Tiffany v. United States

• Decision Date: 13 December 1963
• Docket Number: Civ. A. No. 470-62.
• Citation: 228 F. Supp. 700
• Parties: Earl H. TIFFANY, Jr., Plaintiff, v. UNITED STATES of America, Defendant.
• Court: U.S. District Court — District of New Jersey

228 F. Supp. 700

Earl H. TIFFANY, Jr., Plaintiff, v. UNITED STATES of America, Defendant.

Civ. A. No. 470-62.

United States District Court D. New Jersey.

December 13, 1963.

Lindabury, McCormick & Estabrook, by Francis X. McCormick, Elizabeth, N. J., for plaintiff.

David M. Satz, Jr., U. S. Atty., by Patrick H. Butler, Atty., Dept. of Justice, Washington, D. C., for the United States.

MEANEY, District Judge.

Plaintiff, Earl H. Tiffany, Jr., through a holding company, in 1956 acquired all of the outstanding stock of Fairlawn News, Inc. and became publisher of a weekly newspaper bearing the name Fairlawn News, Inc. Plaintiff was the controlling stockholder of the holding stock company and the other stockholders were inactive.

From the very beginning plaintiff was aware that the financial problems of Fairlawn News, Inc. were pressing and constantly contributed cash funds in order to permit the operation of the newspaper to continue. The payments advanced were sufficient to meet the take-home pay requirements of the employees of the company.

Because of the deteriorating condition of the company the prior owner instituted suit to foreclose a chattel mortgage, and pressure from other creditors caused the filing of an involuntary petition in bankruptcy and the adjudication of Fairlawn News, Inc. as a bankrupt. One Martin Gross was appointed receiver by the Referee in Bankruptcy on December 11, 1957.

At the time of the appointment of the receiver, Fairlawn News, Inc. had paid federal withholding taxes for the first three quarters of 1957 and had made a deposit of $1,000.00 on account of withholding taxes for the month of October 1957. No further deposits were made on account of withholding taxes during November or the first eleven days of December, 1957.

The Treasury Department assessed against plaintiff a penalty in the amount of $4,393.52, plus interest of $454.36, an amount equal to the unpaid withholding and social security taxes due from Fairlawn News, Inc. for the last quarter of 1957. This the plaintiff paid and now seeks to recover a total refund in the sum of $4,850.88, including a $3.00 lien fee.

Plaintiff contends that he is not liable, on the following grounds:

1. That he was not a responsible person as defined in 26 U.S.C.A. section 6671(b), since he was only a part-time officer.

2. That he did not willfully fail to to collect and remit taxes as required by 26 U.S.C.A. section 6672.

3. Even conceding that he was a responsible person, defined in 26 U.S.C.A. section 6671(b), he was not such on the date for depositing withholding taxes and filing the quarterly return.

His assertion that he was not a responsible person, as defined in 26 U.S. C.A. § 6671(b), he justifies by reliance on the cases of Cushman v. Wood, D.C., 149 F.Supp. 644, and Kellems v. United States, D.C., 97 F.Supp. 681. In neither of these does his confidence seem to be well placed. In the Cushman case there was complete delegation of responsibility by the plaintiffs to an office manager and they participated in no way in the nonpayment action. In the instant case the plaintiff by his own admission exercised full authority with respect to the operation of Fairlawn News, Inc., signed checks for the corporation and in October 1957 replaced the general manager with a new general manager and had continually advanced sums of money to meet the take-home pay of the various...