US v. Blakeman

• Decision Date: 30 October 1990
• Docket Number: Civ. A. No. CA4-86-511-A.
• Parties: UNITED STATES of America v. James Neal BLAKEMAN as Executor of the Estate of C.E. Blakeman, Deceased, et al.
• Court: U.S. District Court — Northern District of Texas

750 F. Supp. 216

UNITED STATES of America v. James Neal BLAKEMAN as Executor of the Estate of C.E. Blakeman, Deceased, et al.

Civ. A. No. CA4-86-511-A.

United States District Court, N.D. Texas, Fort Worth Division.

October 30, 1990.

Waymon G. DuBose, Jr., Dept. of Justice, Tax Div., Dallas, Tex., for U.S.

David R. Seidler, Shannon, Gracey, Ratliff & Miller, Fort Worth, Tex., for Ridglea Bank.

William L. Kirkman, Bourland & Kirkman, Fort Worth, Tex., for James Neal Blakeman, Maudine Blakeman, Robert Earl Blakeman and Karen A. Whaley.

William D. Elliott, Bryan C. Collins, Jackson & Walker, Dallas, Tex., for Maudine Blakeman.

Michael Deeds, Dallas, Tex., Steve Meeks, Heard, Goggan, Blair, Williams & Harrison, Fort Worth, Tex., for Tarrant County, Tex., Fort Worth Independent School Dist. and City of Fort Worth, Tex.

MEMORANDUM OPINION

McBRYDE, District Judge.

This action was brought by the United States of America (hereinafter "plaintiff") to reduce to judgment the assessment of certain federal estate tax liabilities of the estate of C.E. Blakeman, deceased ("the estate"); to foreclose plaintiff's federal tax lien(s) against certain real property (hereinafter described) located in Fort Worth, Tarrant County, Texas; and to obtain judgment against defendant James Neal Blakeman, as executor of the estate and individually, for the estate taxes to the extent of all payments of debts of the estate, and, against the survivors of C.E. Blakeman based on the value of any assets they might have received from the estate.

Defendant Maudine Blakeman (hereinafter "Mrs. Blakeman") is the widow of C.E. Blakeman; defendants James Neal Blakeman, Robert Earl Blakeman, and Karren A. Whaley (hereinafter "defendant children") are the children of C.E. Blakeman by a previous marriage; defendant Keep Fresh Filters, Inc., d/b/a Diversified Financial Planners, Inc., formerly NCNB, formerly known as Ridglea Bank, (hereinafter "Keep Fresh") is a judgment creditor of the estate; and defendants Tarrant County, Texas, Fort Worth Independent School District and City of Fort Worth, Texas, (hereinafter "defendant taxing authorities") are taxing entities to whom ad valorem taxes, penalties and interest are due and owing by the estate.

The primary dispute in this case centers around 101.5954 acres of land that was owned by C.E. Blakeman as his separate property at the time of his death. A legal description of this land is given in Exhibit "A" to the judgment in this action that bears the same date as this memorandum opinion. This acreage will be referred to herein as the "Randol Mill property."

At the time of his death, C.E. Blakeman and defendant Mrs. Blakeman resided upon the Randol Mill property. Thereafter, Mrs. Blakeman continued to reside on a 100 acre part of the Randol Mill property. C.E. Blakeman left the property to the defendant children by his last will and testament. A dispute arose between Mrs. Blakeman and defendant children as to the rights of each in the Randol Mill property. Suit, to which they were all parties, was brought in Probate Court in Tarrant County, Texas, to determine their respective rights, and on May 7, 1980, a final judgment was entered. The judgment determined that Mrs. Blakeman had a rural homestead in the Randol Mill property and that she was entitled to the use of 100 acres, to be selected by her, of the Randol Mill property for so long as she occupies the same as her homestead. Neither plaintiff nor defendant Keep Fresh or any of the taxing authorities was a party to the Probate Court action.

The Contentions of the Parties Relative to the Randol Mill Property

The contentions of the parties relative to the Randol Mill property are, briefly, as follows:

Plaintiff contends that the Randol Mill property is encumbered with a special federal estate tax lien pursuant to 26 U.S.C. § 6324(a)(1), as well as a general federal tax lien pursuant to 26 U.S.C. § 6321, to secure payment of the federal estate tax liability of the estate and that plaintiff is entitled to foreclosure of its liens.

Mrs. Blakeman contends that plaintiff's special federal estate tax lien has expired because more than ten years have passed since the date of C.E. Blakeman's death, and, further, that plaintiff's complaint fails to state a claim based on 26 U.S.C. § 6321. She claims in the alternative that, if the Court finds that plaintiff's complaint is sufficient to state a claim under § 6321, she continues to have a rural homestead in 100 acres of the Randol Mill property and that, if the Court orders foreclosure of the property, she is entitled to recover the economic equivalent of a life estate in the 100 acres that she selected as her homestead pursuant to the authority of the May 7, 1980, Probate Court judgment. Specifically, Mrs. Blakeman claims that she is entitled to 74.432 percent of the proceeds of any foreclosure sale of the 100 acres.

Defendant children do not contest that the Randol Mill property is encumbered with a general federal tax lien or that plaintiff is entitled to foreclose the tax lien. They contend that Mrs. Blakeman now has only an urban homestead interest, rather than a rural homestead interest, in the Randol Mill property. Put another way, defendant children claim that Mrs. Blakeman is entitled only to the use of one acre of the Randol Mill property and that, upon foreclosure of the property, they will be entitled to receive the bulk of the proceeds after payment of the outstanding debts of the estate. However, the defendant children join with Mrs. Blakeman in contending that plaintiff's lien rights are subject and inferior to whatever homestead rights Mrs. Blakeman had in the Randol Mill property when the estate tax assessments were made.

Keep Fresh and defendant taxing authorities do not dispute the validity of plaintiff's general federal tax lien or its right to a judgment of foreclosure. These defendants merely seek a determination of the priority of their liens, if any, against the Randol Mill property and recovery from the sales proceeds of the sums due and owing to them in the event a foreclosure sale is ordered.

Stipulations

Prior to trial, the parties stipulated to the following facts:

1. C.E. Blakeman died on May 25, 1978, in Fort Worth, Tarrant County, Texas, while married to Mrs. Blakeman, and that he was survived by three children from a prior marriage, who are defendant children.

2. C.E. Blakeman left a will dated January 18, 1973, which appointed James Neal Blakeman as independent executor, and which was admitted to probate by order dated June 12, 1978.

3. James Neal Blakeman was appointed independent executor of the estate by Probate Court order dated June 12, 1978; on or about June 12, 1978, he executed and filed with the Probate Court an oath that he would well and truly perform the duties of the executor of the estate; he was issued letters testamentary as independent executor of the estate by the Probate Court; and, he, as independent executor of the estate, filed an inventory, appraisement and list of claims with the Probate Court on or about November 10, 1978, which was approved by the Probate Court, by order dated November 27, 1978.

4. On the date of his death, C. E. Blakeman owned the Randol Mill property, consisting of over 100 acres of land located in Fort Worth, Texas.

5. The Randol Mill property was the separate property of C.E. Blakeman and was included in the estate.

6. The will of C.E. Blakeman left all real property of his estate, including the Randol Mill property, to defendant children, who are the sole beneficiaries of the estate and will of C.E. Blakeman, in equal shares, share and share alike.

7. On May 7, 1980, the Probate Court entered a final judgment declaring that the Randol Mill property was the rural homestead of C.E. Blakeman and Mrs. Blakeman. The Probate Court's judgment ordered that Mrs. Blakeman have the use and benefit of 100 acres of the Randol Mill property for so long as she shall occupy the same as her homestead. Plaintiff was not made a party to the Probate Court action between Mrs. Blakeman and defendant children that resulted in the Probate Court's judgment.

8. A delegate of the Secretary of the Treasury made assessments against the estate of C.E. Blakeman on June 17, 1980, in the amount of $124,820.93 for federal estate taxes and $12,651.37 interest. On July 21, 1980, the Secretary of the Treasury assessed penalties and interest in the amounts of $31,205.23 and $1,395.26, respectively. On August 18, 1980, the Secretary of the Treasury assessed interest in the amount of $1,436.30. A payment received April 25, 1983, reduced the outstanding balance of the assessments to $121,522.34. An abatement of a delinquency penalty reduced the outstanding balance of the assessments to $90,495.65 as of July 21, 1980.

9. The assessments were made on the basis of a return prepared by the Internal Revenue Service and agreed to by defendant James Neal Blakeman as executor of the estate.

10. On March 16, 1981, a notice of federal tax lien for the assessment against the estate of C.E. Blakeman was filed with the Tarrant County Clerk.

11. The Internal Revenue Service made demand upon defendant James Neal Blakeman, as executor of the estate, for payment of federal estate taxes due and owing from the estate prior to the filing of the complaint.

12. The complaint was filed on June 16, 1986.

13. James Neal Blakeman, as executor of the estate, has failed to pay the federal estate tax liability due and owing from the estate. There were insufficient funds to do so.

14. Mrs. Blakeman has continuously resided on the Randol Mill property since the death of C.E. Blakeman.

15. Mrs. Blakeman, who was born on June 20, 1928, was forty-nine years old at the date of death of C.E. Blakeman and is currently sixty-two years old.

16. As of October 9, 1990, the unpaid balance of the federal estate tax, interest and statutory additions due and owing to plaintiff United States of America

...