United States v. Glen Upton, Inc.

• Decision Date: 17 July 1974
• Docket Number: No. 20717-1.,20717-1.
• Citation: United States v. Glen Upton, Inc., 378 F.Supp. 1028 (W.D. Mo. 1974)
• Court: U.S. District Court — Western District of Missouri
• Parties: UNITED STATES of America, Plaintiff, v. GLEN UPTON, INC., et al., Defendants.

378 F. Supp. 1028

UNITED STATES of America, Plaintiff, v.GLEN UPTON, INC., et al., Defendants.

No. 20717-1.

United States District Court, W. D. Missouri, W. D.

July 17, 1974.

Scott P. Crampton, Asst. Atty. Gen., Tax Div., John J. McCarthy, Chief, General Litigation Section, Jeffrey D. Snow, Trial Atty., Tax Div., Dept. of Justice, Washington, D. C., Mary A. Schneider, Asst. U. S. Atty., Kansas City, Mo., for plaintiff.

Jack N. Bohm, Kansas City, Mo., for Glen Upton, Inc.

John S. Gordon, Dean F. Arnold, Bagby, Benjamin & Arnold, Martin B. Dickinson, Sr., Kansas City, Mo., for Swope Parkway Ntl. Bk.

MEMORANDUM AND ORDER

JOHN W. OLIVER, District Judge.

The present cause is an action brought to foreclose a federal tax lien against a parcel of real property purchased by the defendant from the taxpayer.With regard to the government's claim, which is separately considered pursuant to Rule 42(b) of the Rules of Civil Procedure, the parties have agreed that no oral evidence need be presented and have submitted the case on a stipulated factual record.We have carefully reviewed the Stipulation and the briefs of the parties and make the following findings of fact and state the following conclusions of law:

I.Findings of Fact

The parties' Stipulation established that:

1.On May 12, 1960, Lane Body and Frame Co. was formed as a corporation under Missouri law.

2.On September 6, 1968, Lane Body and Frame Co. executed a Deed of Trust concerning the parcel of real property in issue to William Asjes as Trustee for Linwood Mortgage Company in the amount of $25,000.

3.On January 15, 1969, the Missouri Secretary of State declared the corporate records, privileges and franchises of Lane Body and Frame Co. forfeited and cancelled and the corporation dissolved as of January 1, 1969.

4.On and as of April 24, 1969, pursuant to an Application for Rescinding Forfeiture submitted by Lane Body and Frame Company's last president, Lee B. Hill, the Missouri Secretary of State rescinded the previously described forfeiture and Lane Body and Frame Co. was restored to good standing on the records of the said Secretary of State.

5.On August 27, 1969, the Internal Revenue Service received an Employer's Quarterly Federal Tax Return concerning Lane Body and Frame Co., Inc., from Lee B. Hill who gave his title as "owner;" the return shows a tax due of $2,538.35 for the first quarter of 1969.Also on August 27, 1969 the Internal Revenue Service received a second Employer's Quarterly Federal Tax Return concerning Lane Body and Frame Co., Inc.(on a preaddressed form) from Mary Ann Hill as secretary-treasurer; the return shows a tax due of $3,414.41 for the second quarter of 1969.

6.On September 15, 1969, the Linwood Mortgage Company foreclosed the lien of a Deed of Trust between Lane Body and Frame Co. and Linwood Mortgage Company and William Asjes, Trustee, upon the parcel of real property in issue and sold same for $25,000 to the Linwood State Bank.

7.On December 26, 1969, the Internal Revenue Service received an Employer's Quarterly Federal Tax Return concerning Lane Body and Frame Co., Inc.(on a preaddressed form) from Lee B. Hill who gave his title as "Pres.;" the return shows a tax due of $2,442.09 for the third quarter of 1969.

8.On October 3, 1969 and October 17, 1969 and December 26, 1969 the United States made assessments (designated as "23C Date") for unpaid withholding taxes against Lane Body and Frame Co., Inc., for, respectively, the second quarter, the first quarter, and the third quarter of that year; during the period November 4, 1969 and March 17, 1970, payments were received by Internal Revenue concerning the above assessments.There remains due and owing the following amounts (which do not include interest): $800 for the first quarter; $2,800 for the second quarter; $2,547.87 for the third quarter, and $2,249.73 for the fourth quarter.

9.On October 3, 1969, and October 17, 1969, and December 26, 1969, the United States gave notice of the assessments described in the preceding paragraph to Lane Body and Frame Co., Inc., and demanded payment thereof for, respectively, the second quarter, the first quarter, and the third quarter of 1969.As indicated in the preceding paragraph some payments were received by Internal Revenue.

10.On January 15, 1970, the Missouri Secretary of State declared the corporate rights, privileges and franchises heretofore conferred upon Lane Body and Frame Co. forfeited and cancelled as of January 1, 1970.

11.On January 19, 1970, Lane Body and Frame Co. and Harry W. Allen, the latter as surety, filed a bond in the amount of $5,500 in the Circuit Court of Jackson County in order to have an opportunity to redeem the parcel of real property in issue.

12.On March 20, 1970 the Internal Revenue Service received an Employer's Quarterly Federal Tax Return concerning Lane Body and Frame Co., Inc., (on a preaddressed form) which return is not signed or dated; the return shows a tax due of $2,232.33 for the fourth quarter of 1969.

13.On March 20, 1970, the United States made an assessment for unpaid withholding taxes against Lane Body and Frame Co., Inc., for the fourth quarter of 1969.

14.On March 20, 1970, the United States gave notice of the assessment described in the preceding paragraph to Lane Body and Frame Co., Inc., and made demand for payment thereof.There remains due and owing (without interest) the sum of $2,249.73.

15.On April 8, 1970, the United States filed a Notice of Federal Tax Lien listing the taxpayer as "Lee B. Hill DBA Lane Body and Frame Co., Inc.," and concerning Federal withholding (941) taxes for the first three quarters of 1969.This notice was filed with the Jackson County Recorder of Deeds under "Hill."

16.On April 14, 1970, the United States filed a Notice of Federal Tax Lien listing the taxpayer as "Lane Body and Frame Co., Inc.," and concerning Federal withholding taxes for the fourth quarter of 1969.This notice was filed with the Jackson County Recorder of Deeds under "Lane."

17.As of December 9, 1970, McDaniel Title Company, agent for Title Insurance Company of Minnesota, made a title search on the Application of Swope Parkway National Bank for a loan policy as concerns the parcel of real property in issue; as the result of this search, it was aware of the Notice of Federal Tax Lien filed on April 8, 1970 against Lee B. Hill DBA Lane Body and Frame Co., Inc.However, McDaniel Title Company failed to search for and become aware of the Notice of Federal Tax Lien filed on April 14, 1970 against Lane Body and FrameCo., Inc 18.On September 14, 1970, Glen Upton, Inc., by Glen A. Upton, entered into a Real Estate Contract with Lane Body and Frame Co., Inc., by Lee B. Hill to purchase the parcel of real property in issue for $40,000.In order to make this purchase, Glen Upton, Inc., had approached the Swope Parkway National Bank to secure a loan.At no time did Glen Upton, Inc., or any of its officers or employees check with the Jackson County Recorder to determine if any notices of federal tax lien were filed effecting the property.

19.Also, on September 14, 1970, a "trustee's corporation warranty deed" was executed by "L. B. Hill and Mary Ann Hill, Trustees of Lane Body and Frame Co., as the sole surviving officers and members of the last board of directors of Lane Body and Frame Co., a dissolved corporation."This deed was signed in the name of "Lane Body and Frame Company, Inc." by L. B. Hill"Trustee and former president" and Mary Ann Hill, "Trustee and former secretary" of "Lane Body & Frame Co., a dissolved corporation."This deed conveyed whatever right Lane Body and Frame Co., Inc., or Lee B. Hill or Mary Ann Hill had in the parcel of real property in issue to Glen Upton, Inc.

20.Also, on September 14, 1970, a Deed of Trust was executed by Glen Upton, Inc., in favor of Swope Parkway National Bank to secure the afore-described loan of $40,000.

21.On September 15, 1970, a Deed of Release was executed by William Asjes, trustee for Linwood Mortgage Company, concerning the parcel of real property in issue.

22.Also on September 15, 1970, the Swope Parkway National Bank, with regard to the Glen Upton, Inc., loan, wrote checks to the following entities in the following amounts: $9,502.73 to Lane Body and Frame Co., Inc.; $1,228.30 to the County Collector; $351.36 to the City Treasurer; $760.03 to the Swope Parkway National Bank; $349.15 to the City Treasurer and $28,157.58 to Linwood Mortgage Company.

23.On September 16, 1970Lee B. Hill signed and delivered to McDaniel Title Company for itself and Title Insurance Company of Minnesota a document entitled "Indemnity Agreement" referring to the Notice of Tax Lien filed on April 8, 1970.In this document Lee B. Hill states that the said lien was filed upon him individually and not against Lane Body and Frame Co., and that "the said claimed lien and amount are for a personal obligation of the undersigned and not an obligation of said dissolved corporation * * *."Moreover, the document recites that "Lee B. Hill is presently, and has been in the past, making payments thereon his said individual tax obligation, under his agreement with the Government, lienor, to ultimately discharge the same * * *."The document further refers to the sale of the real estate in issue and states that "Lee B. Hill agrees to indemnify and save harmless McDaniel Title Company and Title Insurance Company of Minnesota from any and all claims * * *."

24.On September 17, 1970William Asjes, Trustee, delivered a Deed of Redemption from the foreclosure of the Deed of Trust concerning the parcel of real property in issue.

25.Also on September 17, 1970, "Lane Body and Frame, Inc., by Trustee former Pres Lee B. Hill" cashed the check received from Swope Parkway National Bank.

II.Conclusions of Law

1.Jurisdiction of this action is conferred upon this Court by Title 28, United States Code, Sections 1340and13...