U.S. v. McMullin

• Decision Date: 13 November 1991
• Docket Number: No. 90-5077,90-5077
• Citation: 948 F.2d 1188
• Parties: -5888, 92-1 USTC P 50,056 UNITED STATES of America, Plaintiff-Appellee, v. Clinton O. McMULLIN, Defendant-Appellant. McMullin Family Trust, and Laura J. McMullin, Defendants.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1188

948 F.2d 1188

68 A.F.T.R.2d 91-5888, 92-1 USTC P 50,056

UNITED STATES of America, Plaintiff-Appellee, v. Clinton O. McMULLIN, Defendant-Appellant McMullin Family Trust, and Laura J. McMullin, Defendants.

No. 90-5077.

United States Court of Appeals Tenth Circuit.

Nov. 13, 1991.

Deborah Swann (Gary R. Allen and Ann B. Durney, Attorneys, Tax Div., Dept. of Justice, Shirley D. Peterson, Asst. Atty. Gen., of counsel: Tony M. Graham, U.S. Atty., Washington, D.C., with her on the brief), for plaintiff-appellee.

Albert J. Givray (Kristen L. Gordon of Doerner, Stuart, Saunders, Daniel & Anderson, with him on the brief), Tulsa, Okl., Sp. Counsel, for defendants-appellants.

Before BALDOCK and McWILLIAMS, Circuit Judges, and DUMBAULD, District Judge. ^*

McWILLIAMS, Circuit Judge.

On January 9, 1987, the United States brought the present action in the United States District Court for the Northern District of Oklahoma against Clinton O. McMullin and his wife, Laura J. McMullin, and the McMullin Family Trust, seeking to foreclose a federal tax lien against improved real property located in Mayes County, Oklahoma, for the income tax liabilities of Clinton and Laura McMullin. In its complaint, the United States alleged that it had a valid lien against the subject property which Clinton McMullin had purported to convey to the McMullin Family Trust, and that the trust was only his alter ego. The relief sought by the United States was an order that the subject property be sold, either by administrative process or at judicial sale, and that the proceeds thereof be applied towards the tax liabilities of Clinton and Laura McMullin.

The McMullins filed a pro se motion to dismiss for lack of jurisdiction. This motion included a demand for a jury trial. The district court denied the motion to dismiss and in so doing struck the taxpayers' demand for a jury trial, stating that because the action, as then filed, was purely equitable in nature, the taxpayers accordingly had no right to a jury trial. See United States v. Annis, 634 F.2d 1270, 1272 (10th Cir.1980).

On April 4, 1988, the United States filed a motion for summary judgment in its favor on the question of whether the taxpayers were in fact indebted to the United States for unpaid federal income taxes and whether the government's tax liens could reach the property held by the family trust in order to collect taxes owed by the trust's grantors. This motion was supported by numerous exhibits. On the same day, the taxpayers filed an answer wherein they challenged the correctness of the tax assessment.

On September 21, 1988, the district court granted partial summary judgment in favor of the United States "on the issue of fraudulent transfer." However, the district court also stated that "the validity of the assessment as to the amounts assessed, remains an issue for trial."

On January 18, 1989, taxpayers filed another motion for jury trial. The government opposed this motion on the ground that the action was still essentially an action to foreclose tax liens on certain realty, and therefore, being equitable in nature, did not give rise to a right to a jury trial. The district court agreed with the government and denied the motion. The taxpayers filed an objection to the district court's denial of their request for a jury trial, which objection was denied.

A bench trial of this case occurred on January 2 and 3, 1990, at which time the taxpayers appeared pro se. The government called two witnesses who testified in some detail and identified numerous documents which were received into evidence. The government called Clinton McMullin as a witness, but he asserted his Fifth Amendment rights and declined to testify. Neither of the McMullins testified by way of defense nor did they call any other witness. Based on the evidence before it, the district court held that the taxpayers were liable to the United States for the amount of unpaid taxes, penalties, and interest assessed against them. Clinton McMullin filed a notice of appeal, and he will hereinafter be referred to as the "taxpayer."

An opening brief was filed in this court by the taxpayer, appearing pro se. However, it would appear that in preparing his brief in this court, taxpayer had some legal assistance. Notwithstanding, or perhaps because of, taxpayer's brief is, in the main, difficult to follow. The government also filed a brief urging this court to affirm the judgment of the district court. Both briefs made only passing reference to the district court's denial of taxpayer's request for a jury trial.

Another panel of this court was of the view that the denial of taxpayer's request for a jury trial merited closer examination and ordered supplemental briefing on that one issue. In connection therewith, this court also appointed counsel to represent the taxpayer, both in connection with supplemental briefing and oral argument before this panel.

As we understand it, counsel for the taxpayer and the government both agree that when the government only seeks to enforce its tax lien against a taxpayer's property, the taxpayer has no right to a jury trial since the action sounds in equity. United States v. Annis, 634 F.2d 1270, 1272 (10th Cir.1980). Further, we understand that counsel also agree that where the government seeks to reduce a tax assessment to judgment and obtain a personal money judgment against the taxpayer, the taxpayer then has a Seventh Amendment right to a jury trial. See United States v. Anderson, 584 F.2d 369, 373 (10th Cir.1978). It is our further understanding that counsel now agree that in a proceeding such as the present one, where the government seeks both equitable and legal relief, i.e., foreclosure of a tax lien and a money judgment, the taxpayer under the Seventh Amendment is entitled to a jury trial on the legal issues, i.e., the claim for a money judgment. Ross v. Bernhard, 396 U.S. 531, 538, 90 S.Ct. 733, 738, 24 L.Ed.2d 729 (1969); Dairy Queen, Inc. v. Wood, 369 U.S. 469, 473, n. 4, 82 S.Ct. 894, 897, n. 4, 8 L.Ed.2d 44 (1962); Skinner v. Total Petroleum, Inc., 859 F.2d 1439, 1443 (10th Cir.1988); United States v. State of New Mexico, 642 F.2d 397, 399-400 (10th Cir.1981); and United States v. McMahan, 569 F.2d 889 (5th Cir.1978).

In this court, the government argues that even though the taxpayer had a right to jury trial on the legal issue raised in the motion for summary judgment, the taxpayer never made a timely demand for a jury trial. In response to the complaint, the taxpayer did make a timely demand for a jury trial. However, the government points out, and correctly so, that the complaint requested equitable relief only, and accordingly that particular request for a jury trial was properly denied. Although we find no amended complaint in the record before us, the government contends that in its motion for summary judgment it expanded its action to include a claim for legal relief, to which taxpayer made no timely demand for a jury trial. It does appear, however, that taxpayer made two subsequent requests for jury trial, perhaps untimely, both of which were denied. However, the district court did not deny taxpayer's request for jury trial because such was untimely. ¹ And of course the taxpayer, a rancher and part-time self-employed carnival concessionaire, and his wife appeared pro se. Under such circumstances, we are not inclined to sidestep this very important constitutional right on the ground that the request for jury trial was untimely.

The government's final argument is that under the circumstances any error was only harmless error. As indicated, there was a bench trial in this case. The government contends that if there had been a jury impaneled to hear the case, the district court, on the basis of the testimony before it, would have been...