Carr Enterprises, Inc. v. U.S.

• Decision Date: 07 February 1983
• Docket Number: No. 82-1766,82-1766
• Citation: 698 F.2d 952
• Parties: 83-1 USTC P 9202 CARR ENTERPRISES, INC., a corporation, Appellant, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 952

698 F.2d 952

83-1 USTC P 9202

CARR ENTERPRISES, INC., a corporation, Appellant, v. UNITED STATES of America, Appellee.

No. 82-1766.

United States Court of Appeals Eighth Circuit.

Submitted Jan. 31, 1983.

Decided Feb. 7, 1983.

Gene Carr, Secretary Treasurer, Carr Enterprises Inc., appellant pro se.

Glenn L. Archer, Jr., Asst. Atty. Gen., Michael L. Paup, William S. Estabrook, Mary L. Fahey, Attys., Tax Div., Dept. of Justice, Washington, D.C., for appellee; Philip N. Hogen, U.S. Atty., Sioux Falls, S.D., of counsel.

Before ARNOLD, Circuit Judge, HENLEY, Senior Circuit Judge, and JOHN R. GIBSON, Circuit Judge.

PER CURIAM.

Carr Enterprises, Inc. appeals from the judgment of the district court, 539 F.Supp. 528, ¹ finding tax liens on the Buffalo Trail Motel to be valid. The motel had been conveyed to the corporation by Gene and Frances Carr. The corporation had filed suit in state court to quiet title, contending that federal tax liens on the property were invalid. The United States removed the case to federal court and counterclaimed on the basis that the transfer was a fraudulent conveyance under South Dakota law. On this appeal the corporation claims that the filing of the liens deprived the Carrs of due process of law, that the conveyance of the property to the corporation was not fraudulent, and that the federal tax liens were invalid. We affirm.

In September 1975, the Carrs purchased the motel and at the same time formed Carr Enterprises, Inc. under South Dakota laws, ostensibly to avoid the South Dakota usury law limiting the interest rate on loans to individuals. The Carrs were soon thereafter involved in disputes with the Internal Revenue Service over the Carrs' income tax liabilities for 1972, 1973, 1974 and 1975. Gene Carr litigated his 1972 and 1973 tax liability in Tax Court. A deficiency for taxable year 1973 was assessed against Frances Carr in February, 1977. On May 25, 1978 the Tax Court ruled adversely to Gene Carr, finding additional taxes due for the taxable years 1972 and 1973. Further deficiencies were assessed against both Carrs in March 1979 for the taxable years 1974 and 1975. ²

On May 29, 1978, the Carrs transferred their interest in the Buffalo Trail Motel, as well as their personal residence, to Carr Enterprises. At the same time, the motor vehicles owned by the Carrs were transferred to another corporation, D.C. Services Corporation, owned by the Carrs. The only consideration for these transfers was an issuance of stock by the corporations to the Carrs. On May 29, 1978, Gene Carr also transferred his majority stock in the two corporations to a church known as the Life Science Church, which appears to have been formed no earlier than May 25, 1978. Also on May 29, 1978, Gene Carr signed a printed form "vow of poverty" in connection with the formation of this church. The three church "trustees," who signed an acceptance of the church charter on May 29, 1978, were Gene Carr, Frances Carr and a Donna J. Hiles. Gene Carr was ordained as a minister of this church on May 25, 1978, although he testified that both before and after this occurrence he was a practicing Roman Catholic. The Carrs continued to control the motel, and to reside in the residence conveyed to the corporation.

The Government filed the tax liens against the motel on July 2, 1979 (for the liabilities of both Carrs for taxable years 1974 and 1975) and on July 29, 1980 (for the liability of Frances Carr for taxable year 1973) in the office of the Tripp County Register of Deeds. This suit was then filed.

This appeal is plagued by two procedural infirmities. The first is Gene Carr's appearance for the corporation. Though the corporation was represented by an attorney in the district court, Gene Carr, the corporation's secretary/treasurer appears on the appeal brief for the corporation, "pro se". Gene Carr is a chiropractor, and currently owns no interest in Carr Enterprises. The United States has filed a motion to dismiss for failure to prosecute pursuant to Eighth Circuit Rule 13, based on this pro se representation. It is settled law that a corporation may be represented only by licensed counsel. Southwest Exp. Co. v. ICC, 670 F.2d 53 (5th Cir.1982); In re K.M.A., Inc., 652 F.2d 398 (5th Cir.1981); Strong Delivery Ministry Association v. Board of Appeals of Cook County, 543 F.2d 32 (7th Cir.1976). While 28 U.S.C. Sec. 1654 protects parties rights to plead and conduct their own cases, that right has never been interpreted to allow an individual to appear for a corporation pro se.

Second, the corporation has no standing to assert the rights of the individual taxpayers. See Warth v. Seldin, 422 U.S. 490, 509-510, 95 S.Ct. 2197, 2210-2211, 45 L.Ed.2d 343 (1975); Barrows v. Jackson, 346 U.S. 249, 255, 73 S.Ct. 1031, 1034, 97 L.Ed. 1586 (1953); Tileston v. Ullman, 318 U.S. 44, 46, 63 S.Ct. 493, 494, 87 L.Ed. 603 (1943). Where, as here, taxpayers are urging their personal...