163 F.2d 891 | 5th Cir. | 1947
The Tax Court found that Walter J. Cut-cliffe during the years 1933 through 1937 derived his income mainly from his membership in a partnership which conducted a
We. think the question of limitation was fairly before the court and was a good defense as to all the years save 1936 and 1937. Cutcliffe’s petition to the Tax Court exhibited the Commissioner’s jeopardy assessment dated Aug. 28, 1942, for all five years, including the fraud penalties, and alleged that “all and every of the items of deficiency and penalty are not legal or collectible claims against petitioner.” It did not specially mention limitation. The answer also did not mention limitation, but painstakingly alleged as to each year that the petitioner, with wilful intent to evade taxes had filed a false and fraudulent return. At the hearing before the court, opening statements were invited. The Commissioner’s counsel said, among other things: “The petition covers the years 1933, 1934, 1935, 1936 and 1937. As to the years ’36 and ’37 there is no question of statute of limitations. The deficiency notice was sent out in time, within the statute, at that time of three years, from the date the return was filed. As to the three prior years the notice was not within the statute. Fraud has been alleged by respondent for all five years.” Petitioner’s counsel claimed the burden was on the Commissioner to prove fraud, and he should proceed first as to the years 1933, ’34 and ’35, and petitioner should then assume his burden as to ’36 and ’37. The Court ruled: “Under the circumstances I think it will be more efficient if we proceed with all the years together. One issue (is) applicable to all of them, as well as the statute of limitations question on the earlier. * * * I think you had better proceed first for the respondent.”
In spite of the deficiency in the pleadings, we think it clearly apparent that both counsel and the court understood that the assessments for the three earlier years were barred unless the charge of fraud was sustained, and that limitation as to the years ’33, ’34 and ’35 was an issue to be tried, along with the fraud penalties for all the years. It was not understood that the plain defense of limitation was waived by not more clearly pleading it. The defect could have been remedied by a simple amendment. The court in its consideration of the case ought not on its own motion to have eliminated the defense without allowing opportunity to amend. The spirit of Federal Rules of Civil Procedure, rule 15(b), .28 U.S.C.A. following section 723c, ought to be followed. The opening statements of counsel are not idle talk, but may afford the basis of deciding the case, even without appropriate pleading. Oscanyan v. Arms Co., 103 U.S. 261, 26 L.Ed. 539. After finding there was no fraud in the returns, the court should have held the assessments for 1933, 1934 and 1935 were barred by the statute of limitations, and we will modify the judgment of redetermination by eliminating the deficiencies for those years.
The judgment is modified as above stated, and otherwise affirmed.