Opposition Brief — Owens v. United States

INDEX

Page

Opinions below ............. Sa ie wie dA Seiadie ba 1

ER ESL RR A a ee an ame, ON ea 1

Question presented ...... Vide bet ordtes pals oak sae cakes 2

i Bare MG cg tas oe ete er ne oe goa 2

NT ce UAiy ol dns dU wen h eek Reo uk mhs oko wav aca me 4

Ceca ki wiiks wie wa kb WEL ehiinscnes behaves 8

CITATIONS

Cases :

Hazel-Atlas Co. v. Hartford Co., 322 U.S. 238.......... 8

Helvering v. Gowran, 302 U. 8S. 238................... 6

Kent v. Lake Superior Canal Co., 144 U.S. 75......... 8

Owens v. Commissioner, 125 F. 2d 210, certiorari denied,

316 U. S. 704, rehearing denied, 317 U. S. 704........ 2,7

United States v. Throckmorton, 98 U.S. 61......... 8

>

Inthe Supreme Court of the Wnited States

OcToBER TERM, 1949

No. 508

O. O. OWENS, PETITIONER

v.

THE UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE TENTH

CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINIONS BELOW

The findings of fact and conclusions of law of the

District Court (R. 28-30) are unreported. The

opinion of the Court of Appeals (R. 796-799) is

reported at 177 F. 2d 692.

JURISDICTION

The judgment of the Court of Appeals was en-

tered November 1, 1949. (R. 800.) The petition

for writ of certiorari was filed December 29, 1949.

The jurisdiction of this Court is invoked under

28 U.S. C., Section 1254.

(1)

QUESTION PRESENTED

Whether the decision of the Board of Tax Ap-

peals in a prior proceeding (which forms the

basis of this suit), redetermining a deficiency in

taxpayer’s income tax for the year 1920, and its

affirmance by the Court of Appeals, were unlaw-

fully entered and void. This in turn depends

upon whether the Court of Appeals exceeded its

jurisdiction, and whether the District Court, in

the present proceeding, erred in finding that

the evidence did not support taxpayer’s claim

of conspiracy (allegedly involving the Commis-

sioner of Internal Revenue and others) to deprive

him of his day in court.

STATEMENT

The United States brought this suit (R. 3-5)

against taxpayer to enforce collection of defi-

ciency in income tax as determined by the Commis-

sioner of Internal Revenue, and later affirmed by

the Board of Tax Appeals and the Court of Ap-

peals for the Tenth Circuit. Owens v. Cv'mmis-

stoner, 125 F. 2d 210, certiorari denied, 316 U. S.

704, rehearing denied, 317 U.S. 704.

The facts as found by the District Court (R.

28-30) may be summarized as follows:

On February 13, 1926, the Commissioner deter-

mined a deficiency in the taxpayer’s income tax

liability for the taxable year 1920, and on that date

sent him, by registered mail, a written notice of

such determination. Within sixty days thereafter,

a petition was filed by the taxpayer with the Board

-

of Tax Appeals seeking a redetermination of such

deficiency. On February 13, 1941, the Board re-

determined such deficiency in the sum of $28,260.61.

On May 18, 1941, the taxpayer filed a petition for

review of the Board’s decision with the Court of

Appeals for the Tenth Circuit, but filed no bond for

a stay of assessment or collection thereof. On May

29, 1941, the Commissioner made an assessment of

the sum of $28,260.61 together with interest in the

sum of $25,872.39, making a total of $54,133. This

was forwarded to the Collector of Internal Revenue

for the District of Oklahoma, who on June 3, 1941,

gave notice to the taxpayer and demanded payment

of the sum of $54,133. On January 13, 1942, the

Court of Appeals affirmed the order of the Board,

and on February 26, 1942, denied the taxpayer’s

application for a rehearing. On June 8, 1942, this

Court denied the taxpayer’s petition for certiorari.

(R. 28-29.)

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

person the sum of $350 for application on the tax

liability of the taxpayer, leaving an unpaid balance

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

still unpaid. (R. 29.)

As a defense to this proceeding, the taxpayer

sought to show the existence of a conspiracy to de-

prive him of his day in court, but the District Court

found that the evidence did not support such a

claim. (R. 29.) The evidence relating to this

charge of conspiracy will be stated in the Argument

section of this brief.

3

4

Upon the foregoing findings, the District Court

concluded that the Commissioner’s determination

of the tax assesment was a final and conclusive

adjudication of the taxpayer’s tax liability, and

that the United States is entitled to judgment. (R.

29, 30.) The Court of Appeals affirmed. (R. 796-

800.)

ARGUMENT

The petition for certiorari involves two basic

questions: (1) Whether, throughout the prolonged

course of the litigation involving taxpayer’s tax

liability for the year 1920, he has had his ‘‘day in

court’’, (2) Whether a conspiracy to deprive him

of his rights existed between agents of the Govern-

ment and attorneys purporting to represent him.

It is submitted that these issues were properly re-

solved against petitioner by both courts below. The

case turns on its own peculiar facts. No general

question of importance is raised which calls for

further review.

1. The decision of the Board of Tax Appeals

(upon which the present suit is based), redetermin-

ing taxpayer’s income tax liability for 1920 (R.

167), was entered on taxpayer’s petition for review

(R. 347-353) after the proceeding had been restored

to the calendar by order of the Board, vacating

prior memorandum opinions in so far as they af-

fected this proceeding (R. 409-411). Previously,

the Board, upon stipulation, had disposed of this

proceeding adversely to taxpayer (R. 385-394), the

proceeding having theretofore (pursuant to ag» 2e-

5

ment of counsel (R. 366-367)) been consolidated

with two proceedings involving taxpayer’s income

tax liability for 1923 and 1926. And the Board also

denied taxpayer’s motion to set aside such adverse

disposition. (R. 398-411.)

The reason the Board ultimately vacated its

prior orders in the case was that at the time the case

was consolidated with the taxpayer’s 1923 and 1926

eases and submitted on stipulation covering all

three doekets (R. 375-385), it seemed seriously

doubtful that one Secord, an attorney who appeared

for taxpayer in all three dockets, had any authority

whatever to represent him in the 1920 case and to

enter into any stipulation which bound him as to

that year.

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 de-

cision 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 Commissioner (R. 423-550),

the taxpayer appearing pro se, as well as being

represented by two lawyers (R. 424).

The taxpayer unquestionably had ample oppor-

tunity to litigate the only controverted issue in the

ease. He contends that in some way he was denied

his day in court because of fraud and conspiracy

between Secord and representatives of the Govern-

6

ment. But there is not the slightest justification

for taxpayer’s charges of fraud, conspiracy, and

collusion, as we shall show in the succeeding para-

graphs. Taxpayer also argues (Pet. 24-25) that the

Court of Appeals denied him his day in court be-

cause it affirmed the Board’s decision on a different

ground from that given by the Board. The Board

denied the deduction upon the ground that tax-

payer 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; 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. Gowran, 302 U. 8. 238, 239, 245.

2. The District Court found that taxpayer had

not made out a case of conspiracy and fraud. (R.

27, 29, 129-131.) This finding was made after the

most vague and uncertain but continuously reiter-

ated charges of the taxpayer, made throxghout

the trial (see, e.g., R. 60, 62, 63, 64, 65, 67-68, 69,

74-75, 90, 95, 96, 97, 107, 110-111, 118, 119, 120, 121-

122, 126, 131), of a conspiracy on the part of Gov-

ernment officials and others wrongfully to defeat

the taxpayer’s alleged right to the deduction, and

after the District Court permitted taxpayer to in-

troduce evidence of substantially all the facts relat-

ing to the acquisition by him and his associates of

interests in the oil properties in question, including

the record of the consequent litigation, and also

substantially all of the facts relating to the

Commissioner’s deficiency determination for the

taxable year 1920, including the record of the litiga-

tion arising therefrom. No other finding would

have been supported by the record.

Taxpayer contends (Pet. 8-10, 16-17) that be-

cause of the conspiracy involving Secord, he was

prevented from presenting his defense to the defi-

ciency asserted by the Commissioner for 1920. But,

as has been shown, the Board vacated (R. 409-411)

its decision (R. 366-367) based upon the agreement

to consolidate the 1920, 1923, and 1926 proceedings

and upon the stipulation of facts (R. 375-385) en-

tered into on behalf of taxpayer and the Commis-

sioner, so far as it concerned the 1920 case ; and the

ease was subsequently tried alone upon a new stipu-

lation 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 iu the record to sub-

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

Board based its conclusion on such stipulation.

Moreover, the short answer to taxpayer’s charges

of conspiracy and fraud is that the Court of Ap-

peals rejected them in the prior appeal. Owens v.

Commissioner, 125 F. 2d 210, certiorari denied, 316

U.S. 704, rehearing denied, 317 U.S. 704. Secord’s

letter to taxpayer (R. 772-777) merely confirms the

correctness of the District Court’s finding. It is,

7

8

of course, true that in a proper proceeding, upon

proper allegation and proof, a court of equity will

set aside a judgment obtained by fraud extraneous

tothe record. Hazel-Atlas Co. v. Hartford Co., 322

U.S. 238; United States v. Throckmorton, 98 U.S.

61. But taxpayer’s unsupported epithets and alle-

gations do not make out a case of fraud. Kent v.

Lake Superior Canal Co., 144 U. 8S. 75, 91.

CONCLUSION

The petition for a writ of certiorari should be

denied.

Respectfully submitted,

J Paxuup B. PERLMAN,

Solicitor General.

THERON LAMAR CAUDLE,

Assistant Attorney General.

Eis N. SLAcK,

wf Epwakp J. P. ZIMMERMAN,

Special Assistants to the

Attorney General.

J ANUARY, 1950

Wu. S. GOVERNMENT PRINTING OFFICE: 1950 e71329 ase