Court Opinion

ID: 9443846
Source: CourtListenerOpinion
Date Created: 2023-08-03 19:32:14.863765+00
Date Added: 2024-06-11T17:29:37.577681
License: Public Domain

THOMAS, Circuit Judge
(dissenting).
This is an action at law to recover additions to the taxpayer’s income taxes for the years involved allegedly “illegally colected” by the government. The taxpayer admittedly made no income tax returns and paid no income taxes for these years. The additions to the tax were imposed under 26 U.S.C.A. § 293(b) quoted in the majority opinion. In his complaint the taxpayer alleged that “in failing to file income tax returns for the years [in question] he did not act fraudulently with intent to evade the tax.” The government denied these allegations. The case was tried to the court without a jury. The court filed an opinion and made findings of fact and conclusions of law and dismissed the complaint.
The decisive question to be determined on this appeal is whether the following finding of the trial court is “clearly erroneous” :
“From the whole record the Court finds that plaintiff’s course of conduct was not only an omission but an intentional evasion of his duty to make an animal return of income and pay tax thereon. The plaintiff’s conduct was not merely silence or oversight, but was deliberate and intentional concealment, the purpose of which was to evade the payment of tax.”
It is true there was some conflict in the evidence; but that was for the trial court to resolve, not this court. As said by the Supreme Court in United States v. Jefferson Electric Manufacturing Co., 291 U.S. 386, 407, 54 S.Ct. 443, 450, 78 L.Ed. 859: “It [the Court sitting without a jury] was exercising the functions of a jury and its findings are on the same plane as if embodied in a jury’s special verdict.” And *102see Owens v. United States, 8 Cir., 197 F.2d 450; Wessel v. United States, 8 Cir., 49 F.2d 137; Reinecke v. Spalding, 280 U.S. 227, 232, 50 S.Ct. 96, 74 L.Ed. 385; Stone v. United States, 164 U.S. 380, 17 S.Ct. 71, 41 L.Ed. 477.
This rule is now included in Rule 52(a) of the Federal Rules of Civil Procedure, 28 U.S.C.A., in these words: “Findings of fact shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge of the credibility of the witnesses.”
The majority opinion relies upon the principles and reasoning of the courts in Spies v. United States, 317 U.S. 492, 63 S.Ct. 364, 87 L.Ed. 418, and Cave v. United States, 8 Cir., 159 F.2d 464. Both of these cases were criminal cases brought under 26 U.S.C.A. § 145(b), and in my opinion have no application to the facts or the law in this case. The distinction between § 145(b) and § 293(b) was clearly described by the Supreme Court in Helvering v. Mitchell, 303 U.S. 391, 58 S.Ct. 630, 632, 82 L.Ed. 917. In that case Mitchell was first indicted under § 146(b) of the statute, Revenue Act of 1928, for willfully attempting to evade and defeat his income tax, and upon trial to a jury he was acquitted. The Commissioner also assessed a 50% addition to his income tax under § 293(b) and Mitchell claimed that the 50% addition was barred by the doctrine of res judicata. The United States Court of Appeals sustained this contention. In reversing the Court of Appeals, the Supreme Court said: “The difference in degree of the burden of proof in criminal and civil cases precludes application of the doctrine of res judicata. * * * It [the acquittal] did not determine that Mitchell had not willfully attempted to evade the tax.”
The Supreme Court further observed in the Mitchell case that “In assessing income taxes the Government relies primarily upon the disclosure by the taxpayer of the relevant facts. This disclosure it requires him to make in his annual return. To ensure full and honest disclosure, to discourage fraudulent attempts to evade the tax, Congress imposes sanctions. Such sanctions may confessedly be either criminal or civil. * * * Congress may impose both a criminal and a civil sanction in respect to the same act or omission; * * *." The court explained that the proceeding under § 293(b) is civil and not criminal.or punitive. The burden of demonstrating error of the trial court in this court was, therefore, upon the appellant, and he has failed to do so. Coca Cola Bottling Co. of Black Hills v. Hubbard, 8 Cir., 203 F.2d 859, 861, and cases cited.
The majority opinion apparently relies upon the testimony of Mr. Kraftmeyer, the taxpayer, wherein he testified that he knew nothing about bookkeeping; that he never kept business records and no one ever told him that he had to file an income tax return; that he heard of an income tax prior to 1945, but thought that he wasn’t making any income and that he had no income.
The error in this view of the case is obvious. It is the law that “All persons are presumed to know the general public laws of the state or country where they reside, and the' legal effect of their acts.” 31 C.J.S., Evidence, § 132. In Black-hawk-Perry Corp. v. Commissioner, 8 Cir., 182 F.2d 319, this court at page 322 said:
“The Government, and not the Commissioner, is interested in the collection of taxes; and the Government cannot be estopped by a mistake made by a taxpayer. A taxpayer, as well as the Commissioner, is presumed to know the law, * * *." Certiorari denied, 340 U.S. 875, 71 S.Ct. 120, 95 L.Ed. 636; rehearing denied 341 U.S. 956, 71 S.Ct. 1010, 95 L.Ed. 1377. And see, Thomaston Cotton Mills v. Rose, Collector, 5 Cir., 62 F.2d 982, certiorari denied, 289 U.S. 754, 53 S.Ct. 785, 77 L.Ed. 1499; United States v. Hodson, 10 Wall 395, 409, 77 U.S. 395, 409, 19 L.Ed. 937; Wilber Nat. Bank of Oneonta, N. Y. v. United States, 294 U.S. 120, 55 S.Ct. 362, 79 L.Ed. 798; Goodman v. Simonds, 20 How. 343, 61 U.S. 343, 15 L.Ed. 934; Pettibone v. Cook County, Minnesota, 8 Cir., 120 F.2d 850. And see cases cited in footnote 7, at gage 855 of the last cited case.
It is presumed, also, that taxes paid are rightly collected on assessments correctly *103made by the Commissioner. Niles Bement Pond Co. v. United States, 281 U.S. 357, 50 S.Ct. 251, 74 L.Ed. 901.
And a taxpayer suing to recover overpayment of income taxes is required to show compliance with all conditions provided by statute. John F. Jelke Co. v. Smietanka, 7 Cir., 86 F.2d 470.
The emphasis in the majority opinion placed on the taxpayer’s failure to keep books of account is without significance, except as it supports the finding of the trial court. Section 51 of the Internal Revenue Code, 26 U.S.C.A., § 51, requires every individual having for the taxable year a gross income of $600 or more to make a return under oath; and § 54 provides : “Every person liable to any tax imposed by this chapter or for the collection thereof, shall keep such records, render under oath such statements, make such returns, and comply with such rules and regulations, as the Commissioner, with the approval of the Secretary, may from time to time prescribe.”
And the Code of Federal Regulations, Title 26, § 29.54-1, reads:
“Records and Income Tax Form. Every person subject to tile [income] tax * * * shall, for the purpose of enabling the Commissioner to determine the correct amount of income subject to the tax, keep such permanent books of account or records, including inventories, as are sufficient to establish the amount of the gross income and the deductions, credits, and other matters required to be shown in any return under chapter 1 * * *."
See Bechelli v. Hofferbert, D.C.Md., Ill F.Supp. 631.
I cannot agree that the finding of the trial court is “clearly erroneous”, or that it is not supported by the record. Here we have the case of a successful business man who in the years involved enjoyed a taxable income of approximately $76,000, who was not only presumed to know the law outlined above, but he testified that he knew there was a federal income tax law; he employed attorneys in his business affairs, and he pleaded guilty to the charge of willful failure to file a return for 1945; but in this case he relied upon his alleged ignorance of the law to sustain the burden of proof which rested upon him. All these facts and others reviewed by the trial court in its opinion clearly support the finding of the court. The taxpayer failed to show compliance with the conditions provided by statute and, therefore, failed to sustain his claim. See John F. Jelke Co. v. Smietanka, 7 Cir., 86 F.2d 470.
If we consider his testimony only, the taxpayer merely implies that he had no motive to evade paying his taxes, and in failing to make the required income tax returns. But the trial court properly concluded from his demeanor as a witness and from all the evidence that his motive was to evade paying the tax due the government.
1 would affirm on the ground that the findings of the trial court on the issues submitted were not clearly erroneous, but in fact are clearly supported by the record.