Thibodeau v. U.S.

• Decision Date: 05 October 1987
• Docket Number: No. 86-3266,86-3266
• Citation: 828 F.2d 1499
• Parties: -5763, 87-2 USTC P 9620, Unempl.Ins.Rep. CCH 17,695 John A. THIBODEAU, Plaintiff-Appellee, v. UNITED STATES of America, Defendant-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1499

828 F.2d 1499

60 A.F.T.R.2d 87-5763, 87-2 USTC P 9620,

Unempl.Ins.Rep. CCH 17,695

John A. THIBODEAU, Plaintiff-Appellee, v. UNITED STATES of America, Defendant-Appellant.

No. 86-3266.

United States Court of Appeals, Eleventh Circuit.

Oct. 5, 1987.

Roger M. Olsen, Acting Asst. Atty. Gen., Michael L. Paup, Chief, Appellate Section, U.S. Dept. of Justice, Tax Div., Gilbert S. Rothenberg, David M. Moore, Washington, D.C., for defendant-appellant.

Geraldine R. Holloway, Yado, Salem, Keel, Nelson & Bergmann, P.A., Gerald W. Nelson, Tampa, Fla., for plaintiff-appellee.

Appeal from the United States District Court for the Middle District of Florida.

Before ANDERSON and CLARK, Circuit Judges, and SIMPSON ^*, Senior Circuit Judge.

PER CURIAM:

The government appeals from denial by the trial court of its motions for directed verdict and for judgment notwithstanding the verdict. The jury found that John A. Thibodeau (taxpayer), president of a corporation that deducted taxes from its employees' wages but failed to remit them to the I.R.S., was not a "responsible officer" within the meaning of Sec. 6672 of the Internal Revenue Code of 1954. We reverse the denial of the government's motion for judgment notwithstanding the verdict because we find that the taxpayer was a responsible officer as a matter of law. We also reverse the denial of the government's motion for directed verdict on an issue that the jury did not reach--whether the taxpayer willfully failed to account for or pay over the taxes in question.

I. PROCEEDINGS

John A. Thibodeau filed suit against the government to recover $1,843.25 in payments made and credits applied in partial satisfaction of a $42,976.97 penalty assessed against him pursuant to Sec. 6672 of the Internal Revenue Code of 1954 (codified at 26 U.S.C. Sec. 6672 (1982)) ¹ for the failure to account for and pay over federal employment taxes. These taxes were withheld from the wages of the employees of the Thibodeau Corporation during the first two quarters of 1973. The government filed a counterclaim against the taxpayer for the unpaid balance of the assessment, plus interest and statutory additions provided by law. The case was tried before a jury, ² which returned a verdict that the taxpayer was not a person responsible for accounting for and paying over the withheld taxes. The jury did not reach the question of whether the taxpayer willfully failed to account for and pay over the taxes. Judgment was entered for the taxpayer on the jury verdict. The government filed a timely motion for judgment notwithstanding the verdict, which was denied by an order entered February 12, 1986. The district court acknowledged that the taxpayer's case was "very marginal," but stated that the question of liability was an issue of fact that was properly submitted to the jury. The government filed a timely notice of appeal.

II. FACTS

The Thibodeau Corporation was initially formed in 1969 by the taxpayer and his father (John L.) for the purpose of designing and building a machine for handling modular homes. Prior to forming the Thibodeau Corporation, the taxpayer worked as a salesman, selling heavy equipment. Before that, the taxpayer, who has a graduate degree in education, taught school. The taxpayer's father had designed heavy equipment and had also been in the construction business. Shortly after the Thibodeau Corporation was formed, the taxpayer's brother (Raymond) joined the family enterprise, and the corporation expanded into the businesses of construction framing, manufacturing, and installing wood framing and roof trusses for local building contractors. Raymond, who had been in the framing business since 1952, served as president of the corporation. The taxpayer served as vice-president and, at times, as secretary and treasurer. The taxpayer's father, who owned at least 51% of the stock of the corporation, ³ served as chairman of the board. The corporation's offices were located in Tampa, Florida on property owned by the taxpayer and his wife.

From 1970 until the end of 1972, the taxpayer was a salesman for the corporation, negotiating contracts and collecting accounts receivable. Record, Vol. 4 at 41, 49, 70-71, 80. In that position, the taxpayer entered into contracts with local contractors, arranged bank financing for the corporation's accounts receivable, and signed installment sales contracts and security agreements on behalf of the corporation. In addition, the taxpayer had signatory authority on all corporate checking accounts. Id. at 70. However, the taxpayer did not have direct responsibility during this time for payment of the corporation's bills or taxes. Id. at 41-42, 49, 131. Those matters were handled by the taxpayer's brother and father.

In August, 1972, the taxpayer's father sold his stock in the Thibodeau Corporation to Herman Mulder, an Illinois investor, for $200,000. ⁴ Under the terms of the sales agreement, Mulder was to pay $50,000 in cash on or before the closing date, and the balance of $150,000 by means of a promissory note payable in installments. Mulder did not pay the balance due under the promissory note, and the taxpayer's father obtained a judgment against him in 1975.

Shortly after the sale of the stock in the Thibodeau Corporation, Mulder's two sons came to Florida to learn the business. Because neither son had any experience in the construction framing business, the taxpayer and his brother continued to work for the corporation in the same capacities that they had prior to the sale. However, in January, 1973, the taxpayer's brother and Herman Mulder had a "falling out." As a result, Raymond left the corporation and Mulder appointed the taxpayer president. The taxpayer served as president of the corporation until it ceased operation due to bankruptcy in April, 1973. From January until April, 1973, the taxpayer was also a director of the corporation and its resident agent. Record, Vol. 4 at 159-60.

The taxpayer stated that he was the person responsible for "selling, securing contracts, running [the] office, arranging for financing, [and] some hiring & firing." Exhibit 20 (Internal Revenue Service Officer's Interview with John A. Thibodeau, Feb. 24, 1976). As president, the taxpayer directed the corporation's bookkeeper to draw checks, Record, Vol. 4 at 176, and had authority to and did sign checks on behalf of the corporation. Id. at 54, 84, 88-89, 101. The taxpayer could issue payroll checks on his own (as could each of the Mulders), but, at the direction of Herman Mulder, all other checks required two signatures--one Mulder and one Thibodeau. Id. at 54, 82. After his brother left in January, 1973, the taxpayer was, of course, the only Thibodeau left at the corporation. Consequently, his signature was required on all checks (other than payroll checks) issued by the corporation.

The taxpayer knew that the corporation's officers were responsible for remitting the withheld taxes to the government. Exhibit 20, supra. The taxpayer testified that prior to his brother's departure as president, he had told him to "be sure the taxes are paid before the corporation gets into trouble." Record, Vol. 4 at 94. Subsequently the taxpayer was told by the corporation's accountant that the corporation was behind in its taxes. Id. at 81, 122, 124. Indeed, this fact was reflected in the monthly financial statements prepared by the accountant for the taxpayer, id. at 106, 117, which the taxpayer admitted he did not read very carefully. Id. at 80. In addition, the accountant testified that he told the taxpayer of the obligation to deposit the taxes withheld from employees' wages on a weekly basis. ⁵ Id. at 122. Nevertheless, the taxpayer did not pay over the withheld taxes or otherwise segregate those funds from the corporation's general accounts. Id. at 97, 124. Instead, the taxpayer called Herman Mulder in Chicago, who told the taxpayer that he would take care of the matter by "sending money down to pay the taxes." Id. at 197.

The taxpayer testified that he was directed by Mulder to keep the corporation running by collecting the accounts receivable and paying off debts. Id. at 90-91. The taxpayer continued to sign or co-sign checks paying net wages to the corporation's employees, including himself in excess of $400,000, Exhibits 15 & 16; and he continued to pay certain creditors of the corporation, including certain suppliers and himself ⁶ in excess of $53,000. Exhibits 8D & 8E (and attachments). Id. at 83, 88, 91. These payments far exceeded the amount of withheld taxes, which was $42,976.97. The tax liability remained outstanding when the taxpayer, on behalf of the corporation, consented to an order of adjudication of bankruptcy on April 17, 1973.

III. DISCUSSION

In reviewing the denial of the government's motion for judgment notwithstanding the verdict, we consider all of the evidence in the light most favorable to the party opposed to the motion. Carroll Kenworth Truck Sales, Inc. v. Kenworth Truck Co., 781 F.2d 1520, 1525 (11th Cir.1986). In this case, we find no disputed facts regarding whether the taxpayer was a responsible person within the meaning of Sec. 6672, and we conclude as a matter of law that he was a responsible officer of the Thibodeau Corporation during the first and second quarters of 1973. However, the statute imposes liability only upon (1) a responsible person, who has (2) willfully failed to perform a duty to collect, account, or pay over the taxes. George v. United States, 819 F.2d 1008, 1011 (11th Cir.1987); Mazo v. United States, 591 F.2d 1151, 1153 (5th Cir.), cert. denied, 444 U.S. 842, 100 S.Ct. 82, 62 L.Ed.2d 54 (1979). ⁷ Thus, we consider also whether the district court erred in denying the government's motion for directed verdict on the issue of willfulness. A motion for directed verdict should be granted only when, viewing the evidence in its entirety and drawing all reasonable inferences in favor of the nonmoving party,...