Catalina Properties, Inc. v. United States , 166 F. Supp. 763 ( 1958 )

LARAMORE, Judge.

This case comes before the court on defendant’s motion to dismiss on the grounds that the petition fails to state a claim upon which relief can be granted and that this court has no jurisdiction over the subject matter of the suit. The facts as alleged in plaintiff’s petition, which must be taken as true for the purposes of this motion, are as follows:

Plaintiff, a Florida corporation, owned a 99-year leasehold estate in land and a hotel building located in Miami Beach, Florida, which had been subleased to various persons for a period of seven years from December 1, 1948 to November 30, 1955. The rent reserved under the sublease was payable in installments between December 15 and March 15 of each calendar year. On or about December 9, 1952, a jeopardy assessment in the sum of $93,096.72 was made against plaintiff as the alleged transferee of a transferee of one Gilbert Smollin against whom assessments in that amount had been made for income taxes, interest and penalties, allegedly due the defendant for each of the years 1947 to 1950, inclusive. A few days later plaintiff’s sub-lessees were directed to pay the rentals due plaintiff to the Director of Internal Revenue for the Jacksonville, Florida, district by virtue of a levy and the filing of a Federal tax lien upon plaintiff’s right to receive the rentals. Despite assurances and guaranties by plaintiff that it would not deplete its assets, the District Director refused to withdraw the assessment or to release the lien. The District Director failed to collect the rent due plaintiff from the sublessees for the period December 15, 1952 to March 15, 1953, and the sublessees’ indebtedness to plaintiff subsequently became uncollectible and without value resulting in a loss of $29,425.01 which is the amount herein sought by the plaintiff.

The petition alleges that plaintiff is not a transferee of any property belonging' to Gilbert Smollin and was not obligated to the defendant upon said alleged income taxes. It also alleges that the collector failed to release the levy or collect the rents knowing full well that if this was not done during the winter months when the rent was due and owing the rentals would be irretrievably lost. It is plaintiff’s assertion that it has a claim within the jurisdiction of this court founded upon the Fifth Amendment to the Constitution or an implied contract, 28 U.S.C. (Supp. III, 1952 Ed.) § 1491. Treating the facts as alleged in the light most favorable to the plaintiff, we must reluctantly hold that it fails to state a claim over which this court may assert its jurisdiction.

The action of the collector in dis-training plaintiff’s rentals was unauthorized if, as alleged, plaintiff was neither the taxpayer nor a transferee of the taxpayer, 26 U.S.C. (1952 Ed.) § 3690. In Kirkendall v. United States, 31 F. Supp. 766, 90 Ct.Cl. 606, we held that where the collector levied a warrant of distraint and collected monies of a third party not liable for the tax there arose “an implied contract on the part of the Government to make restitution to the rightful owner under the Tucker Act and this court has jurisdiction to entertain the suit”. The fatal distinction between the present case and Kirkendall is that in Kirkendall the money sued for was in fact collected and applied to the tax debt, whereas in this case the money never reached the coffers of the Federal Government. Under such circumstances no implied contract could exist requiring the defendant to return money which it had not received.

This same argument holds true for a claim under the Fifth Amendment which requires that private property shall not be taken for public use without ■just compensation. Assuming that the right to rents is property subject to a Fifth Amendment taking, it cannot be said that this right was. taken by the collector for a public use. It is true that the collector distrained the rents which effectively prohibited plaintiff’s collection, but the funds so distrained never inured to the public. There is no statute which permits the collector to levy on property belonging to third parties not liable for the tax. As was said in Stuart v. Willis, 9 Cir., 244 F.2d 925, 929:

“ * * * In fact, it may be generally stated as a principle of our federal tax law that the power of the Collector never extends beyond the rights of the taxpayer upon whose property the levy is sought. The Collector has rights ‘ “no higher than those of the taxpayer whose right to property is sought to be levied on.” ’ [F. H. McGraw & Co. v. Sherman Plastering Co., D.C., 60 F.Supp. 504, 512.]”

It follows that a suit for the consequences of an unauthorized taking is not a claim founded upon the Fifth Amendment to the Constitution¹ but sounds in tort and jurisdiction in such cases is specifically denied to this court, 28 U.S.C. § 1491.²

Defendant’s motion to dismiss is granted, and plaintiff’s petition is-dismissed.

It is so ordered.

WHITAKER and LITTLETON, Judges, concur.

1 . United States v. North American Transportation & Trading Co., 253 U.S. 330, 40 S.Ct. 518, 64 L.Ed. 935; Vansant v. United States, 75 Ct.Cl. 562.

2 . It should be said in passing that plaintiff was not without its remedies in this situation. It could have brought an action to quash the levy or to enjoin the collector from collecting the intangible obligation. Holland v. Nix, 5 Cir., 214 F. 2d 317.