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United States v. Mellon Bank

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT


August 28, 1975

UNITED STATES OF AMERICA
v.
MELLON BANK, N. A., RESPONDENT AND MILTON F. MEISSNER, INTERVENOR-RESPONDENT, APPELLANT

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA Civil Action No. 74-717.

Staley, Rosenn and Hunter, Circuit Judges.

Author: Hunter

Opinion OF THE COURT

HUNTER, Circuit Judge:

This is an appeal from an order permitting the government to enter a safe deposit box and seize the contents in satisfaction of a jeopardy assessment against the lessors of the box.

The United States, acting pursuant to 26 U.S.C. § 7402, instituted suit against Mellon Bank to enforce a jeopardy assessment against the assets of the taxpayers in the Bank's possession. The district court granted the lessor of the box, appellant Milton Meissner, leave to intervene and contest the government's petition. Meissner raised several arguments in opposition to the motion and pressed for discovery. The district court denied Meissner's discovery motions and ruled further that the Anti-Injunction Act, 26 U.S.C. § 7421, divested it of jurisdiction to consider Meissner's counterclaim. In summary fashion, the district court granted the government's motion to enter the safe deposit box and seize the contents.

We conclude that the Anti-Injunction Act does not divest the district court of jurisdiction over counterclaims when the court has jurisdiction over an enforcement petition filed by the United States under 26 U.S.C. § 7402. Accordingly, we reverse the decision of the district court and remand the matter for additional proceedings.

I

On April 9, 1974, the Internal Revenue Service issued jeopardy assessments*fn1 against Milton Meissner*fn2 on the basis of alleged deficiencies for the tax years 1970 and 1971. When notices of the levy and seizure were received by Mellon Bank on April 10, 1974, Meissner's safe deposit box was sealed. The government, in its petition in the district court, alleged that notice of the assessments and demand for payments had been made in letters sent to Meissner, in care of his accountants; despite these notices, the taxpayer allegedly continued in his refusal to pay.*fn3

On July 26, 1974 the United States filed the instant suit in the district court. Over the government's objection, Meissner was granted leave to intervene.*fn4 Meissner urged in his answer to the government's motion, that the petition be dismissed (1) because the opening of the box would threaten his fifth amendment rights against self-incrimination,*fn5 (2) because the tax deficiencies were not due and owing, (3) because the government failed both to give proper notice of the levy, and to comply with the statute and regulation concerning jeopardy assessments, and (4) because the order sought by the government was unnecessary and therefore beyond the district court's power to issue under 26 U.S.C. § 7402.*fn6

By discovery motions Meissner sought to inspect all Internal Revenue Service documents relevant to his case. The motion was denied.*fn7

The district court granted the government's petition to open the safe deposit box. The instant appeal followed.

II

26 U.S.C. § 7402(a)*fn8 gives the district court jurisdiction to issue orders "necessary or appropriate for the enforcement of the internal revenue laws." When the United States attorney petitioned the district court for an order seeking to open Meissner's safe deposit box, the district court clearly had jurisdiction under § 7402(a). The order the government sought was necessary and appropriate to enforce the government's jeopardy assessment under 26 U.S.C. § 6861*fn9 against a third party bank in possession of the taxpayer's property.*fn10

The district court had discretion to allow Meissner to intervene.*fn11 Having granted Meissner's petition to intervene in a suit over which the court had jurisdiction under § 7402, the court also had jurisdiction over any challenges to enforcement of the jeopardy assessment Meissner might raise.*fn12

The district court erred in concluding that it was without jurisdiction to consider Meissner's counterclaims on the basis of the Anti-Injunction Act. 26 U.S.C. § 7421*fn13 divests the district court of jurisdiction over any "suit for the purpose of restraining the assessment or collection of any tax." Meissner did not sue to enjoin the assessment or collection of any tax. In fact he filed no suit at all. He attempted merely to raise a defense against an affirmative action in which the government sought judicial enforcement of a jeopardy assessment. In none of the cases cited by the government was § 7421 applied to bar a taxpayer from raising a defense in a case where the court had jurisdiction over an Internal Revenue Service enforcement petition.*fn14

Having allowed Meissner to intervene in a suit over which the court had jurisdiction under 26 U.S.C. § 7402, the court also had jurisdiction to consider Meissner's challenge to that motion.

III

Although the district court had jurisdiction to consider any challenge Meissner might raise, we have doubts about the appropriateness of at least some of the claims he has raised.*fn15 As such we do not suggest what procedures,*fn16 if any, would be required in the district court on remand.

Upon remand, the district court is directed to consider the merits of taxpayer's challenges. If the district court concludes that taxpayer has raised no issue which could be considered an appropriate challenge to the instant enforcement petition, it would not be an abuse of discretion to grant the government's motion in summary fashion.

I

For the foregoing reasons, the judgment of the district court is reversed and the matter remanded for further proceedings not inconsistent with this opinion.


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