX
Page
Commissioner Vv. Mitchell, et al.:
Docket Entries in the Tax Court of the United States 1
Relevant Docket Entries in the United States Court of Ap-
peals ectacens sensninnnrsninmeeenasingnhnremmnete sis
SE REA Re aC er RO
EE TEP Re a 10
a cata 11
Stipulation of Facts... Rep R Oe Catto Rodan 14
Supplemental Stipulation of Facts Selebeateat ashes: $ 27
il INDEX
Page
Transcript of Proceedings:
Testimony of Anne Goyne Mitchell = 33
Second Supplemental Stipulation of Facts =. => 49
I ees lcaanhieeciciaete occ Richi naibeesisiaptathiionttienc 50
Findings of Fact and Presmncadle of the Tax Court —
January 27, 1969) _ he ts 51
Decision of the Tax Court src March 19, eee No.
6740-66 67
Decision of the Tax Court (Filed March 19, 1969), No.
6741-66 asd leeiaiees shasta os 70
ee CC Oe, ee Gee ee 71
pee ae eee, Ce eee. 72
Opinion of the Court of Appeals... = 73
Judgment of the Court of Appeals 83
United States v. Angello:
Docket Entries in the United States District Court 84
Relevant Docket Entries in the United States Court of
REE IRD RES EET: Sere anon OOS Oe 87
Petition for Removal from State Court, with attachments __ 88
ak selibeesanaclioaiinaecscoheanonisooons 93
I, I ii acta enicnsinicecnencsnbninintecaencm oases 94
Motion to Dismiss, with attachments 96
Hearing on Motion of United States to Intervene and Motion
of United States to Dismiss and Order —* Both
Motions 101
Answer to Petition in Intervention ______ RE SR ED 101
Interregatioricn (To Phintit) .......... ...——<—i—~ias
Request for Admissions LCE a
Motion for Summary Judgment on Behalf of Defendant,
Metropolitan Life Insurance Company __ 17 EEL Oo AR ae 106
Answers to Interrogatories (By Plaintiff) .... =. s«d208
Answer to Request for Admissions _ “Bi : Bec 5 a
Written Interrogatories (To United States of America) __. 110
INDEX
Answers to Interrogatories (By United States of America) _
Motion for Summary J udgment, with attachments __—__ we
Cross-Motion for Summary Judgment ___ SR NST eee
Hearing and Submission on Motion of United States of
America for Summary Judgment and Cross-Motion by
Plaintiff for Summary J . ., Sareea
Order Granting Motion of Intervenor for Summary Judg-
ment and Order Denying Plaintiff’s Cross-Motion for
Summary Judgment Ea eS ee ee
Notice of Appeal (Filed June De eee Se a
Findings of Fact and Conclusions of Law of the District
Judgment of the District Court = oe
Opinion of the Court of ERAS erie
Judgment of the Court of I ct ce Rexut
Order of the Supreme Court of the United States Granting
a Writ of Certiorari, dated January 18,1971
iii
Page
111
113
116
117
118
119
120
123
124
125
129
130
GENERAL DOCKET
TAX COURT OF THE UNITED STATES
Docket No. 6740-66
ANNE GOYNE MITCHELL
505 South Vienna Street
Ruston, Louisiana
PETITIONER
versus
COMMISSIONER OF INTERNAL REVENUE, RESPONDENT
Date Filings and Proceedings
Dec. 30, 1966 PETITION FILED: FEE PAID 12/30/66
Dec. 30, 1966 Request by Pet. for trial at New Orleans,
La. GRANTED 1/3/67
Feb. 21, 1967 ANSWER filed by Resp.
May 24, 1967 MOTION by resp. for entry of order
that undenied allegations in answer be deemed ad-
mitted.
May 29, 1967 NOTICE of filing of resp. motion for
order under Rule 18 and hearing on June 28, 1967.
(Reply due—6/15/67)
June 12, 1967 Reply filed by Petitioner.
June 13, 1967 ORDER, that respondent’s motion filed
May 24, 1967 is denied and this case is striken from
the calendar for Motions Session on June 8, 1967, at
Washington, D.C.
July 19, 1967 NOTICE OF TRIAL on October 3, 1967,
at New Orleans, La.
Oct. 24, 1967 TRIAL at New Orleans, La. before Judge
Forrester. ;
Resp. Motion to consolidate Dkts. 6740-66 & 6741-66.
No Obj. by Petr.‘ Filed, Granted & Served Oct. 24,
1967.
ici.d LSet a oe Fibre 8 ioe
STIPULATION OF FACTS filed.
SUPPLEMENTAL STIPULATION OF FACTS filed.
ORIGINAL BRIEFS DUE—January 22, 1968
REPLY BRIEFS DUE—March 7, 1968
UNDER SUBMISSION—JUDGE FORRESTER
Oct. 30, 1967 TRANSCRIPT of Oct. 24, 1967 New Or-
leans, Louisiana
Oct. 30, 1967 TRANSCRIPT of hrg. Oct. 23, 1967, at
New Orleans, La. rec’d
Jan. 16, 1968 MOTION by petr. to file Second Stipula-
tion of Fact. “No objection resp.” GRANTED Jan.
17, 1968. Second Supplemental Stipulation of Facts
Lodged.
Jan. 17, 1968 Second Supplemental Stipulation of fact
filed
Jan. 22, 1968 ORIGINAL BRIEF filed by petitioner.
Jan. 22, 1968 ORIGINAL BRIEF filed by respondent.
Mar. 7, 1968 REPLY BRIEF for Respondent filed
Mar. 8, 1968 REPLY BRIEF for Petitioner filed
Jan. 27, 1969 FINDINGS OF FACT AND OPINION
filed, Judge Forrester. Decision will be entered under
Rule 50.
Mar. 14, 1969 AGREED COMPUTATION filed
Mar. 19, 1969 DECISION ENTERED, Judge Forrester.
APPELLATE PROCEEDINGS
June 16, 1969 NOTICE OF APPEAL to U.S.C.A., 5th
Cir., filed by Petr.
June 17, 1969 NOTICE OF FILING with copy of No
tice of Appeal sent to Richard M. Hahn, Acting Chief
Counsel.
June 17, 1969 NOTICE, to parties, of assembling and
date for transmission of record.
GENERAL DOCKET
TAX COURT OF THE UNITED STATES
Docket No. 6741-66
JANE ISABELL GoYNE SIMs
6 Westwood Drive
Ruston, Louisiana
PETITIONER
Versus
COMMISSIONER OF INTERNAL REVENUE, RESPONDENT
Date Filings and Proceedings
Dec. 30, 1966 PETITION FILED: FEE PAID 12/30/66
Dec. 30, 1966 Request by Pet. for trial at New Orleans,
La. GRANTED 1/3/67
Feb. 21, 1967 ANSWER filed by Resp.
May 24, 1967 MOTION by resp. for en
try of order
that undenied allegations in Answer be deemed ad-
mitted.
May 29, 1967 NOTICE of filing of resp. motion for
order under Rule 18 and hearing on June 28, 1967.
(Reply Due on or before June 15, 1967).
June 12, 1967 REPLY filed by Petitioner.
June 13, 1967 ORDER, that resp’s. motion filed May
24, 1967 is denied and this case is stricken from the
calendar for Motions Session on June 28, 1967, Wash-
ington, D.C.
July 19,1967 NOTICE OF TRIAL on October 23, 1967,
at New Orleans, La.
Oct. 24, 1967 TRIAL at New Orleans, La. before J udge
Forrester.
Resp. motion to consolidate Dkts. 6740-66 & 6741-66.
No obj. by Petr.: Filed, Granted & Served Oct. 24,
1967.
STIPULATION OF FACTS filed.
SUPPLEM®NTAL STIPULATION OF FACTS filed.
ORIGINAL BRIEFS DUE—January 22, 1968
REPLY BRIEFS DUE—March 7, 1968
UNDER SUBMISSION—JUDGE FORRESTER
Oct. 30, 1967 TRANSCRIPT of Oct. 24, 1967 New Or-
leans, Louisiana
Oct. 30, 1967 TRANSCRIPT of hrg. Oct. 23, 1967 at
New Orleans, La. rec’d
Jan. 16, 1968 MOTION by petr. to file Second Stipula-
tion of Fact. “No objection resp.” GRANTED Jan.
17, 1968. Second Supplemental Stipulation of Facts
Jan. 17, 1968 SECOND Supplemental Stipulation of
fact filed
Jan. 22, 1968 ORIGINAL BRIEF filed by petitioner.
Jan. 22, 1968 ORIGINAL BRIEF filed by respondent.
Mar. 7, 1968 REPLY BRIEF for Respondent filed
Mar. 8, 1968 REPLY BRIEF for Petr. filed
Jan. 27, 1969 FINDINGS OF FACT AND OPINION
filed, Judge Forrester. Decision will be entered under
Rule 50.
Mar. 14, 1969 AGREED COMPUTATION filed
Mar. 19, 1969 DECISION ENTERED, Judge Forrest-
er.
APPELLATE PROCEEDINGS
June 16, 1969 NOTICE OF APPEAL to U.S.C.A., 5th
Cir., filed by Petr.
June 17, 1969 NOTICE OF FILING with cy. of No-
tice of Appeal sent to Richard M. Hahn, Acting Chief
Counsel.
June 17, 1969 NOTICE, to parties, of assembling and
date for transmission of record.
wa
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
Docket No. 28,163
[Caption Omitted]
RELEVANT Docket ENTRIES *
Date Filings & Proceedings
1969
July 28 Cause docketed and record on appeal filed
= = = =
1970
January 15 Argued and submitted to Ainsworth, Dyer and
Simpson
June 23 Opinion filed and judgment filed, entered and issued
as mandate
* These docket entries have been reconstructed from the peti-
tioner’s files. The original docket entry list was destroyed by fire
at the offices of the Court of Appeals in New Orleans.
mR
TAX COURT OF THE UNITED STATES
Docket No. 6740-66
Filed: Dec. 30, 1966
ANNE GOYNE MITCHELL, PETITIONER
versus
COMMISSIONER OF INTERNAL REVENUE, RESPONDENT
PETITION
The above named petitioner hereby petitions for a re-
determination of the deficiencies set forth by the Com-
missioner of Internal Revenue in his notice of deficiency
bearing symbols PA:NO:WMB, dated September 30,
1966, and as a basis for her case, alleges as follows:
5. The facts upon which the petitioner relies as the
basis of this case are as follows:
(G) During the existence of the community of ac-
quets and gains between petitioner and her
former husband, Emmett L. Mitchell, Jr., all
of the income realized by either of them was
community income.
EXHIBIT “A”
Mrs. Anne Goyne Mitchell
505 South Vienna Street
Ruston, Louisiana 71270
Mrs. Anne Goyne Mitchell
P. O. Box 19772
Baton Rouge, Louisiana 70808
Dear Mrs. Mitchell:
In accordance with the provisions of existing internal
revenue laws, notice is hereby given that the determina-
tion of your income tax liability discloses a deficiency
for the taxable year ended December 31, 1955, in the
amount of $323.00 and additions to tax for delinquency
under Code section 6651(a) in the amount of $80.75
and for negligence under Code section 6653(a) in the
amount of $16.15; 4 deficiency for the taxable year end-
ed December 31, 1956, in the amount of $1,267.73 and
additions to tax for delinquency under Code section 6651
(a) in the amount of $316.93, for negligence under
Code section 6653(a) in the amount of $63.39, and for
failure to pay estimated income tax under Code section
quency under Code section 6651(a) in the amount of
$173.24, negligence under Code Section 6653(a) in the
8
amount of $43.57, and for failure to pay estimated in-
come tax under Code section 6654 in the amount of
$17.27. The enclosed statement shows the computation
of the deficiency or deficiencies.
xf you do not intend to contest this determination in the
Tax Court of the United States, please sign the encivsed
Waiver and return it promptly in the enclosed envelope.
This will permit early assessment of the deficiency or
deficiencies and limit accumulation of interest.
If you do not sign and return the Waiver, the deficiency
or deficiencies will be assessed for collection, as required
by law, upon the expiration of 90 days (150 days if you
are outside the States of the Union and the District of
Columbia) from the date of this letter, unless within
that time you contest this determination in the Tax
Court of the United States by filing a petition with that
Court in aesordance with its rules. A copy of the rules of
the Court ™. v be obtained by writing to the Clerk, Tax
Court of a.» United States, Box 70, Washington, D. C.
20044.
Very truly yours,
SHELDON S. COHEN
Commissioner
/s/ JOHN P. FITZGERALD
John P, Fitzgerald
Chief, Appellate Branch Office
Enclosures: 3
Statement
Waiver
Return envelope
AP:NO:MB:90-D
STATEMENT
Mrs. Anne Goyne Mitchel]
505 South Vienna Street
Ruston, Louisiana 71270
Mrs. Anne Goyne Mitchell
P. O. Box 19772
Baton Rouge, Louisiana 70803
Tax Liability for Taxable Years Ended Decem-
ber 31, 1955, December 31, 1956, December 31,
1957, December 31, 1958, and December 31, 1959,
Income Tax
Deficiency
Additions to Taz
Section Section Section
Year Tax 6651 (a) 6653 (a) 6654
1955 $ 323.00 $ 80.75 $ 16.15 —
1956 1,267.73 316.93 63.39 $ 35.49
1957 453.00 113.25 22.65 12.68
1958 1,750.71 425.02 87.54 47.00
1959 871.34 173.24 43.57 17.27
Totals $4,665.78 $1,109.19 $233.30 $112.44
1958 1959
Statutory deficiency $1,750.71 $871.34
Income tax withheld 50.65 178.37
Net underpayment of income tax $1,700.06 $692.97
The enclosed agreement form reflects this adjustment.
Inasmuch as you failed to file a return for each of the
taxable years ended December 31, 1955, December 31,
1956, December 31, 1957, December 31, 1958, and De-
ember 31, 1959, within the time prescribed by law, 25
10
per centum of the tax for each of said years has been
added to said tax in accordance with the provisions of
section 6651(a) of the Internal Revenue Code of 1954.
The five percent addition to the tax for each of the tax-
able years ended December 31, 1955, December 31, 1956,
December 31, 1957, December 31, 1958, and December
31, 1959, has been asserted under the provisions of sec-
tion 6653(a) of the Internal Revenue Code of 1954.
The addition to tax for failure to pay estimated tax
has been asserted for each of the years ended December
31, 1956, December 31, 1957, December 31, 1958, and
December 31, 1959, under the provisions of section 6654
of the Internal Revenue Code of 1954.
TAX COURT OF THE UNITED STATES
Docket No, 6740-66
Filed: Feb, 21, 1967
ANNE GOYNE MITCHELL, PETITIONER
versus
COMMISSIONER OF INTERNAL REVENUE, RESPONDENT
ANSWER
THE RESPONDENT, in answer to the petition filed
in the above-entitled case admits, alleges and denies as
follows:
(F) and (G) Admits the allegations of subparagraphs
(F) and (G) of paragraph 5. of the petition.
11
Exuipir “A”
U. S. TREASURY DEPARTMENT
INTERNAL REVENUE SERVICE
OFFICE OF REGIONAL COMMISSIONER
Sep. 30, 1966
[EMBLEM |
Mrs. Jane Isabell Goyne Sims
6 Westwood Drive
Ruston, Louisiana 71270
Dear Mrs. Sims:
There will be assessed against you the following amounts
of income tax, plus interest as provided by law, and
additions to the tax, constituting your liability as a
transferee of the assets of Mrs, Anne Goyne Mitchell,
505 South Vienna Street, Ruston, Louisiana, 71270, or
P. O. Box 19772, Baton Rouge, Louisiana, 70803, for
unpaid income taxes in the amounts stated hereafter,
plus interest as provided by law, due from said Mrs.
Anne Goyne Mitchell:
Unpaid income tax for the taxable year ended December
31, 1955, in the amount of $323.00 and additions to tax
for delinquency under Code section 6651(a) in the
amount of $80.75 and negligence under Code section
6653(a) in the amount of $16.15; unpaid income tax
for the taxable year ended December 31, 1956, in the
amount of $1,267.73 and additions to tax for delinquency
under Code section 6651 (a ) in the amount of $316.93,
for negligency under Code section 6653(a) in the amount
of $63.39, and for failure to pay estimated income tax
under Code section 6654 in the amount of $35.49; un-
paid income tax for the taxable year ended December
31, 1957, in the amount of $453.00 and additions to tax
for delinquency under Code section 6651(a) in the
amount of $113.25, for negligence under Code section
6653(a) in the amount of $22.65, and for failure to pay
estimated income tax under Code section 6654 in the
amount of $12.68; unpaid income tax for the taxable
year ended December 31, 1958, in the amount of $1,700.06
—
12
and additions to tax for delinquency under Code section
6651(a) in the amount of $425.02 for negligence under
Code section 6653(a) in the amount of $87.54, and for
failure to pay estimated income tax under Code section
6654 in the amount of $47.00; and unpaid income tax
for the taxable year ended December 31, 1959, in the
amount of $692.97 and additions to tax for delinquency
under Code section 6651(a) in the amount of $173.24
for negligence under Code section 6653(a) in the amount
of $43.57 and for failure to pay estimated income tax
under section 6654 in the amount of $17.27. The en-
closed statement shows the computation of the amounts
of tax and additions to tax stated.
If you do not intend to contest this determination in
the Tax Court of the United States, please sign the
enclosed Waiver and return it promptly in the enclosed
envelope. This will permit early assessment of the tax
and additions to tax and limit accumulation of interest.
If you do not sign and return the Waiver, the unpaid
tax and additions to tax will be assessed for collection,
as required by law, upon the expiration of 90 days (150
days if you are outside the States of the Union and the
: District of Columbia) from the date of this letter, un-
: less within that time you contest this determination in
the Tax Court of the United States by filing a petition
with that Court in accordance with its rules. A copy
of the rules of the Court may be obtained by writing
to the Clerk, Tax Court of the United States, Box 70,
Washington, D. C. 20044.
Very truly yours,
SHELDON S. COHEN
Commissioner
(Signed) JOHN P. FITZGERALD
John P. Fitzgerald
Chief, Appellate Branch Office
ea One, ELM AE ELEN gat,
preity earn eee
Enclosures: 3
Statement
Waiver
Return envelope
AP:NO:MB:90-D
STATEMENT
Mrs. Anne Goyne Mitchell, Transferor
505 South Vienna Street
Ruston, Louisiana 71270
Mrs. Anne Goyne Mitchell, Transferor
P. O. Box 19772
Baton Rouge, Louisiana 70803
Tax Liability for the Taxable Years Ended
December 31, 1955, December 31, 1956, Decem-
ber 31, 1957, December 31, 1958, and December
31, 1959.
13
Mrs. Jane Isabel] Goyne Sims, Transferee
6 Westwood Drive
Ruston, Louisiana 71270
Section
6653 (a)
$ 16.15
63.39
22.65
87.54
43.57
Section
6654
$ 35.49
12.68
47.00
17.27
Income Tax
LIABILITY
Additions to Tax—Internal Revenue Code of 1954
Section
Year Tax 6651 (a)
1955 $ 323.00 $ 80.75
1956 1,267.73 316.93
1957 453.00 113.25
1958 1,750.71 425.02
1959 871.34 173.24
Totals $4,665.78 $1,109.19
1958 statutory deficiency
Prepayment credits not
claimed on return:
Withholding from wages
Net underpayment of
income tax
1959 statutory deficiency
Prepayment credits not
claimed on return:
Withholding from wages
Net underpayment of
income tax
$233.30
$1,750.71
50.65
$1,700.06
$ 871.34
178.37
$ 692.97
$112.44
AE ts a. CN —
14
The enclosed agreement form reflects these adjustments.
The records of this office indicate that assets were trans-
ferred to you by Mrs. Anne Goyne Mitchell on or about
December 28, 1964, without consideration, that such
transfer rendered Mrs. Mitchell insolvent, and that you
hold title to such assets for the account of Mrs. Mitchell.
The above-stated amounts represent your liability as a
transferee of assets of Mrs. Anne Goyne Mitchell for
the unpaid income tax and additions to the tax, plus
interest as provided by law, due from Mrs. Anne Goyne
Mitchell for the taxable years ended December 31, 1955,
December 31, 1956, December 31, 1957, December 31,
1958, and December 31, 1959.
TAX COUR or THE UNITED STATES
Docket No, 6740-66
Docket No, 6741-66
Filed: Oct. 24, 1967
ANNE GOYNE MITCHELL,
JANE ISABELL GOYNE SIMS, PETITIONERS
versus
COMMISSIONER OF INTERNAL REVENUE, RESPONDENT
STIPULATION OF FACTS
IT IS HEREBY STIPULATED that, for the purpose
of this case, the following statements may be accepted
as facts and all exhibits referred to herein and attached
hereto are incorporated in this stipulation and made a
part hereof, subject to the right of either party to object
to the admission of such facts in evidence on the grounds
of materiality or relevance; provided, however, that
either party may introduce other and further evidence
not inconsistent with the facts herein stipulated.
15
1, Petitioner, Anne Goyne Mitchell, is an individual,
whose residence address is 505 South Vienna Street,
Ruston, Louisiana. Petitioner, Jane Isabel] Goyne Sims,
is an individual, whose residence address is 6 Westwood
Drive, Ruston, Louisiana.
2. Anne Goyne Mitchell and Emmett L, Mitchell, Jr.
were married on or about September 22, 1946,
3. At all times during the years 1955 through 1959,
inclusive, Anne Goyne Mitchel] was married to and co-
habiting with, Emmett L, Mitchell, Jr,
4. Sometime during July 1960, Emmett L. Mitchell,
Jr. and Anne Goyne Mitchel] began living Separate and
apart.
5. On or about August 4, 1961, Anne Goyne Mitchel]
filed suit for Separation from bed and board against
Emmett L. Mitchell, Jr., praying that she be allowed to
accept the community of acquets and gains with benefit
of inventory.
6. On or about September 14, 1961, Anne Goyne Mit-
chell was granted a Separation from bed and board a
“mensa et thoro,” against Emmett L. Mitchell, Jr,
7. On or about October 11, 1962, Anne Goyne Mitchel]
was granted a judgment against Emmett L. Mitchell,
Jr. decreeing unto her a divorce “a vinculo matrimonii’’,
8. During the existence of the marriage between
Anne Goyne Mitchel] and Emmett L. Mitchell, Jr., all
of the income realized by either party was community
income.
9. Emmett L. Mitchell, Jr. and Anne Goyne Mitchel]
did not file Federal income tax returns, neither jointly
hor separately, for any of the taxable years 1954, 1955,
1956, 1957, 1958 or 1959.
10. Form 870, Waiver of Restrictions on Assessment
and Collection of Deficiency in Tax and Acceptance of
Overassessment, covering the taxable years 1954, 1955,
1956, 1957, 1958 and 1959 was executed by Emmett L.
Mitchell, Jr. on or about January 11, 1961. The Federal
income tax liabilities indicated on said Form 870 for all
of said taxable years were determined pursuant to the
rates applicable to joint return filings. A copy of said
Form 870 is attached and marked Exhibit A.
—
16
11. Predicated on the Form 870 executed by Emmett
L, Mitchell, Jr. on or about January 11, 1961, Federal
income taxes and penalties were jointly assessed on
March 10, 1961, against Anne Goyne Mitchell and Em-
mett L. Mitchell, Jr. relative to the taxable years 1954
through 1959, inclusive.
12. The March 10, 1961 assessments of Federal in-
come taxes and additions to the tax, jointly assessed
against Anne Goyne Mitchell and Emmett L. Mitchell,
Jr., relative to the taxable years 1954 through 1959,
inclusive, was made without notice to or knowledge of
Anne Goyne Mitchell.
13. Anne Goyne Mitchell had not granted Emmett L,.
Mitchell, Jr. actual or implied consent, authority or
power to legally bind her relative to the Form 870 exe-
cuted by Emmett L. Mitchell, Jr. on or about January
11, 1961 covering Federal income tax liabilities for the
years 1954 through 1959.
14. Anne Goyne Mitchell never acquiesced or con-
sented to being a participant or partner in the Form
* 870, relative to the taxable years 1954 through 1959
signed by Emmett L. Mitchell, Jr. on or about January
. 11, 1961; nor did she consent or acquiesce to being obli-
gated or bound by such Form 870 or any subsequent
assessments thereunder.
15. The joint and several assessments of Federal in-
come taxes and additions to the tax, relative to the years
1954 through 1959, said assessments having been made
on March 10, 1961 were invalid and void as against
Anne Goyne Mitchell.
16. Anniebel Taylor Goyne, mother of Anne Goyne
Mitchell and Jane Isabell Goyne Sims, died on Novem-
ber 5, 1964. The succession proceedings of Anniebel
Taylor Goyne were opened in Lincoln Parish, Louisiana,
State District Court under Probate Docket Number
8880. The documents, Original Petition For Possession,
Affidavit and Sworn, Detailed List of Property, Compu-
tation Showing Inheritance Tax Due the State of Louisi-
ana, Waiver of Rule and Acknowledgment of Inheritance
Taxes Due, and Judgment of Possession, copies of which
RISC pet,
aa oe RS
17
are attached and marked Exhibits B, C, D, E and F,
respectively, in said probate proceedings were filed with
the State District Court on November 13, 1964,
17. On December 23, 1964, Anne Goyne Mitchel] did
grant, convey, transfer and deliver, all her right, title
and interest in the real estate, described in Exhibit F,
Judgment of Possession, inherited by Anne Goyne Mit-
chell from Anniebe] Taylor Goyne, unto Jane Isabell
Goyne Sims,
18, Attached hereto and marked Exhibit G is the
deed of conveyance, filed for record in Conveyance Book
1056, on December 24, 1964, Caddo Parish, Louisiana,
from Anne Goyne Mitchel] unto Jane Isabel] Goyne Sims
of the property described as:
Lots No. 70 and 71 of Caddo Heights Supplement
in Section 3, Township 20 North, Range 15 West,
Caddo Parish, Louisiana,
19. Attached hereto and marked Exhibit H is the
deed of conveyance, filed for record in Conveyance Book
number 106, on December 23, 1964, Lincoln Parish,
Louisiana, from Anne Goyne Mitchell unto Jane Isabell
Goyne Sims of the property described as:
S 14 of Lot No. 1 of Square No. 12, Town of Ruston,
Louisiana, together with all improvements and ap-
purtenances thereon and thereunto belonging, ac-
cording to the original plat and survey of Town of
Lot No. 45 of Unit No. 2 of Northwood Terrace
Subdivision, as per map and plat of said subdivision
on file and of record jn the office of the Clerk of
Court in and for Lincoln Parish, Louisiana;
All that part of E % of SE 1, Section 3, Town-
ship 19 North, Range 5 West, being situated in
Lincoln Parish, Louisiana.
20. On November 14, 1964, $2,402.78 was transferred
from the account of Mrs. Charles C. (Anniebel Taylor)
=
18
Goyne with the Ruston Building and Loan Association,
Ruston, Louisiana to the account of Anne Goyne Mitchell
with the said Ruston Building and Loan Association. A
copy of said Ruston Building and Loan Association’s
record of Anne Goyne Mitchell’s account is attached and
marked Exhibit I.
21. A copy of Ruston Building and Loan Associa-
tion’s record of Jane Isabell Goyne Sims’ account is
attached and marked Exhibit J.
22. Copies of optional payment by Ruston Building
and Loan Association unto Anne Goyne Mitchell, dated
December 28, 1964 and payment slip of Jane Isabell
Goyne Sims to Ruston Building and Loan Association,
dated January 26, 1965, are attached as Exhibit K,
23. On February 1, 1965, Anne Goyne Mitchell exe-
cuted Form 433-AB, Statement of Financial Condition
and Other Information, a copy of which is attached and
marked Exhibit L.
(Signed) Paut K. KirKPATRICK, JR.
Paul K. Kirkpatrick, Jr.
Counsel for Petitioners
LESTER R. URETz
Lester R. Uretz
Chief Counsel!
Internal Revenue Service
arfiwilis.. _ Senate theie
mm. Leulalana
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RUSTON BUILDING & LOAN ASSOCIATION
RUSTON, LOUISIANA
Pa nit
20
ou > —e . . ——-
,Bbe3, PRP IMENT INTERN SL REVENUE SLEVICE
art, 18 STATEMENT OF FINAKCIAL CONDITION AND OTHER INFORMATION
(Tob TAKPAY ER
ine GC, Mitchell
——— ee ee
————.
2. CHECK AL PHO onIA TE BLOCK:
j Doiwervtnuac
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95 South Vienna Street
yston, Louisiana
es
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luston, Louisiana 255-1430 5 Years month
THER INCOME (Sowee) 20. AMOUNTS 2). MATES RECENVEO
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Ruston, Louisiana 68,84 Dee. 3let
wut AL 2. wO.OF ExEUR Tae NAMG AND ADDRESS OF NEXT OF KIN (Other than spouse)
we io. Mrs, Jane G, Sims
2 Westwood Hills
ure eO Ruston, Louisiana
IF PARTNERSHIP OR CORPORATION, COMPLETE THIS SECTION ANO REVERSE OF THISFORM
TWaTEO AVEPAGE NET INCOME FOR NEXT 51K MONTHS:
SETHE FOLLOWING INFORMATION ON OFFICERS OR PARTNERS
NAME AND TITLE
ACORESS
NUMGER OF HARES
OR INTEREST
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SIGNATURE
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(REVERSE)
Form 433-AB (nev, @-63)
ANNE G. MITCHELL
505 SOUTH VIENNA STREET
RUSTON, LOUISIANA
23
STATEMENT SUPPORTING FoRM 4383-AB, ITEM 33
On December 23, 1964 transferred to my sister, Mrs.
Jane G. Sims, without consideration the following:
[.
My undivided one-half interest in the following real
property which was acquired by inheritance from
my mother in November, 1964:
Description
a. S 4 of Lot No. 1 of Square No. 12,
Town of Ruston, Louisiana, together
with all improvements and appurten-
ances thereon and thereunto belonging,
according to the original plat and sur-
vey of Town of Ruston, Louisiana on
file and of record in the office of the
Clerk of Court in and for Lincoln
Parish, Louisiana,
. Lot No. 45 of Unit No. 2 of North-
wood Terrace Subdivision, as per map
and plat of said subdivision on file
and of record in the office of the Clerk
of Court in and for Lincoln Parish,
Louisiana.
. All that part of E 14 of SE 4,
Section 3, Township 19 North, Range
5 West, being situated in Lincoln
Parish, Louisiana.
. Lots No. 70 and 71 of Caddo Heights
Supplement in Section 8, Township 20
North, Range 15 West, Caddo Parish,
Louisiana.
TOTAL VALUE OF REAL PROPERTY
Value of My
One-half Interest
In Mother’s
Succession
$7,500.00
500.00
1,500.00
___ 50.00
$9,550.00
24
II. Cash in savings account in Ruston Building & Loan
Association, Ruston, La. $1,721.21. 1/26/65
The foregoing assets were transferred to my sister on
the recommendation of my attorney who had just closed
my mother’s succession in November, 1964, approxi-
mately one month prior to receipt on December 19, 1964,
of the Final Notice Before Seizure for 1954 income tax.
Prior to closing my mother’s succession, I discussed with
my attorney the matter of the income tax liability for
1954 through 1959. He advised that I could renounce
my interest in the succession and thus pass my interest
in mother’s estate directly to my two children. However,
as it had been over two years since I was contacted by
Internal Revenue Agent, Deuel C. Smith, in regard to
signing with my former husband on his Offer in Compro-
mise, and I had heard nothing since, he felt that the
matter was settled and therefore put me in possession.
Then, after I received the Notice on December 19, 1964,
he felt that to protect my interest, the foregoing assets
should be transferred which would leave me in the same
financial status as if I had renounced my interest in
mother’s estate.
—_—_—_—-— SEPA <anieinEnh~qee a--~aep a
. x Doo The ewene i cee eee ee
sonm 453 b
qe. gdm, Se MOMVALY Hlth AM EXPER
e — ~ - oes eee . -
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TOTAL i$ 405,16 1
€T DIFFERENCE (Income minus persons! eayenses)
27
TAX COURT OF THE UNITED STATES
Docket No. 6740-66
Docket No. 6741-66
Filed: Oct. 24, 1967
ANNE GOYNE MITCHELL,
JANE ISABELL GOYNE SIMS, PETITIONERS
Versus
COMMISSIONER OF INTERNAL REVENUE, RESPONDENT
SUPPLEMENTAL STIPULATION OF FACTS
IT IS HEREBY STIPULATED that, for the purpose
of this case, the following statements may be accepted
as facts and all exhibits referred to herein and attached
hereto are incorporated in this stipulation and made a
part hereof, subject to the right of either party to object
to the admission of such facts in evidence on the grounds
of materiality or relevance; provided, however, that
either party may introduce other and further evidence
not inconsistent with the facts herein stipulated.
24, The separation from bed and board a mensa et
thoro, referred to in paragraph 6 of the Stipulation of
Facts document, was granted by default pursuant to
the petition of Anne Goyne Mitchell.
25. Upon the dissolution of the community of acquets
and gains between Anne Goyne Mitchell and Emmett
L. Mitchell, Jr., she received neither a distribution of
community property nor a property settlement.
26. Jane Isabell Goyne Sims was, at all times perti-
nent hereto, married to Robert B. Sims.
27. The schedule of the assessment of Federal income
taxes, penalties and interest for the taxable years 1955
through 1959, inclusive, made on March 10, 1961, fol-
lows:
28
Interest to
Taxable Account Income March 10,
Year Number Tax Penalties 1961
1955 66T363 $ 7438.92 $ 389.84 $215.19
1956 66T364 2,661.45 1,401.73 610.19
1957 66T365 1,043.53 547.22 176.64
1958 66T366 8,499.77 1,843.88 382.43
1959 66T367 1,415.53 742.30 69.74
28. No payments were made against the assessments
set forth in paragraph 27 for the taxable years 1956,
1957, 1958 and 1959.
29. The only payments made against the assessment
for the taxable year 1955, as set forth in paragraph 27,
were made by Emmett L. Mitchell, Jr., in the total
amount of $135.00; $50.00 having been paid on July 1,
1965 and $85.00 on December 7, 1965.
30. On March 20, 1964 Emmett L. Mitchell, Jr. sub-
mitted an Offer in Compromise, Form 656, incorporating
Collateral Agreements, Forms 2261 and Aud-748, regard-
ing his individual] liabilities for Federal income taxes
and penalties for the taxable years 1954 through 1959.
Copies of the aforementioned Form 656, Form 2261 and
Form Aud-748, submitted to the Internal Revenue Serv-
ice by Emmett L. Mitchell, Jr., dated March 20, 1964,
are attached as Exhibits M, N, and O, respectively.
31. The aforementioned Offer in Compromise and Col-
lateral Agreements were accepted by the Internal Reve-
nue Service on September 9, 1964. Copy of District
Director R. L, Phinney’s letter of acceptance, dated
September 9, 1964 is attached as Exhibit P.
82. Upon acceptance of the Offer in Compromise and
Collateral Agreements by the Internal Revenue Service,
Emmett L. Mitchell, Jr. made the following payments
thereunder:
29
Taxable year
Date Amount Payment applied against
9-09-64 $100.00 1954
10-14-64 25.00 1954
11-19-64 25.00 1954
7-01-65 50.00 1955
12-07-65 85.00 1955
33. No payments other than as shown in paragraph
31 were made by Emmett L. Mitchell, Jr. after accept-
ance by the Internal Revenue Service of the Offer in
Compromise and Collateral Agreements and said Offer
in Compromise and Collateral Agreements became in
default.
34. Form 870, Waiver of Restrictions on Assessment
and Collection of Deficiency in Tax and Acceptance of
Overassessment, covering the taxable year 1954 was exe-
cuted by Anne Goyne Mitchell on August 4, 1956. A
copy of said Form 870 is attached and marked Exhibit
35. Predicated on the Form 870 executed by Anne
Goyne Mitchell on August 4, 1965, the Federal income
tax, penalties and interest were individually assessed
against her for the taxable year 1954 on August 16,
1965 as follows:
Income tax $244.90
Penalties:
Section 294(d) (1) (A) $ 22.65
Section 6653 (b) 131.00 153.65
Interest ahs ges 152.32
Total assessment $550.87
Thereafter, on December 30, 1966, Anne Goyne Mit-
chell filed a claim for refund for the above amounts and
on July 25, 1967 brought a refund action in the United
States District Court for the Western District of Louisi-
ana based upon her claim, which action is stil] pending.
36. Anne Goyne Mitchell and Jane Isabel] Goyne Sims
are sisters.
—
37. On September 27, 1967, the procedures of abate-
ment were executed by the Internal Revenue Service
with respect to the assessment of Federal income taxes,
penalties and interest, made on March 10, 1961, as it
applied, in entirety, to Anne Goyne Mitchell for the
taxable years 1955 through 1959. Also on the same date,
the procedures of abatement were executed by the In-
ternal Revenue Service, with respect to the aforemen-
tiond assessment as it applied to Emmett L. Mitchell,
Jr., down to an amount which reflected the Federal
income taxes, penalties and interest against his one-half
portion of the community income for the taxable years
1955 through 1959, inclusive.
(Signed) Paut K. KIRKPATRICK, JR.
Paul K. Kirkpatrick, Jr.
Counsel for Petitioners
(Signed) Lester R, Urerz
Lester R. Uretz
Chief Counsel
Internal Revenue Service
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TRANSCRIPT OF PROCEEDINGS
Filed; Oct. 30, 1967
(10) ANNE GOYNE MITCHELL
was called as a witness on behalf of the Petitioner, and,
having been first duly sworn, testified as follows:
THE CLERK:
For the record, may we have your name?
THE WITNESS:
Anne Goyne Mitchell.
THE CLERK:
Your address?
THE WITNESS:
101 Ashway, Lafayette, Louisiana.
THE CLERK:
Thank you,
DIRECT EXAMINATION
BY MR. KIRKPATRICK:
Q Mrs. Mitchell, are you the Petitioner in Anne
Goyne [11] Mitchell vs. the Commissioner of Internal
Revenue in Docket No. 6740-66?
A Yes, I am.
Q Mrs. Mitchell, did you file any tax returns for the
years 1954 tiirough 1959?
A No,
Q Mrs. Mitchell, would you tell the Court why you
did not file ta». returns?
A Well I had not been responsible for filing tax re-
turns at any time after my marriage. Tax returns had,
as far as I knew, been filed each year.
MR. McARDLE:
Objection, Your Honor.
The returns themselves will be the best evidence as to
whether they were filed.
34
MR. KIRKPATRICK;:
If Your Honor Please, the witness has been assessed
penalties for failure to file returns and this testimony
goes to the reasonable cause for her failure to file and
negligence.
THE COURT:
I think I will let the statement stand. It isn’t worth
much as evidence unless you want to go into it to show
how she knew or thought she knew.
MR. KIRKPATRICK:
Yes, Your Honor.
THE COURT:
That’s a conclusion on the part of the witness and
worth nothing as evidence really unless it is expanded
I will let it stand.
[12] BY MR. KIRKPATRICK:
Mrs. Mitchell, when were you married?
September 22nd, 1946,
And you were divorced in 1962?
Yes.
During that period of time, did you ever file a
tax return?
A No.
Q Did you believe that your husband filed tax re
turns?
A Yes. I did.
Q Why did you believe that he was filing tax re
turns?
A He led me to believe that he was filing tax returns
each year at the proper time.
Q How did he lead you to believe that, Mrs. Mitchell?
A He talked about getting help with his, getting his
tax return filled out. He talked about the difficulty of
finding additional money when it was needed to pay the
taxes at the time that the taxes were due.
OPO PO
35
Q Mrs. Mitchell, did you know that someone in your
family was required to file Federal Tax Returns?
A Yes.
Q Did you know how much money your husband
made?
A No, I did not.
Q During the entire course of your marriage, did
you [13] ever know how much money your husband
made?
A No, I didn’t.
Q Did you ever ask your husband if he filed his tax
return?
A Yes, of course.
Q Did you ask him once or did you ask him many
times?
A Each year.
Q Is it your testimony you asked your husband each
year whether he filed his tax return or not?
A Yes. Yes.
Q Did you feel it necessary to ask him if he had
filed his tax return?
A Yes. I did.
Q Why did you find it necessary?
A Because he was very remiss in taking care of his
financial obligations in other respects.
I frequently had to make comments regarding things
that needed to be taken care of in a financial way.
Q Well did this cause you to think perhaps that he
had not filed his tax revurn?
A No. It did not.
Q Well if you were concerned about his not paying
other bills and being remiss in his financial obligations,
why did you not think he would be remiss in this type
of obligation?
A I would say this; I was not so much concerned
about [14] the possibility that he would not file a tax
return as the possibility that he would not make the
deadline at which time it should be filed.
I would not have dreamed that he would not have
filed the return because of his fear of the possible conse-
quences which I assume would be immediate.
36
Q Mrs. Mitchell, did it strike you as unusual that
your husband did not ask you to sign a tax return?
A No, it didn’t. I assumed that he signed my name
to the return which he had done prior to this time.
MR. McARDLE:
Objection,
If he had signed it, the return would be the best. evi-
dence of his signing.
THE COURT:
She said, she assumed he had signed her name as he
had done and that is a conclusion on the part of this
witness,
That will be stricken, unless you care to go into it.
BY MR, KIRKPATRICK:
Q Mrs. Mitchell, your husband ever told you that he
had signed your name?
A No. Just that he had sent the return.
MR. KIRKPATRICK:;:
If Your Honor, Please, it may not be the most impor-
tant point in the world but I suggest this witness’ as-
sumption is pertinent to this inquiry [15] because her
assumption does involve an attempt at negligence and
reasonable cause and—
THE COURT:
I think it is pertinent to the inquiry, too, Mr, Kirk-
patrick, but it is not worth yery much as evidence un-
less you show what it is based upon. The evidences that
led her to assume—
BY MR. KIRKPATRICK:
Q Mrs. Mitchell, you did assume a tax return had
been filed, did you not?
A Yes. I did.
Q Did your husband tell you that he was filing a
tax return?
37
A Yes, he did. Every year.
Q Did your husband tell you that he employed any-
one to prepare that tax revasn?
A Yes, he did.
Q Who did he say he employed?
A He said that he employed Mr. Albritton who was
an accountant in Farmerville, which was his hometown.
Q Would this be true during the entire period, Mrs.
Mitchell or would this be true as to a particular year?
A It would be true during, certainly during these
years that are under discussion.
Q Did you know, Mrs. Mitchell, that your husband
—did you know whether or not your husband—strike
that, please.
(16] Did you know whether or not you were required
to sign your husband’s Federal Income Return?
A_ Well, yes. I knew a joint return should be filed
or that a return should be filed.
Q And you knew that—did you know you had not
signed that return?
A Yes.
Q Were you conscious of this when you were asking
your husband if he had, if he had filed his tax return?
A Was I conscious that I had not signed the return?
Q Yes, Ma’am.
A No. Actually I was not for this reason; he had
filed returns in the past.
MR. McARDLE:
Objection, Your Honor, whether he had filed or not.
The returns would be the best evidence of that.
MR. KIRKPATRICK:
If Your Honor, Please, this case involves whether a
return was, in fact, filed.
This witness has been assessed penalties for her fail-
ure to file a return and for her intentional disregard
of the Rules.
This witness’ testimony is that she thought her hus-
band had filed returns. He had given her reasons to
believe that he had filed returns.
—a
38
THE COURT:
We are on the signatures on the return [17] now,
Mr. Kirkpatrick and the particular statement under at-
tack of the objection is that in the past he had signed
her name to returns.
Now obviously she’s talking about an instrument which
possibly might be available for introduction as an ex-
hibit and what has been invoked by the objection is the
best. evidence rule.
Unless you can show unavailability or some reasonable
attempt to obtain such a return or copy I think I will
have to sustain that objection.
MR. KIRKPATRICK:
Well I agree Your Honor.
As a matter of fact, the Government does not have
the returns.
THE COURT:
If you can show that then that is a showing of un-
availability and I will allow the witness to testify.
MR. KIRKPATRICK:
Well I really can’t, the witness is not competent to
testify that her husband signed her name to the return
if she had not signed the return herself. I agree she
cannot establish the fact her husband signed her name
to the return.
THE COURT:
I believe you misunderstood what I said, Mr. Kirk-
patrick.
I said I would allow the witness to testify as to prior
returns and maybe her not having actually seen them
[18] would become unimportant if you are able to show
the unavailability of such returns.
MR. KIRKPATRICK:
Will Counsel agree there are no such returns?
39
MR. McARDLE:
No, because I haven’t check the Federal records and
beyond that even if the Federal Government no longer
has the returns the best. secondary evidence would be
copies of the returns held by Anne Goyne Mitchell ana
no one has attempted to find out if she has copies of
the returns.
THE COURT:
Absent such a showing, I will have to sustain the
objection to the testimony.
MR. KIRKPATRICK:
All right, Your Honor.
BY MR. KIRKPATRICK:
Q Mrs. Mitchell, why did you believe that your hus-
band had signed your name to the returns?
A Well I knew that the return had to be signed.
The returns had been sent each year and I had not
signed them.
MR. McARDLE:
Objection, Your Honor.
THE WITNESS:
Therefore—
MR. McARDLE:
Objection.
The best evidence again. There is no evidence that
returns were signed or were mailed.
THE COURT:
That will be sustained.
BY MR. KIRKPATRICK:
Q Mrs. Mitchell, you have testified that you did not
[19] sign any returns and that you did not see the re-
turns and so obviously you do not know, of your own
personal knowledge, that the returns were filed and that
your name was signed to them?
40
A That's right.
Q I am asking you why you believed, as you testi-
fied, that your name had been signed to the return?
A Well T have reference here to the returns prior
to 1954.
Q Do you know, Mrs. Mitchell, that returns were
filed prior to 1954?
A’ To the best of my knowledge, although I did not
see them.
MR. McARDLE:
Objection, Your Honor.
MR. KIRKPATRICK;
If Your Honor, Please, this witness is competent to
testify if she does or does not have, does not know that
returns were filed.
MR. McARDLE:
The returns themselves are the best evidence, Your
Honor. I object.
MR. KIRKPATRICK:
Returns are the best evidence themselves, Your Honor,
but this witness’ knowledge cannot be shut out of. the
record simply because the Government cannot produce
returns.
THE COURT:
There is no showing of an attempt to get them, Mr.
Kirkpatrick. That’s the whole point.
[20] MR. KIRKPATRICK:
If Your Honor, Please, the return itself is not the
point that the Petitioner is trying to make,
The Petitioner is simply trying to develop the reasons
why she believed that a return had been filed. I do not
se that the witness can testify that a return was
led.
. If 1 will be permitted to continue, I will try to estab-
sh—
41
THE COURT:
Very well. Continue.
BY MR. KIRKPATRICK:
Q Mrs, Mitchell, you have testified that you have
never signed a return—
A (Witness nodded affirmatively. )
Q —from the period of 1946 until the termination
of your marriage.
Have you ever seen a tax return prepared for your-
self and your husband or for either of you?
No.
Q So you cannot testify, can you, that you saw a
return prepared or that you know that one was filed?
A No. I cannot.
Q Of your own personal knowledge, you could not
testify today, could you, that a return had ever been
filed during the time that you were married?
[21] A Not of my own knowledge. No.
Q You do testify that you thought a return had been
filed?
A Yes. I do.
Q Is it your testimony that you thought a return had
been filed each year?
A Yes, it is.
Q And you assumed that your name had been signed
to the return by your husband?
A That’s correct.
Q My question is: what led you to make that as-
sumption?
A Well, prior to 1954 these returns had been filed.
MR. McARDLE:
Objection.
THE WITNESS:
I don’t know how to answer the questions without—
BY MR. KIRKPATRICK:
Q Do you believe returns were filed prior to 19547
A Yes. I believe returns were filed all the way up
to the end of my marriage until I learned otherwise.
42
Q Why do you think returns were filed prior to 1954?
A Because each year at the time that returns should
be filed my former husband informed me that he was
filing the return at the proper time.
[22] Q Now, Mrs. Mitchell, although you believed
your husband was filing returns because he told you
he was—
A Yes.
Q —why did you think your name had been affixed
to the return?
A Well someone had to put my name on the return.
I did not do it. So, I assumed that he did.
Q Is it your testimony then that simply because you
assumed a return had been filed and you believed that
your name, your signature was necessary to the return
that you assumed from that that your name had been
affixed to the return?
A Yes.
Q Mrs. Mitchell, did you ever see a pay check of
your husbands?
A No. I did not.
Q Did you handle the money in your family?
A With regard to incidental household purchases,
yes.
Q You had a joint bank account?
A Yes.
Q And you drew checks upon that account?
A Yes.
Q Did you see the balances in that account?
A Very rarely.
Mrs. Mitchell, you transferred certain property
[23] to your sister. You transferred some real estate
aod you transferred a building and loan account which
you had inherited from your mother.
Did you have an agreement with your sister to re-
transfer that property to you?
A No. At the time I made the transfer under the
advice of my attorney.
Q Did your sister transfer any of that property back
to you prior to this deficiency being proposed?
43
A I have used some of the money from the building
and loan account.
Q How much have you used?
A Twelve hundred dollars.
Q In what year did you use that money?
A In 1965-66.
MR. KIRKPATRICK:
Thank you, Mrs. Mitchell.
That’s all.
CROSS EXAMINATION
BY MR. McARDLE:
Q Mrs. Mitchell, why did you separate from your
husband?
A Well it’s culmination of a long series of events.
I would say the primary cause, the crux of the whole
matter was his continuing financial irresponsibility over
a very long period of time.
[24] Q Did you attend college?
Yes, I did.
Are you a Teacher?
Am I a Teacher?
Yes.
Yes. I am.
Where do you teach now?
I teach at the University of Southwestern Louisi-
ana, at Lafayette.
Q And during some of the years here involved, you
taught at St. Paul’s; is that right?
A Yes.
Q Would you consider yourself a reasonably intelli-
gent woman?
A I would think so.
Q Now, you stated that you were aware Income Tax
Returns were required of individuals?
A Yes.
Q And you have testified that you never signed a
oe any return any time during your marriage?
es.
POPO Pop
44
Q And that you never saw a return and what not,
Did your husband gamble?
A_ I have reason to believe that he did. Yes,
Now he wasn't financially responsible in paying
his [25] debts?
A That's right.
Q Could he afford gambling losses?
A No. We could not,
Q And did he borrow money to finance his gambling?
A_ I don’t know,
He did borrow money but whether it was to finance
gambling, I don’t know.
Q Did he lie?
A Yes. Very often,
Q You consider gambling and borrowing money and
lying not supporting the family an irresponsible act?
A Yes, I did.
Q You would consider your husband to be irrespon-
sible?
A Yes, I would.
Q Did your husband sell the residence at 1255 Au-
burn Street in Monroe, Louisiana in 1956?
Yes, he did.
Was that property in joint names?
In joint names?
Was it your property and his property?
Yes.
When that property was sold, did you sign the
contract?
A (Pause). I honestly can’t remember.
26] Q Well you do realize if you have a legal docu-
ment such as a transfer of a home and what not where
your signature is required, that you are supposed to be
the one to sign it. Is that right?
A Yes.
Q And you don’t consider yourself irresponsible?
A No. I do not.
May I ask a question?
Is it not possible in Louisiana for a husband to trans-
fer property without the wife’s signature?
OPrOore>
—
45
Q Well I would have to look up all of the law before
I could answer that. I am sorry.
Did you ever ask your husband to see a retained copy
of the Income Tax Return?
A Yes, | have.
Q Did he show it to you?
A No. He did not.
Q Then you never saw either a retained copy or an
Income ‘Tax Return?
A No.
Q You stated that you and your husband had a joint
bank account, Is that correct?
A Yes.
Q And that you could draw checks from that bank
account?
{27} A I could with some degree of risk.
But you did?
What?
You did draw checks from that checking account?
On occasions,
Did you ever see the stubs?
You mean, the bank statement?
The statement or the checks?
Or checkbook stubs?
Either one?
Very rarely.
You did see them on occasions?
On occasions. Not the stubs, the bank statement
on occasions.
Q Did you ever go through any of these retained
copies of checks for the cancelled checks or the stubs
of the bank statement to determine if your incoming
liabilities had been paid?
A No. I did not.
Q Did you ever contact the Internal Revenue to see
if returns had been filed?
A Well it never occurred to me to do that.
Q Well then, you never verified actually that your
returns—never really attempted to verify if your returns
had been filed?
>o
FPOPO PO PO PO
46
[28] A No, I did not. But, may I say this; I assumed
that—
Q Yes. I understand that.
Is it correct in July of 1960 that you were informed
that no returns had ever been filed for the years '54
through 1960?
A That is correct.
Q Now this was July of 1960 and you were still
living with your husband?
A Yes, I was,
Q At that time, did you file a return for the years
involved?
A At that time did I—
Q After you found out Income Returns had not been
filed for 1954 through 1959, did you then file Income
Tax Returns for any of those years?
A_ No, I didn’t.
Q Not even for 1959?
A I filed a return for 1960.
Q Yes.
But, in July of 1960 you found out 1959 Tax Returns
had not bene filed; is that correct?
A Yes,
But, in July of 1960 you found out 1959 Tax Returns
had not been filed; is that correct?
A Yes.
Q And after you found out you did not file a 1959
Income Tax Return; is that correct?
[29] A_ TI had no idea that I could at that point.
Q Did you file one?
A I did not know. It did not occur to me to do so.
Q Now you stated that you inherited this real prop-
erty from your mother that you transferred on Decem-
ber 23rd to your sister, Jane Isabell Goyne Sims?
Yes.
ag did that under advice of counsel?
es.
a that advice of counsel related to Income Tax?
es.
POPrO>Y
47
Q In other words, he told you to get the property
out of your hands so it could not be collected for Income
Tax?
A At that time the Internal Revenue people from
Shreveport were threatening to seize the property and
to garnishee my salary, My attorney L, D, Knapper in
Ruston advised me to transfer the property to my sister
and so I did.
Q And you did this?
A Yes.
Q As you stated in your financial statement, without
consideration?
A Yes.
Q Now Exhibit “L” is the financial statement that
you prepared on February Ist, 1965, I believe.
Would you look at this?
[30] A Right here?
Q Yes.
Now this was signed on February Ist, 1965, is that
right, I believe?
Does that represent substantially the assets that you
held on December 23rd, 1964; in other words, excluding
the property you transferred to your sister on December
28rd, 1964?
You had no other property other than what is in that
statement?
A That’s right.
MR. McARDLE:
That’s all, Your Honor.
THE COURT:
Mrs. Mitchell, what was your college or university?
THE WITNESS:
Louisiana Polytech Institute in Ruston.
THE COURT:
Your degree?
THE WITNESS:
BS in Home Economics.
48
THE COURT:
Home Economics.
What is it you teach now?
THE WITNESS:
I am now teaching Speech.
THE COURT:
Speech?
THE WITNESS:
Yes.
. * * a
[3] RECROSS EXAMINATION
BY MR. McARDLE:
Q Mrs. Mitchell, you could write letters to the In-
ternal Revenue, could you not?
A It never occurred to me there was a need to write
letters to the Internal Revenue because I did not know
that returns had not been filed until I was so informed
in July of 1960.
Q You did not know that they had been filed either?
A No. But I had no reason to believe that they had
not been.
MR. McARDLE:
That’s all.
MR. KIRKPATRICK:
I have no further questions, Your Honor.
_
49
TAX COURT OF THE UNITED STATES
Docket No. 6740-66
Docket No. 6741-66
Filed: January 16, 1968
ANNE GOYNE MITCHELL,
JANE ISABELL GOYNE SIMS, PETITIONERS
versus
COMMISSIONER OF INTERNAL REVENUE, RESPONDENT
SECOND SUPPLEMENTAL STIPULATION OF FACT
IT IS HEREBY STIPULATED that, for the purpose
of this case, the following statement may be accepted as
fact and the exhibit referred to herein and attached
hereto is incorporated in this stipulation and made a
part hereof:
38. On September 18, 1961 Anne Goyne Mitchell re-
nounced the Community of Acquets and Gains formerly
existing between herself and Emmett Leon Mitchell, Jr.
39. Attached hereto and marked Exhibit R is the Act
of Renunciation of Community filed for Record in Con-
veyance Book 84 at Page 371 on September 19, 1961,
Lincoln Parish, Louisiana.
(Signed) Paut K. KIRKPATRICK, JR.
Paul K. Kirkpatrick, Jr.
Counsel for Petitioners
1000 Ouachita Bank
Monroe, Louisiana 71201
(Signed) LESTER R. URETz
Lester R. Uretz
Chief Counsel
Internal Revenue Service
EXHIBIT R
STATE OF LOUISIANA
PARISH OF LINCOLN
RENUNCIATION OF COMMUNITY
BE IT KNOWN AND REMEMBERED, That on this
18th day of September, 1961,
BEFORE ME, the ger att Notary Public in and
for Lincoln Parish, State of Louisiana, and in the pres-
ence of the undersigned legal and competent witnesses:
PERSONALLY CAMS AND APPEARED, ANNE
GOYNE MITCHELL, a resident of Lincoln Parish, Lou-
isiana, who has been married but once and then to
Emmett Leon Mitchell, Jr., from whom she has been
judicially separated, who declared that:
She was judicially separated from Emmett Leon
Mitchell, Jr., on September 14, 1961, by Judgment ren-
dered in the Third Judicial District Court of Louisiana
in and for Lincoln Parish, in proceedings numbered
18094, Civil Docket, styled “Anne Goyne Mitchell vs.
Emmett Leon Mitchell, Jr.”
Appearer desires and is entitled to exonerate herself
from the debts contracted during the marriage of Ap-
pearer and Emmett Leon Mitchell, Jr.
In accordance with the laws of the State of Louisiana,
and particularly Articles 2410 and 2415 of the Revised
Civil Code of Louisiana, Appearer has and does hereby
and herewith renounce the legal partnership of the Com-
munity of Acquets and Gains that formerly existed
between her and Emmett Leon Mitchell, Jr.
Appearer declared that she has not done or performed —
any acts whatsoever indicating an acceptance of said
Community of Acquets and Gains.
IN WITNESS WHEREOF, This Act of Renunciation
of Community has been executed by ANNE GOYNE
MITCHELL in the presence of the undersigned legal
51
and competent witnesses and Notary Public in Ruston,
Lincoln Parish, Louisiana, on the day, month and year
first hereinabove written, after due reading of the whole.
ATTEST:
/s/ GLENDA LAUTER
/8/ ANNE GOYNE MITCHELL
Anne Goyne Mitchell
/s/ L. D. NAPPER
Notary Public in and for
Lincoln Parish, Louisiana
IN THE TAX COURT OF THE UNITED STATES
Docket Nos. 6740-66, 6741-66
Filed January 27, 1969
ANNE GOYNE MITCHELL, PETITIONER
Vv.
COMMISSIONER OF INTERNAL REVENUE, RESPONDENT
JANE ISABELL GOYNE SIMS, PETITIONER
Vv.
COMMISSIONER OF INTERNAL REVENUE, RESPONDENT
1. Held, that under the community property laws of
Louisiana a wife has a present, vested interest in the
income of the community and is therefore under a duty
to make either a single or a joint return, and is liable
for the tax on one-half of community income; and this
is so, even though the wife subsequently renounces the
community of acquets and gains and _ takes nothing
therefrom. Held, further, that wife’s failure to file a
return was without reasonable cause and her failure to
pay the tax was negligent. Determined penalty for un-
derpayment of estimated tax is mandatory since statu-
—— ————
52
tory exceptions are not applicable, and such determina-
tion is upheld.
2. Parties agree that a prior assessment against wife
and her husband was invalid and void as against wife.
Held, the thrust of sec. 6404, I.R.C, 1954, is permissive,
not mandatory, and respondent was not required to abate
void assessment before making determinations herein.
3. Held, liability for tax on one-half of Louisiana
community income is upon wife, and consequently her
gratuitous transfer of her separate property to her sis-
ter, which transfer left her insolvent, makes the sister
liable as a transferee.
Paul K, Kirkpatrick, Jr., for the petitioners.
Bruce A. McArdle, for the respondent.
FORRESTER, Judge: In these consolidated cases re-
spondent has determined the following deficiencies in
identical amounts against Anne Goyne Mitchell, peti-
tioner in docket No. 6740-66, and against Jane Isabell
Goyne Sims, petitioner in docket No. 6741-66, as trans-
feree of the assets of Anne Goyne Mitchell:
Year Income tax Sec. 6651(a) Sec. 6653(a) Sec. 6654
1955 $ 323.00 $ 80.75 $ 16.15 0
1956 1,267.73 316.93 63.39 $ 35.49
1957 453.00 113.25 22.65 12.68
1958" 1,750.71 425.02 87.54 47.00
1959 871.34 173,24 43.57 17.27
4,665.78 1,109.19 233.30 112.44
* For the years 1958 and 1959 credit has been allowed for $50.65
and $178.37, respectively. These amounts represent withholding
from wages.
FINDINGS OF FACT
General
Some of the facts have been stipulated and are so
found. The stipulation and exhibits attached thereto are
incorporated herein by this reference.
Petitioner Anne Goyne Mitchell (hereinafter some-
times referred to as Anne) and petitioner Jane Isabell
Goyne Sims (hereinafter sometimes referred to as Jane)
53
each resided at Ruston, La., at the time of the filing of
their respective petitions herein. Anne and Jane are
sisters.
The issues for determination in docket No. 6740-66
are: (1) Whether Anne, on the basis of her interest
in community property under Louisiana law, is liable
for income taxes on a one-half portion of the community
income for the taxable years 1955 through 1959, inclu-
sive, and additions to the tax thereto under sections
6651(a),’ 6653(a), and 6654; (2) whether joint and
several assessments that were void and invalid against
Anne for Federal income taxes and additions thereto
for the years 1954 through 1959, and not abated by the
respondent, prevented determination of the deficiency
herein; and (3) whether Jane (docket No. 6741-66) is
liable as Anne’s transferee for the deficiencies determined
against her.
For convenience and clarity, we shall deal with each
of the above issues separately.
Issue 1. Liability for One-half of the Community Income
FINDINGS OF FACT
On or about September 22, 1946, Anne married Em-
mett L. Mitchell, Jr. (hereinafter sometimes referred
to as Emmett). Anne and Emmett were divorced on
October 11, 1962.
During the existence of the marriage between Anne
and Emmett, all of the income realized by either party
was community income. Throughout the marriage of
Anne and Emmett, finances were a constant source of
trouble and controversy. At no time during the course
of their marriage did Anne see her husband’s paycheck
or know how much money he made. Although Anne and
Emmett had a joint bank account, and although Anne,
with some degree of risk, drew checks on this account,
She was rarely aware of the balances therein.
Sometime in or after 1952, while Anne and Emmett
were residing at Monroe, La., Emmett rented a post
1 All references herein are to the Internal Revenue Code of
1954, unless otherwise stated.
oe 7
office box and retained the only key. Subsequent to the
rental of the post office box, no mail was delivered to
the Mitchell’s home. When the Mitchells moved to Rus-
ton, La., in 1956, Emmett again rented a post office
box, and Anne was only aware of those bills and bank
statements that Emmett chose to bring home. Emmett
was financially irresponsible and Anne frequently at-
tempted to bring to his attention those obligations she
was aware of and that “needed to be taken care of in
a financial way.”
Anne was aware of her husband’s fiscal irresponsi-
bility, and repeatedly questioned him each year about
the preparation of income tax returns. She believed that
Emmett would file returns because of the consequences
if he did not, which she assumed “would be immediate,”
but she was concerned about the returns being filed on
time. Anne was led to believe that income tax returns
were filed each year, because Emmett told her about
getting help from Mr. Albritton, who was an accountant
in Farmerville, Emmett’s hometown; and securing the
additional money allegedly needed to pay the taxes. Anne
assumed not only that returns had been filed but that
her signature had been affixed thereto by her husband.
No income tax returns, however, were filed by either
Anne or Emmett for the taxable years 1954 through
1959.
During 1955 and 1956 Anne was employed as a teacher
by St. Paul’s Methodist Church, receiving as salary (her
community one-half) $1,350 and $750 respectively. Her
actual receipts in such years were $2,700 and $1,500.
As a result of Emmett’s continuing financial irrespon-
sibility, Anne and Emmett began living separate and
apart in July 1960. On or about August 4, 1961 Anne
filed suit for separation from bed and board against
Emmett, praying that, under Louisiana law, she be al-
lowed to accept the community of acquets and gains
with benefit of inventory. She was granted a separation
from bed and board a mensa et thoro, against Emmett
by default, on or about September 14, 1961. On Septem-
ber 18, 1961, she renounced the community of acquets
and gains formerly existing between herself and Em-
55
mett, and on or about October 11, 1962, she was granted
a judgment of divorce a vinculo matrimonii.
Upon the dissolution of the community of acquets and
gains between Anne and Emmett, she received neither
a distribution of community property nor a property
settlement. Respondent, in his notice of deficiency, de-
termined deficiencies against Anne for one-half of the
community income for the tax years 1955 through 1959,
and additions thereto under sections 6651(a ), 6653(a),
and 6654.
OPINION
in the case before us we are asked to decide whether
in Louisiana, a community property State, one spouse
is liable for the tax on one-half of all the income of
the community irrespective of whose efforts produced
the income for the community. In other words, in the
absence of joint returns must one Louisiana spouse re-
port one-half of the community income even though such
income was earned by the efforts of the other spouse.
We hold that each spouse in Louisiana is responsible
for tax on one-half of the community income regardless
of whose efforts produced it.
In 1930, the U.S. Supreme Court decided that the
community property laws in the States of Washington,
Arizona, Texas, and Louisiana “entitled [a husband and
wife] to file separate returns each treating one-half of
the community income as his or her respective income.” 2
Poe v. Seaborn, 282 U.S. 101 (1930) ; Goodell y. Koch,
282 U.S. 118 (1930); Hopkins v. Bacon, 282 U.S. 122
(1930); Bender v. Pfaff, 282 U.S. 127 (1930).
In United States v. Malcolm, 282 U.S. 792 ( 1931),
the Court of Appeals for the Ninth Circuit had requested
instructions from the Supreme Court on the following
questions of law:
*For almost 18 years income earned by a spouse who was
domiciled in a community property State enjoyed the tax bene-
fits of income splitting. In 1948 Congress, realizing the patent
inequities between the marital unit in a community property
State and a common-law State, amended the 1939 Internal Revenue
Code by adding what is presently sec. 6013.
56
1. Under the applicable provisions of the Peve-
nue Act of 1928 must the entire community income
of a husband and wife domiciled in California be
returned and the income tax thereon be paid by
the husband?
2. Has the wife, under §161(a) of the Civil
Code of California such an interest in the commu-
nity income that she should Separately report and
pay tax on one-half of such income?
In a per curiam opinion the Supreme Court answered
the first question “no” and answered the second question
“yes,” citing Poe v. Seaborn, supra; Goodell v. Koch,
supra; and Hopkins v. Bacon, supra.
Although Poe v. Seaborn and the related community
property cases decided in 1930 stated that a husband
and wife were entitled to file joint returns, it wasn’t
until our decision in Paul Cavanagh, 42 B.T.A. 1037
(1940), affd. 125 F. 2d 366 (C.A. 9, 1942), that it was
decided she had a duty to return one-half of the com-
munity income. In Cavanaugh, we interpreted both the
decision of United States v. Malcolm, supra, and section
22(a) of the 1934 Revenue Act (now sec. 61) to hold
that a wife in California could not, at her option, ro.
turn one-half of the income of the community, stating
at pages 1043-1044:
Gross income, as defined in section 22(a) of the
Revenue Act of 1934, 48 Stat. 680, ch. 277, includes
“income derived from * * * dealings in property,
whether real or personal, growing out of the owner-
ship or * * * interest in such property, * * * or
gains or profits and income derived from any source
whatever * * *.” Such income must be reported by
the individual to whom the statute attributes it.
Clearly, therefore, the petitioner’s wife is taxable
on one-half of the community income. She is the
owner thereof, although not entitled to present pos-
session. This appears to be the inescapable conclu-
sion to be drawn from the Supreme Court’s opinion
in the Malcolm case, supra,
57
Consequently, there is no longer the situation
whereunder the wife may at her option return one-
half of the income. Since she now must do so, it
follows that the petitioner is taxable only on the
other half of the entire community property. There-
fore, as to the second issue in this proceeding the
Board holds in favor of the petitioner.
Again in Marjorie Hunt, 22 T.C. 228 (1954), we held,
under the community property laws of California, that
a spouse was liable for taxes on her one-half of the
community income.
In the instant case we are concerned with the com-
munity property laws of Louisiana. Petitioners argue
. that: (1) Under Louisiana community property laws
the wife dces not have a sufficient interest in the com-
munity property to make her liable for tax on one-half
of its income; (2) Federal income taxes are community
debts for which the husband is liable and a wife who
renounces the community of acquets and gains is not
liable for income taxes on community property; and (3)
it would be unconstitutional to collect the community’s
taxes from a spouse who neither received community
income nor voluntarily assumed the indebtedness.
We recognize that under the Louisiana community
property system decisions may be found supporting the
proposition that a wife has only an expectancy in the
community property. See “Nature of the Wife’s Interest
During the Existence of the Community,” 25 La. L. Rev.
159, 179-180 (1964); however, since the decision of
Phillips v. Phillips, 160 La. 813, 107 So. 584 (1926),
the weight of authority in Louisiana has favored an
ownership concept. Bender y. Pfaff, supra. We deem it
proper to follow this authority. See Commissioner v.
Estate of Bosch, 387 U.S. 456 (1967).
SIn this case the Supreme Court of Louiisana said, 107 So. at
588: “The wife’s half interest in the community property is not a
mere expectancy during the marriage: * * * The title for half of
the community propery is vested in the wife the moment it is
acquired by the community * * *, even though it be acquired in the
name of only one of them.”
58
We think that the laws of Louisiana are overwhelm-
ing in their characterization of the wife’s interest as
more than a mere expectancy. The Louisiana Civil Code
provides, inter alia, that “Every marriage * * * super-
induces of right partnership or community of acquets
or gains, if there be no stipulation to the contrary” ;*
that a wife may bring an action against the heirs of
her husband for a fraudulent disposition of the common
property;* that she may petition for a separation of
property when, due to her husband’s mismanagement,
her dowry is in danger or when, because of the dis-
orderly conduct of her husband's affairs, she believes
that his estate may not be sufficient to meet her rights
and claims."
We find that petitioners’ position on this point is un-
tenable and accordingly we hold that in Louisiana a
wife has such rights, claims, and powers in the prop-
erty of the marital community as are equivalent to own-
ership, and that she is responsible for the tax on one
half of the community income.
Petitioners contend that Anne's renunciation of the
community of acquets and gains, on September 18, 1961,
exonerated her from liability for Federal income taxes.
In support of such contention they refer us to articles
2410 and 24117 of the Louisiana Civil Code; Stu ffler vy.
*La. Civ. Code Am. art. 2399 (West 1951).
Messersmith, 229 La. 495, 86 So. 2d 169 (1956).
* La, Civ, Code Ann. art. 2404 (West 1951).
pen, 231 La. 206, 91 So. 2d 12 (1956).
Messersmith vy.
Thigpen v. Thig-
* La. Civ. Code Ann. art. 2425 (West 1951). Brown & Learned
Vv. Smyth, 40 La. Ann. 325, 4 So, 300 (1888).
* Art. 2410. Exoneration of wife or
community.
Art. 2410. Both the wife and her heirs or assigns have the
Privilege of being able to exonerate themselves from the debts
contracted during the marriage, by renouncing the partnership or
community of gains.
Art. 2411. Rights of renouncing wife.
Art. 2411. The wife, who renounces, loses every sort of right
to the effects of the partnership or community of gains.
But she takes back all her effects, whether dotal or extradotal.
heirs by renunciation of
Puckett, 30 La. Ann. 811 (1878); and Brassac vy. Du-
eros, 4 Rob. 335 (1843),
These cases and statutes stand for the proposition
that a wife and her heirs or assigns may “exonerate
themselves from the debts contracted during the mar-
riage by renouncing the partnership or community of
gains.” (Emphasis supplied.)
The complete answer is that the income tax is not
a debt created by contract, Bender vy. Pfaff, 38 F. 2a
649 (C.A, 5, 1930), and further, that Anne’s renuncia-
tion came long after her liabilities for the annual in-
come taxes here in issue had attached. The wife in
Louisiana does not have an option to assume the tax
liability resulting from the income of the community.
Smith v. Donnelly, 65 F. Supp. 415, 417 (E.D. La.
1946); Saenger y, Commissioner, 69 F. 2d 683 ( C.A, 5,
1934), affirming 28 B.T.A. 377 (1933); Commissioner
v. Hyman, 135 F. 2d 49 (CA, 5, 1943), affirming 46
B.T.A. 992 (1942),
Petitioners suggest that it would be unconstitutional
to collect the community’s taxes from a spouse who nei-
ther received community property, nor voluntarily as-
sumed the indebtedness.
We are not unmindful that the Federal tax obliga-
tions of a wife in a community property State may be
greater than those of her sister in a common-law State.
But, this is not always the case for we hold only that
the wife in a community property State must account
for one-half of the community income, regardless of
whose efforts produced such income,
Over a third of a century has elapsed since the Sv-
preme Court decided Poe v. Seaborn, supra, wherein the
Court, in passing upon the constitutional aspects of
splitting community income, stated at pages 117-118:
Finally the argument is pressed upon us that the
Commissioner’s ruling will work uniformity of in-
cidence and operation of the tax in the various
states, while the view urged by the taxpayer will
make the tax fal] unevenly upon married people.
This argument cuts both ways. When it is remem-
bered that a wife’s earnings are a part of the com-
munity property equally with her husband's, it may
well seem to those who live in states where a wife’s
earnings are her own, that it would not tend to
promote uniformity to tax the husband on her earn-
ings as part of his income. The answer to such
_ argument, however, is, that the constitutional re-
quirement of uniformity is not intrinsic, but geo-
graphic. * * * [citations] And differences of state
law, which may bring a person within or without
the category designated by Congress as taxable, may
not be read into the Revenue Act to spell out a lack
of uniformity. * * *
We find no reason why the constitutional precepts of
Poe v. Seaborn, that were applicable in permitting com-
munity income to be split, should not be applicable in
requiring the spouse to report and pay her tax on one-
half of the community income.
In addition to the deficiency for one-half of the tax
on the community income, respondent determined penal-
ties against Anne under sections 6651(a) and 6653(a)
for failure to file a tax return and for failure to pay
the tax. Section 6651 (a) provides for a 5-percent pen-
alty per month of the tax due, but not in excess of 25
percent for failure to file a tax return “unless it is
shown that such failure is due to reasonable cause and
not due to willful neglect.” We do not find willful neg-
lect in the instant case; however, it is well settled that
a penalty under section 6651(a) is avoided only when
there is, in addition to the absence of willful neglect, a
reasonable cause. Charles E. Pearsall & Son, 29 B.T.A.
747, 749 (1934).
Petitioners argue that Anne had reasonable cause and
that she was “not negligent unless she was under some
affirmative duty to doubt her husband and independently
verify his statements.” We are Sympathetic to Anne’s
plight; however, we believe that she did not have rea-
sonable cause. Anne neither saw the returns nor signed
her name to them. It was certainly not reasonable sim-
ply to assume that her husband had signed her name to
61
the returns, especially we! she did not even attempt
to verify the existence of 52/4 returns. As we said in
Leo Sanders, 21 T.C. 2, 1020 (1954), affd. 225 F.
2d 629 (C.A. 10, 19g5). certiorari denied 350 U.S. 967
(1956) :
A wife required to file a return because of in-
come of her husband {!” # community property State
or who joins in a jeiMt return can not shed the
responsibility for delinquency by saying that she
relied entirely upon her husband, not a specially
qualified tax authoritY) Otherwise Congress would
be frustrated in the PUrpose behind section * * *
[6651 (a) }.
We find that Anne is a/8° liable for the penalties im-
posed under section 6653(2)- This section provides for
a 5-percent penalty on a deficiency when said deficiency,
resulting from an underp2Yment, is due either to “neg-
ligence or intentional disre&4’d of rules and regulations
(but without intent to deffaud).” T"2 penalty imposed
under this section is upon the total underpayment even
though only part of the underpayment is due to negli-
gence,* and the burden of Proving that no part of the
underpayment was due to Negligence is upon petitioner.
Terry C. Rosano, 46 T.C. 681, 688 (1966).
Anne was under a duty to make either individual or
joint income tax returns, 8¢¢s. 6012 and 6013, and to
pay a tax on her community one-half of the taxable
income shown on these réturns, secs. 1 and 2. Anne’s
failure to pay income taxes resulted from her failure
to file returns and we have found that Anne demon-
strated a lack of due care in assuming that her husband
prepared and signed her name to these putative returns.
* SEC. 6658. FAILURE To PAY TAX.
(a) NEGLIGENCE OR INTENTIONAL DISREGARD OF RULES AND
REGULATIONS WITH Respect 7° INCOME oR GIFT Taxes.—If any
part of any underpayment * * * is due to negligence or intentional
disregard of rules and regulations (but without intent to defraud),
there shall be added to the tax 49 amount equal to 5 percent of the
underpayment.
62
Anne’s conduct in failing to file income tax returns was
also responsible for her failure to pay income taxes for
the years in question. Therefore, we hold that Anne
was negligent, and is liable for the 5-percent penalty on
her share of the community income.
Respondent in his notice of deficiency determined that
Anne was liable for additions to the tax under section
6654, which provides for an addition to the tax in the
case of any underpayment of estimated tax by an indi-
vidual. This section is mandatory unless certain excep-
tions (none of which are applicable in the instant case)
relating to prior year’s taxes, or payments, are complied
with. It does not provide relief upon a showing of rea-
sonable cause, lack of willful neglect, or extenuating cir-
cumstances. Estate of Barney Ruben, 33 T.C. 1071
(1960).
Anne does not come within any of the exceptions to
section 6654 and is therefore responsible for additions
to the tax under that section.
Issue 2. Existence of a Deficiency
FINDINGS OF Fact
Emmett and Anne did not file Federal income tax
returns, either jointly or Separately, for any of the tax-
able years 1954 through 1959. Form 870, “Waiver of
Restrictions on Assessment and Collection of Deficiency
in Tax and Acceptance of Overassessment,” covering
these 6 taxable years was executed by Emmett on or
about January 11, 1961. The execution of this form by
Emmett permitted the Commissioner to make an assess-
ment without complying with the time and notice (90
day) requirements of section 6213. The Federal income
tax liabilities indicated on said Form 870 for all of the
said taxable years were determined pursuant to the
rates applicable to joint return filings. Predicated on
the Form 870 executed by Emmett, Federal income taxes
and penalties were jointly assessed on March 10, 1961,
against both Anne and Emmett for the taxable years
1954 through 1959, inclusive.
68
The March 10, 1961, assessments were made without
notice to, or the knowledge of Anne. Anne neither
granted Emmett actual or implicd consent nor authority
or power to legally bind her to the Form 870. Anne
neither acquiesced nor consented to being a participant
or partner in the Form 870; nor did she consent or ac-
quiesce to being obligate or bound by such Form 870 or
any subsequent assessments thereunder.
Respondent concedes that the above joint and several
assessments of Federal income taxes and additions to
the tax, relative to the years 1954 through 1959 were
invalid and void as against Anne.
Form 870, “Waiver of Restrictions on Assessment and
Collection of Deficiency in Tax and Acceptance of Over-
assessment,”” covering the taxable year 1954 was exe-
cuted by Anne on August 4, 1965. Predicated on such
waiver, the Federal income tax, penalties, and interest
were individually assessed against her for the taxable
year 1954 on August 16, 1965, in the amount of $550.87.
On December 30, 1966, Anne filed a claim for refund
for the above amount and on July 25, 1967, brought a
refund action in the U.S. District Court for the Western
District of Louisiana based upon her claim, which action
is still pending.
On September 27, 1967, procedures of abatement were
executed by the Internal Revenue Service with respect
to the assessment of Federal income taxes, penalties,
and interest, made on March 10, 1961, as it applied, in
entirety, to Anne for the taxable years 1955 through
1959. On the same date, procedures of abatement were
also executed by the Internal Revenue Service, with re-
spect to the aforementioned assessment as it applied to
Emmett, down to an amount which reflected the Federal
income taxes, penalties, and interest against his one-
half portion of the community income for the taxable
years 1955 through 1959, inclusive.
OPINION
Petitioners argue that no deficiency exists under sec-
tion 6211 (Definition of a Deficiency) because the re-
Some an —
64
spondent failed to abate the assessment made against
Anne on March 10, 1961, pursuant to the execution of
the waiver agreement (Form 870) executed by her hus-
band on January 11, 1961. Respondent agrees that the
assessments made on March 10, 1961, were invalid and
void as against Anne.
As we understand petitioners, it is their contention
that the void assessment must be abated by the respond-
ent under section 6404 before there can be a valid defi-
ciency under section 6211, since no deficiency can exist
if the determination of the tax due is less than the
amount previously assessed. We disagree.
As we read both the statute and the regulations pro-
mulgated under section 6211 and 6404, we find that the
Secretary or his delegate is not required to abate an
invalid and void assessment in order to assert a defi-
ciency. Of course there may be a question as to whether
an assessment is invalid and void, but in the instant
case petitioners and respondent are both in agreement
on this point. “Section 6404 does not impose a duty on
the District Director to abate improper assessments * * *,
Its thrust is permissive, not mandatory.” Poretto y.
Usry, 295 F. 2d 499, 501 (C.A. 5, 1961).
The fact that the assessment may have been valid
against Emmett is of no consequence in the instant case,
when Anne neither consented to the execution of Form
870 nor authorized Emmett to act on her behalf. Cf.
Marie A. Dolan, 44 T.C. 420 (1965).
We hold that a valid and proper determination was
made herein as against Anne.
Issue 3. Transferee Liability
FINDINGS OF FACT
Anniebel Taylor Goyne (hereinafter sometimes re-
ferred to as Anniebel), mother of Anne and Jane, died
on November 5, 1964. On December 23, 1964, Anne
conveyed all of the real estate inherited by her from
her mother, to Jane.
65
On November 14, 1964, $2,402.78 was transferred
from the account of Anniebel with the Ruston Building
& Loan Association, to Anne’s account with that same
association. On December 23, 1964, Anne withdrew
$2,676.81, the balance of her account, from the Ruston
Building & Loan Association, and transferred to her
sister, Jane, $1,721.21.
The above transfers to Jane were made without con-
sideration, and there was no agreement between Anne
and Jane for any retransfer.
On February 1, 1965, Anne executed Form 433-AB
(“Statement of Financial Condition and Other Informa-
tion”) showing assets of $2,250 and liabilities of
$1,081.20, exclusive of the deficiencies determined here-
in. A supporting statement to such Form 433-AB reads
in part:
On December 23, 1964 [I] transferred to my
sister, Mrs. Jane G. Sims, without consideration
the following:
I. My undivided one-half interest in the follow-
ing real property which was acquired by inheritance
from my mother in November, 1964:
* * * a
Value of my
one-half interest
in mother’s
succession
Description:
Total value of real property $9,550.00
II. Cash in savings account in Ruston Building
& Loan Association, Ruston, La., $1,721.21.
The foregoing assets were transferred to my sis-
ter on the recommendation of my attorney who had
just closed my mother’s succession in November,
1964, approximately one month prior to receipt on
December 19, 1964, of the Final Notice Before
Seizure for 1954 income tax.
Prior to closing my mother’s succession, I dis-
cussed with my attorney the matter of the income
66
tax liability for 1954 through 1959. He advised
that I could renounce my interest in the succession
and thus pass my interest in mother’s estate di-
rectly to my two children. However, as it had been
over two years since I was contacted by Internal
Revenue Agent, Deuel C. Smith, in regard to Sign-
ing with my former husband on his Offer in Com-
promise, and I had heard nothing since, he felt that
the matter was settled and therefore put me in
possession. Then, after I received the Notice on
December 19, 1964, he felt that to protect my in-
terest, the foregoing assets should be transferred
which would leave me in the same financial status
as if I had renounced my interest in mother’s estate.
OPINION
Respondent in his notice of deficiency to Jane, deter-
mined that she was liable as a transferee of property
from Anne for deficiencies in income taxes and the addi-
tions thereto determined against Anne and the taxable
years 1955 through 1959,
Petitioners do not contest any of the basic facts, or
Jane’s liability as a transferee, except to argue:
[Anne’s] transfer was of her separate property.
Since the liability for income taxes on the commu-
nity income was a community debt which she
[Anne] could not be required to satisfy out of her
Separate property, in view of her nonacceptance of
the community; her transfer of separate property
to Mrs. Sims cannot be said to * * * [constitute
her] a transferee.
This is the identical argument made by the petitioners
in issue 1, and we reject it for the reasons there ex-
pressed. Jane’s liability as transferee will be computed
in conformity with our holdings on the other issues.
Decisions will be entered under Rule 50.
67
DECISION
TAX COURT OF THE UNITED STATES
Filed: March 19, 1969
Docket No. 6740-66
ANNE GOYNE MITCHELL, PETITIONER
versus
COMMISSIONER OF INTERNAL REVENUE, RESPONDFNT
Pursuant to the opinion of the Court filed January
27, 1969, and incorporating herein the facts recited in
the respondent’s computation as the findings of the
Court, it is
ORDERED and DECIDED: That there are deficien-
cies and additions to the tax due from the petitioner as
follows:
Addition to Tax eae
Sec. 6651(a) Sec. 6653(a) Sec. 6654
Year Income Tax 1954 Code 1954 Code 1954 Code
1955 $ 323.00 $ 80.75 $16.15 $ —
1956 1,267.73 316.93 63.39 35.49
1957 453.00 113.25 22.65 12.68
1958 1,750.71 425.02 87.54 47.00
1959 871.34 173.24 43.57 17.27
/s/ BRUCE M. FORRESTER
Judge
Entered: Mar. 19, 1969
* * * *
It is hereby stipulated that the foregoing decision is
in accordance with the opinion of the Court and the
respondent’s computation, and that the Court may enter
this decision, without prejudice to the right of either
68
party to contest the correctness of the decision entered
herein.
(Signed) PAUL K. KIRKPATRICK, JR.
Paul K. Kirkpatrick, Jr.
Counsel for Petitioner
(Signed) RicHarD M. HAHN
Richard M. Hahn
Acting Chief Counsel
Internal Revenue Service
1957
Income Tax $ 453.00
Addition to tax (Sec. 6651(a), 1954 Code) 113.25
Addition to tax (Sec. 6653(a), 1954 Code) 22.65
Addition to tax (Sec. 6654, 1954 Code) 12.68
Liability $ 601.58
plus interest on the above liability as provided by law
from December 23, 1964, to the date of payment.
1958
Income Tax $1,700.06
Addition to tax (Sec. 6651(a), 1954 Code) 425.02
Addition to tax (Sec. 6653(a), 1954 Code) 87.54
Addition to tax (Sec. 654, 1954 Code) 47.00
Liability $2,259.62
plus interest on the above liability as provided by law
from December 28, 1964, to the date of payment.
1959
Income Tax $ 692.97
Addition to tax (Sec. 6651(a), 1954 Code) 173.24
Addition to tax (Sec. 6653(a), 1954 Code) 43.57
Addition to tax (Sec. 6654, 1954 Code) 17.27
Liability $ 927.05
69
plus interest on the above liability as provided by law
from December 23, 1964, to the date of payment.
/s/ BRUCE M. FORRESTER
Judge
Entered: Mar. 19, 1969
* os * *
It is hereby stipulated that the foregoing decision is
in accordance with the opinion of the Court and the
respondent’s computation, and that the Court may enter
this decision, without prejudice to the right of either
party to contest the correctness of the decision entered
herein.
(Signed) PAUL K. KIRKPATRICK, JR.
Paul K. Kirkpatrick, Jr.
Counsel for Petitioner
(Signed) RicHARD M. HAHN
Richard M. Hahn
Acting Chief Counsel
Internal Revenue Service
—
70
TAX COURT OF THE UNITED STATES
Docket No. 6741-66
Filed: March 19, 1969
JANE ISABELL GOYNE SIMS, PETITIONER
versus
COMMISSIONER OF INTERNAL REVENUE, RESPONDENT
DECISION
Pursuant to the opinion of the Court filed January
27, 1969, and incorporating herein the facts recited in
the respondent’s computation as the findings of the
Court, it is
ORDERED and DECIDED: That the following state-
ment shows the liabilities due from the petitioner as
transferee of assets of Anne Goyne Mitchell, Ruston,
Louisiana, transferor, for unpaid income taxes and ad-
ditions to tax of the transferor for the taxable years
1955, 1956, 1957, 1958 and 1959:
1955
Income Tax $ 823.00
Addition to tax (Sec. 6651(a), 1954 Code) 80.75
Addition to tax (Sec, 6658(a), 1954 Code) 16.15
Liability $ 419.90
plus interest on the above liability as provided by law
from December 23, 1964, to the date of payment.
1956
Income Tax $1,267.73
Addition to tax (Sec. 6651(a), 1954 Code) 316.93
Addition to tax (Sec. 6653(a), 1954 Code) 63.39
Addition to tax (Sec. 6654, 1954 Code) 35.49
Liability $1,683.54
plus interest on the above liability as provided by law
from December 23, 1964, to the date of payment.
71
TAX COURT OF THE UNITED STATES
WASHINGTON, D.C.
Docket No. 6740-66
Filed: June 16, 1969
ANNE GOYNE MITCHELL, PETITIONER
Versus
COMMISSIONER OF INTERNAL REVENUE, RESPONDENT
NOTICE OF APPEAL
Notice is hereby given that Anne Goyne Mitchell here-
by appeals to the United States Court of Appeals for
the Fifth Circuit from the decision of this court entered
on the 19th of March, 1969.
(Signed) PauL K. KIRKPATRICK, JR.
Paul K. Kirkpatrick, Jr.
Hudson, Potts & Bernstein
1000 Ouachita National Bank
Building
Counsel for Anne Goyne
Mitchell
TAX COURT OF THE UNITED STATES
WASHINGTON, D.C.
Docket No. 6741-66
Filed: June 16, 1969
JANE ISABELL GOYNE SIMS, PETITIONER
versus
COMMISSIONER OF INTERNAL REVENUE, RESPONDENT
NOTICE OF APPEAL
Notice is hereby given that Jane Isabell Goyne Sims
hereby appeals to the United States Court of Appeals
for the Fifth Circuit from the decision of this court
entered on the 19th day of March, 1969.
(Signed) Paut K. KIRKPATRICK, Jr.
Paul K. Kirkpatrick, Jr.
Hudson, Potts & Bernstein
1000 Ouachita National Bank
Building
Counsel for Jane Isabell
Goyne Sims
73
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 28163
ANNE GOYNE MITCHELL, PETITIONER-APPELLANT
-&,
COMMISSIONER OF INTERNAL REVENUE,
RESPONDENT-APPELLEE
JANE ISABELL GOYNE SIMS, PETITIONER-APPELLANT
vw.
COMMISSIONER OF INTERNAL REVENUE,
RESPONDENT-APPELLEE
Appeals From the Decisions of the Tax Court
of the United States (Louisiana Case)
(June 23, 1970)
Before AINSWORTH, DYER and SIMPSON, Circuit Judges
DYER, Circuit Judge: These appeals from the Tax
Court involve the question of a wife’s liability out of
her separate property for federal income taxes on com-
munity income earned when she and her husband were
residents and domiciliaries of Louisiana, a community
property state. The Tax Court held that the wife is
liable for the tax on one-half of all the community in-
come regardless of whose efforts produced the income
for the community and even though the wife did not
file a return, renounced the community and received
none of the community property upon the dissolution of
the community. The Tax Court also held the wife liable
for statutory penalties imposed by §§ 6651, 6653 and
6654 of the Internal Revenue Code of 1954.' The Court
‘Penalties under §6651(a) are imposed for failure to file a
return, under § 6653(a) for negligent failure to pay taxes that
are due, and under § 6654 for failure to file estimated tax returns
and pay the estimated taxes.
Siticinasiiininensiesisenieniiciasensivatsiiaiibdl
74
further held the transferee of the wife’s separate prop-
erty liable for the taxes under § 6901 of the Code. We
disagree on the initial question of the wife’s liability for
the taxes and therefore reverse on all issues.
Anne and Emmett Mitchell were married on Septem-
ber 22, 1946. During the taxable years in question they
lived under the Louisiana community of acquets and
gains. For the taxable years beginning January 1, 1955,
and ending on December 31, 1959, neither Mrs. Mitchell
nor her husband filed federal income tax returns. Dur-
ing 1955 and 1956 Mrs. Mitchell was employed ¢s a
teacher and received salaries of $2700 and $1500 for
the respective years. Income taxes were withheld from
this income. It was stipulated that during the years in
question all the income earned by both Mrs. Mitchell
and her husband constituted community income and the
amount of this income is not in dispute. The Tax Court
found as a matter of fact that Mrs. Mitchell did not
know of her husband’s finances and relied upon his as-
surances that their tax returns were timely filed and
their taxes properly paid. She assumed that he signed
her name to the income tax returns.
Mrs. Mitchell began living apart from her husband
in July, 1960. On March 10, 1961, the Commissioner
assessed income taxes and penalties against Mr. and
Mrs. Mitchell. It was stipulated that Mrs. Mitchell did
not receive or have knowledge of this assessment. On
September 4, 1961, Mr. and Mrs. Mitchell were judici-
ally separated and on September 18, 1961, Mrs. Mitchell
renounced the community of acquets and gains pursu-
ant to Article 2410 of the Louisiana Civil Code? Mr.
and Mrs. Mitchell were divorced on October 11, 1962.
In 1964 Mrs. Mitchell inherited an undivided interest
in her mother’s estate. On December 23, 1964, she trans-
ferred this interest to her sister, Mrs. Jane Sims, with-
out consideration. Thereafter, on September 30, 1966,
* Article 2410 provides: “Both the wife and her heirs or assigns
have the privilege of being able to exonerate themselves from
the debts contracted during the marriage, by renouncing the part-
nership or community of gains.”
75
the Cominissioner determined that additional deficiencies
existed.
The Tax Court held that under the Louisiana com-
munity property system the wife has such rights, claims
and powers in the property and income of the marital
community as are equivalent to ownership. This owner-
ship interest made Mrs. Mitchell liable for one-nalf of
the tax due on the community income for the period in -
question. The Court held that her renunciation of the
community did not affect the tax liability because it read
Article 2410 of the Louisiana Code as allowing the wife
to exonerate herself solely from contractual debts of the
community, whereas the tax liability was imposed by
law.
The Tax Court also held Mrs. Mitchell liable for the
penalties imposed by § 6651(a) of the 1954 Code for
failure to file tax returns for the years in question be-
cause she did not have reasonable cause to rely on her
husband’s assertions that he had filed the returns. Pen-
alties under § 6653(a) were also assessed because the
Tax Court held that she acted negligently in failing to
pay taxes that were due, The Tax Court further im-
posed penalties under § 6654 for failing to file estimated
tax returns and pay the estimated taxes for each of the
years 1955 through 19593
It was stipulated by both parties in the Tax Court
that if Mrs. Mitchell Were liable out of her separate
property then the transferee without consideration of
* The Court determined the total liabilities for the years in ques-
tion as follows:
Addition to tax
Year Income tax §6651(a) §6653(a) _-§ 6654
1955 $ 323.00 $ 80.75 $16.15 _
1956 1,267.73 316.98 63.39 $35.49
1957 453.00 118.25 22.65 12.68
1958 1,750.71 425.02 87.54 47.00
1959 871.34 173.24 48.57 17.27
plus interest on the above liabilities on provided by law f
cember 23, 1964, to the date of paym og y law from De-
_
76
that property would likewise be liable. The Tax Court
therefore found Mrs. Sims, the transferee, liable.
It is, of course, incumbent on us to examine Louisiana
law to determine the nature and extent of the commu-
nity interest owned by the wife because the state law
determination of this interest is binding on federal
courts in the adjudication of federal tax controversies,
Poe v. Seaborn, 1930, 282 U.S. 101, 51 S. Ct. 58, 75
L, Ed. 239; Bender v. Pfaff, 1930, 282 U.S. 127, 51 §.
Ct. 64, 75 L. Ed. 252; see also Commissioner v. Estate
of Bosch, 1967, 387 U.S. 456, 87 S. Ct. 1776, 18 L. Ed.
2d 886, and Commissioner v. Hyman, 5 Cir. 1948, 185
F. 2d 49.
Under Louisiana law the wife has a prevent, vested
ownership interest in one-half of the community prop-
erty, including its income. United States Fidelity and
Guaranty Co. v. Green, 252 La. 227, 210 So. 2d 328
(1968) ; Phillips v. Phillips, 160 La. 813, 107 So. 584
(1926). Because of this vested interest in the income
the Commissioner contends that Mrs. Mitchell is liable
individually, and out of her separate property, for in-
come taxes on one-half of the community’s income. How-
ever, the bare characterization of this ownership inter-
est as vested is not determinative of the issue. Under
the law of Louisiana the wife does not own the income
in a separate capacity. She owns the income only deriva-
tively through her one-half ownership interest in the
community. It is the community which owns the income
and owes the community debts. Poe vy. Seaborn, supra;
Bender v. Pfaff, supra; Messersmith v. Messersmith, 229
La. 495, 86 So. 2d. 169 (1956).
If the community owns the income it also owes the
tax since it is axiomatic that income is taxed to the
owner thereof. Helvering vy. Horst, 1940, 311 U.S. 112,
61 S. Ct. 144, 85 L, Ed. 75. The Commissioner contends
that the liability for income taxes is not a community
debt. However, the Supreme Court of Louisiana held to
the contrary in Messersmith vy. Messersmith, supra,
where the court said: “[{A]ll sums expended for income
tax * * * must be held to be debts of the community
77
and to be payable out of community funds.” Jd. at 176.
See also Tate v. Tate, 12 So. 2d 506 (La. Ct. App. 1948).
Note, Creditor’s Rights, 25 La. L. Rev. 201 (1964). The
question then is whether we should “look through” the
community concept and hold the wife liable for a com-
munity debt because she is the owner of an interest in
the community.
The wife does not have control or management of the
community property until dissolution of the community.
Agar v. Agar, 239 La. 941, 120 So. 2d 485 (1960) and
this is true even if the husband is absent from the home.
Grandeson v. International Harvester Credit Corp., 223
La. 504, 66 So. 2d 317 (1953). During the existence of
the community the husband can alienate the property
without her consent. La. Civ. Code Article 2404; Pitre
v. Pitre, 247 La. 594, 172 So. 2d 693 (1965). As a
corollary of his almost exclusive control over the com-
munity property the nature of the wife’s interest in the
community is such that the burdens cannot, unless she
expressly binds herself, be satisfied out of her separate
property. La. Civ. Code Article 2403. It is only when
the community is dissolved and she does not renounce
the community that the nature of her interest becomes
such that it can burden her separate property. Beal v.
Ward, 13 La. App. 191, 127 So. 423, 1930. Therefore,
since income taxes on community income are community
debts, Messersmith, supra, the wife’s renunciation of the
community is not academic. Mrs. Mitchell was not at-
tempting to relieve herself of a debt which she had al-
ready incurred, as the Government argues, but was
avoiding the assumption of a liability which was the
liability of the community and which was to be acquitted
out of community funds.
Article 2403 of the Louisiana Civil Code establishes
the principle that there are separate debts and commu-
nity debts which must be acquitted out of the respective
funds:
[T]he debts contracted during the marriage enter
into the partnership or community of gains, and
must be acquitted out of the common fund, whilst
oe 9 eto a
78
the debts of both husband and wife, anterior to the
marriage, must be acquitted out of their own per-
sonal and individual effects.
App. 1960); accord, Personal Finance, Inc. v. Simms,
148 So, 2d 176 (La. Ct. App. 1962); Brock Furniture
Co. v. Carroll, 86 So. 2d 715 (La. Ct. App. 1956).
Although the community is not a taxpayer the courts
have recognized the underlying concept of the community
as an entity in tax cases. Commissi v. Chase Man-
alet,
E.D. La. 1952, 104 F, Supp. 20, affd 202 F. 2d 433,
cert, den. 346 U.S. 820 ( 1953). The Commissioner as-
the community is similar to a partnership and the “pass
through” provisions of partnership income taxation
should apply. The community of acquets and gains, is,
however, not similar to an ordinary commercial partner-
ship because the wife may renounce it and thereby ab-
solve herself of all debts of the community, retroactively.
Court said:
Such a partnership does exist in contemplation of
law, but only, we apprehend, when she accepts the
community; if she renounces it, the community is,
as to her, as though it never existed, and everything
done during the marriage in relation to the pu: -
chase or alienation of property must be considered
as done by the husband alone.
79
The Commissioner relies on those United States Su-
preme Court cases* which held that the husband is not
required to report the whole community income on his
individual return as authority that the wife is liable for
one-half of the taxes. This reliance is misplaced. Bender
and Poe did not hold that the wife was required to re-
port the income but rather that she had a sufficient in-
terest in the community income to entitle her to report
one-half of the community income. The real significance
of the finding of a vested ownership in the wife in
Bender was not to make her separately liable but to
rebut the Commissioner’s reliance there on cases such
as Lucas v. Earl, 1930, 281 U.S. 111, 50 S. Ct. 241, 74
L. Ed. 731, where the factor of who earned the income
was held determinative of who owed the tax.
The holding of Bender is consistent with Louisiana
law. Where the husband and wife are living under the
community of acquets and gains the wife may assume
the liabilities of the community and be liable for such
assumption out of her separate property. La. R.S. 9:103
(1950) ; Friendly Loans, Inc. v. Morris, 142 So. 2d 810
(La. Ct. App. 1962). But to extend Bender to require
the wife to report the income would be destructive of
the Louisiana system of community property without
any clear statutory authorization. This we refuse to do.
The case at hand is also distinguishable from those
cases cited by the Commissioner where the wife, after
having signed a return, was held liable for one-half of
the income tax. E.g., United States v. Malcolm, 1931,
282 U.S. 792, 51 S. Ct. 184, 75 L. Ed. 714; Commis-
sioner v. Hyman, 5 Cir. 1948, 185 F. 2d 49; Saenger v.
Commissioner, 5 Cir. 1934, 69 F. 2d 683. Since the
wife in those cases had signed a return she had assumed
the liability for the tax. Therefore the issue of her lia-
bility for the tax was not in dispute.
* Poe v. Seaborn, supra; Bender vy. Pfaff, supra.
5’ We are not convinced that Smith v. Donnelly, E.D. La. 1946,
65 F. Supp. 415 decided otherwise. There was no mention in
Smith of a return but the court cited Saenger and Hyman as the
only authority for its sweeping conclusion that the wife is liable
for one-half of the income tax of the community,
’
80
Mrs. Mitchell might have been held liable for the in-
come taxes if she had accepted the benefits upon the
dissolution of the community. She elected, however to
renounce the community pursuant to Article 2410 of
the Louisiana Civil Code which specifically provides that
such renunciation exonerates her from all “debts con-
tracted during the marriage.” We are not persuaded by
the Commissioner’s assertion that the term “debts con-
tracted during the marriage” should be limited to debts
created by contract. In discussing the term “debts con-
tracted” Planiol, 3 Civil Law Treatise, Part 1, § 1086
(1959) would read the term to mean debts incurred by
any means, whether contract, tort or statute. This in-
terpretation of the term is more in keeping with the
purpose of the renunciation provision—to protect the
wife’s separate property from onerous debts of the com-
munity which the husband incurred and did not satisfy,
factors over which the wife had no control.
Under Louisiana law, absent the willingness of the
husband to divulge to the wife information concerning
the financial status and affairs of the community, she
has no way of knowing nor means to compel him to
inform her of the community’s assets, liabilities or in-
come. She could neither prepare a return showing the
community income nor pay the tax. She has no power
to guarantee that the community will be solvent enough
to satisfy the tax liability. As a result, if she is held
* Article 2404 of the Louisiana Civil Code requires that in order
for the wife to have an action against the-husband for fraudulent
disposition of the community assets said disposition must be
made with an “intent to injure the wife.” As the United States
Supreme Court pointed out in Fernandez vy. Wiener, 1945, 826 USS.
340, 349, n. 7, 66 S. Ct. 178, 90 L. Ed. 116: “Where the husband
has aliened some part of the community in fraud of his wife's
rights, she or those representing her have an action for reim-
bursement against the husband or his representatives upon the
termination of the community, but not before, Guice v. Lawrence,
2 La. Ann, 226, 228. The fraud required for an action of this kind
seemingly must be intentional and the motive for the transaction.”
[Emphasis supplied.]
See also Thigpen v. Thigpen, 281 La. 206, 91 So. 2d 12 (1956).
Although the wife may obtain a judicial separation of property
81
liable for the income taxes, she may have no property
with which to satisfy the debt unless the community is
dissolved in a solvent state, a factor over which she has
no control. Even if the community is solvent it is im-
possible for the wife to reach its assets until its dissolu-
tion because under § 2403 of the La. Civ. Code a sepa-
rate debt (which is what the Commissioner is asserting
against Mrs. Mitchell) may not be acquitted out of the
community fund. Thus, as pointed out in U.S. v. Rob-
bins, 1926, 269 U.S. 315, 328, 46 S. Ct. 148, 70 L. Ed.
285, “(T]he fund taxed, while liable to be taken for his
debts, is not liable to be taken for the wife’s * * * so
that the remedy for her failure to pay might be hard
to find.” If Mrs. Mitchell had not fortuitously inherited
property from her mother she would not have obtained
any assets with which to satisfy the tax liability and
the problem recognized in Robbins would have been real
—Mrs. Mitchell would be liable for taxes for which she
would be powerless to obtain the funds to pay.
Our holding does not leave the Commissioner without
recourse. Under Louisiana law the husband is liable for
the community debts that may be satisfied both out of
the community and out of his separate property. Poin-
dexter v. Louisiana & A, Ry. Co., 170 La. 521, 128 So.
297 (1930); Rouchon v. Rocamora, 84 So. 2d 873 (La.
Ct. App. 1956) ; Gosserand v. Monteleone, 164 La. 397,
118 So. 889 (1927). The rationale for this liability is
not that the husband’s ownership interest in the com-
munity should subject him to such liability but rather
that as head and master of the community he should be
liable for the debts he has incurred with respect to com-
munity property, and that it would be inequitable to re
quire the creditor to distinguish between the community
property and the husband’s seperate property. Note,
Creditor’s Rights, 25 La. L. Rev. 201 (1964).
without dissolution of the marriage this remedy is difficult to ob-
tain and somewhat illusory because the wife must show prior
mismanagement and thus the funds may have already been dis-
sipated.
82
The Commissioner’s contention that Mrs, Mitchell in.
curred the statutory penalties under §§ 6651, 6653 and
6654 of the Code fails because she was under no duty
to file a return under § 6012 of the Code since she had
no separate income.
Since Mrs. Mitchell owes no tax obviously her trans-
feree, Mrs, Jane Sims, does not either,
Reversed.
SIMPSON, Circuit Judge, dissenting:
I respectfully dissent.
I would affirm the Tax Court upon the basis of its
opinion, reported at 51 T.C. No. 62.
83
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
OCTOBER TERM, 1969
No. 28163
T.C. Docket Nos. 6740-66 and 6741-66
ANNE GOYNE MITCHELL, PETITIONER-APPELLANT
v.
COMMISSIONER OF INTERNAL REVENUE,
RESPONDENT-APPELLEE
JANE ISABELL GOYNE SIMS, PETITiONER-APPELLANT
Vv.
COMMISSIONER OF INTERNAL REVENUE,
RESPONDENT-APPELLEE
Appeals From the Decisions of the Tax Court
of the United States (Louisiana Case)
Before AINSWORTH, DYER and SIMPSON, Circuit Judges
JUDGMENT
This cause came on to be heard on the transcript of
the record of the Tax Court of the United States, and
was argued by counsel;
ON CONSIDERATION WHEREOF, It is now here
ordered and adjudged by this Court that the decisions
of the said Tax Court in this cause be, and the same
are hereby reversed.
It is further ordered that respondent-appellee pay to
petitioners-appellants, the costs on appeal to be taxed
by the Clerk of this Court.
SIMPSON, Circuit Judge, dissenting.
Issued as Mandate: June 23, 1970.
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87
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
Docket No. 28,154
[Caption Omitted]
RELEVANT DOCKET ENTRIES
Date Filings & Proceedings
1969
July 18 Docket Cause, Etc.
* * * *
August 26 Original Brief on Behalf of Plaintiff-Appellant,
Mrs. Frances Angello, Widow of Jack Sparacio
(M).
* * * *
September 26 Brief for the Appellee ( Intervenor-Appellee-U.S.A. )
(P).
_ * _ o
December 5 Assigned for January 15, 1970 at New Orleens.
1970
January 15 Entg. Argument & Submission Before Hons. Ains-
worth, Dyer & Simpson, CJs.
June 22 Reversed “Per Dyer, C.J.” Judge Simpson Dissent-
ing
July 6 Ext. to 7/31/70—Petition for Rehearing. (Also
Filed In No. 28168)
August 3 Fig. Letter of Appellee confirming that no petition
for rehearing will be filed.
August 3 Fig. Motion of Appellee for Stay of Mandate.
Granted to 9/20/70—REW, 8/11
September 22 Letter to S.C. Extending the time for filing Certio-
rari to 10/5/70.
October 9 Fig. Notice (PC) of filing petition for certiorari.
88
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF LOUISIANA
NEW ORLEANS DIVISION
Civil Acticn No. 66-884
Section A
(Filed: Dec. 29, 1966)
MRS. FRANCES ANGELLO, WIDOW OF JACK SPARACIO
versus
METROPOLITAN LIFE INSURANCE COMPANY, and
UNITED STATES OF AMERICA
PETITION FOR REMOVAL FROM STATE COURT
The petition of the United States of America, through
Louis C. LaCour, United States Attorney for the Eastern
District of Louisiana, with respect represents that:
1. This removal is based on Section 1441 of Title 28,
United States Code. The United States District Court
has original jurisdiction of this matter under Section
1346(e) of Title 28, United States Code as amended by
Section 202(a), Federal Tax Lien Act of 1966.
2. The original action entitled, “Mrs. Frances Angello,
widow of Jack Sparacio v. Metropolitan Life Insurance
Company, Et Al.,” No. 456-928 of the docket of the
Civil District Court for the Parish of Orleans, State of
Louisiana, is a suit against the United States of Amer-
ica, wherein the plaintiff seeks to recover the proceeds of
her deceased husband’s insurance policy No. 620965308E1
issued by the Metropolitan Life Insurance Company, who
has refused payment because your petitioner, acting
through the District Director of Internal Revenue Serv-
ice, served upon the Metropolitan Life Insurance Com-
pany a Notice of Tax Lien.
3. There exists the issue as to whether the United
States of America or the plaintiff, Mrs. Frances Angello,
widow of Jack Sparacio, has the right to collect the
proceeds of policy No. 620965303E1.
89
4, This case is removable under Section 1446(b) of
Title 28, United States Code.
5. That under Section 1446(d) of Title 28, United
States Code, no bond is required of the United States
of America.
6. A copy of plaintiff’s original petition served upon
the United States of America, via mail, on November 30,
1966, being the only pleading served upon the United
States of America, is attached hereto and filed herewith.
WHEREFORE, petitioner prays that this action be
removed from the Civil District Court for the Parish of
Orleans, State of Louisiana, to the United States District
Court for the Eastern District of Louisiana, New Orleans
Division.
Louis C. LACour
United States Attorney
By /s/ Ernest N. Morial
ERNEST N. MOoriAL
Assistant United States
Attorney
418 Royal Street, Room 407
New Orleans, Louisiana 70130
Telephone: 527-2491
PR REE a CEL Te ERE
CIVIL DISTRICT COURT
IN AND FOR PARISH OF ORLEANS
STATE OF LOUISIANA
DIVISION OF LOUISIANA
No.
Docket No.
Mrs. FRANCES ANGELLO, WIDOW OF JACK SPARACIO
va.
METROPOLITAN LIFE INSURANCE COMPANY, ET AL
Filed: , 1966
Deputy Clerk
TO THE HONORABLE, THE JUDGES OF THE CIVIL
DISTRICT COURT IN AND FOR THE PARISH OF
ORLEANS, STATE OF LOUISIANA:
The petition of Mrs, Frances Angello, widow of Jack
Sparacio, a person of the full age of majority and a resi-
dent of the Parish of Orleans, State of Louisiana, with
respect represents:
I,
That your petitioner is the beneficiary under Policy
No, 620 965 303 E1 issued by Metropolitan Life Insur-
ance Company, a foreign insurance company authorized
to do and doing business in the State of Louisiana on
the life of Jack Sparacio, who died on March 11, 1966.
Il.
Following the death of Jack Sparacio, petitioner’s hus-
band, your petitioner, who is the named beneficiary on
said policy of life insurance, completed all the necessary
forms and filed same with defendant, Metropolitan Life
Insurance Company, in order to collect the proceeds due
her under the policy.
—
91
Ill.
On April 13, 1966, defendant, Metropolitan Life In-
surance Company acknowledged to petitioner that the
amount of NINETEEN HUNDRED THIRTEEN AND
88/100 ($1,913.88) DOLLARS was payable to petitioner,
that all of the requirements had been met by petitioner
in order to collect the proceeds due her under the policy,
but that a notice of lien and notice of levy had been
served on Metropolitan Life Insurance Company by the
Internal Revenue Service of the U. S. Government and
for this reason, defendant, Metropolitan Life Insurance
Company has refused to pay to petitioner the amount
due her under the policy.
IV.
That no tax is due the U. S. Government by your
petitioner; any lien filed by the U. S, Government would
be for taxes due by Jack Sparacio and not due by your
petitioner; accordingly, the United States is not entitled
to a lien or levy on the proceeds due petitioner under
this policy. That the United States should be made a
party defendant to these proceedings so that your peti-
tioner can secure from this Court judgment ordering
Metropolitan Life Insurance Company to pay over to
petitioner the proceeds due her under the policy notwith-
standing the notice of lien and notice of levy filed and
served against defendant, Metropolitan Life Insurance
Company by the defendant, United States through the
Internal Revenue Service.
WHEREFORE, petitioner prays that the defendants,
Metropolitan Life Insurance Company and United States
Internal Revenue Service be duly cited to appear and
answer this petition, that they be served with copies of
same, and after all legal delays and due proceedings had,
there be judgment herein in favor of petitioner, Mrs.
Frances Angello, widow of Jack Sparacio, and against
defendants, Metropolitan Life Insurance Company and
United States Internal Revenue Service ordering Metro-
politan Life Insurance Company to pay over to your
92
petitioner, Mrs. Frances Angello, widow of Jack Spa-
racio, the entire proceeds due her under Policy No.
620 965 303 El on the life of Jack Sparacio, deceased.
And for all general and equitable relief.
REUTER, REUTER & SCHOTT
Attorneys for
Mrs, Frances Angello,
widow of Jack Sparacio
1607 National Bank of
Commerce Bldg. |
New Orleans, Louisiana 70112
By: /s/ Patrick M. Schott
PATRICK M. ScHoTT
Trial Attorney
VERIFICATION
Ernest N. Morial, being duly sworn, did depose and
say that he is an Assistant United States Attorney; that
he prepared and read the above and foregoing Petition
for Removal and that the allegations contained therein
are true and correct to the best of his knowledge, infor-
mation and belief.
/s/ Ernest N. Morial
ERNEST N. MorIAL
Assistant United States
Attorney
Sworn to and subscribed this
28th of December, 1966.
/s/ Gene S. Palmisano
Notary Public
—_
93
MOTION TO INTERVENE
{Number and Title Omitted]
[Filed: May 8, 1967]
The United States of America moves for leave to in-
tervene herein in order to assert the claim set forth in
the complaint, of which a copy is hereto attached, on
the ground that the United States of America has a tax
lien against such property and rights to property sub-
ject to this action as provided for in Federal Rules of
Civil Procedure Rule 24(a) (2).
Louis C. LaCour
United States Attorney
By /s/ Ernest N. Morial
ERNEST N. MORIAL
Assistant United States
Attorney
500 St. Louis Street (527-2921)
New Orleans, Louisiana 70130
- - -000- - -
94
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF LOUISIANA
NEW ORLEANS DIVISION
Civil Action No. 66-884
Section A
\Filed: May 8, 1967]
MRS, FRANCES ANGELLO, WIDOW OF JACK SPARACIO,
PLAINTIFF
vw.
METROPOLITAN LIFE INSURANCE COMPANY, DEFENDANT
vw.
UNITED STATES OF AMERICA, INTERVENOR
PETITION IN INTERVENTION
The C © ’s permission having been obtained, the
United Staw., of America, intervenor herein, by its at-
torney, Louis C. LaCour, United States Attorney for
the Eastern District of Louisiana, complains and alleges:
I
The United States of America intervenes herein to
enforce its tax liens against such property and rights
to property subject to this action.
II
Intervention by the United States of America is com-
menced under the authorization of the Chief Counsel,
Internal Revenue Service, a delegate of the Secretary of
the Treasury, and at the direction of the Attorney Gen-
eral of the United States pursuant to Section 7401 of
the Internal Revenue Code of 1954.
III
On February 19, 1965, a delegate of the Secretary of
the Treasury made assessments against the plaintiff-tax-
95
payer, Frances Sparacio (now, Frances Angello), for
her federal income tax liabilities for the years 1959,
1960 and 1961 in amounts totaling $12,239.27.
IV
Notice of the foregoing assessments and demand for
payment was made in accordance with law upon Frances
Sparacio (now Frances Angello) on February 19, 1965.
V
A “Notice of Federal Tax Lien” (Treasury Depart-
ment Form 668) reflecting the foregoing liabilities was
filed in accordance with law with the Recorder of Mort-
gages, Parish of Orleans, New Orleans, Louisiana, on
April 138, 1965.
VI
The taxpayer-plaintiff, Frances A. Sparacio (now
Frances Angello) has refused and neglected to pay all
of the foregoing liabilities so that after certain admin-
istrative adjustments, she is presently indebted to the
United States for income tax liabilities for the years
1959, 1960 and 1961 in the total amount of $3,211.06,
plus interest thereon as provided by law.
VII
On May 14, 1965, a delegate of the Secretary of the
Treasury caused to be served on the Louisiana Tax Clerk
a Notice of Levy (Treasury Department Form 668-A),
which had the effect of notifying the Metropolitan Life
Insurance Company of the income tax liabilities of the
plaintiff-taxpayer.
WHEREFORE, the United States of America prays:
1. That this Court adjudicate the respective rights of
all parties heretofore with respect to the property which
is the subject of this action.
2. That this Court determine that the plaintiff-tax-
payer is indebted to the United States of America in
the amounts of $3,211.06, plus interest thereon as pro-
vided by law.
96
3. That this Court order, adjudge and decree that
the indebtedness of the plaintiff-taxpayer is secured by
federal tax liens in favor of the United States and that
such liens attach to her rights in the subject property.
4. That the federal tax liens here above set forth be
foreclosed upon the proceeds of the insurance policy
which is the subject of this action.
5. That the Court render such other and further re-
lief as is just and proper in the premises.
Louris C, LaCour
United States Attorney
By /s/ Ernest N. Morial
ERNEST N. MOoRIAL
Assistant United States
Attorney
- = -000- - -
MOTION TO DIsMIss
[Number and Title Omitted]
(Filed: May 8, 1967]
The defendant, United States of America, by and
through its attorney, Louis C. LaCour, United States
Attorney for the Eastern District of Louisiana, respect-
fully moves this Court to dismiss this action on the
ground that it: (1) seeks declaratory judgment with
respect to federal taxes; and, (2) inferentially seeks to
enjoin the collection of federal taxes, which causes are
barred by statute.
Louis C, LaCour
United States Attorney
By /s/ Ernest N. Morial
ERNEST N. MorIAL
Assistant United States
Attorney
---000---
97
AFFIDAVIT
[Number and Title Omitted]
STATE OF LOUISIANA
PARISH OF ORLEANS
Before me, the undersigned authority, personally came
and appeared Ernest N. Morial, Assistant United States
Attorney for the Eastern District of Louisiana, who,
after being duly sworn, did depose and say:
That to the best of his knowledge, information, «»
belief, and his files so reflect, the plaintiff herein,
Frances Angello, is indebted to the United States of
America for unpaid income taxes in the amount of
$3,211.06, plus interest and that the attached exhibits
(Notice of Levy and Notice of Federal Tax Lien) show
that these documents were executed with respect to the
tax liabilities of Frances Sparacio (Now Angello).
/s/ Ernest N. Morial
ERNEST N. MORIAL
Assistant United States
Attorney
Sworn to and subscribed before
me this 8 day of May, 1967.
/s/ Harry F. Connick
Notary Public
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INTERNAL REVENUE CODE OF 1954 (c) EXCEPTION IN CASE OF SECURITIES...
5 2 (1) Exception.--Even though notice of o lien
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- . *. .° SEC. 6321. LIEN FoR TAXES ner prescribed in subsection (ca) of this section, the
2 en po RS cae f lien sholl not be valid with respect fo o security, as-
UNITED STATES ce a “If ony person lioble to poy any tox neglects or defined in porograph (2) of this subsection, as -
& a mae - refuses to poy the some ofter demond, the amount against any mortgagee, pledgee, or purchaser of such
; Mey eS Sat | c ‘ , . lifcluding ony interest, additional amount, addition security, for an adequate and full consideration in
as es ke kee he . ; : . " to tox, or ossessable Penalty, together with any costs money or money's worth, if at the time of such mort-
a See ae aay? pe Pies "= thet moy acerve in eddition thereto) sholl be a lien goge, pledge, or purchase such mortgagee, pledgee,
Pe. | WS. OS . in fovor of the United Stotes upon all property ond or purchoser is without notice or knowledge of the
Se ea ie = pee cae rights to property, whether real or personal, belong- existence of such lien.
Sines eS A a ie 3 Ing to such person, ; ; : oP : t
; a Se “3 eo merge (2) Definition of Security.--As used In this “.
er oer = ’ ' a . se. 6322. PERICD OF LIEN. subsection, the term “security” means any bond, =
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' ee . - Se a a, , Unless onother dote ts specificolly fixed by indebtedness, issued by any corporation {including ~, .
- et es: Bid = ’ low, the lien imposed by section 6321 sholl arise at one issued by a government or political subdivision is.
F a oo rae ! ee the time the assessment is made ond shall continue thereof), with interest coupons or in registered form, -
‘ a “ “ until the liability for the omount so ossessed is satis- shore of stock, voting trust certificate, or any certifi. a9
( , an ar Tek & fied or becomes unenforceable by reason of lapse of cote vf interest or porticipotion in, certificate of ~
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ls ak. eee, aid ae oe : cate for, or warrant or right to subscribe to or pure os
Gees a ene amare "SEC. 6323. VALIDITY AGAINST MORTGAGEES, chase, any of the foregoing; Ne NF
NOTICE OF T AX LIEN xc: ; - PLEDGEES, PURCHASERS, AND JUDGMENT - baal deal w 4
‘ pak . 2 CREDITORS, ail ce : ‘. - y 2
° : Be Tia ike ‘eee : [d) DISCLOSURE OF AMOUNT OF OUTSTAND- 3
; — eo ae aa ING LIEN.--If @ notice of lien hos been filed under ~..
re a ars ee OE ars a: ag! +3 ‘fa) INVALIDITY OF LIEN WITHOUT NOTICE... subsection (a), the Secretary or his delegcte is au- a:
* F gtiscae oe ae ee ee ie ee RS TEE Except as otherwise Provided in subsection (c), the thorized to provide by rules or regulations the ex- =
. ; iia ee ont ~| : lien imposed by section 6321 shall not be valid as tent to which, ond the conditions under which, Infore >
, ee Fe lee Newas Er eee A ogainst any mortgocee, pledgee, purchoser, or Judg- mation os to the omount of the outstanding obliga- - >
Sate » eS ee ae ve ment creditor until notice thereof hos been filed by tion secured by the lien may be disclosed. v8 8 “-
i _ e © * hie Pen eel the Secretory or his delegate— -.. 1. eer ¥ Avig ©
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ee re ae, 4 4 a ths * (1) Under State or Territorial Lows.--In the ‘CHARGE OF PROPERTY. ee thee.
led thi Soe x : len f office designated by the low of the State or Territory . A .. ame: :3. =
i this ay o : ' In-which the property subject to the lien is situated, : <i ee ae
. P ast v ‘s whenever the Stote or Territory has by law desig. . fa) RELEASE OF LIEN.--Subject to such rules 3
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? —, A___m. . 4 filing of such notice; or Prescribe, the Secretary or his delegate mny Issueq =.
« = j o- { Pia eee : certificate of release of any lien imposed with respect -
a / ens ee aie x, , (2) With Clerk of District Court.--In the office t0 any internal aS Tae if- ! a.
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ar, « art Ps nia — ne, Ley g cou © esa i? Gey — > co (1) Licbility Sotisfied or Unenforceable.--The ‘~
j Lj i WO . ; “+ “Hen ls situated, whenever the State or erritory has : rer a
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. : ‘ : the omount ossessed, together with all interest in re-
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‘ legolly unenforceable, or, in the cose of the estate
: (3) With Clerk of District Court for District tox imposed by chopter 11 or the gift tox imposed by
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101
HEARING ON MOTION OF UNITED STATES TO INTERVENE
AND MOTION OF UNITED STATES TO DISMISS AND ORDER
GRANTING BOTH MOTIONS
MINUTE ENTRY: CHRISTENBERRY, J. June 7, 1967
{Number and Title Omitted]
This cause came on this day for hearing on motion of
United States to intervene and motion of United States
i> dened
PRESENT :
Patrick M. Schott, Esq.
Attorney for Plaintiff
Ernest N. Morial, Esq.
Assistant U. S. Attorney
IT IS ORDERED that the motion of United States to
intervene be, and it is hereby, GRANTED.
IT IS FURTHER ORDERED that motion of United
Siaies to dismiss be, and it is hereby, GRANTED.
ANSWER TO PETITION IN INTERVENTION
{Number and Title Omitted]
{Filed: Jan. 2, 1968]
Now into Court comes defendant in intervention, Mrs.
Frances Angello, widow of Jack Sparacio, hereinafter
referred to as “Mrs. Sparacio” to make the following
defenses to the petition in intervention filed by the
United States of America herein.
102
FIRST DEFENSE
The property on which the United States is seeking
to enforce a lien consists of a sum of money owed by
Metropolitan Life Insurance Company on an insurance
policy on tlie life of Mrs. Sparacio’s husband and in
which Mrs. Sparacio was the beneficiary. These funds
are therefore the property of Mrs. Sparacio and no one
else’s.
SECOND DEFENSE
The assessment made against Mrs. Sparacio as set out
in paragraph III of the petition in intervention were
made wrongfully, erroneously and illegally against Mrs.
Sparacio for the following reasons:
1. The tax liabilities were Mrs. Sparacio’s husband's
and not hers and should have been based upon separate
tax returns signed and filed by him alone.
2. The Internal Revenue Service secured Mrs. Spa-
racio’s signature on joint returns by meai.. of such rep-
resentations and under such circumstances that she was
misled, made the victim of her own ignorance of the law
and prevented from having competent legal advice as
warranted by the facts and circumstances of the case.
8. The tax liabilities could not have been assessed
against Mrs. Sparacio without the aforesaid wrongful
procurement of her signature on joint returns for the
years set out in paragraph III of the petition.
THIRD DEFENSE
Mrs. Sparacio is justified under the facts and law ap-
plicable thereto in her refusal to pay these tax liabilities
which are her husband’s and not hers.
WHEREFORE, Mrs. Sparacio prays:
1. That the Court dismiss the claim of the United
States as to the life insurance proceeds.
2. That the lien of the United States on the proceeds
of the insurance policy be cancelled.
Pt le eh!
3
:
;
i
103
3. That the defendant in intervention be awarded all
of said proceeds due by the Metropolitan Life Insurance
Company under the said insurance policy.
4. For all general and equitable relief.
REUTER. KEUTER & SCHOTT
Attorneys for defendant in
intervention
1607 N.B.C. Building
New Orleans, La. 70112
By /s/ Patrick M. Schott
PATRICK M. SCHOTT
Trial Atty.
- - -000- - -
INTERROGATORIES
[Number and Title Omitted]
{Filed: April 30, 1968]
In accordance with the provisions of Rule 33 of the
Federal Rules of Civil Procedure, the United States of
America, intervenor, by its attorney, Louis C. LaCour,
United States Attorney for the Eastern District of Lou-
isiana, requires the plaintiff, Mrs. Frances Angello, to
answer the following interrogatories separately, fully, in
writing, under oath, and signed within fifteen (15) days
of service hereof:
1. If you do not admit each and every statement con-
tained in the Request for Admissions, Nos. 1 through
12, inclusive, filed herein, explain and specify in detail
in what respect any statement not admitted is believed
to be untrue, and what you believe to be the correct
facts in this regard.
2. If you do not admit each and every statement con-
tained in the Request for Admissions, Nos. 1 through
12, inclusive, filed herein, list the documents or records
104
of any nature which Support or tend to support your
denial of any such statement. In answering this inter.
rogatory, you are to include the names and addresses of
© person or persons having possession, custody or con- |
trol of such documents or records. oe
3. If you do not admit each and every statement con-
tained in the Request for Admissions, Nos. 1 through
12, inclusive, filed herein, list the names and addresses
of any person or persons who have knowledge of any
fact or facts which Support or tend to support your de
nial of any such statement.
4. State the amount and source of your income for
the year 1959.
5. State the source and amount of your income for
the year 1960.
6. State the source and amount of your income for
the year 1961.
Louis C. LaCour
United States Attorney
By /s/ James Carriere
Assistant United States
Attorney
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REQUEST FOR ADMISSIONS
(Number and Title Omitted]
(Filed: April 30, 1968]
Pursuant to the provisions of Rule 36, Federal Rules
of Civil Procedure, the United States of America, by its
attorney, Louis C. LaCour, United States Attorney for
the Eastern District of Louisiana, requests the plain-
tiff, Mrs. Frances Angello, within ten ( 10) days after
service of this request, to make the following admissions
for the purpose of this action only:
1. That during the years 1959, 1960 and 1961, you
were married to Jack Sparacio.
2. That during the years 1959, 1960 and 1961, you
resided in the State of Louisiana.
105
8. That you filed no income tax return for the year
1959.
4. That you filed no income tax return for the year
1960.
5. That you filed no income tax return for the year
1961.
6. That you have no books or records relating to the
business operations and income of your deceased hus-
band, Jack Sparacio, for the years 1959, 1960 and 1961.
7. That you have no personal knowledge of any facts
relating to the business operations and income of your
deceased husband, Jack Sparacio, for the years 1959,
1960 and 1961.
8. That on February 19, 1965, the District Director
of Internal Revenue made assessments against you for
your federal income tax liabilities for the years 1959,
1960 and 1961, in the total amount of $12,239.27,
9. That notice of the foregoing assessments and de-
mand for payment were made upon you on February 19,
1965.
10. That a Notice of Federal Tax Lien ( Treasury
Department Form 668) reflecting the foregoing liabili-
ties was filed with the Recorder of Mortgages, Parish of
Orleans, New Orleans, Louisiana, on April 18, 1965.
11. That you have made no payments to the Internal
Revenue with respect to the aforementioned liabilities.
12. That after certain administrative adjustments,
you #e currently indebted to the United States of Amer-
ica for federal] income tax liabilities for the years 1959,
1960 and 1961 in amounts totaling $3,211.06, plus statu-
tory interest.
Louis C. LACour
United States Attorney
By: /s/ James Carriere
Assistant United States
Attorney
---000-- -
106
MOTION FOR SUMMARY JUDGMENT ON BEHALF OF
DEFENDANT, METROPOLITAN LIFE INSURANCE COMPANY
{Number and Title Omitted]
[Filed: May 2, 1969]
Defendant, Metropolitan Life Insurance Company, ap-
pearing herein through undersigned counsel, moves this
Court for Summary Judgment in its favor and suggests
to the Court that mover holds certain insurance proceeds
in the sum of ONE THOUSAND NINE HUNDRED
THIRTEEN AND 88/100 ($1,913.88) DOLLARS as to
which the other parties to these proceedings, Mrs.
Frances Angello, widow of Jack Sparacio and United
States of America, have each asserted a claim against
mover and that mover holds such proceeds merely as a
stakeholder having no interest in the said proceeds and
that mover desires to deposit the said proceeds into the
Registry of this Honorable Court in order that the other
parties to these proceedings may assert their respective
claims against the said proceeds; mover, therefore, asks
that it be granted leave from this Honorable Court to
deposit the sum of ONE THOUSAND NINE HUNDRED
THIRTEEN AND 88/100 ($1,913.88) DOLLARS into
the Registry of this Court and that there be Summary
Judgment entered in favor of mover, Metropolitan Life
Insurance Company, dismissing all claims being asserted
against mover upon mover’s making the said deposit of
ONE THOUSAND NINE HUNDRED THIRTEEN
AND 88/100 ($1,913.88) DOLLARS into the Registry
of this Court and that, upon the making of the said
deposit, mover be recognized as having discharged in
full all of its obligations and duties under Policy No.
620-965-303 M1 issued by mover; mover further sug-
gests to the Court that an analysis of the following docu-
ments, either attached to this Motion or already part of
the record, will disclose that there is no genuine issue in
respect to any material fact and that mover is entitled,
as a matter of law, to all relief demanded:
f
eran eet
ry PS * 2 oP oy wee Pree
ENE NNT) Coane ait gal tpt SEPT MEMS IIe Pew Loy i IETS RIE INS fr Neh pena gy 2 IT SA PRES IE Tien S
107
1. The pleadings of all parties heretofore filed in this
proceeding ;
2. The statement of those facts not in issue required
by Rule 4E of the Local Rules of the United States
District Court for the Eastern District of Louisi-
ana, New Orleans Division.
/s/ Phelps, Dunbar, Marks,
Claverie & Sims
PHELPS, DUNBAR, MARKS,
CLAVERIE & SIMS
Attorneys for Metropotitan
Life Insurance Company
1300 Hibernia Bank Building
New Orleans, Louisiana 70112
Telephone No, 529-1311
/s/ Richard C. Brown
RICHARD C. BROWN
Trial Attorney
ORDER
Considering that all counsel of record have approved
and submitted without objection the above and foregoing
Motion for Summary Judgment of defendant, Metropoli-
tan Life Insurance Company;
Let the above and foregoing Motion for Summary
Judgment of defendant, Metropolitan Life Insurance
Company, be granted upon defendant, Metropolitan Life
Insurance Company, depositing the sum of ONE THOU-
SAND NINE HUNDRED THIRTEEN AND 88/100
($1,913.88) DOLLARS into the Registry of this Court,
— sum to be held subject to the further orders of this
urt.
New Orleans, Louisiana, this 6th day of May, 1968.
/s/ Herbert W. Christenberry
United States District Judge
---000-- -
ANSWERS TO INTERROGATORIES
{Number and Title Omitted]
[Filed: June 14, 1968]
1. The undersigned does not admit Request No. 12
and the explanation and detailed specification as to why
can be found in her pleadings and in the affidavit which
she has filed in this record in support of the memoran-
dum in opposition to various motions filed by the United
S
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