Before Hon. Roger J. Kiley and WALTER J. Cummings, Circuit Judges, and William J. CAMPBELL, Senior District Judge.*fn1
In this tax refund action, the issues were whether plaintiff Robert W. Monday and his brother, John A. Monday, the third-party defendant, were responsible corporate officers (under 26 U. S. C. § 6671(b)) who willfully failed to collect and pay over withholding taxes of employees of the P. C. Monday Tea Company for the third and fourth quarters of 1960 in violation of 26 U. S. C. § 672. In June 1968, a jury found that both Mondays were responsible for remitting these taxes but that their failure to do so was not willful. On the prior appeal of the Government, we held that the jury had been improperly instructed on the question of the Mondays' willfulness, entitling Robert Monday to a new trial. As to John Monday, we reversed the judgment of the district court with instructions to enter judgment for the United States because the evidence of his willfulness was so conclusive that a contrary verdict could never stand. Monday v. United States, 421 F.2d 1210 (7th Cir. 1970), certiorari denied, 400 U. S. 821. In denying petitions for rehearing, we ordered the district court not to enter judgment against John Monday until it considered (1) whether there was an administrative practice that the Government would not press its claim against the responsible officers where the corporate obligation had been met and, if so, (2) whether the Commissioner's computations of the amount of taxpayers liability was proper insofar as the Government might have collected any of the $7400 of P. C. Monday Tea Company accounts receivable, which had been assigned to the Government by the company's bankruptcy referee.
Upon retrial, the jury again found in favor of Robert Monday as to willfullness. With respect to John Monday, the district court determined that he was liable for the taxes in issue and filed an unreported memorandum opinion to that effect. John Monday has appealed from the adverse judgment against him.
Appellant John Monday's principal argument is that the district court should have stricken Government Exhibit 19 and dismissed the Government's third-party complaint on the ground that the certificate of assessment pertains to the third and fourth quarters of 1964, whereas the third-party complaint covers the third and fourth quarters of 1960. Since this argument goes beyond the expressly limited issues for which the case was remanded, the district court was correct in holding that John Monday was not free to interject it. Nevertheless, the district judge took pains to address the argument on its merits, and we concur in his resolution.
Exhibit 19 consisted of three documents:
1. The district director's blue certificate stating that he had compared the attached copy of the original assessment certificate, with the original assessment certificate relating to the third and fourth quarters of 1964 and that it was a true copy thereof.
2. A copy of the Form 236 assessment certificate dated October 16, 1964.
3. A copy of the certificate of assessments and payments of John A. Monday reflecting liability for the third and fourth quarters of 1960 and certified by the district director to be a true and complete statement.
We adopt the following reasoning advanced by the district court in denying the motion to strike and dismiss:
"Monday's motion to strike the exhibit is based on the recital on W. S. Stumpf's blue certificate (document 1 of Exhibit 19) that the assessment against John A. Monday is for the third and fourth quarters of 1964, not 1960 as alleged in the third-party complaint. This recital is an obvious clerical error. It should recite an assessment for the third and fourth quarters of 1960. The fact that the 1964 date is an error is made clear by reference to the third document of Exhibit 19 - the Certificate of Assessments and Payments - showing John A. Monday's liability for the third and fourth quarters of 1960. The error is further evidenced by the fact that the Assessment Certificate is dated October 16, 1964, and thus could not reflect any assessment for the fourth quarter of 1964 which ended on December 31, 1964.In addition, Monday has made no showing whatsoever that he was disadvantaged by the erroneous date on the blue certification. The error is not shown to have affected any of Monday's rights. Rule 61 of the Federal Rules of Civil Procedure. Finally, the error complained of does not relate to the assessment itself but rather only to the document certifying the authenticity of the Assessment Certificate."
Next, appellant urges that he was entitled to a jury trial by virtue of the Seventh Amendment. In our earlier opinion, we granted a judgment notwithstanding the verdict against John A. Monday. 421 F.2d at 1217. This was reconfirmed in our order on petition for rehearing subject only to the district court's resolution of the two issues stated above. Again, the district court was required to follow our mandate, and any contention that our disposition was incorrect would be proper only before us, by way of petition for rehearing, or before the Supreme Court, by way of petition for certiorari. However, the district court was, of course, correct that we were empowered to grant judgment n.o.v. by Section 2106 of the Judicial Code.*fn2 It is well settled that such action does not violate the Constitution. Neely v. Eby Construction Company, 386 U. S. 317, 322.
On remand, the Government conceded that there was an administrative practice whereby it does not seek collection of withholding and social security taxes from a responsible officer when it has collected them from his corporation. But the district court held that the appellant failed to show that any monies had been collected by the Government from the P. C. Monday Tea Company in satisfaction of the trust fund liabilities at issue. Nevertheless, appellant claims that the Commissioner's $11,948.17 assessment against him should be reduced by $3,167.57 because the Internal Revenue Service allegedly did not apply $3,167.57 to the Government's most recent tax claims, in violation of the bankruptcy referee's order. See 421 F.2d at 1218. However, appellant's argument is not that the $3,167.57 was collected from the company and then assessed against him contrary to conceded administrative practice. Rather he objects to the manner in which the Government applied this money received in the bankruptcy proceeding to satisfy its tax claims. But the referee did not have the authority to direct the Government to apply the involuntarily paid money in any particular manner of satisfaction of its valid claim.*fn3 O'Dell v. United States, 326 F.2d 451, 456 (10th Cir. 1964). The chronology of satisfaction was in the discretion of the Government.
Appellant also asserts that the district court should reduce the assessment against him in the amount of $7400 in accounts receivable of P. C. Monday Tea Company assigned to the Government by the bankruptcy referee. The Government realized nothing from that assignment, and the record on the first appeal indicates that the accounts receivable were probably valueless.*fn4 Furthermore, as the district judge held, the assessment against appellant should not be reduced to this extent because he was the officer responsible for seeing that the withholding taxes were paid over, regardless of any failure of the Government to use due diligence to collect the accounts receivable.*fn5 See Datlof v. United States, 370 F.2d 655, 656 (3rd Cir. 1966), certiorari denied, 387 U. S. 906; Cash v. Campbell, 346 F.2d 670 (5th Cir. 1965). As long as the Government has not been paid, it may look to the responsible officers for satisfaction.
Finally, appellant claims that the district court should have reduced his assessment by the $4500 that was paid to the Government in March 1961 by the P.C. Monday Tea Company. He now states that the payment was made against the tax delinquencies of the third and fourth quarters of 1960, as owed here, rather than for the first quarter of 1961. However, the district court found the $4500 payment was to be applied against the corporation's tax obligations for the first quarter of 1961, and appellant himself so testified at the first trial. ...