Florida v. United States

• Decision Date: 22 December 1960
• Docket Number: No. 16476,16477.,16476
• Citation: 285 F.2d 596
• Parties: Thomas P. FLORIDA et al., Appellants, v. UNITED STATES of America et al., Appellees. Andrew J. FLORIDA et al., Appellants, v. UNITED STATES of America et al., Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

285 F.2d 596 (1960)

Thomas P. FLORIDA et al., Appellants, v. UNITED STATES of America et al., Appellees.

Andrew J. FLORIDA et al., Appellants, v. UNITED STATES of America et al., Appellees.

Nos. 16476, 16477.

United States Court of Appeals Eighth Circuit.

December 22, 1960.

E. L. McHaney, Little Rock, Ark., for appellants, Thomas P. Florida and Stephens Co.

Leon B. Catlett, Little Rock, Ark., and E. J. Ball, Fayetteville, Ark., for appellants, A. J. Florida and others; Catlett & Henderson, Little Rock, Ark., on the brief.

Wayne W. Owen, Little Rock, Ark., for appellee, Beverly J. Lambert, Jr., receiver.

Homer R. Miller, Atty., Tax Div., Dept. of Justice, Washington, D. C., for United States, appellee; Charles K. Rice, Asst. Atty. Gen., Meyer Rothwacks, A. F. Prescott and Douglas A. Kahn, Attys., Dept. of Justice, Washington, D. C., and Osro Cobb, U. S. Atty., and James Gallman, Asst. U. S. Atty., Little Rock, Ark., on the brief.

Before VAN OOSTERHOUT and BLACKMUN, Circuit Judges, and REGISTER, District Judge.

VAN OOSTERHOUT, Circuit Judge.

This is an action commenced by the Government pursuant to §§ 7402(a) and 7403, Internal Revenue Code, 1954, 26 U.S.C.A. §§ 7402(a), 7403, to enforce payment of taxes, to foreclose tax liens, to secure restraining orders and injunctions, and the appointment of a receiver.

This case is still in its early stages and these appeals are from an order of December 2, 1959, appointing a temporary receiver over certain assets, and an ex parte order of December 31, 1959, directing the marshal to place the receiver in charge of the assets of Reserve Estate Life Insurance Company, hereinafter called Reserve Life. Discussion of the conflicting facts and legal problems presented by this litigation will be confined to the issues presented by these appeals.

The complaint alleges that Andrew J. Florida and wife are indebted to the Government for income taxes for the year 1949 and the years 1951 to 1954, inclusive, in the sum of $3,882,466.55; that George H. Florida and wife are similarly indebted for federal income taxes for the years 1951 to 1954, inclusive, in the amount of $1,662,052.49; that valid assessments had been made against the taxpayer for such delinquent taxes, pursuant to the statute. The Commissioner also made substantial assessments against a large number of defendant Arkansas and Tennessee corporations owned and controlled by Andrew J. and George H. Florida, which corporations he claimed had not fulfilled separate corporate purposes but were in fact merely alter egos for the taxpayers. It is alleged that Andrew J. Florida and wife are liable as transferees under the trust fund theory for taxes of a number of such corporations and in the amount of $2,513,415.03, and that George H. Florida and wife have a similar liability in the amount of $1,699,000.19.

The complaint alleges that the Floridas had filed false and fraudulent income tax returns with intent to evade taxes; that they own property within the court's jurisdiction; that the taxpayers were insolvent; that their assets had been concealed and shifted about and dissipated; that a receiver was necessary to prevent transfers and concealment of taxpayers' property and to preserve said property as a source for enforcement of liability for taxes.

The court, after a hearing, on December 2, 1959, appointed a receiver pendente lite over the property of Andrew J. Florida and George H. Florida, and their wives, and the property of the defendant Arkansas and Tennessee puppet corporations. A receivership was denied over the assets of the defendant Reserve Life.

The court's memorandum opinion supporting its December 2, 1959, order is reported at 178 F.Supp. 627. On the issue of receivership for Reserve Life, the court states:

"Although the Court is convinced that there should be a receivership, it is not felt that the same should extend to Reserve Estate Life Insurance Company itself. That company is solvent, according to its last balance sheet. The appointment of a receiver might well have an adverse effect on the company\'s policy holders, its value as a going concern, and its future prospects. This the Court would avoid. It would seem that the rights of the Government can be adequately protected if the receiver assumes control of the stock of the insurance company, as contrasted to the company itself and its assets. With the receiver in control of the stock, he can exercise all rights that the owners thereof could exercise." 178 F.Supp. at page 632.

The court in its order as amended states:

"The application of the plaintiff for the appointment of a receiver to take charge of the affairs of the defendant, Reserve Estate Life Insurance Company is denied. However, subject to the rights of Union Planters National Bank, Mrs. Corrine Watson, Stephens Company, Inc., and Thomas P. Florida as pledgees of portions of the stock in said company, this receivership shall extend to said stock and the receiver appointed herein is hereby vested with all of the rights and powers with respect to said stock, including voting rights, which could be exercised by the owners of said stock at this time, or which said owners during the pendency of these proceedings may or might become entitled to exercise. Upon termination of any pledge of said stock held by Union Planters National Bank, or upon the release of any portion of said stock from pledge by Union Planters National Bank, such stock or the released portion thereof shall be surrendered promptly to Stephens Company, Inc., and Thomas P. Florida to be held by them pursuant to the terms of the original pledge. When all indebtedness secured by a pledge or pledges of such stock has been paid the pledgee or pledgees shall promptly surrender such stock to the receiver to be by him held and controlled along with other receivership assets."

On December 31, 1959, the receiver appointed by the December 2 order filed a petition asserting that he became the owner of the Reserve Life stock by virtue of the December 2 order, and that he called a meeting of the stockholders and voted all the stock and elected himself and his nominees directors, who in turn elected him president; that he is entitled to the records and assets of Reserve Life; that a demand therefor has been made and refused. The receiver prayed for an order directing the United States Marshal to seize the records and assets of Reserve Life and deliver them to him. The court on the same day entered an order ex parte granting the relief prayed. The order reads:

"On petition of Beverly J. Lambert, Jr., Receiver herein, and for good cause shown, it is by this Court considered, adjudged and decreed that the Honorable Beal Kidd, U.S. Marshal for the Eastern District of Arkansas, be and he is hereby authorized and directed to gather unto himself all the assets, records and books of account of every nature, including the corporate seal of the Reserve Estate Life Insurance Company, and immediately surrender the same unto the said Beverly J. Lambert, Jr."

Two separate, timely appeals were taken from the orders of December 2 and December 31, 1959. Thomas P. Florida and Stephens Company, Inc., a corporation wholly owned and controlled by Thomas P. Florida, are appellants in case No. 16,476, Andrew J. Florida, George H. Florida, their wives, and Reserve Life are appellants in case No. 16,477.

Our first problem is to determine whether we have jurisdiction to consider these appeals. No final judgment has been entered in this action. Hence no jurisdiction under these appeals is conferred by 28 U.S.C.A. § 1291.

Title 28 U.S.C.A. § 1292 authorizes interlocutory appeals in certain unusual and limited situations. The pertinent part of the statute, so far as these appeals are concerned, is subsection (a) (2), which provides:

"(a) The courts of appeals shall have jurisdiction of appeals from:

* * * * * *

"(2) Interlocutory orders appointing receivers, or refusing orders to wind up receiverships or to take steps to accomplish the purposes thereof, such as directing sales or other disposals of property;"

The December 2 order is clearly an interlocutory order appointing a receiver. No party questions the appealability of such order. Section 1292(a) (2) clearly confers jurisdiction upon this court to consider the appeal from the December 2 order.

A very close and difficult question is presented as to our jurisdiction to consider the appeal from the order of December 31. A careful reading of the two orders appealed from convinces us that neither order expressly appoints a receiver over Reserve Life. In the December 2 order, the court states, "The application of the plaintiff for the appointment of a receiver to take charge of the affairs of the defendant, Reserve Estate Life Insurance Company, is denied." The December 31 order, read in the light of the petition for such order, strongly indicates that the order is based upon the receiver's claim that he is entitled to the assets as the authorized managing officer of the corporation, and that it is not an order appointing a receiver for Reserve Life. The complaint makes no allegation that Reserve Life is owing any delinquent taxes. The court, in its December 2 order above quoted, in effect found that Reserve Life was a separate and distinct corporate entity serving a legitimate corporate purpose. In the light of the court's statements in the December 2 order and its opinion, we do not believe the December 31 order is intended to be or is in fact an order appointing a receiver for Reserve Life. If the court had intended to appoint a receiver for Reserve Life, we believe it would have said so in specific terms.

Appellants have cast considerable doubt upon the validity of the December 31 ex parte order.¹ However, jurisdiction to consider appeals is governed by statute. We find no statutory basis for an appeal from the interlocutory order of December 31. We note that appellants have made no attempt to take...