Reply Brief — Owens v. United States

TABLE OF CASES.

PAGB

Commissioner v. Owens, 78 F. (2d) 768............. 22, 23

Helvering v. Gowran, 302 U. S. 238, 239, 245........ 19

Helvering v. National Grocery Co., 304 U. S. 282, 82 L.

IE, Wit CUE Dene keer ck vse cess6000es 18

Helvering v. Rankin, et al., 295 U.S. yy) 79 L. ed. 1343. 18

Helvering v. Tex-Penn Oil Co., 300 U. S. 481, 81 L. ed.

CAE Aaah OU ss pink é.0u650'6waebesices sone 18

Helvering v. Wood, 309 U. 8. 344, 84 L. ed. 796, 799.... 18

Hormel v. Helvering, 312 U. S. 552, 85 L. ed. 1037.... 19

Levitt & Sons v. Nunan, (2nd Cir.) 142 F. (2d) 795. ..18-19

Levitt & Sons v. Nunan, (2nd Cir.) 160 F. (2d) 209.... 19

Mott v. United States, 283 U. S. 747................. 22

Owens v. Commissioner, 125 F. (2d) 210.......... 3, 18, 24

Patton, et al., v. Commissioner of Internal Revenue,

(Gth Cir., Ohio) 168 F. (2d) 28................. 18

Rapeer v. Colpoys, United States Marshal, (App. D. C.)

DCN Lo akc cid cedeecabckeee 18

Reynolds v. Stockton, 140 U. S. 254, 268, 35 L. ed. 464,

TRULY he cau cak ein dhcandsbadedwakoes 18

Robinson, et al., v. Elder, (9th Cir., Nev.) 78 F. (2d)

ET ccc aGcUiick vgbih ind Wess <eeece <> 18

Ross v. Commissioner, 169 F. (2d) 483, 496.......... 18

United States v. Walker, 109 U. S. 258, 266, 3 S. Ct.

Ce ea ee er 18

Vee) ae ae Ts

IN THE SUPREME COURT OF THE UNITED STATES.

October Term 1949.

No. 508

O. O. OWENS, Petitioner,

vs.

THE UNITED STATES OF AMERICA, Respondent.

REPLY TO BRIEF IN OPPOSITION.

The falsifications of the facts and the distortions of

the Record in Respondent’s Brief in Opposition requires

the filing of this Reply Brief which your Petitioner prays

this Court will receive and consider.

On page 2 of Brief in Opposition, under the heading,

“Question Presented,’’ appears the following:

‘¢* * * This in turn depends upon whether the Court

of Appeals exceeded its jurisdiction, and whether the

District Court, in the present proceeding, erred in find-

ing that the evidence did not support taxpayer’s claim

of conspiracy (allegedly involving the Commissioner

of Internal Revenue and others) to deprive him of his

day in court.’’

That the Court of Appeals did exceed its jurisdiction

is made abundantly clear by the short argument of that

proposition on pages 24 and 25 of Petitioner’s Brief in sup-

port of his Petition filed herein.

It will be observed the trial court made no findings of

the facts of the FRAUDS (R. 28-29), although the frauds

7

were not denied by Respondent but were abundantly proved

and established by Petitioner’s documentary evidence—not.

withstanding Respondent suppressed other documentary

evidence and oral testimony which would have also proved

and established both conspiracy and the frauds perpetrated

pursuant thereto.

-_2—

The Record, at page 129, reveals that during the course

of the trial and without knowing or considering the con-

tents of the great bulk of documentary evidence immediate-

ly theretofore introduced by Petitioner, and which evidence

conclusively established the frauds as well as the conspiracy,

the Trial Court stated: [

‘*Now then, with reference to the question of con-

spiracy: I realize that the defendant in this case is

carried away by that but I can’t find any evidence in

this case to convince me that any one department or

more than one department, either the Treasury of the

Attorney General’s Office or of the Commissioner of

Internal Revenue, that evidence establishes a direct

and wilful conspiracy to deprive the Petitioner, the de-

fendant of his rights, and so find in addition to the —

other facts.’’

All conspiracies are willful; most are indirect.

It is obvious the Trial Court’s Finding of Fact IV

(R. 29):

‘That the defense offered by the defendant rela- ©

tive to a conspiracy to deprive him of his day in court

and the further defenses offered by the defendant were

included in the former case of Owens v. Commissioner,

125 F. (2d) 210. That the evidence is not sufficient to

support the claim as to any conspiracy nor that the ,

defendant was denied his day in court.’’

is merely reiteration of the previous finding (R. 129) but

omitting the peculiar characterization ‘‘direct and wilful

_—

conspiracy.’’? It is equally obvious the Trial Court inten-

tionally used the expression ‘‘direct and wilful conspiracy’’

to distinguish the conspiracy proved by Petitioner, and not

denied or attempted to be refuted by Respondent, from an

intentionally designed and effectuated conspiracy.

Moreover, the Finding (R. 29):

‘‘That the defense offered by the defendant rela-

tive to » conspiracy to deprive him of his day in court

and the further defenses offered by the defendant were

included in the former case of Owens v. Commissioner,

125 F. (2d) 210.”

_ was obviously made in complete disregard of the Record

facts.

The Record (395-665) clearly demonstrates that there

was no issue of conspiracy, or of collusion and frauds, in

Owens v. Commissioner reported in 125 F. (2d) 210, and

that opinion on its face so shows. There the issues were

limited to Petitioner’s liability for tax on $75,989.20 ex-

torted from him in 1920 by the Secretary of Interior, and

whether Petitioner could be held liable for interest on any

deficiency, however small, for the eight years, four months

and two days’ delay in the decision of the case caused by

the unauthorized intercession of unauthorized attorneys pre-

tending to repesent Petitioner, whose lack of authority was

at all times known by the Commissioner of Internal Kev-

enue, his attorneys and other representatives.

The Record also reveals (R. 357-359, 585-609) that, aft-

er the Board of Tax Appeals in November, 1939, had heard

the evidence only and before all the briefs were filed, Peti-

tioner, on March 26, 1940, discovered convincing proof that

the unauthorized appearances and acts of the unauthorized

attorneys pretending to represent your Petitioner—the sec-

ond of whom had stipulated away your Petitioner’s defense

SUES eet erty ans sis SRO See Se SF SRP

—_

to the asserted deficiency—and the acts of the attorneys for

the Commissioner of Internal Revenue, in cooperation with

such unauthorized attorneys, resulted and flowed from a

perfectly designed and well concealed conspiracy between

such unauthorized attorneys and attorneys for the Commis-

sioner of Internal Revenue, and also resulted and flowed

from a conspiracy between attorneys for the Commissioner,

to deprive and to defraud your Petitioner of a hearing or

opportunity to be heard and also to enable the Board of

Tax Appeals to decide the case upon part only of the facts

of your Petitioner’s defense—such part to be falsely stated

and fraudulently stipulated;

o=QZas

That upon discovery of such proof your Petitioner im-

mediately sought to reopen the case (R. 357-359, 585-609)

and to offer full proof of such conspiracy, but the Board

denied him leave so to do (R. 623), and based and grounded

its decision, in part, upon the identical falsely stated facts

previously fraudulently stipulated (R. 621-622) ; that there-

after when that fact had been called to the Board’s atten-

tion (R. 623-667) the Board made important changes in its

Findings of Fact, without changing its Conclusions of Law

which conformed to the falsely stated facts set forth in an

opinion of the Court of Appeals in another case (R. 621-

623), which latter opinion was also based upon the afore-

said falsely stated facts fraudulently stipulated, and which

omitted any reference whatever to the deduction, or the

facts thereof, in controversy in Petitioner’s 1920 case.

On pages 2 and 3 of Respondent’s Brief the following

statement appears:

“On February 13, 1926, the Commissioner deter-

mined a deficiency in the taxpayer’s income tax lia-

bility for the taxable year 1920, and on that date sent

him, by registered mail, a written notice of such deter-

mination. Within sixty days thereafter, a petition was

- 9 meters. SLE PLE VEIL ORAS RS RT Peak:

ED LENE ALES PIE COOP LE NOS EE ETI AYE Ge PURPLE MET a se

—

filed by the taxpayer with the Board of Tax Appeals

seeking a redetermination of such deficiency. On Feb-

ruary 13, 1941, the Board redetermined such deficiency

in the sum of $28,260.61.’’

Had the Trial Court found and had Respondent stated:

EXACTLY FIFTEEN YEARS LATER the Board redeter-

mined the deficiency in the sum of $28,260.61, such amount

being the tax determined to be due on $75,989.20 of the

taxpayer’s income which he claimed the Secretary extorted

from him in 1920—such statement would shock, would

amaze and would dumbfound this Court. Nevertheless such

statement is correct and is the substance of the immediate-

ly above quoted excerpt from Respondent’s )3rief.

With no deaths requiring revivor of the action, with

no third parties’ rights intervening to complicate or delay

redetermination by the Board, in the amount of $28,260.61,

of a deficiency originally determined in the amount of

$54,852.90 and thereafter reduced to $36,116.86 by the Com-

missioner, any court should be dumb-founded by such delay,

and should also be disturbed by the question: What caused

such prolonged delay?

The Answer: Conspiracies and frauds, including forg-

ery committed by an Assistant Chief Counsel for the Com-

missioner, to deprive and defraud Petitioner of a hearing

or opportunity to be heard in defense against such deficien-

cy which had been fraudulently determined in the first in-

stance; the fraudulent substitution of unauthorized attor-

neys for Petitioner’s attorney of record before the Board;

the fraudulent stipulating by the second unauthorized attor-

ney and an attorney for the Commissioner of falsely stated

facts as the facts of Petitioner’s defense; the omission of

any reference to any fact relating to the payment in 1920

by Petitioner of $75,989.20 extorted from him by the Secre-

tary; the conspirators’ conniving—for eight years and four

months after the first unauthorized attorney fraudulently

7a

entered his ‘‘appearance’’ as Petitioner’s attorney before

the Board—to retain the benefits of their frauds, including

forgery, and their seeking to enforce the Board’s affirmance,

also obtained by fraud, of the deficiency in the amount of

$36,116.86 ; their prolonged, bitter resistance of Petitioner’s

efforts to vacate the Board’s affirmance of such deficiency;

and finally—after the Board’s affirmance of the $36,116.86

deficiency had been vacated—the time required for the

Board to distort the true facts of Petitioner’s defense,

against the $28,260.61 residue of such deficiency, in such

manner as to pretendedly support its predetermined de-

cision to hold Petitioner bound by the falsely stated facts

fraudulently stipulated by the conspirators, and also to hold

Petitioner liable for tax on his income that had been ex-

torted from him by the Secretary—all of which was charged

by Petitioner (R. 6-23), none of which was denied by Re-

spondent in the Trial Court, all of which Petitioner abun-

dantly proved by documentary and oral evidence (reflected

by.the entire Record), none of which Respondent attempt-

ed to refute or to disprove—except by suppressing addi-

tional documentary evidence in its exclusive custody and

the oral testimony of witnesses under its control.

—-6—

On page 3 of Respondent’s Brief appears the following:

“On December 6, 1946, there was paid by a third

person the sum of $350 for application on the tax lia-

bility of the taxpayer, leaving an unpaid balance of

$53,783. (R. 29) This balance, plus interest, is still

unpaid. (R. 29)”

The quoted sentence ending with “$53,783” is an excerpt

from Finding II of the Trial Court and omits the language

that immediately follows, to-wit:

“* * * which payment was made without the

knowledge or consent of O. O. Owens who refuses to

accept credit therefor.”

=

Why was a period substituted for the comma imme-

diately following the figures “$53,783,” and the balance of

the Finding, “which payment was made without the knowl-

- 7

edge or consent of O. O. Owens who refuses to accept

credit therefor.” omitted from Respondent’s Brief if not for

the purpose of trying to mislead this Court by making it

appear Petitioner had accepted the benefit of such unau-

thorized payment by a third person, and, in consequence,

had ratified the asserted deficiency.

The significance of such omitted language is greater

than appears from the excerpt, quoted by Respondent, stand-

ing alone. It is as typical of the conduct of the Commis-

sioner of Internal Revenue, his officers, agents, attorneys

and other representatives from the inception of this case

in 1921—particularly throughout all proceedings before the

Board and before the courts—as the forgery committed by

an Assistant Chief Counsel for the Commissioner, demon-

strated by Exhibit “A” to Petitioner’s Petition filed herein.

It is also an attempt to duplicate the impression created by

the maliciously false statement, “the taxpayer admitted the

allegations of the complaint * * *” on pages 6 and 7 of

Respondent’s Brief filed in the Court of Appeals, which

statement was adopted by that court and embodied in its

opinion notwithstanding Petitioner in his Reply Brief spe-

cifically called that court’s attention to the falsity of such

statement and that its purpose was to make it appear Peti-

tioner had thus confessed judgment.

On page 4 of Respondent’s Brief appears the follow-

ing:

“The case turns on its own peculiar facts. No

general question of importance is raised which calls for

further review.”

Respondent concedes the facts are “peculiar.” The con-

spiracy, and frauds perpetrated pursuant thereto, are no

doubt unique—and were effective. What about the denial

of due process? That is certainly a general question of

importance—at least important to all except conspirators,

and only an inconvenience to them.

sone

EPA BENE Tt SAREE ED IRE TOS EEG GAS IF sip AEE ots

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Piieiraisece scien

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But, there IS ALSO RAISED another general question

of importance, supposedly long settled, which calls for fur.

ther review. That question is: May Public Officers connive

with rogues to rob a citizen of his property, may they exer.

cise a veto upcn the means employed for their detection,

and may Respondent retain the benefits of a judgment or

deficiency obtained by the conniving of its officers with —

rogues and by the frauds perpetrated by them?

The “peculiar” facts of this case and the Court of

Appeals’ opinion certainly call for further review unless

Petitioner is to be subjected by Respondent to peculiar law

applied to the admitted “peculiar” facts.

Respondent’s position is that since the facts of this case

are peculiar and unique and may probably never be dupii-

cated no general question of importance is raised; that it

should be permitted to retain the benefits of the frauds of

its officers, attorneys and other representatives, and until

and unless its officers, attorneys and other representatives

make a practice of duplicating the identical frauds on all

taxpayers no general question of importance will be raised

—that isolated, peculiar frauds perpetrated upon isolated

individual taxpayers by Government Officials should be per-

mitted to stand unredressed even though the frauds deny

due process.

On page 5 of Respondent’s Brief appears the follow-

ing:

‘Ultimately, the sole issue presented to the Board

for its decision relating to the 1920 case was whether

taxpayer was entitled to a certain deduction from gross

income for that year. (R. 610, 619) The decision of the

Board denying the deduction was rendered upon a full

hearing had before it, at which a new stipulation was

introduced (R. 453), as well as evidence both oral and

documentary adduced by the taxpayer and the Commis-

sioner (R. 423-550), the taxpayer appearing pro se, as

well as being represented by two lawyers (R. 424).”

(Emphasis mine.)

The word ‘‘ultimately’’ as used by Respondent means the

FIFTEEN YEARS’ delay heretofore explained. The in-

ference is that the presence of a sufficient number of law-

ers guarantees a full hearing and due process. The Record

discloses (R. 437-476) that at the hearing denominated ‘‘a

full hearing’’ in Respondent’s Brief, Petitioner was re-

quired by the Board to use the ‘‘stipulation’’ fraudulently

entered into February 5, 1931, by the second unauthorized

attorney and an assistant to the Chief Counsel for the Com-

missioner ; that some of the most material and decisive facts

of your Petitioner’s defense to the 1920 deficiency had been

entirely omitted from the fraudulent stipulation; that other

material and decisive facts had been falsely stated in such

fraudulent stipulation; but that proof of such omitted facts

was supplied by Petitioner, and the false statements of fact

were corrected where counsel for the Government would

agree, but where agreement could not be reached the true

facts were established by documentary and oral evidence;

and

That while there were supposedly two lawyers present

at the continued hearing and appearing for Petitioner, one,

Mr. Hansen, was Petitioner’s office manager and account-

ant, who was present as a witness and testified as to Peti-

tioner’s method of accounting and reporting (R. 512); that

the other, Mr. Swindler, lived and practiced in Washington,

D. C., and had been employed by Petitioner (R. 434) to

watch the docket of the Board and to prevent further com-

plications by the appearance and conduct of additional un-

authorized attorneys should they attempt to enter the case;

that neither Hansen nor Swindler had any knowledge of

the facts relating to the deduction of $75,989.20 then in con-

troversy nor of the transaction out of which such claimed

deduction arose, and

a

That your Petitioner was the only person, then living,

who was familiar with those facts, who had a clear recollec-

tion of them and, in consequence, was in position to interro-

gate witnesses about matters ancillary to or relating to those

facts, and who could testify to the facts which Petitioner

could not establish by documentary evidence because of the

absence of Petitioner’s records—which had been stolen or

surreptitiously removed from the files and custody of his

former attorney of record and none of which, then, nor

since, have ever been returned to your Petitioner.

The Record (620-623) also discloses that after the afore-

said hearing was concluded the Board ignored the true facts

thus adduced and established by documentary evidence as

well as by oral testimony—and in writing its opinion based

its decision, in part, (R. 621-623), upon some of the iden-

tical falsely stated facts previously fraudulently stipulated

by the second unauthorized attorney pretending to repre-

sent your Petitioner and by an assistant to the Chief Coun-

sel for the Commissioner of Internal Revenue.

-10—

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pe.

A full hearing requires not only the opportunity to

present all the evidence but also giving consideration to

and deciding the case upon all such evidence. In the hear-

ing, denominated a ‘‘full hearing’’ in Respondent’s Brief,

Petitioner was deprived of the opportunity of offering his

records that had theretofore been stolen from his former

attorney of record and which had never been returned to

him. Notwithstanding, in the absence of such records, your

Petitioner, by collateral evidence, proved and demonstrated

the true facts, such evidence was entirely ignored by the

Board. Therefore, to all intents and purposes, such hear-

ing denominated ‘‘a full hearing’’ might as well never have

been held and that farcical proceeding could as well have

been dispensed with, and the Board could as well have used

(Piss seein resem nate oN Hi Pe ere ee MON Tae

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—

the language of the attorney for the Commissioner with

reference to the fraudulent stipulation and his insisting that

it be used, to-wit:

‘*We stipulated these facts before. If it is good

enough for one case it is good enough for this case.

The fact of the matter is in docket No. 14379 I think

Your Honor will find that stipulation in the file.’’ (R.

437)

Also on page 5 of its Brief in Opposition Respondent

states:

‘*He contends that in some way he was denied his

day in court because of fraud and conspiracy between

Secord and representatives of the Government.’’ (Em-

phasis mine.)

Petitioner does not make, and has never made, the conten-

tion he was ‘‘in some way’’ denied his day in court.

On the contrary, the Record discloses Petitioner proved,

in proper sequence and step by step, the conspiracies, and

the frauds perpetrated pursuant thereto, to deprive and

defraud your Petitioner of a hearing, or opportunity to be

heard, in defense against such deficiency (R. 355-411, 620-

623); that at all times up te March 26, 1940 (R. 357-359)

your Petitioner, in the absence of proof to the contrary,

had proceeded upon the belief that the deficiency had pre-

viously been sustained by the Board of Tax Appeals as a

result of accident, confusion, inadvertence and mistake (R.

765-767), and had presented his defense to the deficiency

accordingly ; but

That, on March 26, 1940, Petitioner discovered con-

vincing proof (R. 357-359) that he had previously been de-

prived and defrauded of a hearing and an opportunity to

be heard, and had been deprived and defrauded of an op-

portunity to present the true facts of his defense as a result

———ys

of conspiracies between unauthorized attorneys pretending

to represent Petitioner and attorneys for the Commissioner

of Internal Revenue, and also as a result of conspiracy be-

tween the officers, agents, attorneys and other representa-

tives of the Commissioner; and that all the prior acts of

such unauthorized attorneys and attorneys for the Commis-

sioner resulted and flowed from perfectly designed and well

concealed conspiracies to deprive and defraud your Peti-

tioner of an opportunity to present, and to have considered

by the Board, the true facts of his defense;

That notwithstanding your Petitioner, upon discovery

of such convincing proof, immediately sought leave to re-

open the case and to offer proof of such conspiracies and

frauds before the case was decided by the Board (R. 357-

359), such leave was denied and thereafter the Board, in

part (R. 621-623), based its opinion upon the identical false- _

ly stated facts fraudulently stipulated by the second un-

authorized attorney pretending to represent your Petitioner |

and an assistant to the Chief Counsel for the Commis-

sioner (R. 376-385).

There was no vague, uncertain and indefinite char-

acterization by Petitioner that he was ‘‘in some way’’ de-

nied his day in court. Instead there was positive proof

of the conspiracies and the frauds perpetrated pursuant

thereto which deprived and defrauded your Petitioner of

his day in court. Nowhere in the Record does there appear

any denial by Respondent of the allegations of such con-

spiracies, collusion and frauds. Instead, Respondent moved

to strike such allegations, ‘‘All upon the grounds and for

the reasons that the same is redundant, immaterial, imper-

tinent and scandalous.’’ (R. 19-20)

Moreover, Respondent offered no evidence in an at-

tempt to refute Petitioner’s oral and documentary evidence

-12—

which proved and demonstrated such conspiracies and

frauds, which were effectuated, and which deprived and de-

frauded your Petitioner of his day in court.

Moreover, Respondent suppressed documentary rec-

ords, some of which were your Petitioner’s own records

that had been stolen or surreptitiously removed from the

files of his former attorney of record, and suppressed the

oral testimony of witnesses, all of which evidence would

have more conclusively established the existence, the in-

tent and purpose of the conspiracies, the frauds perpetra-

ted upon Petitioner pursuant thereto and the effect of those

frauds of depriving and defrauding your Petitioner of his

day in court.

On page 6 of the Brief in Opposition Respondent states:

‘‘The Board denied the deduction upon the ground

that taxpayer was on the cash basis of accounting and

was not entitled to a deduction since the money alleged

to be paid was not paid in the taxable year;’’ (Empha-

sis mine.)

That quoted statement refers to another fraud perpe-

trated by the Board in its memorandum opinion (R. 253,

261, 620-621). Notwithstanding Petitioner for all years prior

and subsequent to 1920 was on the accrual basis of account-

ing—and of reporting income for taxation and had never

sought leave to change and had never been changed by the

Commissioner from the accrual to cash basis of reporting

(R. 477-550)—the Board held Petitioner bound by an ob-

vious typographical error on the face of Petitioner’s incom-

plete tentative returns, which were qualified in every con-

ceivable manner and filed with an explanation that they

were incomplete and incorrect and reserving the right to

file a completed, correct amended return (R. 257, 85-86),

and

pssst Seragt

wey iS Se

Bios RE pe efor pth

Bie.

Notwithstanding Petitioner’s books for 1920 had been

submitted in the first part of the 1939 hearing by Petition.

er’s accountant, Mr. Hansen, and had been thoroughly ex-

amined by Respondent’s attorneys and other representa-

tives (R. 411-423), and

Notwithstanding such books showed they were kept on

accrual basis, and—except the deduction of the $75,989.20

extorted from Petitioner, which was not presented by Han-

sen in the first part of the hearing because of his lack of

knowledge of the facts and because of Petitioner’s illness

and absence—all deductions raised in Petitioner’s original

Petition filed in 1926 with Board, and two deductions or

issues not raised therein were allowed (R. 411-423)—which

reduced, to $28,260.61, the previously asserted deficiency of

$36,116.86, and

Notwithstanding, in the continued hearing held in No-

vember, 1939, all the evidence with reference to books, to

accounting and reporting income related to the business, |

books and reporting by the partnership of Gayer and |

Owens, as partners, and as individuals for 1919 and prior |

years—and such evidence established the fact that for 1919

and all prior years Petitioner was on the accrual basis of

accounting and reporting (R. 423-550)—

Nevertheless, the Board (R. 620) first found and con-

cluded Petitioner kept NO books for 1920; then by inter-

lineation corrected such finding to recite ‘‘no PROPER

books’’ were kept, and

To sustain the first finding of NO BOOKS, the Board

referred to the testimony at the continued hearing (R. 423-

500) about the partnership books for 1919 and prior years

—which partnership had been dissolved twenty years and

its books and records scattered, lost or destroyed—as

‘“No books of account are in evidence which would

—

bear on petitioner’s contention, and the records which

were mentioned at the hearing, though not produced, do

not give an indication that they were kept either as

regular books of account or on an accrual basis. Con-

sequently respondent’s contention must prevail.’’ (R.

620-621), and—

The Board, by such legerdemain, ignored not only the

established true facts but also ignored its own finding of

the extortion—the award of additional moneys out of the

impounded funds to Martha Jackson in 1920—and, to ar-

rive at its predetermined decision to deny the deduction,

held Petitioner’s 1920 RETURN was not on the accrual

basis (R. 619).

Notwithstanding the Board in its opinion (R. 620)

found the substance of the 1920 stipulation as ‘(which

awarded additional moneys out of the impounded funds to

Martha Jackson)” and thus found payment of the extor-

tion to have been made by Petitioner in 1920, in complying

with the Secretary’s unlawful and void order, and

Notwithstanding the receiver thereafter held more in

trust for Martha Jackson and held correspondingly less in

trust for Petitioner and his associates, Brazell and Johnson,

and

Notwithstanding after execution of “the 1920 stipula-

tion (which awarded additional moneys out of the impound-

ed funds to Martha Jackson)” (R. 620) Martha’s legal rep-

resentative (Parmenter) and two others—McKinney, the il-

legally appointed interloper-guardian (R. 215-216), and the

Secretary of the Interior, both claiming the right to ad-

minister Martha’s estate (Deft. Ex. 18, R. 231-245; Deft.

Exs. 3 to 13, incl., R. 199-214)—asserted or exercised do-

minion, supervision or control of such “‘additional moneys

awarded out of the impounded funds to Martha Jackson” —

Merely because the receiver, as one trustee for Martha,

did not, until 1922, DISTRIBUTE the assigned or awarded

funds to the Superintendent of the Five Civilized Tribes,

Waa Die i LR Sah eS Cana ts

Prins rte tictesrctacratay ven Sanidite snes ch

as another trustee, by agreement, for Martha—such delay

in DISTRIBUTION being caused by the struggle between

the contending guardians and the Secretary in which each

sought to get possession of and to administer the awarded

impounded moneys—

The Board, in its memorandum opinion, capriciously

and deliberately confused such DISTRIBUTION in 1922

with the PAYMENT by Petitioner in 1920—“(which

awarded additional moneys out of the impounded funds to

Martha Jackson)” and held:

“It will be observed from the findings of fact,

supra, that it was not until September, 1922, that the

money was paid out of the impounded funds to the

Superintendent of the Five Civilized Tribes for the ben-

efit of Martha Jackson. Consequently if petitioner's

tax return was compiled on the cash basis for the year

1920, neither a loss nor an expenditure in that year

can be claimed since no money was actually paid in

that year.” (R. 620)

The award of additional moneys out of the impounded

funds to Martha Jackson in 1920 constituted complete pay-

ment, free from contingencies, in that year and was there-

fore deductible in 1920 on either cash or accrual basis of

reporting income for taxation—even under the Board’s find-

ing that Petitioner’s 1920 RETURN was not on the ac-

crual basis.

On the same page of Respondent’s Brief appears the

following language:

««* * * the Court of Appeals based its affirmance on

the ground that the amount sought to be deducted was

a capital outlay and therefore not deductible at all.

But, of course, an appellate court is not limited to the

grounds given by the lower tribunal. Helvering v. Gow-

ran, 302 U. S. 238, 239, 245.”

By such statement Respondent seeks to skate over and gloss

over the true situation.

‘A final decree rendered in 1919 (R. 183), from which

no appeals had been taken, adjudicated your Petitioner and

others to be the owners of property and impounded funds

involved in litigation brought by the Secretary of the In-

terior and lost by him throughout all the courts. Approxi-

mately one year after such decree was rendered the Secre-

tary arbitrarily and unlawfully promulgated an order (R.

199-201) designed and intended to require an oil company

to pay approximately $300,000.00 to a certain Indian as roy-

alty, and attempted to identify such royalty as royalty ac-

crued under the terms of a receiver’s lease, which receiver

had been appointed at the demand of the Secretary, and

under which lease the property had been fully developed and

every barrel of oil and every dime of revenue therefrom

had been produced—the title which royalty had been final-

ly adjudicated and possession thereof awarded to Petitioner

and his associates by the final decree from which no —

had been taken. (R. 183-198)

The Record (201-252) discloses that the Secretary, by

arbitrary exercise of power and by abuse of the power of

his office, stopped all further judicial process in that case

and, by coercion, extorted from your Petitioner and his

two associates more than $200,000.00 of their impounded

funds, title to which had been finally adjudicated (R. 183-

198).

The Record discloses (353-355) that in its original An-

swer filed with the Board Respondent raised the issue that

the $75,989.20 extorted from Petitioner by the Secretary

was a capital investment, in that Respondent claimed it

was a part of the purchase price of property; that in the

continued hearing before the Board in 1939 Respondent

abandoned that issue and stood exclusively upon the con-

tention Petitioner was on the cash basis of accounting and

—_

reporting (R. 423-550), and in consequence thereof the

Board in rendering its memorandum opinion expressly re-

fused to consider the issue of capital investment or to find

the facts thereof (R. 623);

That nevertheless, on review by the Court of Appeals

Respondent raised the issue of capital investment, present-

ed and urged that the $75,989.20 represented:

«<* * * the amount of his share of an increase in

the purchase price of an Indian allotment the title to

which was then in litigation, which the petitioner and

his associates had allegedly agreed to make in that year

in compliance with an order of the Secretary of the

Interior.”’

The appellate court seized upon such newly raised is-

sue and without jurisdiction so to do made its own inde-

pendent findings of fact thereof, avoided deciding the ques-

tion of law arising out of the facts so found—namely, the

invalidity of the Secretary’s order—and arbitrarily and

capriciously affirmed the Board’s decision. (Owens v. Com-

missioner, 125 F. (2d) 210.)

The appellate court had no jurisdiction or power to so

proceed and its opinion is void on its face. Rapeer v. Col-

poys, United States Marshal, (App. D. C.) 85 F. (2d) 715,

717; United States v. Walker, 109 U. S. 258, 266, 3 S. Ct.

277, 27 L. ed. 927; Robinson, et al., v. Elder, (9th Cir., Nev.)

78 F. (2d) 817, 818; Reynolds v. Stockton, 140 U. 8. 254,

268, 35 L. ed. 464, 468; Helvering v. Rankin, et al., 295 U.S.

123, 79 L. ed. 1343; Helvering v. Nat. Grocery Co., 304

U. 8. 282, 82 L. ed. 1346, 1356; Helvering v. Tex-Penn Oil

Co., 300 U. S. 481, 81 L. ed. 755, 756; Helvering v. Wood,

309 U. S. 344, 84 L. ed. 796, 799; Patton, et al., v. Com. of

Int. Rev., (6th Cir., Ohio) 168 F. (2d) 28; Ross v. Com-

missioner, 169 F. (2d) 483, 496; Levitt & Sons v. Nunan,

haiti eb ale Se NE Si 2 AIS Cac ATES

oe

peda) dats < abies

Pees

‘ . —

(2d Cir.) 142 F. (2d) 795; Levitt € Sons v. Numan, (2d Cir.)

160 F. (2d) 209; Hormel v. Helvering, 312 U. S. 552, 85

L. ed. 1037; Helvering v. Gowran, 302 U. S. 238, 239, 245.

True, an appellate court is not limited to the grounds

given by the Board for its decision, but equally true the ap-

pellate court IS limited to the facts found by the Board—

and the appellate court has no jurisdiction or power to

make its own independent findings of fact or to draw in-

ferences therefrom.

Where the appellate court accepts new grounds or a new

theory not urged or tried by the Board, it is mandatory up-

on the court to remand the case to the Board for hearing of

the facts of such new ground or theory.

The case of Helvering v. Gowran, 302 U. S. 238, 239, 245,

cited in Respondent’s Brief In Opposition, sustains the fore-

going statement and destroys the contention stated on page

6 of Respondent’s Brief.

In Helvering v. Gowran, supra, this Court held:

‘If the Court of Appeals had accepted the theory

it would have been open to the taxpayer to urge, in view

of the new issue presented that he should have the op-

portunity to establish before the Board additional facts

which would affect the result. As we accept the new

theory, leave is granted Gowran to apply to the lower

court for that purpose.’’

Petitioner was afforded no such relief or remedy in this

case. He was not given an opportunity to offer his proof

on the newly raised issue of capital investment or capital

outlay. The appellate court’s accepting such newly raised

ground or theory, its making its own independent findings

of fact, its avoiding a decision of the question of law arising

out of the facts so found, and its arbitrarily affirming the

—20—

Board’s decision, within themselves and standing apart

from the acts of all others representing the Commissioner

there or Respondent here, was a denial to Petitioner of due

process of law, a denial of a full hearing as well as denial

of an opportunity to be heard.

In paragraph 2 on page 6, reference is made by Re.

spondent to numerous pages of the Record. Examination

of the Record will reveal that such page references are to

the oral testimony of witnesses and to comments by Peti-

tioner during the course of the trial. With meticulous care

throughout Respondent’s entire brief no reference is made

to any of the documentary evidence which proved and estab-

lished the conspiracies, and the frauds perpetrated upon

Petitioner pursuant thereto—nor to Respondent’s suppres-

sion of other documentary evidence and the testimony of

witnesses under its control.

On page 7 of Respondent’s Brief appears the following

language:

««* * * and the case was subsequently tried alone

upon a new stipulation of facts (R. 453-460) and other

evidence (R. 423-550). The stipulation which Secord

had entered into was not introduced at this hearing,

and there is nothing whatsoever in the record to sub-

stantiate the taxpayer’s charge (Pet. 17) that the

Board based its conclusion on such stipulation.’’ (Ital-

ics mine.)

Petitioner will first discuss the last, or full, sentence

in the above-quoted excerpt, which is a false statement.

The Record discloses Petitioner never contended such

stipulation entered into by Secord was ‘‘introduced at this

hearing’’—meaning the hearing before the Board in 1939.

But, the Record does disclose (437) that Respondent's

counsel stated:

‘‘We stipulated these facts before. If it is good

enough for one case it is good enough for this case. The

fact of the matter is in docket No. 14379 I think Your

Honor will find that stipulation in the file.’’

and thereafter Petitioner was required to use, but permit-

ted to correct, the so-called Secord stipulation, where cor-

rections could be agreed upon, otherwise Petitioner offered

documentary and oral evidence to prove the facts omitted

from the so-called Secord stipulation and also to correct the

falsely stated facts in such stipulation.

On page 17 of Petitioner’s Petition, cited by Respond-

ent, the following language is used:

‘*Although Petitioner was thereafter ostensibly re-

lieved from the aforesaid frauds and the effect of the

fraudulently stipulated, falsely stated facts of his de-

fense and was ostensibly granted a hearing on the

merits of his defense, nevertheless, at a later hearing

and by its decision the Board held Petitioner was bound

by the identical falsely stated facts PREVIOUSLY

fraudulently stipulated by the Commissioner’s and Re-

spondent’s attorneys and the aforesaid second un-

authorized attorney, and thus a second time the Board

denied Petitioner due process of law.’’ (Emphasis

mine. )

As a pretended ground or reason for denying the ex-

tortion deduction on the accrual basis of reporting, the

Board used the falsely stated facts PREVIOUSLY fraudu-

lently stipulated to conjure up a fictitious contingency on

Petitioner’s ownership of the assigned, impounded funds.

Such fictitious contingency was the moot appeal of

McKinney, the illegally appointed, interloper-guardian (R.

215-226) from an order of the Trial Court—which had en-

tered the final and supplemental decrees (R. 183-198)—

denying him leave to intervene, or to disturb those decrees

or even to get into the case.

RE MSP. ai Nas Rai tA Ss tat isp

McKinney had no right to intervene or to appeal. His

“appeal” was moot. Furthermore, neither Martha nor her

legally appointed guardian could appeal because she, in

effect, had won the lawsuit. (R. 183-193) Therefore the

Secretary could not appeal in his official capacity or for

her. He could not act in Martha’s or Parmenter’s place or

stead. (Mott v. United States, 283 U. S. 747.)

Nevertheless, the Board ignored those record facts, and

reached back to, resorted to and used the falsely stated

facts PREVIOUSLY fraudulently stipulated as the basis for

a fictitious contingency, then used such pretended but fic:

titious contingency as its reason for denying the extortion-

deduction on the accrual basis of reporting.

Such falsely stated facts PREVIOUSLY fraudulently

stipulated were stipulated to be the facts of all of Petiticn-

er’s appeals pending in 1931 before the Board. The Com:

missioner appealed from the Board’s decision of Petition-

er’s 1923 case. The appellate court’s opinion in that case,

Commissioner v. Owens, is reported at 78 F. (2d) 768.

That case was submitted to the appellate court on the

identical falsely stated facts PREVIOUSLY fraudulently

stipulated in the 30-called Secord stipulation. Among other

false statements that stipulation falsely stated (R. 383, par.

(w)) appeals were taken from the final decree. Had that

statement been true then contingencies would have been

created on Petitioner’s ownership of his portion of the im-

pounded funds. Since such statement was false no such

contingencies existed. That false statement was corrected in

the 1939 hearing before the Board (R. 459, par. (w)). In

its Memorandum Opinion the Board ignored that correc:

tion and substituted language from the opinion in Commis-

sioner v. Qwens (supra) to accomplish the purpose of the

false statement (R. 666-667).

The Board’s opinion (621-623) itself refutes Respond-

ent’s statement:

‘““There is nothing whatsoever in the Record to

substantiate the taxpayer’s charge (Pet. 17) that the

Board based its conclusion on such stipulation.’’

ae i J 6h.) CO

—323—

The cited portions (R. 621-623) of the Board’s Opinion call

specific attention to the Court of Appeals’ opinion in Com-

missioner v. Qwens, 78 F. (2d) 768, and also call attention

to the fact that Petitioner’s contentions in the 1920 case

were inconsistent with the facts as stated in that opinion.

The Board made its conclusions square with and conform

to that Appellate Court Opinion.

Moreover, the cited portions of the Board’s opinion (R.

621-623) show on their face that the Board based and

grounded its denial, on the accrual basis, of the extortion

deduction upon pix appellate court’s opinion in Owene—.

Commissionery. pra. ‘The Record (pp. 623-665) demon-

strates in detail the errors in the Board’s Opinion in the

1920 case and the fact that numerous paragraphs thereof

were copied verbatim from the appellate court’s opinion in

Commissioner v. Qwens, supra, and other findings were

made therefrom without regard to the true facts proved by

Petitioner and established in the Record of the 1939 hear- .

ing of Petitioner’s 1920 case.

Furthermore, the Record (666-667) shows the changes

made by the Board in its Memorandum Opinion, pursuant

to Petitioner’s motion for reconsideration. Some of such

changes show on their face corrections of falsely stated

facts contained in the so-called Secord stipulation. Those

corrections eliminated the fictitious contingencies on Peti-

tioner’s ownership of the impounded funds assigned in 1920

—which the Board (R. 620) tound and defined as “‘( which

awarded additional moneys out of the impounded funds to

Martha Jackson)”. But the Board did not change its con-

clusions to conform to the corrections.

Such changes also show substitutions of facts stated by

the appellate court (R. 667) in Commissioner v. Owens,

supra, for the true facts of the 1920 case proved and estab-

lished by Petitioner by documentary evidence in the 1939

hearing of the 1920 case—and the statements of fact bor-

rowed by the Board from the appellate court’s opinion in

Commissioner v. Qwens, supra, were made to serve the

Board’s purpose of deciding Petitioner did not in 1920 own,

free from contingencies, the funds impounded by the

receivers,

The Board resorted to those tractics notwithstanding

documentary evidence, staring it in the face, demonstrated

that on June 17, 1919, by final decree, from which no ap.

peals were taken, Petitioner was adjudicated to be the

lawful owner of and was awarded possession of his portion

of the impounded funds (R. 183-198).

No better proof of conspiracy and fraud to deny Peti-

tioner consideration of the true facts of his defense, to

deny him a full hearing, to deny due process of law could

It would be highly advisable for Respondent’s brief

writer to carefully examine the Record and Petitioner’s Pe.

tition before he attempts to distort them.

In conclusion, in support of the immediately foregoing

accusation, your Petitioner calls this Honorable Court’s at- |

tention to the following language at the bottom of page 7

of Respondent’s Brief In Opposition, to-wit:

‘*Moreover, the short answer to taxpayer’s charges

of conspiracy and fraud is that the Court of Appeals re-

jected them in the prior appeal. Owens v. Commission-

er, 125 F. (2d) 210, certiorari denied, 316 U. S. 704, re-

hearing denied 317 U. S. 704.’’

A short answer to the above quoted ‘‘short answer” |

is that no issue of conspiracy and fraud was presented to,

and therefore could not be rejected by, the Court of Appeals

in the prior appeal (Owens v. Commissioner, 125 F. (2d) | }

210). This, for the simple reason that—after the evidence —

was offered but before the Board rendered its opinion Peti- —

tioner discovered proof convincing to him that the acts and

conduct of the attorneys for the Commissioner of Internal

Revenue resulted and flcwed from a perfectly designed and |

—25—

well concealed conspiracy—your Petitioner immediately

sought, but was denied by the Board, leave to reopen his

case and offer proof of such conspiracies and frauds.

Furthermore, Respondent’s statement on page 8:

«<@ © * taxpayer’s unsupported epithets and allega-

tions do not muke out a case of fraud. Kent v. Lake

Superior Canal Co., 144 U. S. 75, 81.”

is utterly groundless. Of course unsupported epithets and

allegations do not make out a case of fraud and no author-

ity need be cited in support of that legal axiom.

But, abundant documentary proof of allegations of con-

spiracy and fraud not denied by Respondent, which proof

Respondent made no attempt to refute or to disprove—

other than by suppressing additional documentary evidence

in its exclusive custody and by suppressing the oral testi-

’ mony of witnesses under its exclusive control—DOES make

out a case of conspiracy and fraud, and no authority need

O. O. OwENs,

Petitioner.