The opinion of the court was delivered by: John E. Miller, District Judge.
The plaintiff, C.C. Gunn, is a citizen of Arkansas and resides
at Van Buren in Crawford County, Arkansas. The plaintiff, C.C.
Gunn Produce Company, is a partnership composed of C.C. Gunn and
Eddie Gunn, husband and wife. The office and principal place of
business of such partnership is also located at Van Buren,
Crawford County, Arkansas, in the Western District of Arkansas.
The defendant, Curtis R. Mathis, is District Director of the
District of Arkansas, Internal Revenue Service, and resides at
Little Rock, Pulaski County, in the Eastern District of Arkansas.
The defendant, Jack A. Stotts, is a Senior Collection Officer,
Internal Revenue Service, and likewise resides at Little Rock in
the Eastern District of Arkansas. The defendant, Tim M. Krone, is
a Revenue Officer, Internal Revenue Service, and resides at Fort
Smith, Arkansas, in the Western District of Arkansas.
The plaintiff, C.C. Gunn, has been engaged in the buying and
selling of farm produce for approximately 25 years. In 1945 the
plaintiff, Eddie Gunn, became a partner in the business, and the
business has since been operated as a partnership composed of
plaintiffs, C.C. Gunn and wife, Eddie Gunn.
On April 27, 1956, the Tax Court entered decisions against
plaintiff, C.C. Gunn, for the calendar years 1942 to 1946, both
inclusive, finding that he owed large amounts of income tax for
those years and civil fraud penalties for the years 1942 to 1944,
both inclusive. On July 26, 1956, plaintiff Gunn filed his
petition in the United States Court of Appeals for the Eighth
Circuit for review of the Tax Court decisions. He was unable
financially to pay the deficiencies found by the Tax Court, and
was also unable to make bond to stay assessment and collection of
the taxes and penalties, and prosecuted his petition for review
in the Court of Appeals without paying the deficiencies and
without making bond.
Section 7485 of the Internal Revenue Code of 1954, 26 U.S.C.A.
§ 7485, provides that a petition for review of a Tax Court
decision shall not operate as a stay of assessment or collection
of any portion of the amount of the deficiency determined by the
Tax Court, unless the petitioner files with the Tax Court a bond
in a sum fixed by the Tax Court not exceeding double the amount
of the portion of the deficiency in respect of which the petition
for review is filed, and with surety approved by the Tax Court,
conditioned upon the payment of the deficiency as finally
determined, together with any interest, additional amounts, or
additions to the tax provided for by law.
On August 31, 1956, while the petition for review was pending
in the Court of Appeals, representatives of the Internal Revenue
Service assessed the additional income taxes, interest and
penalties against plaintiff, C.C. Gunn, and on October 26, 1956,
filed of record a notice of federal tax lien with the Circuit
Clerk of Crawford County, Arkansas, and contemporaneously
therewith demanded payment of plaintiff Gunn of said taxes,
interest and penalties, as found by the Tax Court. Following such
demand there were extended negotiations between the plaintiff,
C.C. Gunn, and representatives of the Internal Revenue Service,
which resulted in the execution of a written agreement, by the
terms of which Gunn agreed to make payment in four annual
installments beginning with the date of the agreement, March 16,
1957. The agreement specifically provided that the plaintiff did
not admit the validity of the asserted tax liability nor of the
assessment thereof, and did not waive any of his legal rights,
including the right to prosecute his petition for review of the
Tax Court decisions then pending in the Court of Appeals.
On August 8, 1957, the Court of Appeals by opinion and judgment
the decision of the Tax Court as to the calendar years 1945 and
1946, but reversed as to the calendar years 1942, 1943, and 1944,
and remanded the case for further proceedings as to those three
years. See, Gunn v. Commissioner of Internal Revenue, 8 Cir.,
247 F.2d 359. Following the decision of the Court of Appeals,
plaintiff tendered the amount due for the years 1945 and 1946,
and requested defendants to cancel or withdraw the purported
assessment and lien for the calendar years 1942, 1943, and 1944.
Section 6213(a) of the Internal Revenue Code of 1954, 26
U.S.C.A. § 6213(a) provides:
"Within 90 days * * * after the notice of
deficiency authorized in section 6212 is mailed * * *
the taxpayer may file a petition with the Tax Court
for a redetermination of the deficiency. Except as
otherwise provided in section 6861 no assessment of a
deficiency in respect of any tax imposed by subtitle
A or B and no levy or proceeding in court for its
collection shall be made, begun, or prosecuted until
such notice has been mailed to the taxpayer, nor
until the expiration of such 90-day * * * period as
the case may be, nor, if a petition has been filed
with the Tax Court, until the decision of the Tax
Court has become final. Notwithstanding the
provisions of section 7421(a), the making of such
assessment or the beginning of such proceeding or
levy during the time such prohibition is in force may
be enjoined by a proceeding in the proper court."
The plaintiff, C.C. Gunn, in the instant suit "tenders payment
to defendant, Mathis, in his official capacity as District
Director of Internal Revenue, or otherwise in accordance with his
instructions as such District Director, of unpaid deficiencies
and interest for the years 1945 and 1946 as found by the Tax
Court and affirmed by the United States Court of Appeals for the
Eighth Circuit; and both plaintiffs pray that after notice as
required by law, the defendants and each of them be temporarily
enjoined from making any levy, seizure or distraint under the
pretended authority of such purported assessment or assessments,
lien or liens; that after service has matured and this cause has
been fully heard by the Court such temporary injunction be made
permanent; that plaintiffs recover from the defendants their
costs of suit; and for such other and further relief as to the
Court may seem proper."
As a practical matter the plaintiffs are seeking to expunge
from the records of Crawford County, Arkansas, and such other
counties in which the lien may have been filed, the notice of
federal tax lien filed by the representatives of the Internal
Revenue Service following the deficiency assessment of taxes,
interest and penalties on August 31, 1956, while the petition for
review of the Tax Court decisions was pending in the United
States Court of Appeals for the Eighth Circuit.
Summons was served by the United States Marshal for the Western
District of Arkansas on Honorable Charles W. Atkinson, United
States District Attorney for the Western District of Arkansas,
and on defendant, Tim M. Krone, a Collection Officer of the
Internal Revenue Service, at Fort Smith, Arkansas. Also, the
Marshal sent by registered mail two copies of the summons and
complaint to the Attorney General of the United States at
Washington, D.C., and a copy of the summons and complaint to the
Internal Revenue Service, U.S. Treasury Department, Washington,
The United States Marshal for the Eastern District of Arkansas
served the defendants, Curtis R. Mathis, District Director of
Internal Revenue, and Jack A. Stotts, Senior Collection Officer
of the Internal Revenue Service, with a copy of the complaint and
summons at 208 Federal Building, Little Rock, Arkansas, on
November 18, 1957. On the same date service of summons was made
upon the defendants, they were served with
copy of a "Motion for Temporary Injunction".
On November 25, the defendants, Curtis R. Mathis, District
Director of Internal Revenue, and Jack A. Stotts, Senior
Collection Officer, Internal Revenue Service, filed a motion to
dismiss the cause for the following reasons:
"1. The venue is improper;
"2. This Court is without jurisdiction;
"3. The complaint fails to state a cause of action
upon which relief can be granted."
On December 3, 1957, the defendant Krone filed a similar motion
adopting the motion that had theretofore been filed by Mathis and
A hearing on the motion for a preliminary injunction was
originally set for November 27, but was continued by the Court
until December 10, 1957. The defendants appeared by the United
States Attorney for the Western District of Arkansas, and renewed
their motions to dismiss. Action on the motions was deferred
without prejudice to the contention of said defendants, and the
plaintiffs proceeded to introduce the ore tenus testimony of
plaintiff, C.C. Gunn, certain stipulations, and 14 exhibits. At
the conclusion of the introduction of the testimony the Court
took the claims of the parties under consideration.
The Court has reached the conclusion that the motions of
defendants to dismiss for improper venue are well founded, and
therefore the Court does not reach the merits of the claims of
Title 28 U.S.C.A. § 1391(b) provides:
"A civil action wherein jurisdiction is not founded
solely on diversity of citizenship may be brought
only in the judicial district where all defendants
reside, except as otherwise provided by law."
Title 28 U.S.C.A. § 1392(a) provides:
"Any civil action, not of a local nature, against
defendants residing in different districts in the
same State, may be brought in any of such districts."
The plaintiffs contend that since the defendant Krone resides
in the Western District of Arkansas, that the venue is proper.
Contrarily, the defendants contend that since Mathis and Stotts
are both residents of the Eastern District of Arkansas, they can
only be sued in their official capacity in the jurisdiction of
their official residence.
Rule 20, F.R.C.P., 28 U.S.C.A., among other things, provides:
"All persons may be joined in one action as
defendants if there is asserted against them jointly,
severally, or in the alternative, any right to relief
in respect of or arising out of the same transaction,
occurrence, or series of transactions or occurrences
and if any ...