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Thornton v. United States


decided: February 20, 1974.


Forman, Hunter and Garth, Circuit Judges.

Author: Garth

GARTH, Circuit Judge:

The defendants appeal from an order of the District Court dated January 19, 1973 which granted the taxpayers' motion to enjoin certain jeopardy assessments and which ordered the return of certain properties and monies seized by the defendants pursuant to those assessments. Jurisdiction is based on 28 U.S.C. § 1291. A detailing of the procedural history is necessary to understand our disposition of this appeal.


On June 21 and 22, 1972, the District Director of Internal Revenue made certain jeopardy assessments against the plaintiffs Henry and Ernestine Thornton and two corporations,*fn1 managed, operated and owned by Henry Thornton. The plaintiffs thereupon on June 27, 1972 filed a Complaint, and a Motion for a "Restraining Order and Preliminary Injunction". The Complaint inter alia alleged that the actions of the District Director--in making the assessments and the levies and in seizing certain property*fn2 --were taken in bad faith to harass the plaintiffs; were unlawful, illegal and violated the plaintiffs' constitutional and statutory rights; and exceeded the authority of the Director. Furthermore, plaintiffs claimed that the statute under which the Director acted was unconstitutional. Injunctive relief was sought, as well as the return of the liquor licenses, the voiding of the assessments and levies, and a declaration that plaintiffs had no liability to the defendants.

On the same day that the Complaint and the Motion for Preliminary Injunction were filed, an informal agreement was executed by the parties, which provided for the return of the two liquor licenses upon the delivery by plaintiffs to the defendants of a $2,500 bond. The bond was furnished on July 7, 1972.*fn3

On August 10, 1972 the plaintiffs moved to "Stay Levy and Sale on and of Plaintiff's Assets and for Obtaining Defendant's Computations of Alleged Deficiencies".*fn4 That motion was made returnable on September 19, 1972. No testimony, affidavits or other evidence was produced at the hearing, at which only oral arguments were made. Subsequent to the hearing the plaintiffs filed a brief (on October 22, 1972) which included a statement that the jeopardy assessments were not personally made by the District Director of Internal Revenue, but were rather made by a subordinate.

On January 19, 1973 (filed January 22, 1973) the District Court entered its memorandum and order which (1) granted the plaintiffs' motion for a permanent injunction to enjoin the jeopardy assessments of June 11 [sic] 1972 and June 22, 1972, and (2) ordered that any monies, property or other funds taken by the Government be returned to the plaintiffs, and (3) ordered that the defendants' motion for a declaratory judgment on the merits of the case be denied.*fn5

Implicit in the Court's opinion which held the assessments to be illegal was a finding that they were not personally made by the District Director of Internal Revenue, Alfred L. Whinston, but rather were authorized by a Group Chief. Relying solely on this ground, the Court invalidated the jeopardy assessments.

On January 29, 1973 the defendants moved to vacate the Court's order of January 19, 1973 and sought a rehearing. In support of this motion the defendants submitted an affidavit to support their contentions that the assessments were legally authorized.*fn6

On February 14, 1973 the defendants' motion to vacate the January 19, 1973 order, and for rehearing, was denied. This appeal taken from the January 19, 1973 order (which granted plaintiffs' motion for permanent injunction against the defendants) then followed.


§ 7421(a) of the Internal Revenue Code of 1954*fn7 provides, (with certain provisions not relevant here) that "no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person." Exceptions to this express prohibition have been allowed only in limited areas and for extraordinary circumstances. Enochs v. Williams Packing & Navigation Co., 370 U.S. 1, 8 L. Ed. 2d 292, 82 S. Ct. 1125 (1961); Iannelli v. Long, 487 F.2d 317 (3rd Cir. 1973); Sherman v. Nash, 488 F.2d 1081 (3rd Cir. 1973). The taxpayer has the burden of proof to show that he falls within the exceptions of the § 7421 prohibition against suits. See Enochs v. Williams Packing & Navigation Co., supra; Transport Manufacturing and Equipment Co. of Del. v. Trainor, 382 F.2d 793 (8th Cir. 1967).

Procedurally, all that was before the District Court when the permanent injunction issued was plaintiffs' motion limited by its terms to "Stay Levy and Sale" and to obtain "Defendant's [sic] Computations of Alleged Deficiencies." We cannot ascertain whether or not the District Court considered in conjunction with that motion, the pleadings entitled "Motion for Restraining Order and Preliminary Injunction" filed with the Complaint on June 27, 1972. It is evident from its opinion, however, that the District Court having found that the District Director had not personally approved the assessments and that hence they were unauthorized, then and there determined that the entire litigation should be disposed of solely on that ground and by its final order.*fn8

In any event, prior to October 22, 1972 (the date plaintiffs filed their brief, which was some 30 days after the oral argument), no issue respecting improper authorization of the assessments had been raised. Neither the Complaint nor any other pleading contained any such allegation. Not even in the oral argument of September 19, 1972 did the taxpayers suggest that the assessments were improper because they were not personally made by the District Director. It was not until October 22, 1972 when the plaintiffs filed their only brief (post-hearing), that for the first time the plaintiffs raised the issue which triggered the Court's opinion and order of January 19, 1973.*fn9 Through a hearsay non-sworn statement, plaintiffs asserted in their brief :

"The Internal Revenue Service, through its Revenue Officers and Group Chief, Mr. Thomas Meehan, admitted to Plaintiffs' counsel . . . 'That the said jeopardy assessments were not personally made by the District Director, Alfred L. Whinston, who was away on leave from his office, and that the jeopardy assessments were made by a subordinate employee of the Internal Revenue Service. '" (emphasis supplied)

Notwithstanding the lack of evidentiary underpinning, the District Court held that the assessments were illegal. The difficulty with the District Court's reasoning and holding is that there is no evidence in the record to support such a finding. Not only had the taxpayers failed to meet their burden*fn10 of showing lack of authorization (or any other matter sufficient to bring them within the rare exceptions to § 7421), but they had totally failed to produce any evidence whatsoever which would require a countershowing by defendants.*fn11 A statement in a brief or in oral argument does not constitute evidence. See United States v. Howard, 360 F.2d 373, 376 fn. 4 (3d Cir. 1966); Slaughter v. Philadelphia National Bank, 417 F.2d 21, 32 fn. 20 (3d Cir. 1969); Shock v. Tester, 405 F.2d 852 (8th Cir. 1969).

Findings of fact are to be made upon evidence, and are not to be set aside unless clearly erroneous. F.R.C.P. 52(a), Krasnov v. Dinan, 465 F.2d 1298 (3d Cir. 1972). The District Court's finding that the assessments were unauthorized is wholly without an evidential basis and is clearly erroneous.

The January 19, 1973 order of the District Court will be vacated and the cause remanded to that Court for further proceedings not inconsistent with this opinion.

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