Jerald D. Zwak v. United States

However, nei- bills.34 IV. CONCLUSION House and Senate nor House bill the Senate bill ther the In summary, the several relevant stat- years on based future included benefits utes, regulations in- administrative adopt allocation scheme. To service caselaw, terpretations, policy con- position would mean that the con- Blessitt’s siderations all indicate posi- that Blessitt’s expanded scope priority of the ferees tion is authority suggests untenable. No beyond of either of the far scheme requires payment that ERISA of retire- predecessor bills. ment benefits based years on future Our earlier discussion of caselaw and actually service not worked as of the date regulatory interpretation has documented Engine on which the Dixie defined benefit Congress enacted the fact that at time plan terminated. ERISA, it was well established that retire- reasons, foregoing judgment For the years were of actu- ment benefits based of the court district Congress If intended to al service. had AFFIRMED. years include benefits based future Category con- service in this would have major departure pre-exist- from

stituted a certainly merited

ing law and would have However, explanation. there no

detailed legislative history in the

mention expanded concept benefits

ERISA employee to include was entitled possibly he would earn the fu- benefits ZWAK, Plaintiff-Appellant, D. Jerald Furthermore, it is clear from the ture. passages legislative his- introductory v. tory primary purpose of the America, UNITED STATES House, Senate, reports and Conference Defendant-Appellee. any significant changes fully explain No. 87-3131. bring pension ERISA would benefit law. major changes

All the other ERISA affect- Appeals, Court of United States ing employee’s entitlement benefits Eleventh Circuit. standards, (e.g. vesting, funding PBGC ter- insurance) exhaustively were dis- mination July 1988. Thus, extremely

cussed. it seems doubtful intended to introduce what rethinking of

amounts to a fundamental area discus-

the entire benefits without explanation. Drummond

sion See Coal Watts, 735 F.2d Cir.

Co.

1984)(elimination single of a word between of a is an unreliable indicator

versions bill intent, Congressional particularly where explained).

the deletion is not following (g)pro-rata to receive to each entitled The House Bill contained the 34. (a) priorities on account of a distribution priority: classes of (f) through (a) employee contributions Bill: The Senate (b) already employees benefits of re- vested (a) voluntary employee contributions (b) mandatory employee contributions ceiving benefits (c) other vested benefits (c) pay benefits in status (d) other accrued benefits (d) insured benefits (e) interest on accrued benefits Cong., H.R.Conf.Rep. 2d No. 93rd See Sess., (f) plan remaining proposed liabilities Cong. Ad- reprinted U.S.Code in 1974 payment upon termination min.News Farber, Rosenberg, Dept, Kenneth W. Div., Section, Appellate of Justice Tax D.C., Washington, defendant-appellee. RONEY, Judge, Before Chief HATCHETT, Judge, Circuit *, Judge. HAND Chief District HAND, Judge. Chief District case, taxpayer In this tax refund grant appeals the district court’s of sum- mary judgment to the Government. taxpayer district court held that the assessed liable for federal excise taxes making respect to the and transfer handgun silencers and that the de- eleven fense of was unavailable to the taxpayer this civil action. Because we case, find, particular facts of this under that the defense of is available taxpayer, to the we reverse.

FACTS operation, conducted in An undercover Alcohol, agents by of the Tobacco Treasury Depart- Firearms Division of the ment, charges against resulted in criminal (Zwak), for taxpayer, Jerald D. Zwak making transferring fire- crimes of paying the tax thereon arms without possession of firearms which do not have indictment The six count serial numbers. against alleged violations of returned Zwak 5861(e),(f) (i)1 in connec- 26 U.S.C. § transfer of tion with the manufacture and Jr., Fla., Hugo Pesóla, Tampa, plain- handgun At his criminal silencers. eleven tiff-appellant. trial, Zwak raised the defense Rita, Chief, of ac- George Paup, jury ment. The returned a T. Michael L. verdict Olsen, Gen., Roger Atty. quittal. M. Asst. Richard

* Hand, (e) a firearm in violation of the Honorable William Brevard Chief U.S. to transfer [including provisions chapter of this failure Judge District for the Southern District of Ala- 5811]; pay tax of or § transfer bama, sitting by designation. J200 (f) make a firearm in violation [including chapter failure to visions of this pay Specifically, these sections of the Internal Rev- 5821]; making § J200 provide: enue Code (i) possess is a firearm which to receive or any person— It shall be unlawful for required by a serial number as not identified by chapter; ... (f) (i). 5861(e), § 26 U.S.C. court, ously addressed taxpayer’s to the Subsequent entrapment may be Reve- whether charges, the Internal offensively in this civil tax refund excise tax used (IRS) a civil made nue Service issue, predicated essen- respect action. A second against Zwak with assessment prin- resolution of the tially fire- on this Court’s same and transfer silencers, issue, supports the record ciple handgun whether arms, eleven entrapment of as a prosecu- finding in case a this the criminal subject of the were 1982, gave 23, IRS matter of law.2 the August On tion. the tax- payment of for and demand notice 1,May On penalty due. es, interest and DISCUSSION of seizure a notice of 1984, issued the IRS Entrapment Defense Availability of I. by On Zwak. property owned real certain respect to the avail- 1984, paid position the full amount with 21, Zwak’s May Zwak in this $7,711.29. ability the of of owing, of a total essentially alter- on two context rests civil re- claim for the IRS a filed Zwak with (1) imposed the theories: taxes native alleging that the 30,1985, January on fund 58214—the 26 U.S.C. under were of the silencers and sale manufacture a tax and the latter former “transfer” the and that result of and, really punitive “making” tax —are investigation had agents involved nature; (2) therefore, and right to due constitutional his violated nature, are civil in if the taxes even claim on rejected the IRS of law. The cess ought permitted not to be Government this 18,1985. commenced Zwak September since the from him such collect taxes 19, seeking a tax on March action very him to do induced Government complaint incorporating and refund assessed. taxes were for which the acts entrapment previously of allegations did position, as takes The Government The Govern- IRS. to the in his claim made court, entrapment de- district judgment summary for filed a motion culpability to criminal is a defense fense 23, 1986. granted on December which was in criminal therefore, only and, applies 1987, filed timely February Zwak On do proceedings which cases, tax not civil challenging only that appeal notice of rea. mens require not by decision district court’s portion of the of the defense he was denied here taxes theory that Zwak’s ment. predicated in nature is punitive imposed are distinction contained solely upon the ISSUES for tax assessed $200 5811 between § tax the $5 and transferred “firearm” each issues on presents essentially two Zwak (as de weapon” “any other for issue, assessed of first one principle appeal. The con Zwak 5845(e)) transferred. fined previ- not § and for this Court one impression by imposed sub ib) paid. tax By The whom sought inter- arguments, During Zwak oral by paid (a) shall be issue, this section here whether the taxes section that of ject third In- jeopardy clause. imposed the double violate transferor. timely presented to not issue was as this asmuch this below, Court, court to the district or raised (b). 5811(a) and § 26 U.S.C. and properly before this Court issue is the will not be addressed. part: pertinent provides, in 4.Section collected, levied, (a) shall be Code Rate. There Revenue of the Internal 3. Section 5811 tax at the making upon of a firearm part: paid pertinent provides, in collected, made. levied, firearm for each $200 rate of (a) shall be Rate. There by imposed sub- (b) By paid. The tax at the rate whom paid transferred a on firearms transferred, paid except, (a) |200 shall be section each firearm section for any as classified firearm the firearm. transfer tax 5845(e) shall weapon under section firearm such $5 for each be at the rate 5821(a) (b). § 26 U.S.C. transferred. Congress to tax is extensive power “fire- between distinction tends equivalent crushing effect weapon” is falls sometimes with “any other arm” and “le- “illegal” and between or in- unessential to a distinction deemed on businesses the difference gal” welfare, where, firearms as public to the imical therefore, penalty as a intended is, $195 narcotics, the collection dealings illegal transferring firearms. As is well is difficult. the tax also protestations known, restraints the Government's the constitutional Despite that a dis appear contrary, it does taxing are few. Internal Revenue drawn tinction Kahriger, 345 U.S. United States fire “legal” “illegal” and between Code 760-61 as rate of tax purposes arms (1953). apparent This their transfer. sessed Appeals relied Fifth Circuit Court support distinction, re- Kahriger to Sonzinsky and upon both the transfer that both contention certain criminal argument that ject an imposed are here tax the tax and instance, Act of no Gun Control first of the Federal In visions in nature. the punitive “le “illegal” provi- the tax between invalid because 1968 were such distinction of purposes confiscatory is drawn gal” firearms tax imposed a the Act sions of In making. upon their the tax assessing firearm. United of a transfer distinc addition, such it is evident that Cir.1972). (5th Boss, 458 1144 F.2d v. States tax transfer respect to the tion with held, pertinent part: The Circuit Fifth the either that a conclusion not necessitate im- Congress to move motives that The in na remedial punitive rather than is tax of the Courts. are no concern pose a tax imper an the tax constitutes or that ture Furthermore, that supra. Sonzinsky, taxing Congress’ broad of exercise missible purpose accomplishes another an act ago long Supreme Court As the powers. raising does not invalidate revenue than States, Sonzinsky recognized in v. United 5861(d) Section it. omitted]. [Citation 772 unregistered an making possession of (1937): of part of the web is weapon unlawful regulatory. measure Every tax is some of aiding enforcement regulation economic interposes an extent it To some Having provision 5811. tax § transfer com- activity taxed as to the impediment tax and of a transfer payment required tax But a others taxed. pared not that of a aid in collection registration it has as an less a tax because any the is not long taxing power has and it regulatory tax, Congress effect ... under Act of penalty pos- that on impose been established reasonably may exer- purports to be an face on its which weapons. Such unregistered of session any the taxing power is not cise of the ultimate- imposed transferees penalty or is burdensome less so because tax whom discourages the transferor ly thing suppress the restrict or to tends transferring a fire- is from the tax levied taxed. paying the tax. arm without The 555-56. 57 S.Ct. at at Circuit Court Sixth The 458 F.2d its inter- Supreme Court later reaffirmed determined has also Appeals Congress’ tax- of the breadth pretation amend- imposed by the 1968 taxes excise challenged the case ing power in a which Act, 26 Firearms to National ments persons en- tax on occupational levy of an seq., are reasonable 5801 et U.S.C. §§ wagers, accepting the business of gaged in Congress. See taxing power within that: and held Black, 472 F.2d 130 v. e.g., States United to excise cease federal [A] denied, Leach Cir.1972), sub nom (6th cert. discourages it merely valid because be States, v. United Nor is the taxed. the activities deters (1973); States United 36 L.Ed.2d revenue obtained because the tax invalid Cir.1971). Wilson, 440 F.2d negligible.... It is axiomatic is predicated upon too ments were a literal inter- precedent, we above Based statute, pretation but concluded that: pursuant assessed taxes conclude They civil in take no account fact that 5821 are 26 U.S.C. to application the circum- taxing statute’s] discretion [the nature within foreign is to stances under consideration no merit Congress. findWe purpose; application that such an its punitive taxes are these contention that shocking justice to the sense that it so in nature. therefore criminal urged duty has been that it is the stop prosecution in the inter- court to do, find merit We itself, protect to it est of the Government if even contention Zwak’s alternative illegal conduct of its officers from the nature, the Govern are civil these taxes purity courts. preserve its to collect permitted to be ought him 214. Conse- induced 287 U.S. at S.Ct. at taxes if the Government such principle regarding important quently, very illegal acts do the reaffirmed: construction was statutory assessed. Government’s taxes were adopted by position All should receive a sensible con- point, on this position laws terms should so for its deci struction. General be as the basis district court application as not to lead in their ar limited The Government sion, inapposite. con- oppression, or an absurd injustice, only entrapment defense has gues that the therefore, always, be sequence. It will con by the Courts addressed been legislature intended presumed that no authori and that of criminal actions text language which would exceptions to its support Zwak’s contention ty exists The rea- results of this character. avoid applicable to a defense is entrapment the pre- in such should son the law cases who agree that the courts action. civil We its letter. vail over entrapment de the have to date addressed 214, quoting 447, at at 53 S.Ct. only in the done so fense have 482, 19 Kirby, 7 Wall. States v. United the disagree, We context. (1868). upon this estab- Based L.Ed. 278 authority sup to no exists proposition that construction, statutory principle of lished of this defense port applicability the ultimately held: Supreme Court the is not At issue present context. civil the that it was unable to conclude We are the court has addressed whether enacting this Congress in the intention context, in but entrapment defense a civil detection processes of its statute principles supporting the rather whether by the should be abused and enforcement in a criminal defense application of this anof by government officials instigation a civil applicable in equally are context in- otherwise part persons the act on context. its com- them to in order to lure nocent applicability decision In a seminal not are punish We and to them. mission defense, Supreme entrapment of the to to violence by the letter do forced Congress arguments that rejected Court This, statute. purpose and of the spirit that, policy public and "is the arbiter underlying and think, has been we forbidden and expressly where conduct in suggestions thought in controlling statute, are courts penalized a valid that the Government opinions judicial to disregard the and liberty at to law prosecute estopped to such case prosecution for its violation because bar prosecu- bar courts should that the has opinion crime they are of the that the highest of the requirements If the tion. government instigated by officials.” been maintenance policy public 435, States, pre- 287 U.S. Sorrells United integrity of administration 210, 214, 419 445-46, statute 53 of the the enforcement clude here, possess- present (1932) conviction for as are (challenging such circumstances the con- justify intoxicating liquor in selling viola- considerations ing and the same pur- outside Act). lies that the case clusion Prohibition tion of the National general its and of the Act argu- recognized view that these Supreme Court 1184 impose excise taxpayer construed to de- should not be who

words subject taxation, has committed the act inconsistent to proceeding at once mand a firearm, and here transfer of a policy and abhorrent with that illegal but was induced to commit the act justice. sense of government. Russell, by the 411 U.S. at 215. See 448-49, at 53 S.Ct. government 93 S.Ct. at 1644. To allow States, also, v. United U.S. Sherman instigate illegal officials to act and lure (1958). L.Ed.2d 78 S.Ct. an otherwise innocent to commit the Supreme Court years, the In more recent illegal act in order to assess collect applicability of the again has addressed thereupon would do violence to the taxes defense, again in once albeit statutes, spirit purpose of the revenue See, United States v. the criminal context. instance 26 this U.S.C. Russell, Consequently, portion we reverse that (1973) (challenging conviction L.Ed.2d the district court’s in this case decision selling methamphet- manufacturing granted summary judgment amine). upon specifically Although called grounds inapplicability Government on held to be the address what has been defense. in the defense of principal element ment, predisposition the defendant’s that of Entrapment II. as a Matter of Law crime, Supreme Court to commit the encourages Zwak also this Court to defense, reaffirmed the basis acquittal by rule because of his Congress” principle “implied intent of only jury the criminal trial in which his the Sorrells Sherman established entrapment, he as a mat was cases, emphasized that: entrapped by ter of law the Government relatively [Entrapment limited de- is a transferring manufacturing and into any authority fense. It is rooted not produced silencers which the tax assess prosecu- dismiss of the Judicial Branch to However, argued ment here at issue. as it tions for what feels have been “ov- Government, by the the law is well settled enforcement,” instead erzealous law but that: in the notion that could charges on criminal [A]n punishment intended criminal for a have innocent; prove that the defendant is ele- defendant has committed all the who merely proves the existence of a rea- it prescribed of a offense but ments was guilt.... It doubt as to his is sonable by govern- induced to commit them clear that difference relative ment. proof in civil of the criminal and burdens 435, 411 U.S. at 93 S.Ct. at 1644. of precludes application actions estoppel. of doctrine collateral

Although taxing powers Congress of extensive, undisputedly are we must con- 89 United States v. One Assortment of interpretation clude of that “a literal Firearms, 361-62, 354, [26 465 104 S.Ct. U.S. expense of U.S.C. at the 1099, 1104, 361, (1984) (per 5821] L.Ed.2d 368 79 producing also, the reason of the law and absurd Lot Emerald Cut curiam). See One States, flagrant injustice” 235, consequences 232, is to be Stones v. United 409 U.S. Sorrells, 446, 489, 492, 438, condemned. 287 U.S. at 63 34 442 93 S.Ct. L.Ed.2d v, Mitchell, 391, Helvering (1972); princi- 214. It seem that the S.Ct. at 630, 917, 632, Congress”, 58 920-21 ple “implied of intent of S.Ct. (1938). forms the for the defense basis context, equally applica- in the criminal is a Zwak’s criticism because convic- act, ble to circumstances which an itself charges prove the tion on criminal context, strictly taxable in a civil is commit- guilt estopped defendant’s for collateral by ted an otherwise innocent at the its ad- purposes, the Government ensures government instigation of officials. As in vantageous position by prosecuting the context, entrapment litigating any the criminal related prior criminal case civil must a double context be rooted the notion civil action is irrelevant. Absent bar, are jeopardy tactics could not have intended to Government’s

1185 See, e.g., Fifty ($50,000) As One Thousand Dollars proscribed law. U.S. Firearms, Currency, 89 465 U.S. at 757 F.2d sortment of Cir.1985). 103 presents This case 104 S.Ct. at somewhat of an anoma- ly, acquittal because Zwak’s addition, contrary to conten- In may charges criminal predicated have been tions, evidence record does not estab- jury’s determination that he was If, entrapment as a matter of lish law. entrapped into committing the subject remand, Zwak continues to assert the de- Thus, crimes. question becomes entrapment, obligated he fense will be principles whether the One enunciated defense, prove his as is true of affirm- Firearms, Assortment 89 a forfeiture actions, by prepon- ative defense civil case, govern action, still in this notwith- derance of the evidence. believable standing Zwak’s assertion of an conclusion, grant In the district court’s ment defense the criminal action.2 summary judgment in favor of the Unit- At issue in One Assortment 89 Fire- of America is ed States REVERSED arms was whether a gun acquittal owner’s the case is REMANDED. charges involving pre- of criminal firearms in rem forfeiture subsequent pro- cluded a HATCHETT, Judge, Circuit ceeding against those same firearms. At dissenting: trial, gun owner, Mulcahey, criminal disagree majority’s holding I admitted that he had no license to deal in regarding availability of an contended, does, firearms but as Zwak action, in this tax refund civil entrapped making he had been into separately emphasize that write the ma- illegal Reasoning firearms transactions. jority’s apply decision does not to civil for- that it “need not be concerned whether the proceedings.1 feiture jury acquit Mulcahey decided to because he action, government In a forfeiture illegal entrapped into sale under certain circumstances allowed jurors or whether the were not convinced private property. govern- seize What guilt beyond of his a reasonable doubt for may may seize it also tax. It reasons,” the Court held that estoppel neither axiomatic that collateral negate jury’s possibility verdict did not government jeopardy nor double bars the might preponderance that a of the evidence civil, initiating from remedial forfeiture illegal Mulcahey engaged had show following acquittal action on related Assortment transactions. One firearms Firearms, United States v. One charges. 361-62, U.S. Firearms, Assortment Thus, concluded at 1104-05. the Court (1984); One 79 L.Ed.2d 361 the criminal Mulcahey’s S.Ct. Ring pre- Lot Emerald Cut Stones & One charges involving the firearms did not States, in rem forfeiture United subsequent clude One (1972); against firearms. United States v. ceeding the same 34 L.Ed.2d 438 Russell, (S.D.Fla.1983) (unreported) [available 1. In United States v. ALH WESTLAW, 1637, 1644, (1973), WL 425]. 36 L.Ed.2d 366 Supreme entrapment Court stated that is a limit entrapment ed defense which is rooted "in the notion that Assuming defense is avail- 2. that an action, pun Congress could not have intended criminal tax refund able to Zwak this civil for a defendant who has committed all ishment first have to establish that he was Zwak would acquitted prescribed charges offense but was on an the elements of the criminal based government.” acquittal entrapment commit induced to them defense. Zwak’s Russell, prod- (empha charges may S.Ct. at 1644 not be deemed the at criminal date, added). any entrapment more so than To all courts which have ad uct his defense sis jury lenity entrapment product or the existence of defense have done so in dressed Therefore, cases, guilt. as to his criminal with some federal reasonable doubt the context of expressly holding proceed the basis that an de in this civil action courts See, entrapment de- proceeding. acquittal in a civil was due to fense is not available O’Neill, de- simply was Zwak’s sole e.g., F.2d Cir. fense because this Kondrat v. leap 1987) (text Westlaw); charges faith Shops, is a Gucci v. fense to the criminal Inc. Associates, Inc., unwilling Dreyfoos to take. No. which I am 83-709-CIV- Firearms, 465 at Assortment of 362, 104 Zwak, Assortment One relates As it significant for at least 89 Firearms Zwak, gun owner's one reason. As 89 Fire- Assortment One sole defense entrapped into he had been was arms transactions. illegal firearms

making the that the not intimate did

Notably, the Court entrapment defense

gun owner’s proceeding forfeiture

preclude an remin Had this been

against the firearms. the Court would

case, likely it seems indication given some have rem the in available Instead, the Court proceeding. forfeiture acquittal of jury’s pointed out that charges could have been criminal including entrapment, reasons, number irrelevant jury’s reasons were that the

but the in rem forfeiture purposes of

ceeding. today that an decision

Accordingly, the to Zwak is available

entrapment defense partic- limited to the be

this tax case should Assortment case. One

ular facts of this that an clear 89 Firearms makes charges not bar a subse-

of criminal action, even where quent civil forfeiture charges may have

acquittal of the of an assertion due to the

been apply reasoning should defense. The same

in this tax case. LOAN SAVINGS &

STATE FEDERAL LUBBOCK, Plain OF ASSOCIATION Counter-Defendant-Appellant, tiff, Defendant, CAMPBELL,

W.M. Counter-Plaintiff-Appellee.

No. 87-3336. Appeals, Court

United States Circuit.

Eleventh

July Schreeder, Flint, Wheeler H.

David Atlanta, Ga., counter- plaintiff, Flint, defendant-appellant.

Case Details

Case Name: Jerald D. Zwak v. United States

Court Name: Court of Appeals for the Eleventh Circuit

Date Published: Jul 8, 1988

Citation: 848 F.2d 1179

Docket Number: 87-3131

Court Abbreviation: 11th Cir.