United States v. First National City Bank

PETITIONER: United States
RESPONDENT: First National City Bank
LOCATION: Harris County Justice of Peace Courts

DECIDED BY: Warren Court (1962-1965)
LOWER COURT: United States Court of Appeals for the Second Circuit

CITATION: 379 US 378 (1965)
ARGUED: Nov 16, 1964
DECIDED: Jan 18, 1965

Facts of the case


Media for United States v. First National City Bank

Audio Transcription for Oral Argument - November 16, 1964 in United States v. First National City Bank

Earl Warren:

Number 59, United States versus First National City Bank.

Mr. Oberdorfer.

Louis F. Oberdorfer:

Mr. Chief Justice, may it please the Court.

This case is here on a writ of certiorari to the Court of Appeals for the Second Circuit.

The case involves a question, which is important for the administration and enforcement of the revenue laws as they pertain to the tax liabilities and the enforcement of the tax liabilities of non-resident aliens and foreign corporations, which by virtue of realizing income from sources within the United States bring themselves within the orbit of our substantive tax laws.

William O. Douglas:

That is the taxpayers outside of United States?

Louis F. Oberdorfer:

Taxpayers and nonresident, it's a foreign corporation Omar, S.A.

The question, the narrow question is the extent to which the United States District Court in the Southern District of New York, may exercise its equity power under the classic sources of equity power and the power granted by the Internal Revenue Code to assess the commissioner of internal revenue and enforcing tax liens and reducing to -- for collection the assets of a taxpayer.

In the circumstances here, the Internal Revenue Service having served liens and notices of levy on several organization of brokerage houses and investment houses in banks in New York, which held assets of this foreign corporation.

The Internal Revenue Service through the Department of Justice asked the District Court to assist in the enforcement of these administrative remedies available to the Internal Revenue Service and so far as we're immediately concerned here, asked the Court for a temporary injunction restraining the investment houses in New York and the banks in New York from permitting any transactions with the respect to the assets of this delinquent foreign taxpayer --

Arthur J. Goldberg:

Mr. Oberdorfer.

Louis F. Oberdorfer:

Yes, Your Honor?

Arthur J. Goldberg:

The delinquency is in respect to those -- with respect [Inaudible]

Louis F. Oberdorfer:

That's correct Your Honor.

Well, it's not disputed for purposes of this proceeding.

They haven't --

Arthur J. Goldberg:

They didn't get – [Inaudible]

Louis F. Oberdorfer:

Well, they will have an opportunity either in this proceeding or in the Tax Court proceeding, which they have instituted for adjudication of the liability if any.

But for purposes of the matter as it was before the District Court, there is a liability in the amount of $19 million.

The problem, if I can state the problem first, is whether or not the District Court in entering this temporary injunction, running to the banks and the investment houses, which held assets of this corporation prior to service on the taxpayer can also cover in that injunction transactions with respect to bank deposits, which are payable in the first instance to the taxpayer by the bank at a foreign branch of the bank.

The bank is a single corporation.

It receives deposits at many branches.

These branches are not separate corporations.

In the corporate sense, in no sense are they separate entities and it is our contention, if Your Honors please, that this power of the District Court under statute and under principles of equity temporarily to phrase the transactions with respect to this taxpayer by an injunction running against any stakeholder within the jurisdiction of the District Court includes the power to stop transactions anywhere under the control of the lienee, the stakeholder including transactions, which the stakeholder may claim involves some action by it or refraining from action by it outside the United States.

Mr. Oberdorfer [Inaudible]

Louis F. Oberdorfer:

In the first instance Your Honor, when the -- bear in mind that there are two layers of remedy here.

They are the administrative remedies of lien and levy by which the Internal Revenue Service can normally without leave of the Court.


Louis F. Oberdorfer:

-- where there's a jeopardy assessment go in and seize bank deposits.

We have -- there is in the code and we have invoked here for a number of reasons, the additional power of the Court to help the Internal Revenue Service in this collection process.