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STONE v. UNITED STATES

December 31, 1963

Clifford A. STONE and Audrey D. Stone, his wife, as a marital community, Plaintiffs,
v.
UNITED STATES of America, and Neal S. Warren, as District Director of Internal Revenue for the District of Washington, Defendants



The opinion of the court was delivered by: LINDBERG

In this action plaintiff husband and wife, as a marital community, are seeking relief both from a Notice of Levy served on Mr. Stone's employer, purporting to attach plaintiff's salary and all rights to property due him from his employer, and from a Notice of Lien against certain real property belonging to the marital community. Both the levy and the claim of lien against the real property are based on a federal tax assessment and lien arising out of the unpaid tax obligation of Mr. Stone, incurred prior to his marriage to the plaintiff wife. Husband and wife allege that the tax lien arises from a separate obligation of the husband which is not a debt of the marital community under Washington law, and that the personal and real property against which the lien is asserted are the property of the marital community, and not properly of the husband to which a federal tax lien may attach.

Plaintiffs seek:

 1. An order declaring the tax lien to be a separate obligation of the husband and not a liability of the marital community and declaring the tax lien null and void against property or rights to property of the community.

 2. A permanent injunction against enforcement of said lien against community property and from distraint of community property therefor.

 3. An order quieting title to the real property and decreeing that the United States has no right, title, and interest or lien in said real property.

 The United States moves to dismiss the action on the grounds that the complaint fails to state a claim upon which relief can be granted; that 26 U.S.C.A. § 7421(a) prohibits maintenance of a suit to restrain the assessment or collection of a federal tax; and that the court lacks jurisdiction by reason of the doctrine of sovereign immunity.

 As a basis for its contention that the complaint fails to state a claim upon which relief can be granted, the government points out that under Washington law each of the spouses has a present, vested, undivided one-half interest in their community property, Poe v. Seaborn, 282 U.S. 101, 51 S. Ct. 58, 75 L. Ed. 239; Rucker v. Blair (9 Cir. 1929) 32 F.2d 222; Occidental Life Insurance Co. v. Powers, 192 Wash. 475, 74 P.2d 27, 114 A.L.R. 531, and it is argued that this interest of the tax-obligor spouse constitutes a property right to which a federal tax lien will attach and against which levy and distraint can be effected, notwithstanding the fact that the tax obligation is a separate premarital debt of the taxpayer spouse and not a debt of the marital community composed of both spouses.

 It is beyond dispute that nonliability of community real and personal property for separate debts of one spouse has long been the rule in Washington. Escrow Service Co. v. Cressler, 59 Wash.2d 38, 42, 365 P.2d 760, and cases cited therein; Schramm v. Steele, 97 Wash. 309, 166 P. 634. However, the government takes the position that such immunity of the community property from liability for separate debts may be characterized as but a state exemption created by judicial interpretation of the Washington statutes pertaining to community property. The gist of the contention is that while state law must be consulted to determine whether a taxpayer has a sufficient interest in the 'property' or 'rights to property' involved to satisfy the requirement of 26 U.S.C.A. § 6321 creating tax liens, United States v. Bess, 357 U.S. 51, 78 S. Ct. 1054, 2 L. Ed. 2d 1135; Aquilino v. United States, 363 U.S. 509, 80 S. Ct. 1277, 4 L. Ed. 2d 1365, once a property interest of the taxpayer is found, state exemption laws are inoperative to prevent attachment of tax liens in favor of the United States created by federal statutes. United States v. Bess, supra; United States v. Heffron (9 Cir. 1947) 158 F.2d 657, certiorari denied 331 U.S. 831, 67 S. Ct. 1510, 91 L. Ed. 1845.

 As to the government's contention that this court lacks jurisdiction, this action can be sustained under 28 U.S.C.A. §§ 1340, 2410 and 2463 as a suit brought by a third party (the marital community of Clifford A. Stone and Audrey D. Stone) for the purpose of quieting title to property clouded by a federal lien for the tax obligation of another, or to resist distraint or detention of property for the tax debt of another. United States v. Coson (9 Cir. 1961) 286 F.2d 453; Seattle Association of Credit Men v. United States (9 Cir. 1957) 240 F.2d 906; Rothensies v. Ullman (3 Cir. 1940) 110 F.2d 590. Sovereign immunity has been waived by section 2410. Husband and wife, suing as a marital community holding community property by a unity of title, may be accorded the status of a third party in contradistinction to the husband's position as tax-obligor. Cf Pettengill v. United States (D.C.Vt.1962) 205 F.Supp. 10.

 Coming then to consideration of the basic issue for decision: What is the nature and origin of the Washington rule of law which holds community property to be immune from liability for the separate premarital debt of the husband?

 An early expression of the nature of the marital community in Washington is found in Holyoke v. Jackson, 3 Wash.T. 235, 238 et seq., 3 P. 841, 842 (1882), where the Washington court said:

 '* * * By the provisions of the husband and wife acts passed in 1879, and previously, the husband and wife and considered as constituting together a compound creature of the statute, called a community. This creature is sometimes, though inaccurately, denominated a species of partnership. * * *

 'In it, the proprietary interests of husband and wife are equal, and those interests do not seem to be united merely, but unified; not mixed or blent, but identified. It is ...


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