Scherer v. United States, 3802

• Decision Date: 16 December 1963
• Docket Number: No. 3802,3806.,3802
• Citation: 228 F. Supp. 168
• Parties: A. Peter SCHERER, Plaintiff, v. UNITED STATES of America, Defendant. Truman JOINER, Plaintiff, v. UNITED STATES of America, Defendant.
• Court: U.S. District Court — District of Idaho

228 F. Supp. 168

A. Peter SCHERER, Plaintiff, v. UNITED STATES of America, Defendant.

Truman JOINER, Plaintiff, v. UNITED STATES of America, Defendant.

Nos. 3802, 3806.

United States District Court D. Idaho, S. D.

December 16, 1963.

Myron E. Anderson, for plaintiffs.

Claude V. Marcus, Boise, Idaho, for plaintiff, Z. Peter Scherer.

Sylvan A. Jeppesen, U. S. Atty., Jim Christensen, Asst. U. S. Atty., Boise, Idaho, Louis F. Oberdorfer, Asst. Atty. Gen., Edward S. Smith, Jerome Fink, John M. Bray, Attys., Dept. of Justice, Washington, D. C., for defendant.

CHASE A. CLARK, Chief Judge.

These are actions brought by taxpayers, J. Peter Scherer, Cause number 3802, and Truman Joiner, Cause number 3806, for a refund of a portion of a penalty, plus interest, assessed against the plaintiffs. Such penalties were levied on the grounds that plaintiffs were responsible persons under a duty to withhold, collect, and pay over F.I.C.A. taxes and withholding taxes of Lucky Custer Mining Corporation, within the meaning of Sec. 6672, I.R.C.1954, and who failed to do so. The Government has filed its counterclaim for the remaining unpaid portion of the assessment, plus interest.

The matter was tried before the Court without a jury. Witnesses were sworn and examined, exhibits introduced and admitted and the cause submitted. Briefs have been filed by the respective parties and the Court has fully considered the same.

Scherer, by occupation an accountant, was Treasurer and Secretary of the Lucky Custer Mining Corporation, and owner of 119 shares of stock out of a total stock issue of 55,283 shares.

Joiner is Comptroller for Morrison-Kundsen Company of Boise and acted as President and Director of Lucky Custer. He owned 1,000 shares of stock. He had nothing to do with the books and records but occasionally he deposited his own funds to the corporation's account in order to meet expenses. There were considerable advances amounting to some $63,000.00. The mining operation was run by a mine manager. The manager had authority to hire and lay off help, incur expenses and write checks.

The record shows that Lucky Custer Mining Corporation was incorporated in the fall of 1952 and the mining operation closed down in July of 1955. Scherer was one of the incorporators and was a director and Secretary-Treasurer throughout the entire period. The office address of Lucky Custer was Scherer's office. All bills of Lucky Custer came across his desk for payment. Scherer also performed work for Lucky Custer in his professional capacity as accountant. Scherer signed Form 941, Employment Tax Return, that was filed for Lucky Custer. For the most part the corporation's checks were signed by him.

Scherer knew the taxes were not being paid. He testified that he paid the bills directed by the Board of Directors but that he had authority to draw the checks to cover specific items of expenditures as it was impossible for the Board to meet and authorize payment of each specific bill. From this he contends that he had no authority to pay the taxes in controversy here.

While Joiner was not as close to the heart of this matter as was Scherer, the record does show that he was familiar with the need for payment of these taxes; that he learned very shortly after assuming the duties of President that these F.I.C.A. and withholding taxes of Lucky Custer Mining Corporation were not being paid over to the Government.

He also was a director and was President of the Company. His name was on the signature card of Lucky Custer at Idaho First National Bank and he could write checks when the occasion presented itself.

The fact of the matter is that these taxes were not paid because these men hoped that they might strike a bonanza at the mine and should that happen then the Government would get its money; but, in the meantime, they used every cent available to keep the business going rather than...