Court Opinion

ID: 4481371
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:14:51.602457+00
Date Added: 2024-06-11T14:54:00.677878
License: Public Domain

Tannenwald, J. concurring: I agree with the conclusion reached by the majority, hut I Avould avoid polarization on the issue of privity which seems to characterize both the majority and dissenting opinions. Prior to 1938, section 51 (b) merely provided that a husband and wife living together might each make a return or make a single joint return, in which case “the tax shall be computed on the aggregate income.” Sec. 51 (b), Revenue Act of 1936,49 Stat. 1648,1670. Under the section and its predecessors, not only was there no suggestion in the decided cases that a spouse was estopped by the other spouse’s conviction for fraud,1 but there was a conflict as to whether a spouse who signed a joint return was liable for the entire tax shown to be due or only for that proportionate part of the total tax as was represented by his or her net income. Compare Cole v. Commissioner, 81 F. 2d 485 (C.A. 9, 1935), with Myrna S. Howell, 10 T.C. 859, 867-868 (1948), affirmed per curiam 175 F. 2d 240 (C.A. 6, 1949). In order “that any doubt as to the existence of such liability should be set at rest” (H. Rept. No. 1860, 75th Cong., 3d Sess., p. 30 (1938)), the section was amended at the time of the enactment of the Revenue Act of 1938 (52 Stat. 447, 476); the previously quoted language from the 1936 Act was retained and the phrase “and the liability with respect to the tax shall be joint and several” was added. The identical language was incorporated in section 51(b) of the 1939 Code and section 6013(d)(3) of the 1954 Code. In the foregoing context, it seems clear that section 6013 (d) (3) does no more than mandate joint and several liability “after such liability has been established.’’’’ See Natalie D. Du Mais, 40 T.C. 269, 272 (1963); Marie A. Dolan, 44 T.C. 420, 426, fn. 10 (1965). The issue in this case is the manner in which the liability is to be established and on that score the statute is silent. As we stated in Marie A. Dolan, 44 T.C. at 426-427: Section 60139 provides that the tax liability of a husband and wife who file a joint return shall be joint and several. Inasmuch as the statute nowhere spells out the consequences of joint and several liability, it has been held that Congress intended the common law rules to apply. United States v. Wainer, 211 P. 2d 669, 673 (C.A. 7, 1954).10 See Hanover Bank v. Commissioner, 369 U.S. 672, 687 (1962); First Savings & Loan, Association, 40 T.C. 474, 482 (1963). [Footnotes omitted.] The obligee of a joint and several obligation may proceed separately against each obligor. See Marie A. Dolan, 44 T.C. at 427, and cases cited therein; Restatement, Judgments, sec. 101 (1942). A judgment against one obligor is not a basis for collateral estoppel against another; each joint and several obligor is entitled to be heard on the merits of the claim asserted against him. See Restatement, Judgments, sec. 94 (1942). Understandably, it has not been suggested that there is privity per se between a husband and wife. Cf. Locomotive Engineers Mut. Life & Ins. Ass’n v. Laurent, 172 F. 2d 889 (C.A. 7, 1949); Sasser v. First Joint Stock Land Bank, 99 F. 2d 744 (C.A. 5, 1938); Jack Douglas, 27 T.C. 306, 315 (1956), affirmed sub nom. Sullivan v. Commissioner, 256 F. 2d. 4 (C.A. 5, 1958). The argument that the joint and several liability requirement of section 6013(d) (3) either creates a statutory privity between, spouses or makes a finding of privity unnecessary begs the essential issue herein. That issue, in its simplest terms, is whether the requirements of judicial convenience demand that we construe section 6013(d) (3) as against a spouse who has not been shown to be a party to the other spouse’s fraud; who in no way participated, nor even had the opportunity to participate, in the criminal proceeding-in which that fraud was established; and who, if he or she is not afforded an opportunity to litigate the issue of fraud, will automatically be liable for a substantial addition to any deficiency found to be due. To state the question is to answer it, especially where the statutory provision does not specifically deal with the problem and the construction sought by respondent raises a serious constitutional question. See Lucas v. Alexander, 279 U.S. 573, 577 (1929); Postal Telegraph Cable Co. v. Newport, 247 U.S. 464, 476 (1918); 1 Mertens, Law of Federal Income Taxation, sec. 3.36. To say that in the criminal proceeding a spouse represents the other spouse’s interests with respect to civil liabilities ignores the realities of life; holding the other spouse automatically bound by virtue of the signature on the j oint return is equally applicable where there is a plea of guilty in the criminal proceeding — a step the pleader might be more than willing to take in the hope of receiving a lighter or suspended sentence. Cf. Arctic Ice Cream Co., 43 T.C. 68 (1964). Balancing the various interests involved herein, it is not too much to require that respondent satisfy his burden of proof against Lucille H. Kodney by presenting evidence of her husband’s fraud and not by relying exclusively on the latter’s criminal conviction. See Schneid-man, “The Civil Fraud Penalty and the Innocent Spouse,” 55 A.B.A. J. 994 (Oct. 1969). The extent to which section 6013 (d) (3) may create a bar to the relitigation of issues relating to basic deficiencies or additions to tax not involving criminal aspects will, in my opinion, depend upon the particular facts and circumstances of each situation as it arises and need not be decided here. Compare Nadine I. Davenport, 48 T.C. 921, 929 (1967). DeenneN, Hoyt, Featherston, and Quealy, JJ., agree with this concurring opinion.   Indeed, until 1964, this Court had held that the criminal conviction did not even estop the convicted spouse. See John W. Amos, 43 T.C. 50, 56 (1964), affd. 360 F. 2d 358 (C.A. 4, 1965).