i'll take up the case for argument zero three five five four seven three california board of equalization versus school if you will each side has twenty minutes morning sales to another holes or rather to or to another wholesale the board's claim for the board's claim for unpaid excise tax and interest is approximately two point prove that the sales were not made to through a to the wholesaler listed in the debtors past returns but rather to retailers is it a question of whether that very determination is there a material issue a genuine issue of material fact that needs to be addressed by the trier of fact as opposed to recent patient the same now if that's true and if the owed by the wholesaler to the state the way these two statutes work is the first eighty seven thirty secs imposes a duty of collection on the wholesaler the second eighty seven so where our yard well said a moment ago you thought there were issues of fact here yet c because if you want if you expect he said that's just a part of it wrong when it granted caulfield summary judgment but you're also asking eight as they are written which is the wholesaler the wholesalers fuel is delivered to a reef but if you can change in that motion the facts were in dispute in the aunt made it and it's amended disclosure statement that the fuel in issue here was sold and delivered to a retailer that is what is in compas within the statutory provisions  know you say the facts are undisputed in one direction they say they're undisputed in a different direction and i know that when both people make a summary judgment motion one is tempted to say well let's give them what they want but it could be that the facts are actually disputed you think they're undisputed one way they can cure undisputed the other way maybe and needs to be crushed my question about the district court was was that this reco feel then cool feeling responsible for the tax whatever yes cool fuel in the test i'm sorry who are the backwash responsible for the tax because for two reasons first it was cool fuels fuel that was sold to the retailers in this case second the board never made it along page sixteen of the bettors three they make the you did not admit that but they still say that's the case that mr hill wasn't stole the gasoline put it in his own company actually his own shell operation  not a wholesaler for the fuel issue in this case you can in order to be a wholesaler you must have a permit if you do not have a permit you are not a wholesaler so in other words if i manage to get a whole bunch of fuel by by committing a really clever fraud and i get a whole bunch of fuel allocated to me and i sell a wholesaler sale to retailers you can't put a tax on me because i don't have a certificate as a whole selective and i sell millions of dollars of gasoline to retailers in your position as i would know any tax i'm not a wholesaler so you guys just lose all the tax is that correct i mean that would be your legal position correct it's a hypothetical which i have not addressed but it's in this case that's mr hill the hypothetical called mr hill and you argue your statement with well he's not a wholesaler and i'm trying to the question i'm asking you is so why change subject or second suppose we find there is a fact question about whether the fuel is embezzle who sold it who didn't sell it we send it back or try to the bankruptcy judge there's an outstanding order requiring you to answer sooner rather cores are produc g documents right privileged documents yes which is the but you say their privilege they say the judge that they're not but what about the we did everything that we could possibly do procedurally to bring that before the court it's here now we took a rap we file an appeal we've received it before it was just  before this court to determine the propriety i was running one thing in iraq or two for one request for admission well it is here now because of the summary judgment that is so but but in terms of when you just have a discovery order but if we decide that she was within her discretion to require you to answer the iraq authorities did you objected to do i understand correctly then that her order we have her order you are then precluded from contradicting the the  admissions that they asked you to admit position relative to these requests for admissions in order to fully expound upon that we would have to disclose third party taxpayer information which the statues a moving target here if you don't mind the effect that look both sides move for summary judgment are you really telling us that they're disputed this is a fact here and the answer is no there aren't any material issues that are in dispute it is we kind of explained this to the bankruptcy judge there was no argument for the court there are several different grounds on which school fuels entitle to summary judgment those grounds are independent of each other and as between the two or three of them you may find that there are some differences of factual three and one of them with the embezzlement argument one of them was the agency issue on which the bankruptcy judge in a district court eventually rules not addressing either of the others and the third one was the one that was addressed in the briefs here and retailers in high def because the board's admissions candidly to say was an outfit composed of an comprised of mr hill and others we know who some of those others are the have largely first names like go by sa and others some of the others may have included some of the folks at sunshine western that much i will concede is going to remain a mystery but bruce hill and others in the board's words arranged to obtain fuel front from cool fuel under that's what the claim of the case is all about when you take your employer's merchandise under false pretenses and you resell it to somebody and you don't give back the full amount that you received and that's an investment the question then  well if you say so i'm sorry if you say so i suppose but of course they never took to feel you know if you're stealing your employer's loaves of bread you carry them out the front door and you do something with them  including by the way the board's own records that identify high desert as a seller and i don't mean just their response to requests for admissions i'm also talking about their own internal records that identify the volume of fuel sold by high desert their spreadsheets that they described but apparently had not maintained or kept but identified fuel moving from cool to intermediate companies invent to retailers their own records and identify their own internal memoranda including memorandum by lehman who is the head of the special unfortunate section but identify fuel as going from cool fuel to a wholesaler to a retailer and he identifies the wholesalers high desert the boards rich doesn't actually exist which doesn't exist as well it doesn't exist in the sense that it doesn't have a valid permit it certainly exists in the real world and we know it existed in the real world because truckers the independent shipping companies whose tank trucks pulled up to the terminals filled up and went to the retail truck stops those folks had communications with high desert representatives they sent their invoices to high desert so if i call myself high desert then i am a company that exists right you are a company that you heron discussed with you are you a wholesaler if you do that absolutely you are how do we know that we know that because of the statute eighty seven thirty six defines a wholesaler as somebody who sells fuel to a retailer and if the taxpayers of the world out there had uncertainty about that the board publishes a guideline for wholesalers for tax payers and in that and it's part of the record here in that guide it says your rightful tailor if you sell to a retailer and if there were any doubt about that norm rice was the wanted to or who conducted people want to hear was asked if his deposition this is part of the record show posts you don't have a license or a permit and you sell fuel to a retailer are you liable for the tax and he gives  answer which everyone would you accept the board here which is of course you're liable for the tax and there's an obvious reason for that if you set up a system where somebody can just become a fly by night thief and shell fuel wholesale to retailers and just pockets the tax and the state says well you get to keep the tax you're not responsible to pay it that's an invitation for fraud and the poor doesn't really mean that they mean it here only because it's the only way they can get it so the only legitimate company that exists in this story as far as  footsteps a little bit the law i really want to do is vessel tax i wouldn't want to hurt my employer i just want to hurt those nasty tax right so that's what i'm going to do how would i say if i'm r given mr hill's to dish and it would probably be relatively easy for him to do that with a put there was a problem though you know cool fuel was not without internal controls  and typically when it shoal its fuel directly to retail customers which it didn't do very often typically when it did it was shipped in cool fuel tank trucks which was not the case here and it was would probably do just this way right i would say well i'm going to see that he's going to set up a phony company i'm going to pretend that i'm selling the fuel going to the company i'm going to pay cool fuel everything they're entitled to except the tax and i'm going to skim th e he might do that you know that's certainly possible and if you say well does that then raise the question whether he's embezzling fuel or the tax i don't think it does and the reason i think it doesn't is because the premise for this whole scheme is you've got to get fuel from somewhere that's the first thing you've got to get and you've got to get it under false pretenses somehow you've got to steal it and you can't just go up to a texaco terminal and pull fuel ever texaco pipeline it's not quite that simple you've got to have a release number and you've got to have some inside information or together so what you start the way it starts here is you've got to steal the fuel and once you do that that's an embezzlement of the fuel never got the never got the full purchase price or full sales price or no they got the cost of the merchandise plus their profit for a part that they didn't get was the tax correct right now how do we know that he stole the fuel and are not the tax money fuel because that's because that's the only way you can steal money later on and it's put it differently let me tell you work it const go and you you know the two scenarios warn you the dishonest employee takes a well now i really have a problem with your interpretation of that case you're taking it where the case doesn't go because the board is not seeking penalties correct they are not and that's what i see is the direct holding in that case that whole field can't be liable for the penalties of the tax but it doesn't excuse them for the tax and it seems to me with the district court did was take that case and then go further and say has some factual findings in it and all the of those findings are in the context of whether cool fuel is involved in a fraud the findings nonetheless are that cool people wasn't involved in a fraud bankruptcy court looked at in relied upon those findings don't undermine in any sense or in any real way i think the significance of those for the vice against factor analysis and  board doesn't quarrel except in one respect with fights against i don't disagree with the bankruptcy judges application or reading of that case the board says the rap nor frankly doesn't disagree with those factual findings in the decision a recommendation to clearly which is that they had submitted that to the disk recorder the bankruptcy court but doesn't disagree with those factual conclusions the borgias argument invites against factor it is rather that  against factors shouldn't extend or have consequences for a bystander like the board who has an interest in a sale transaction sensible seller is nonetheless bound to an innocent bystander who has no role in the transaction which is where the board and deal with the board or in fourteen for me is a sort of perverse result here that says  engineered a fraud that is so fundamentally successful and effective that the opportunity to undo the deal no longer exists well then that principles entitle to avoid the transaction even though he can no longer return it if he is not bound by the transaction still was the agent of cool fuel walsh the hooker to twelve pallets second for fifty at four fifty eight dual agency rule does not apply where the two principles of the that statement is disputed it is immaterial issue of fact that cannot be decided either by the district court but must be returned to the bankruptcy court for decision our records as we have submitted them to the bankruptcy court in the rice declaration show that these transactions would worry if your e and cool fuels accounting system they are scheduled in