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COMMUNIST PARTY v. MOYSEY

May 23, 1956

The COMMUNIST PARTY, U.S.A., Plaintiff,
v.
Donald C. MOYSEY, as District Director of Internal Revenue for the District of Lower Manhattan, New York, Defendant



The opinion of the court was delivered by: LEVET

This motion made by plaintiff herein, the Communist Party, U.S.A., seeks an order enjoining and restraining the defendant during the pendency of this action from collecting or attempting to collect from plaintiff or any of its affiliated state organizations by lien, levy or otherwise Federal income taxes assessed against plaintiff for the year 1951.

The complaint, not verified, seeks to enjoin the defendant from enforcement of a jeopardy assessment under Title 26 U.S.C.A. 6861(a). Plaintiff contends that the assessment and the lien filed and the levy made by the defendant upon the property and assets of the plaintiff herein are unlawful and in violation of constitutional rights of the plaintiff for the following reasons:

 (a) That the assessment constitutes a gross abuse of the defendant's discretion under Title 26 U.S.C.A. § 6861;

 (b) That the assessment, lien and levy constitute a deprivation of liberty and property of the plaintiff without due process of law and in violation of the Fifth Amendment;

 (c) That the assessment, lien and levy against the plaintiff, a political party, constitute a gross and arbitrary discrimination against it and a denial of equal protection of law in violation of the due process clause of the Fifth Amendment; and

 (d) That the jeopardy assessment made by the defendant violates plaintiff's rights of free speech and assembly, guaranteed by the First Amendment.

 Plaintiff's motion papers contain an affidavit of one Philip Bart, who states that he is the Acting Treasurer of the Communist Party, U.S.A. Bart further asserts that he has read the complaint and that the same is true to his own knowledge except as to matters therein stated on information and belief.

 Affiant declares that the funds derived by the plaintiff come from initiation dues and assessments. A campaign to raise the deficit by gifts of money is held each year. This campaign is announced in the 'Daily Worker' without payment or charge. Because of the lien and levy made by the defendant on March 27, 1956, this campaign was cancelled 'since it was evident that members and supporters of the organization would not make gifts to it knowing that the proceeds of such gifts would be levied upon and seized by the defendant.' Consequently, it is said no gifts have been made or received. Bart, therefore, contends that unless a preliminary injunction is issued the members of plaintiff will cease to pay dues, the members and others will refrain from making gifts to the plaintiff and that plaintiff will thereby suffer irreparable injury and destruction.

 In opposition, the United States Attorney submitted a deposition of the plaintiff by the aforesaid Philip Bart. The facts adduced by this deposition are as follows:

 Bart has been the Acting Treasurer of the Communist Party since January 1956, having been appointed by Eugene Dennis, General Secretary of the organization. Bart says that he is in charge of conducting financial activities but that he is unable to tell the amount of the dues received from the members without examining the books.

 Since January 1956, although plaintiff has maintained books reporting payment of dues by the different affiliated state organizations Bart had no direct knowledge of how the state organizations collect dues. The national organization requests the state organizations to pay to national 50% of the total dues collected by the state units, and these amounts are remitted from time to time.

 As to the sources of income of plaintiff during 1951, Bart conceded that he could not state specifically what transpired in 1951. Bart testified that for the period from October 1955 through March 1956, approximately $ 40,000 was collected in dues.

 Bart conceded that prior to January 1956, when he became Treasurer, or Acting Treasurer, he had no personal familiarity with the method used in the books of plaintiff. As a matter of fact, prior to October 1955, plaintiff kept no books or records of its expenditures and receipts. Bart had no detailed familiarity with the treatment of income and disbursements. Prior to January 1956, Bart had no personal knowledge of the amount of money received by plaintiff or of the amount expended for any particular purpose.

 Bart avers that he found that certain books had been kept since October 1955 and he continued the same method, although it was the opinion of the accountant who began keeping plaintiff's books that there ought to be certain changes. Neither in the entries of payments nor in the expenses is there a use of names in all instances. Faced with specific questions as to the acts of plaintiff in 1951, the witness was unable to answer and he professed that he did not know how much the plaintiff expended during 1951 for hiring halls.

 The Party, Bart said, distributes certain literature but does not maintain mailing lists, nor does plaintiff keep lists of its members. The individual organizations have no such lists. The person who becomes a member does not sign anything to become a member but merely pays an initiation fee and is introduced to his particular organization. If accepted, he is made a member, paying dues henceforth to his local club. A portion of these dues is forwarded to the county organization, by the county to the state, by the state to the national organization.

 The witness did not know how many members plaintiff had; formerly there were cards showing dues paid by the members, but this practice was discontinued. Asked if the plaintiff raised funds for the 'Daily Worker,' Bart admitted that the plaintiff was giving public support to this newspaper and has raised funds among its members for this purpose.

 Bart stated that plaintiff had not filed reports with the Clerk of the House of Representatives showing a statement of donations which it had received each year, but claimed that election committees of the Communist Party had filed such reports in each election in which they participated.

 On the books of the plaintiff, even since October 1, 1955, Bart said the receipts sometimes indicate just the first name of certain people; in other instances, were just endorsed, 'Friend;' and in other instances, 'Cont.' There are no other records. The membership is all on the local level and there are no national members. Plaintiff has never filed donee tax returns. Witness estimated that in 1951 there were approximately 25,000 members.

 Although the witness asserted that no official letter had been sent out by him in reference to the present remittance of dues from district organizations, he said there were 'conversations that there cannot be any dues collected at this time' and that he was a participant in these conversations. The national organization made no effort to have dues transmitted to it from the state or district organizations since the levy was made. The campaign set for this Spring was cancelled by advice from Bart.

 As to Paragraph 7 of the complaint, the witness admitted in effect that he had no knowledge thereof. As to Paragraph 16 of the complaint, the witness, in effect, said that he knew of no threats as to further or successive levies upon the property of the plaintiff; as to Paragraph 17, the witness had no specific evidence of any intent on the part of the defendant to destroy the plaintiff as a political party.

 The only evidence of any borrowings by the plaintiff since the date of the levy was a loan of $ 500 and the borrowing of $ 300 to pay the telephone bill. The witness admitted there was no effort to borrow money; that there had been no collection of dues and no assessments, and no remittance of dues to the national organization since the levy. An organization known as the 'Emergency Committee for a Free Press' apparently was instituted, but the witness stated that no funds from it had come to the Communist ...


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