E. M. Piper v. United States of America, United States of America v. E. M. Piper

GEWIN, Circuit Judge.

An action was brought under 28 U.S.C. §§ 1340 and 1345¹ by the United States against E. M. Piper, taxpayer, in the United States District Court for the Northern District of Texas to reduce tax liens to judgment and for collection of federal taxes, manufacturer’s excise taxes, due for the third and fourth quarters of 1958 and for all quarters of 1959. Before trial the Government’s motion for-partial summary judgment with respect to the tax due for the fourth quarter of 1959 was granted. After a trial on taxpayer’s liability for taxes due in the other periods covered by the complaint, final judgment, which incorporated by reference the partial summary judgment, was rendered for the Government as to all of the excise taxes which had been assessed, but taxpayer was awarded a partial offset based on equitable recoupment. Both parties appeal and by stipulation of counsel the appeals have been consolidated. We affirm.

In 1964 taxpayer was convicted of wilfully and knowingly failing to file a manufacturer’s excise tax return for the fourth quarter of 1959 and for wilfully failing to pay the manufacturer’s excise tax as an importer of automobiles for this quarter in violation of 26 U.S.C. § 7203.² In the instant case the Government sought to reduce to judgment the amount of the assessment of tax liability in the criminal proceeding as well as the assessments for the last two quarters of 1958 and the first three quarters of 1959.

The Government moved for partial summary judgment with respect to the tax due for the fourth quarter of 1959 on the ground that taxpayer was collaterally estopped by his criminal conviction from contesting the amount due for this period. Such motion was supported by an affidavit of the District Director of Internal Revenue which set forth, inter alia, the type of tax assessed, the taxable periods involved, and the amounts of tax, penalties and interest due, and by the judgment of conviction in the criminal case.

In response to this motion taxpayer filed an unverified pleading signed by counsel for appellant denying'that he had been the importer of the automobiles involved in the assessment. In addition, he asserted that since the jury was not required to ascertain the precise amount of the excise taxes required to be reported in order to convict him of violating § 7203, there was no basis for his being collaterally estopped from litigating the amount due in the civil action. The trial court entered partial summary judgment finding that taxpayer was collaterally estopped to challenge the amount due for the fourth quarter of 1959.

At the trial which followed, taxpayer’s defense to the assessments for the third and fourth quarters of 1958 and for the first, second and third quarters of 1959 was that he was not the importer of the automobiles and thus was not liable for the excise tax. Taxpayer also urged that he should be entitled to equitable recoupment to the extent that he could have deducted from his income taxes for those years the excise taxes whch he might be found to owe.

The jury found that taxpayer was the importer of the automobiles involved and final judgment, incorporating by reference the partial summary judgment, was rendered for the Government as to all of the excise taxes which had been assessed but taxpayer was granted a setoff based on equitable recoupment.

Taxpayer appeals from that portion of the final judgment which incorporated the partial summary judgment in the Government’s favor. The Government appeals from that portion of the judgment granting taxpayer's claim for equitable recoupment. However, the Government has abandoned its attack on the trial court’s grant of a setoff based on equitable recoupment. The Government low only seeks, in case we reverse and remand the partial summary judgment, to have the amount of the setoff reversed and remanded for such redetermination as might be necessary. In light of our decision to affirm this case, it is not necessary for us to discuss this issue.

The court below granted the Government’s motion for partial summary judgment on the basis that taxpayer was collaterally estopped by his criminal conviction to challenge the amount of tax due for the fourth quarter of 1959. Taxpayer contends that collateral estoppel does not apply because a decision as to the correctness of the Government’s assessment was not necessary to convict him of the § 7203 violation. See Moore v. United States, 360 F.2d 353 (4 Cir. 1965). The Government concedes that since the amount of tax due is not an essential element of the § 7203 offense, collateral estoppel is not applicable to this issue. We agree. However, we affirm the judgment of the district court on the basis that the Government’s motion and taxpayer’s response showed that there was no triable issue of fact with respect to the fourth quarter of 1959. Rule 56(e) and (f) F.R.Civ.P.³ Appellant made no effort to present an affidavit explaining his failure to controvert the affidavit filed by the Government.

The Government supported its motion for partial summary judgment with an affidavit from the District Director which set out with particularity the taxes, penalties and interest due. Such affidavit is detailed and sets out the Government’s claim with specificity. In his answer taxpayer did not attempt to contradict the amounts shown in the Director’s affidavit, but simply asserted that the matter was not foreclosed from litigation by the earlier criminal conviction. Such response, at most, only demonstrates a hope that evidence contradictory to the Government’s claim can be produced. An unverified pleading denying the factual statements contained in an affidavit filed in support of summary judgment is not sufficient to controvert the affidavit. The response is certainly not sufficient to show the existence of a triable issue of fact as to the amount due. Beaufort Concrete Co. v. Atlantic States Constr. Co., 352 F.2d 460 (5 Cir. 1965); Gauck v. Meleski, 346 F.2d 433, 436 (5 Cir. 1965); Wilkinson v. Powell, 149 F.2d 335 (5 Cir. 1945).

Taxpayer primarily opposed the Government’s motion on the ground that he was not an importer of the automobiles on which the excise taxes were alleged to be due. The Government contends that a finding that taxpayer was an importer was necessary to his criminal conviction and is therefore not open to litigation in the present action. Taxpayer was found guilty of wilfully failing to file the tax return and to pay the excise tax on imported automobiles. Under 26 U.S.C. § 4061(a) it is provided that “[t]here is hereby imposed upon the following articles * * * [automobile chassis and bodies] sold by the * * * importer a tax equivalent to the specified percent of the price for which so sold * * * ” Thus it was necessary in order to convict taxpayer for failure to pay the tax imposed by the above quoted section, to find that he was in fact an importer. Therefore taxpayer was precluded by collateral estoppel from relitigating that issue in the instant case. Tomlinson v. Lefkowitz, 334 F.2d 262 (5 Cir. 1964), cert. den. 379 U.S. 962, 85 S.Ct. 650, 13 L.Ed.2d 556 (1965).

Finding no triable issue of material fact and that the Government was entitled to judgment as a matter of law, we hold that the district court committed no error in granting the Government’s motion for a partial summary judgment. Judgment affirmed.

1 . These statutes confer jurisdiction on the District Courts,

2 . This section provides as follows:

“SBC. 7203. WILLFUL FAILURE TO FILE RETURN, SUPPLY INFORMATION, OR PAY TAX.

Any persqn required under this title to to pay any estimated tax or tax, or required by this title or by regulations made under authority thereof to make a return (other than a return required under authority of section 6015 or section 6016), keep any records, or supply any information, who wilfully fails to pay such estimated tax or tax, make such return, keep such records, or supply such information, at the time or times required by law or regulations, shall, in addition to other penalties provided by law, be guilty of. a misdemeanor and, upon conviction thereof, shall be fined not more than $10,000, or imprisoned not more than 1 year, or both, together with the costs of prosecution.”

3 . Rule 56(e) contains the following provision which was added by amendment effective July 1, 1963:

“When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If he does not so respond, summary judgment, if appropriate, shall be entered against him.”

Rule 56(f) provides:

“(f) When Affidavits are Unavailable. Should it appear from the affidavits of a party opposing the motion that he cannot for reasons stated present by affidavit facts essential to justify his opposition, the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or may make such other order as is just.”