Gadoury v. United States ( 1996 )

USCA1 Opinion

                                [NOT FOR PUBLICATION]



                            UNITED STATES COURT OF APPEALS
UNITED STATES COURT OF APPEALS

                                FOR THE FIRST CIRCUIT
FOR THE FIRST CIRCUIT

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        No. 95-1872



                             IN RE:  EDOUARD GADOURY, JR.



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                                EDOUARD GADOURY, JR.,



                                      Appellant,



                                          v.



                               UNITED STATES OF AMERICA

                            FOR INTERNAL REVENUE SERVICE,



                                      Appellee.



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                     APPEAL FROM THE UNITED STATES DISTRICT COURT



                           FOR THE DISTRICT OF RHODE ISLAND



                [Hon. Raymond J. Pettine, Senior U.S. District Judge]
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                                        Before



                                Torruella, Chief Judge,
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                            Aldrich, Senior Circuit Judge,
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                              and Selya, Circuit Judge.
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            Guido R. Salvadore for appellant.
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            Alice L. Ronk  with whom Lorretta  C. Argrett,  Assistant Attorney
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        General, Gary R. Allen, David  English Carmack and Sheldon Whitehouse,
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        United States Attorney, were on brief for appellee.
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                                  February 26, 1996

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                 Per Curiam.  Edouard Gadoury, Jr.'s appeal covers an
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             unfavorable decision by the Internal Revenue Service that he



               is a responsible person who willfully failed to pay over



               withheld payroll taxes, 26 U.S.C.   6672,1 the burden of



             proof being upon him, Caterino v. United States, 794 F.2d 1
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            (1st Cir. 1986), cert. denied, 480 U.S. 905 (1987); a finding
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              supporting the IRS by the United States Bankruptcy Court;2



            findings by a magistrate concluding that the bankruptcy court



               had not committed clear error, and the district court's



              confirmation of the magistrate's findings.  Proof of clear



             error is Gadoury's burden throughout; we do not have de novo
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                 review.  Id. at 5.  Unhappily, he has not succeeded.
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             We consider first a procedural point, in fact but a straw to



               which Gadoury, understandably, would cling.  When, by a



              course that we need not consider, he found himself in the



              bankruptcy court, Gadoury filed a motion for the court to



             determine that he had no   6672 liability.  The government,




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            1.        (a) General rule.  Any person required to

                      collect, truthfully account  for, and pay

                      over any  tax imposed  by this  title who

                      willfully fails to  collect such tax,  or

                      truthfully account for and pay over  such

                      tax, or willfully  attempts in any manner

                      to  evade or defeat  any such tax  or the

                      payment  thereof, shall,  in addition  to

                      other  penalties  provided   by  law,  be

                      liable to  a penalty  equal to  the total

                      amount  of   the  tax   evaded,  or   not

                      collected, or not  accounted for and paid

                      over. . . .



            2.  Gadoury having ended up in a Chapter 7 proceeding.



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              erroneously interpreting the motion to be merely a request



            for a hearing, awaited the court's response, only to discover



              that the response was to allow the motion, in light of the



              government's failure to reply.  The government then sought



            vigorously to have the order vacated under Fed.R.Civ.P. 55(e)



             (made applicable to adversary proceedings by Bankr. R. 7055)



              which prohibits entry of default against the United States



               unless plaintiff has presented evidence on the merits.



             Alternatively, it asserted good cause under Rule 55(c).  We



              find no error either way in the court's rescission of the



                           order and proceeding to a trial.



              Our substantive start and, indeed, finish, is whether the



               district court properly refused to reject the bankruptcy



            findings that Gadoury was responsible, and "willfully" failed



             to pay the payroll taxes, aided by the IRS's presumption of



               correctness with which it entered the bankruptcy court.



              Caterino, 794 F.2d at 5.  We are further reminded by that
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                opinion that such findings may be aided by unexpressed



            inferences if they reasonably appear to have been intended by



              the court.  794 F.2d at 6 n.2.  Some of the facts found by



             the bankruptcy court, plus some stipulated, are as follows:



             Gadoury was hired by Sprague Company in 1986 as bookkeeper.



             His title was changed to Controller.  As such he was not an



            officer, but he could sign company checks, solo, and did sign



              company tax returns and tax checks.  The bankruptcy court,







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            however, correctly ruled, "[T]he cases do say again and again



            that just mere check writing authority is not enough."  There



             was, of course, more.  The court found, on evidence that it



             believed, as well as the parties' stipulations, that Gadoury



              had significant control over disbursement of the company's



            funds, making him a responsible person.  For good measure, it



             also found that he had received no special instructions not



              to pay.3  Gadoury fully disputed this evidence.  Looked at



             most favorably to him it might be possible to find, in light



             of the company's business straits and poor cash flow, he not



              only had special instructions not to pay, but that a broad



              order from his superior reduced his authority altogether,



              with his superior taking over his duties.  The difficulty



            here is that the superior denied this, and the court believed



              him.  The fact that the court failed to discuss Gadoury's



             evidence, or state why it was not persuasive, does not make



                          its contrary findings clear error.



              As to willfulness, Gadoury admitted that he was aware the



            taxes were not being paid, that he urged them to be paid, but



              that he failed to take any steps to see that they were in



                       fact paid.  There is no more to be said.



                                      Affirmed.
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            3.  For the possible importance of such, see Howard v. United
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            States, 711 F.2d 729 (5th Cir. 1983).
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