RINIERI v. SCANLON No. 63 Civ. 3279.
254 F.Supp. 469 (1966)
Antoine B. RINIERI, Plaintiff, v. Thomas E. SCANLON, District Director of Internal Revenue for the District of Brooklyn, New York, Defendant.
United States District Court S. D. New York.
April 20, 1966.
Joy, Hallinan & Finn, New York City, for plaintiff, C. Joseph Hallinan, Jr., Harris, Witlin & Fishkin, Saul L. Harris and Jesse Fishkin, New York City, of counsel.
Robert M. Morgenthau, U. S. Atty., for defendant, Arthur S. Olick, Asst. U. S. Atty., of counsel.
LEVET, District Judge.
This is an income tax refund action. It was assigned to me for all purposes under Rule 2, General Rules of the Southern and Eastern Districts of New York. Plaintiff has moved for summary judgment.
The action grows out of the fact that on June 18, 1962, plaintiff was found to have in his possession at Idlewild Airport, New York, New York, the sum of $247,500 in United States currency. Plaintiff is a French citizen and landed at New York as a passenger on a flight which departed from Chicago, Illinois, and was scheduled to terminate in Zurich, Switzerland.
Once it was learned that plaintiff had the sum of money in his possession, it is undisputed that the following actions were taken:
1. On June 18, 1962, the Federal Narcotics Bureau seized the money ($247,500) in the hands of plaintiff and turned it over to the Internal Revenue Service (IRS).
2. On June 21, 1962, allegedly pursuant to Section 6861, Internal Revenue Code of 1954, a jeopardy assessment in the amount of $247,820 was levied against plaintiff and his assets.
3. On or about June 25, 1962, the District Director notified plaintiff in writing that:
(b) In accordance with Section 6851 of the Internal Revenue Code of 1954, the Director immediately terminated the taxable year of plaintiff beginning January 1, 1962 and ending June 21, 1962 and declared the income taxes therefor immediately due and payable.
(c) The taxes due for the period were $247,820, which amount was to be paid immediately. (See Pl. Ex. J, 9/26/65)
4. On or about June 21, 1962, the Director, allegedly pursuant to Section 6020, Internal Revenue Code of 1954, filed a so-called "Dummy" return for plaintiff, Form 1040B, "U. S. Non-Resident Alien Income Tax Return." The "Dummy" return and accompanying papers showed taxes due for the period from January 1, 1962 through June 21, 1962 in the sum of $247,820.
5. On August 23, 1962, the Director acknowledged receipt of $247,500. On October 26, 1962, a refund of $10,000 was made to plaintiff.
6. On December 27, 1962, plaintiff executed a "U. S. Departing Alien Income Tax Return" showing no income earned in the United States and no tax due.
7. Plaintiff duly filed a claim for refund for the entire amount in the hands of the government, which was denied, and thereafter plaintiff duly instituted this action.
The statutes involved herein are as follows:
1. Sections 6851(a) (1) and (d), Internal Revenue Code of 1954, which are as follows:
2. Sections 6861(a) and (b), Internal Revenue Code of 1954, which are as follows:
(3) Section 6020, Internal Revenue Code of 1954, which is as follows:
The government also cites Sections 861 (a) (3) and 871(c), Internal Revenue Code of 1954.
PROOF OF THE PLAINTIFF
On this motion plaintiff has submitted his own affidavit, sworn to January 27, 1964; a lengthy deposition of plaintiff taken in Paris, France at the instance of the United States; and certain documentary exhibits. The plaintiff's testimony is substantially as follows:
1. On June 12, 1962, plaintiff arrived in New York City by air from Paris, France. He brought with him cash of approximately $247,000 which he said represented what he had earned over a period of time buying and selling art.
2. Plaintiff came to the United States in order to buy an art object. He hoped to purchase same from a Mr. Anderson.
3. After arriving at Idlewild at 7:30 P.M. on June 12, 1962, plaintiff went to the Plaza Hotel at Fifth Avenue and 59 Street, registered and deposited this money in a safe deposit box at the hotel.
4. Rinieri went to the "21" Club after registering at the Plaza. Here he had an appointment with the prospective vendor. No one appeared. He remained at the "21" Club until 10:30 P.M., paid his check and returned to the Plaza.
5. The next day, June 13, 1962, plaintiff traveled by air from Newark Airport, Newark, New Jersey, to Charlotte, North Carolina via Eastern Airlines, arriving at Charlotte at 9:05 A.M., and
6. In Asheville plaintiff stayed with a friend, one Gennett, as a guest from June 13 to June 18, 1962. Gennett introduced plaintiff to the Wachovia Bank in Asheville, where plaintiff put the money into a safe deposit box registered in the joint names of plaintiff and Gennett.
7. On June 18, 1962 plaintiff flew from Asheville to Chicago and there boarded a Swiss airplane which was to fly via Montreal, Canada to Zurich, Switzerland. The plane was rerouted to New York. That evening plaintiff had in his possession $247,500 in United States currency. Plaintiff was arrested at Idlewild Airport.
The affidavit and the deposition are generally consistent. The government goes to some lengths to point out alleged inconsistencies, but it is far from clear that the various statements are inconsistent. In my view they do not conflict. Moreover, the government points to no inconsistency in the material portions of the testimony—whether the money was earned here or brought in with plaintiff, what plaintiff's purpose was in coming to this country, and what plaintiff's actions and movements were while in this country.
In further support of his position, plaintiff offers, among other documents, various letters from airlines confirming that "Antoine Rinieri" traveled upon their flights at certain of the times stated in his testimony. Plaintiff also produces a letter from the Plaza Hotel reciting that an "Antoine Rinieri" registered there on June 12, 1962 and departed on June 13, 1962, and a receipt for a safety deposit box at the Wachovia Bank and Trust Company, Asheville, North Carolina, dated June 13, 1962, issued in the name of A. Rinieri or N. C. W. Gennett, Jr. A certain deposition of one Gaffney, a federal narcotics official, is also produced.
PROOF OF THE GOVERNMENT
The government relies largely on the assessment made by the Director and the return which was filed for Mr. Rinieri. While it is true that such assessment on trial would be prima facie proof of the tax due, this court's examination of the revenue agent who prepared the Dummy return for Mr. Rinieri wholly nullified any presumption of correctness to which the assessment and Dummy return might otherwise be entitled. The Revenue Agent testified in substance that he did not know whether Mr. Rinieri earned any money here; that his only information was that Rinieri was found with the money at the airport and that Rinieri refused to answer certain questions; that he was instructed to prepare a return showing a tax of approximately $247,500 due and he therefore did so; and that the $53,100 cost-of-living income figure was a pure fiction constructed in order to make the tax due come out close to $247,500, the amount found in plaintiff's possession. The agent testified in addition that he knew of no further information in the files of IRS, other than that already stated, pertaining to the earning of the money in this country by Mr. Rinieri.
The reports, also prepared by this Agent, which accompany the Dummy return recite that unnamed agents of the Bureau of Narcotics "believe" these funds represent the proceeds from the sale of narcotics in the United States by the taxpayer, as well as the fact that the taxpayer was then serving a jail term for contempt in failing to answer certain questions before a Grand Jury in the Eastern District of New York pertaining to the money. Specific "information" as to the earning of the money in the United States is nowhere alleged or set forth.
The government also claims that the plaintiff has a bad record. Most of these allegations are wholly unsubstantiated or are not substantiated in conformity with the requirements of Rule 56(e), Fed.R.Civ.P. They are not on personal knowledge or duly certified documents. I do not consider them. Rinieri does admit to one conviction involving stolen checks in 1950, but that conviction was "amnestied" due to service
The sum and substance of the situation is this, then: While pointing to not one iota of proof that any of this money was earned within the United States, although approximately 46 months for investigation have passed since the money was seized, the government contends that a jury would be entitled to disbelieve the plaintiff's story.
The cases are, of course, replete with statements that mere conclusory affidavits which assert that issues of fact exist are insufficient to defeat well-grounded motions for summary judgment. See, e. g., Dressler v. M/V Sandpiper, 331 F.2d 130 (2nd Cir. 1964) (Kaufman, J.). As was said by Chief Judge (now Circuit Judge) Anderson in Boyce v. Merchant's Fire Insurance Co., 204 F.Supp. 311 (D.Conn.), aff'd per curiam, 308 F.2d 806 (2nd Cir. 1962):
And as is pointed out at 6 Moore, Federal Practice, ¶ 56.15, pp. 2346-2347 (2nd ed., 1965 rev.):
See also Belinsky v. Twentieth Restaurant, Inc., 207 F.Supp. 412 (S.D.N.Y. 1962).
The government presses its credibility point, however. It is true that under some circumstances an issue with respect to the credibility of one of movant's "witnesses" may defeat a motion for summary judgment. See Arnstein v. Porter, 154 F.2d 464 (2nd Cir. 1946). However, I believe the present case to come within a complementary line of cases, epitomized by Radio City Music Hall Corp. v. United States, 135 F.2d 715 (2nd Cir., 1943) (L. Hand, J.); Dyer v. MacDougall, 201 F.2d 265 (2nd Cir. 1952) (L. Hand, J.); Lavine v. Shapiro,
Moreover, the existence of the sections of the Internal Revenue Code heretofore set forth does not prevent the granting of summary judgment herein.
The government in its memorandum upon this motion concedes: "Section 6851 confers no assessment authority but it does provide that the findings of the district director shall be presumptive evidence of jeopardy." Yet it is clear that if there are no taxes due there can be no "jeopardy."
Further, it has appeared, as recited above, that the Dummy return itself was not based upon any factual information furnished by anyone. It was purely fictitious. Nor is it subscribed by the Secretary or his delegate, or required by Section 6020. On the state of the proof herein, I am forced to conclude that the Revenue Agent's testimony set forth below reveals the true nature of the government's actions:
The government has acted in a fashion which can only be described as arbitrary, capricious and unconscionable. The government, after ample time for inquiry, can produce not one shred of proof that the money was earned in the United States. On such a record at trial I would
Settle judgment on notice.
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