Burden v. United States, 72-1844.
| Decision Date | 12 July 1973 |
| Docket Number | No. 72-1844.,72-1844. |
| Citation | 486 F.2d 302 |
| Parties | Jack S. BURDEN, Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Tenth Circuit |
John M. Imel, Tulsa, Okl. (Donald P. Moyers, and John H. Conway, Jr., Tulsa, Okl., of counsel), for plaintiff-appellant.
Carleton D. Powell, Tax Div., Dept. of Justice, Washington, D. C. (Myron C. Baum, Acting Asst. Atty. Gen., Meyer Rothwacks, Elmer J. Kelsey, and Wesley J. Filer, Tax Div., Dept. of Justice, Washington, D. C.; Nathan G. Graham, U. S. Atty., of counsel, on the brief), for defendant-appellee.
Before LEWIS, PHILLIPS and BARRETT, Circuit Judges.
Jack S. Burden appeals from a judgment denying his claim for refund of employee withholding taxes in the amount of $310.99 which he paid following a Government penalty assessment and the Court's judgment allowing the Government's counterclaim for $156,-016.28. The Court found that Burden was a responsible officer of CPM Constructors, Inc., (CPM), charged with a duty to remit withholding and social security taxes withheld from employees for the first and second quarters of 1967, and that he willfully failed to pay them in violation of 26 U.S.C.A. § 6672.1 Jurisdiction in this court rests on 28 U.S.C.A. § 1291.
CPM, an Oklahoma corporation, was formed in 1965 to carry on non-union construction work as a subsidiary of Universal Engineers and Constructors; Universal is principally owned by the O. R. Burden Construction Corporation. CPM entered into two construction contracts with Transwestern Pipeline Company of Texas (TPC) in 1966 to construct three compressor stations and to enlarge a fourth station in Arizona. Burden was Chairman of CPM's Board of Directors when the work began on the contracts with TPC. He was also President and Chairman of the Board of Directors of O. R. Burden Construction Corporation, and Chairman of the Board of Directors of Universal Engineers and Constructors.
CPM submitted its bid to TPC on a non-union basis. Later TPC persuaded CPM to operate with union labor without any adjustment in the contract price. Problems developed with respect to the performance under the contracts with TPC including labor union troubles with employees, erroneous and incorrect engineering and designing by TPC and numerous revisions of drawings by TPC. CPM began experiencing financial difficulties in November of 1966. CPM's president was terminated on March 8, 1967, at which time Burden assumed those duties. Prior to that time Burden met with TPC officials. TPC paid CPM $188,000 on March 6, 1967, as compensation for overtime wages. TPC also paid CPM $2,541,013.75 for work on the compressor stations. In addition, O. R. Burden Construction advanced CPM $200,000. CPM used these monies to meet net payroll expenses, to pay subcontractors and material suppliers, and to pay off a bank loan.
On April 21, 1967, TPC relieved CPM from performance under the contracts. TPC owed CPM about $400,000 and paid about $359,000 directly to CPM's creditors. CPM failed to pay employment taxes to the IRS for the first and second quarters of 1967.
Burden alleges that: (1) his actions were not "willful" under Section 6672; (2) CPM became the agent of TPC; (3) he lost control over the funds of CPM to TPC; and (4) under these circumstances he was unable to pay the subject taxes. Once TPC started paying CPM's bills, Burden argues that it was reasonable for him to assume that it would also pay the subject taxes. He also asserts that all job proceeds from TPC were assigned to the bank as security for its loans.
There is no argument that under Section 6672 Burden was a "person" under the duty to collect and pay the taxes withheld on the wages of CPM's employees. The issue is whether he "willfully" failed to discharge this duty.
We review the evidence in the light most favorable to the Government and we will not overturn the findings of the District Court unless they are clearly erroneous. House Beautiful Homes, Inc. v....
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