Cash v. Campbell, 21231.

• Decision Date: 20 May 1965
• Docket Number: No. 21231.,21231.
• Citation: 346 F.2d 670
• Parties: James R. CASH, Appellant, v. Ellis CAMPBELL, Jr., District Director of Internal Revenue, et al., Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

346 F.2d 670 (1965)

James R. CASH, Appellant, v. Ellis CAMPBELL, Jr., District Director of Internal Revenue, et al., Appellee.

No. 21231.

United States Court of Appeals Fifth Circuit.

May 20, 1965.

Ronald M. Mankoff, Durant, Mankoff & Davis, Dallas, Tex., for appellant, Mary Neal Sisk, Dallas, Tex., on the brief.

Carolyn R. Just, Atty., Dept. of Justice, Louis F. Oberdorfer, Asst. Atty. Gen., Lee A. Jackson, David O. Walter, Attys., Dept. of Justice, Washington, D. C., H. Barefoot Sanders, U. S. Atty., Dallas, Tex., for appellee.

Before RIVES, BROWN and WISDOM, Circuit Judges.

RIVES, Circuit Judge.

The appellant's brief asserts:

"The sole question presented for review is whether on the evidence as presented the trial court could have properly held that appellant knowing at all times during the period involved of his obligation to collect, truthfully account for and pay over the withholding and social security taxes, and having failed to pay over such taxes and having preferred subsequent creditors over the United States, such failure to pay over the taxes to the United States was without reasonable cause and therefore willful within the meaning of § 6672.\' (R. 262, `Conclusions. of Law\')."¹

Casco Chemical Corporation began business² in 1958 and ceased business in the spring of 1960, except for the receipt of certain income and the payment of liabilities other than taxes. Its last payments of the withholding and social security taxes withheld from its employees were for the first two quarters of 1959. On January 11, 1963, a penalty assessment pursuant to section 6672 was made against the appellant in the amount of $15,335.31, representing the employees' portion of the social security taxes and the employees' income taxes withheld for the third and fourth quarters of 1959 and the first and second quarters of 1960. The appellant paid $114.55, an amount sufficient to cover the penalty for the third quarter of 1959 applicable to one employee and then filed a claim for a refund of the amount paid. The claim was disallowed and appellant filed suit against the Director. The United States intervened and filed its complaint in intervention against the appellant for the amount of the penalty assessment less the $114.55 and less the sum of $621.35 obtained by administrative levy. After trial, the district court entered its findings of fact and conclusions of law and rendered judgment against the appellant in the principal amount of $13,385.27, plus interest. This appeal ensued.

The appellant was president, chairman of the board and general manager of the corporation from its inception in 1958 until its demise in 1960. He signed the corporation's quarterly tax returns for each of the four quarters for which the taxes were not paid. He testified that until January 22, 1960, he was not aware that those returns were forwarded without payment of the taxes shown to be due.

There was ample evidence to support the district court's finding that the appellant was the responsible officer of Casco whose duty it was to collect, account for and pay over its withholding and social security taxes. Among other such evidence, Casco's bookkeeper testified that when the appellant was in the office he had "the final say as to what checks would be prepared, for who and in what amount."

Corporate funds were deposited into the personal bank account of the appellant as follows:

                    "1959
                  "February              $ 1,264.59
                   November               65,206.73
                   December               90,680.11
                    "1960
                  "January                34,296.41
                   February               16,537.55
                   March                  21,794.97
                   April                  20,935.98
                   May                    10,289.65
                   June                   15,000.00
                   October                15,000.00
                                       _____________
                     TOTAL              $291,005.99"
                

The appellant used those funds to pay corporate creditors other than the government. From all of the evidence we cannot say that the district court was clearly erroneous in finding that "the plaintiff appellant was at all times aware of the financial condition of the corporation and knew at all times that the withholding and social security taxes withheld from the employees for the quarters involved herein had not been paid to the Government."

The appellant insists, however, that his failure to pay the taxes was not willful because it was premised upon...