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Kenner v. Commissioner of Internal Revenue

decided: January 5, 1968.


Hastings, Chief Judge, and Castle and Fairchild, Circuit Judges.

Author: Fairchild

FAIRCHILD, Circuit Judge.

William H. Kenner, present petitioner, suffered adverse decisions by the tax court, affirmed here.*fn1 On September 12, 1966, Dr. Kenner presented to Judge Withey of the tax court a document entitled "Petition for court to request U.S. Attorney General to investigate fraud upon the court". Judge Withey concluded the tax court lacked jurisdiction either to grant or deny the petition, and ordered it "lodged" with the tax court.

Dr. Kenner applied to this court for permission to appeal. We deemed the September 12 petition an application to set aside the previous decisions on the ground of fraud upon the tax court, the action of Judge Withey as dismissal for lack of jurisdiction, and the application for our permission to appeal as a petition to review, to be heard here in ordinary course.

Two questions are presented: (1) Whether the tax court has power to vitiate its own decision, once it has become "final" under the terms of 26 U.S.C. sec. 7481. (2) If the tax court has such power, what disposition of this case ought we to make?

Dr. Kenner has appeared pro se. An assistant attorney general has appeared for the commissioner of internal revenue. On the first issue, counsel for the commissioner tells us: "Although the matter is not entirely free from doubt, it is the considered position of the Commissioner that the Tax Court, vested with a part of the judicial power of the United States, has the inherent power to undo that which has been obtained from it by fraud and that the 'finality' provisions of Section 7481 do not deprive it of that power expressly or by necessary implication".

On the second issue, the commissioner contends that the allegations made by Dr. Kenner do not add up to fraud upon the court, and that dismissal was justified, but the commissioner suggests that if this court believes that "petitioners, appearing pro se, should be given a second chance, i. e., an opportunity to reframe their charges with the benefit of counsel, it is submitted that the Tax Court is the appropriate forum for that purpose".

Although the tax "court" is an independent agency in the executive branch*fn2 its powers and business are judicial in nature.*fn3 In some instances courts have been persuaded that because the tax court's responsibilities are judicial, it must have powers which courts have, though not spelled out by Congress.

Congress has, however, very explicitly provided at what point a decision of the tax court shall become final. Finality accrues promptly after the exhaustion of the possibilities of direct review.*fn4 In the instant case, the decisions became final in 1963 upon the expiration of the time allowed for filing a petition for certiorari to review our decision affirming the decision of the tax court.

It has been settled that such finality precludes any subsequent reconsideration by the tax court, at least on such grounds as mistake, newly discovered evidence, and the like.*fn5 It has also been decided that where such finality is reached by lapse of the prescribed period after decision by the Supreme Court it precludes further consideration by the Supreme Court on application for rehearing.*fn6

If any room has been left for a relaxation of the statutory finality in order to permit the tax court to consider whether its decision is the product of a fraud upon it, that is all that has been left. Even that possibility seems to have been rejected by the eighth circuit in deciding that the tax court does not have equitable jurisdiction to set aside a decision, once it has become final, even, apparently, where fraud has been demonstrated.*fn7 We think, however, that it can be reasoned that a decision produced by fraud on the court is not in essence a decision at all, and never becomes final. It is most difficult to assume that Congress intended that a decision procured by fraud on the tax court could not be reached by any procedure in any tribunal, once the possibilities of direct review were exhausted. If a convincing case of palpable fraud on the court were presented, it is hard to justify a holding that it could not be considered. We conclude that the tax court has power to inquire into the integrity of its own decision even when such decision has become final and immutable in all other respects as a result of exhaustion of direct review or expiration of the time allowed for seeking review.

Disposition of the instant petition.

Dr. Kenner has made the broad assertion that the tax court decision "is tainted with fraud. The very temple of justice has been defiled with it". So general an assertion is not enough, and there is a heavy burden both of particularized pleading and of proof upon the one who seeks to impeach an order or decree of a court.*fn8 "There must be an offer to prove specific facts which will pretty plainly impugn the official record".*fn9 It "is necessary to show an unconscionable plan or scheme which is designed to improperly influence the court in its decision".*fn10

"'Fraud upon the court' should, we believe, embrace only that species of fraud which does, or attempts to, defile the court itself, or is a fraud perpetrated by officers of the court so that the judicial machinery can not perform in the usual manner its impartial ...

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