||UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT
||No. 77-3164, Summary Calendar*fn*
576 F.2d 70
||July 10, 1978
||DONALD H. MATHES AND PATRICIA MARIE MATHES,
COMMISSIONER OF INTERNAL REVENUE, RESPONDENT-APPELLEE
||Appeal from the Decision of the Tax Court of the United States.
||Donald H. Mathes, Houston, Texas, Patricia Marie
Houston, Texas, (Pro Se), for Appellant.
||M. Carr Ferguson, Asst. Atty. General, Tax Division, U.S. Dept. of
Justice, Washington, District of Columbia, Gilbert E. Andrews, Act.
Chief, Appellate Section U.S. Dept. of Justice, Washington, District
of Columbia, Stuart E. Seigel, Cnsl., IRS, Washington, District of
Columbia, Crombie J.D. Garrett, Atty., Tax Div., Dept. of Justice,
Washington, District of Columbia, Gayle P. Miller, Atty., Tax Div.,
Dept. of Justice, Washington, District of Columbia, for Appellee.
||Roney, Gee and Fay, Circuit Judges.
||Author: Per Curiam
||Taxpayers, Donald and Patricia Mathes, are husband
and wife and filed their 1973 and 1974 tax returns jointly. On May
20, 1975, taxpayers filed a Form 1040 return which they denominated
"Amended 5-19-75 for Statutory Dollars" for 1973. On this
amended return they reported as income approximately 40% of the
amount on the original return. They repeated this process for their
1974 return. This discount upon the face value was, according to
taxpayers, based upon statutes which define "the standard
United States dollar . . . as either a specific weight of gold in a
coin or a specific weight of silver in a coin."
||After an audit, the Commissioner of Internal Revenue issued a
deficiency assessment based upon the face amount of income received
by taxpayers in Federal Reserve Notes. The taxpayers filed a
petition in the United States Tax Court challenging the deficiency
assessment. The Tax Court rejected the challenge and taxpayers
||Taxpayers first assert that they have a legal right to choose a
lawful method of reporting income which in their case is to report
their income of "notes" in terms of lawful, statutory
dollars. Taxpayers correctly state that "the legal right of a
taxpayer to decrease the amount of what otherwise would be his
taxes, or altogether avoid them, by means which the law permits,
cannot be doubted." Gregory v. Helvering, 293 U.S. 465, 469, 55
S. Ct. 266, 267, 79 L. Ed. 596 (1935). However, the method used by
these taxpayers to reduce their taxes is not a legal method.
||Close to a century ago, the Supreme Court stated:
||Under the power to borrow money on the credit of the United
States, and to issue circulating notes for the money borrowed,
[Congress'] power to define the quality and force of those notes as
currency is as broad as the like power over a metallic currency
under the power to coin money and to regulate the value thereof.
Under the two powers, taken together, Congress is authorized to
establish a national currency, either in coin or in paper, and to
make that currency lawful money for all purposes, as regards the
national government or private individuals. . . . (Emphasis added)
||Juilliard v. Greenman, 110 U.S. 421, 448, 4 S. Ct. 122, 130, 28 L.
Ed. 204 (1884).
||Congress has delegated the power to establish this national
currency which is lawful money to the Federal Reserve System. 12
U.S.C. § 411. Congress has made the Federal Reserve note the
measure of value in our monetary system, 12 U.S.C. § 412 (1968),*fn1
and has defined Federal Reserve notes as legal tender for taxes, 31
U.S.C. § 392 (1965). Taxpayers' attempt to devalue the Federal
Reserve notes they received as income is, therefore, not lawful
under the laws of the United States.
||Taxpayers also assert they were denied their Seventh Amendment
right to trial by jury before the Tax Court. The Seventh Amendment
preserves the right to jury trial "in suits at common
law." Since there was no right of action at common law against
a sovereign, enforceable by jury trial or otherwise, there is no
constitutional right to a jury trial in a suit against the United
States. See 9 C. Wright & A. Miller, Federal Practice &
Procedure § 2314, at 68-69 (1971). Thus, there is a right to a jury
trial in actions against the United States only if a statute so
provides. Congress has not so provided when the taxpayer elects not
to pay the assessment and sue for a redetermination in the Tax
Court. For a taxpayer to obtain a trial by jury, he must pay the tax
allegedly owed and sue for a refund in district court. 28 U.S.C.
§§ 2402 and 1346(a)(1). The law is therefore clear that a taxpayer
who elects to bring his suit in the Tax Court has no right,
statutory or constitutional, to a trial by jury. Phillips v.
Commissioner, 283 U.S. 589, 599 n. 9, 51 S. Ct. 608, 75 L. Ed. 1289
(1931); Wickwire v. Reinecke, 275 U.S. 101, 105-106, 48 S. Ct. 43,
72 L. Ed. 184 (1927); Dorl v. Commissioner, 507 F.2d 406, 407 (2d
Cir. 1974) (holding it "elementary that there is no right to a
jury trial in the Tax Court.").
||One other issue the taxpayers raise is that the Tax Court judge
violated the Canons of Judicial Ethics in deciding this case for the
Internal Revenue Service. Although the Tax Court's opinion did not
answer every argument, statute, and case cited by the taxpayers (as
ours does not) and the opinion did not give an analysis of its
decision, the decision was grounded upon the Constitution and the
laws of the United States.
||*fn* Rule 18, 5 Cir.,
see Isbell Enterprises, Inc. v. Citizens Casualty Co. of New York et
al., 5 Cir. 1970, 431 F.2d 409, Part I.
||*fn1 Any Federal
Reserve bank may make application to the local Federal Reserve agent
for such amount of the Federal Reserve notes hereinbefore provided
for as it may require. Such application shall be accompanied with a
tender to the local Federal Reserve agent or collateral in amount
equal to the sum of the Federal Reserve notes thus applied for and
issued pursuant to such application. The collateral security thus
offered shall be notes, drafts, bills of exchange, or acceptances
acquired under the provisions of sections 82, 342-347, 347c, and 372
of this title, or bills of exchange endorsed by a member bank of any
Federal Reserve district and purchased under the provisions of
sections 348a and 353-359 of this title, or bankers' acceptances
purchased under the provisions of said sections 348a and 353-359 of
this title, or gold certificates, or Special Drawing Right
certificates, or direct obligations of the United States. In no
event shall such collateral security be less than the amount of
Federal Reserve notes applied for. The Federal Reserve agents shall
each day notify the Board of Governors of the Federal Reserve System
of all issues and withdrawals of Federal Reserve notes to and by the
Federal Reserve bank to which he is accredited. The said Board of
Governors of the Federal Reserve System may at any time call upon a
Federal Reserve bank for additional security to protect the Federal
Reserve notes issued to it. (Emphasis added)