interesting issues involving involving the interplay between the tax and bankruptcy areas of the law and it would be a very interesting case that if if it were just changed entirely typical bankruptcy case with that involves a surplus bankruptcy a state which is an important fact in this case but in essence what we really believe is that this involves misinterpretation by the district court of the fact of the state of an agreement in the bankruptcy proceeding before you get to the substance of it and before we get to the car why is the district court wrong concluding that the eyes lawyers isleys as individuals can seek a refund under the statute and it has to be a state secret behind under the statute well i think that the nub of the of the reason there is the estate had no interest in this refund and i believe the settlement agreement effectively confirms that that there was no interest on behalf of the estate and if from as from a standing issue if that's the issue to be addressed only the district judge read the statute saying that the state that the state had standing under the statute to seek a refund on the isleys did not this is not a question where they actually had some interest and i think they did but the question is whether under the statute they had a right to seek a refund was the district judge wrong on the reading of the statute i believe that is wrong for at least two reasons first the district court judges seem to be excessively interested  in the concept at least that's what i took it to be the concept of the who made the payment in fact who made the payment in this case the payment was made from the a revenue service and from a statutory standpoint we believe that's all that's required these were payments from the liquidation of the isleys assets directly to the internal revenue service and objection at one point to the characterization of the proof of claim as secured versus unsecured there was never an objection made to the amount of the claim  after the district court case was over settlement agreement effectively was a carve out of these issues from the bankruptcy proceeding what the trustee was facing when they when they were examined and finally examined the claims in this case was a situation in which the they were convinced that there was going to be excess funds in the regardless of any collections that were due to the asset that was the royalty interests that were the subject of the settlement agreement that that surplus sixty state would exist if the if the trustee could find a way to satisfy the tax claims because the remaining claims in the estate were going to be future revenue source funds that were not yet in the estate being the future royalty interests or payments on those interest and as a way collecting a fund that would essentially be set aside to satisfy the tax claims there was a two million dollar amount that was paid upfront that satisfy the existing assessed claims and then there was another million dollar contingent fund that was essentially established for the proposed claims that the i that payment and applied it in the manner that the eiseley said requesting that ironic well it's ironic because if you get beyond the preliminary procedural issues the government's underlying argument on the is that there was no that the government did that the surplus proceeds in the new jersey bankruptcy case back you know but those were years of those weren't designated they were not designated but the government's position is they're involuntary payment involuntary payments under the government's rules are incapable of designations so here we have in california the exact same surplus payment in the i r s allows the designation but of course in this case we don't have a deceased taxpayer who was one of the three taxpayers in hundred new jersey thing but of course if you designate where they would do it anyway they're likely to do it where they would do it anyway well if you designated involuntary payment they won't follow what they will they have to send somewhere and if you designate an involuntary payment where they were going to allocate it anyway they're probably going to allocate it exactly where they were going to do and despite the fact you also designated precisely that it could be but it's usually the taxpayer but designated in a manner favorable to them in the  it on an involuntary payment and applies it to where they want so maybe at this stage we want to hear from the government and then you can respond you have plenty of time if you want to reserve ok tha an order of the bankruptcy court that payment can amount of assets of the estate that paper trail of that check is really just a question of form over substance and then since the bankruptcy court the whole purpose of our bankruptcy system which is to resolve with and then with the claims of credit are now you're getting to the merits but what about the standing issue this technical status issue you heard  i think she's arguing that some of her assets were being used to satisfy some of his tax liability and you responded that yeah that is really that is the heart of her client if she acknowledges that she waived the right her rights to the songwriter royalty those rights were according to the property settlement agreement but not according to any recorded l listen her claim to the songwriter royalties might have been a good claim but that was satisfied in the bankruptcy and i've got nothing in front of me that tells me that that so you say i can look it up but i know that was not the papers that were presented to me you're correct your hon as to her i don't know that there's identity of interest and further california race judicata law doesn't apply it's federal i should've called a law now it may be that the identity of interest principle in california law is the same as federal but nonetheless i have trouble seeing the identity of interest of the government and its brief did not as i recall agree with that position just records and in fact going back to the property loses no matter how you look at it and market discipline my concern is is there a threshold here there are several steps of analysis and it would be convenient perhaps to look at it at the very beginning which is what was the right it was the proper entity apply for the refund the money to do with the merits of whether the tax was owing or not but who had standing to make the cl and if that's the case is there some i r s regulation that requires that in a situation like this the entity that paid the tax in favor of an individual  has exclusive right to file a refund claim i've been puzzled by why if it's the liability respects of the individual which has been established and the individual feels for whatever reason that maybe more than was necessary was paid why can't that individual why can't that individual apply to file for the refund i'm not aware of a regulation  bankruptcy estate ok whether or not ronald wants that money back later on is not relevant to the interpretation of the statutes who made the payment at the if someone voluntarily pays your taxes for you you can't then try to get that money back only in the person who made the payment even when there was a bonafide dispute as to whether the amount paid was  yes that he had this very large tax liability she had her assets used to satisfy his tax liability so it's not a question of what her tax liability is wash and what his tax liability is and whether her funds were used to she a party in the bankruptcy she was applying them in the bankruptcy and that is in the record it's not really obvious but she and her attorney if you're on the any way that appears in the record was she making a claim at the time during the bankruptcy was she making a claim that the assets that were being brought into the bankruptcy estate they claim isley standing is now a he's no longer with the u s attorney's office because he's now a bankruptcy judge in this federal district of california so you know that it's somebody that knew from whence he spoke we believe the implementing this settlement agreement to why she was hands of all or of all of the tax matters in this suit he had this asset that was the future co publisher and and songwriter royalties income streams that he didn't because he already had more than enough money if he could take care of these taxes so by by coming up with a mechanism by which he could liquidate that future stream that he doesn't need and can effectively abandoned and then applying it to the ta leaving it to the debtor to take care of the tax issues then the trustee can move forward and administer the remaining claims on the remaining assets and pay the money you know i just i don't see the harm to mr isley in the matter  i agree totally with you this is with respect to mrs mistress we're not perform as well as well i mean monies to satisfy his tax obligation was paid out of the bankruptcy estate by your own representation after  about that and then money that comes back to him also goes to satisfy the tax that our position on the underlying merits is that the major portion of the two million dollars that was taken to took pa taxes was not due it wasn't lawfully do and that's what the substance of our refund claim is that the i r s and this goes back to the prior bankruptcy is that the ira's took his money out of the prior bankruptcy and paid his money again with the excess money from the bankruptcy the prior bankruptcy it wasn't it wasn't something that was handled in a bankruptcy or paid through the bankruptcy or on a claim in a bankruptcy that was all dealt with separately this was money left over that the tr after all of the claims had been paid it was an excess collection in the new jersey bankruptcy ok and well i don't and then what happened of that money that that money was paid by the trustee we argue voluntarily to the internal revenue service and the i r s took all that money and paid the brothers taxes even though our claim is that at least a third of that money was ronald's money and should have gone to pay ronald's taxes now if there had been done then th then the two million or most of the two million that was paid in the california bankruptcy wouldn't have been due and so that was the basis of our refund claim is that you know we shouldn't have needed to take two million dollars from ronald margaret's assets to pay that claim because that they didn't owe two billion dollars and that's that's the substance of the action and so that's why and that's why we believe we had a valid claim why we believe it was ronald claimed to be perfectly honest i was the one that prepared and have the claims filed but we were we were representing our use of the claims filed which claims where ok i'm sorry the refund claims that are the subs the subject of this appeal i prepared i prepared and had filed the refund claims that were then denied by the i r s and became the basis of the reserve any reason why the refund claim could not have been filed on behalf of the state i i i it's possible that it could have been filed on behalf of the estate but then we would probably be facing an objection from the government the estate has no standing because the estate didn't need the money and they had no interest in the in the funds because there was already this surplus that so the state had no interest in pursuing this they may have lacked constitutional the state may have la secretary may credit the amount of such overpayment including interest and so forth in respect of the turnover of your tax on the part of the person who made the overpayment and shall subject to certain subsections refund any balance to such person or the words the person who made the overpayment in our position is this was ronald's taxes that was paid from the proceeds of the stale of ronald assets by rob and i think that satisfies any requirement that you could have under section sixty four zero two who wrote the check the check was written by the it was on the attorney tru account of the buyer and under the settlement agreement that was approved by the bankruptcy court it specifically states that the payment shall be from the debtor ronald to the i r s and to the district court of the government just prefers to ignore that that fact of the appropriate set forth in the in the settlement agreement that's an entity distinct from the bankruptcy of state if i understood satisfy rattles tax money deal with use of purposes of assumption that ronald does have standing to seek a refund from the i r s if and that fact this isn't an overpayment he should get some money back ok his argument as to why he should get some money back is that that one point three million dollars paid at the end of the new jersey bankruptcy should have been allocated at least one third to him that's the argument that's correct you told me that it was not paid pursuant to any judgment of the bankruptcy court in the new jersey bankruptcy is that correct that's correct is it also correct that one of the other brothers has made this name allocation argument the model is now seeking to make and lost in the third circuit that's correct and the but you'd like us to get to the merits and disagree with the third circuit on the principle of law the opinion of the third circuit seem to suggest that that that rudolph isley the other brothers such a such a right exists i've never seen a case where the remedy is not against the government for applying the money wrong for the against the taxpayer that got the money i've never seen such a lawsuit never heard of talk to your brother or your brothers there is you go ahead and do that i guess that's what the third circuit decided but i don't i don't view that as being i mean if you if you want to decide t not to be entitled to pursue the government at the same time that syria and be allowed to prove that theory and the underlying facts if we can but what am i to think about margaret you heard my question with respect to margaret what's your response as to why margaret so entitled to something here i think you're exactly right margaret's co publisher rights were not transferred away from her and in the property settlement those were sold there is evidence in the record i haven't heard of that in fact you can tell that the argument by the government here that it's not then presented any point previously well thank you council your time has expired the case just argued will be submitted for decision and we will hear argument next in united states versus fernande