Schweitzer v. United States
| Citation | 193 F. Supp. 309 |
| Decision Date | 04 March 1961 |
| Docket Number | Civ. No. 206L,299L. |
| Parties | Kenneth C. SCHWEITZER, Plaintiff, v. UNITED STATES of America, Defendant (two cases). |
| Court | U.S. District Court — District of Nebraska |
T. J. Fraizer and C. C. Fraizer, Lincoln, Neb., for plaintiff.
William C. Spire, U. S. Atty., Omaha, Neb., Bruno Lederer, Atty., Dept. of Justice, Washington, D. C., for defendant.
The above-entitled matter came on for trial before the Court in Lincoln, Nebraska, on the 31st day of October, 1960, and the 1st day of November, 1960. The plaintiff was represented by T. J. Fraizer of Fraizer & Fraizer, Lincoln, Nebraska, and the defendant was represented by Bruno Lederer, Tax Division, Department of Justice, Washington, D. C. The Court having heard the testimony, having reviewed the briefs submitted on behalf of both parties and being fully advised in the premises, makes findings of fact and conclusions of law, as follows:
1. That this action was brought under and pursuant to 28 U.S.Code, § 1346 (a), to recover penalties alleged to have been erroneously and illegally assessed and collected by the United States from the plaintiff. This Court has jurisdiction over the parties and subject matter of this action.
2. By order of the Court dated and filed April 1, 1960, the actions in Civil No. 206L and Civil 299L were consolidated for trial purposes.
3. That under the provisions of Section 6672 of the Internal Revenue Code of 1954, 26 U.S.C. § 6672, there was asserted and assessed against the plaintiff a penalty of 100 per cent of the amount of employees' withheld income tax and employees' withheld Federal Insurance Contribution Act, 26 U.S.C. § 3101 et seq., tax collected but not paid over by S & D Studebaker-Packard, Inc., a corporation, for the four calendar quarters of 1957 and the first calendar quarter of 1958.
4. That the plaintiff paid to the U. S. Treasury Department, Internal Revenue Service, the penalties assessed against him on the dates, for the periods, and in amounts as follows:
Date Penalty Amount Including
Paid Period Tax Involved Interest
June 9, 1958 1st Quarter W.T. & F.I.C.A. $1.022.38
1957 Tax
Apr. 8, 1959 2nd Quarter W.T. & F.I.C.A. $1,06663
1957 Tax
Apr. 8, 1959 3rd Quarter W.T. & F.I.C.A. $1,180.74
1957 Tax
Apr. 8, 1959 4th Quarter W.T. & F.I.C.A. $1,305.17
1957 Tax
Apr. 8, 1959 1st Quarter W.T. & F.I.C.A. $ 171.41
1958 Tax
That the penalties set forth above are equal to amounts collected from the employees of S & D Studebaker Packard, Inc., as withheld income and F.I.C.A. taxes, plus interest, and that the amounts so collected were never paid over to the United States.
5. That the plaintiff filed claims for refund of the penalties assessed against and paid by him, as required by law, with the District Director, Internal Revenue Service, Omaha, Nebraska. Said claims set out in detail the contentions of the plaintiff.
6. That on the 17th day of September, 1958, the plaintiff was notified by registered letter from James L. McCrory, District Director U. S. Treasury Department, Internal Revenue Service, that the plaintiff's claim for refund for the first quarter of 1957 had been disallowed in full, and that on the 6th day of November, 1959, the plaintiff was notified by registered letter that the plaintiff's claim for refund for the second, third, and fourth quarters of 1957, and the first quarter of 1958, had been disallowed in full.
7. That the plaintiff, Kenneth C. Schweitzer, was president of S & D Studebaker-Packard, Inc., a Nebraska corporation, during all of the year 1957 and during the first quarter of the year 1958, and during said period was the owner of 1,710 shares of the capital stock of said corporation of the par value of $10 per share, and that during said period of time, Jimmie L. Delp was the vice-president, secretary, and treasurer of said corporation and the owner of 1,610 shares of the capital stock of said corporation of the par value of $10 per share, they being the sole stockholders of said corporation; that during the said period, the Board of Directors of S & D Studebaker-Packard, Inc., consisted of plaintiff, plaintiff's wife, and Jimmie L. Delp.
8. That the corporation was incorporated under the laws of the State of Nebraska on January 13, 1954, and thereupon engaged in the business of selling new and used automobiles and a general automobile repair and service business until March 1, 1958, at which time the corporation ceased all business operations. Plaintiff made loans in a considerable amount to the corporation for some of which notes payable to him were executed and for some of which he did not receive notes. The Court cannot make a specific finding as to the amount of the loans or the amount owing to plaintiff on any particular date but does find that the loans were in a considerable amount.
9. That plaintiff was president of Schweitzer Excavating Company, a corporation, and devoted full time to the excavating company. He gave attention to S & D Studebaker-Packard, Inc. as hereafter mentioned.
10. That during all of the year 1957, and until January 28, 1958, Jimmie L. Delp, the vice-president, secretary and treasurer of the corporation, was the active manager of the corporation, devoting his entire time to conducting the affairs of the business. Delp signed corporate checks, directed the payment of bills, signed corporate tax returns, and exercised complete supervision over the employees of the corporation. During said period, plaintiff relied upon Delp to conduct the day-to-day affairs of the corporation, but held telephone conversations with Delp occasionally but not every day. The telephone conversations were generally concerned with the corporation's shortage of money to pay its bills in general. He was at the place of business sometimes as often as once a week; sometimes as infrequent as once a month.
11. That on January 28, 1958, Delp resigned and ceased active management of the corporation, whereupon plaintiff, Kenneth C. Schweitzer, assumed the duties of active manager of the...
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