Phillips v. Commissioner

283 U.S. 589, 51 S. Ct. 608 (1931)



Where only property rights are involved, mere postponement of the judicial enquiry is not a denial of due process, if the opportunity given for the ultimate judicial determination of the liability is adequate. Delay in the judicial determination of property rights is not uncommon where it is essential that governmental needs be immediately satisfied. For the protection of public health, a State may order the summary destruction of property by administrative authorities without antecedent notice or hearing. Because of the public necessity, the property of citizens may be summarily seized in war-time. And at any time, the United States may acquire property by eminent domain, without paying, or determining the amount of the compensation before the taking.


Petitioner was one of the transferees of the assets of the dissolved corporation. No notices of any tax deficiencies of the corporation were sent to any of the other transferees, and no proceedings for collection were instituted against them. Rather, petitioner was assessed the entire tax deficiency of the corporation. On review, the United States Supreme Court rejected petitioner's arguments that several constitutional guaranties were violated. The Court similarly found no merit in petitioner's argument that the specific liability sought to be enforced was governed by the law of Pennsylvania and barred by its statute of limitations; or that petitioner could not be held liable for more than his pro rata share of the unpaid corporate tax.


Did the procedure provided in § 280 of the Revenue Act of 1926 satisfy the requirements of due process?




The Court found that the procedure provided in § 280 of the Revenue Act of 1926 satisfied the requirements of due process because two alternative methods of eventual judicial review were available. Furthermore, whether or not petitioner had a right to contribution against other stockholders, the Court held that the government was not required to marshal the assets of a dissolved corporation so as to adjust the rights of the various stockholders.

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