Federal Procedure-Jurisdiction of District Court to Grant Declaratory Judgement to Nontaxpayer Whose Property Has Been Seized by District Director of Internal Revenue

Personal property of plaintiff, a delinquent taxpayer, was seized and sold by defendant district director of internal revenue. Defendant contended that the seized property actually belonged to plaintiff’s corporation, which also was delinquent in its taxes; he planned to apply the proceeds of the sale of the property against the corporation’s tax liability. Plaintiff sued in federal district court for a declaratory judgment that the property belonged to him, not the corporation, and that the proceeds should be applied against his own tax liability. Plaintiff and defendant were citizens of the same state. Plaintiff sought to base federal jurisdiction either on section 1340 of the Federal Judicial Code, which grants jurisdiction over all causes of action “arising under any Act of Congress providing for internal revenue,” or on section 2463 of the Judicial Code, which grants jurisdiction over property “taken or detained under any revenue law of the United States.” The district court dismissed the complaint for lack of jurisdiction on the ground that the Federal Declaratory Judgment Act does not permit the granting of declaratory relief in “controversies with respect to Federal Taxes.” On appeal, held, reversed. Plaintiff did not bring this action as a taxpayer qua taxpayer, but as a nontaxpayer seeking to prevent the application of his property against the tax liability of another, and the scope of the jurisdiction conferred on the district courts by section 1340 and section 2463 of the Judicial Code exceeds the scope of the jurisdiction which the Declaratory Judgment Act withdraws from the district courts in matters involving federal taxes. Bullock v. Latham, 306 F.2d 45 (2d Cir. 1962).