Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-90-05077/USCOURTS-ca10-90-05077-0/pdf.json

Parties Involved:
Clinton O. McMullin
Appellant
Laura J. McMullin
Not Party
McMullin Family Trust
Not Party
United States of America
Appellee

Document Text:

PUBLISH 

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

UNITED STATES OF AMERICA, 

Plaintiff-Appellee, 

FILED 

United States Court of Appeals Tenth Circuit 

NOV 13 1991 

ROBERT L. HOECKER 

Clerk . 

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No. 90-5077 

CLINTON O. MCMULLIN, 

Defendant-Appellant. 

MCMULLIN FAMILY TRUST, and 

LAURA J. MCMULLIN, 

Defendants. 

Appeal from the United States District Court 

for the Northern District of Oklahoma 

(U.S. District Court No. 87-C-17-E) 

Deborah Swann (Gary R. Allen and Ann B. Durney, Attorneys, Tax 

Division, Department of Justice, Washington, D.C.; Shirley D. 

Peterson, Assistant Attorney General; Of Counsel: Tony M. Graham, 

United States Attorney, Washington, D.C., with her on the brief), 

for Plaintiff-Appellee. 

Albert J. Givray (Kristen L. Gordon of Doerner, Stuart, Saunders, 

Daniel & Anderson, with him on the brief), Tulsa, Oklahoma, 

Special Counsel for Defendants~Appellants. 

Before BALDOCK and McWILLIAMS, Circuit Judges, and DUMBAULD, 

District Judge.* 

McWILLIAMS, Circuit Judge. 

* Honorable Edward Dumbauld, United States District Judge for 

the Western District of Pennsylvania, sitting by designation. 

Appellate Case: 90-5077 Document: 010110096927 Date Filed: 11/13/1991 Page: 1 
On January 9, 

action in the United 

District of Oklahoma 

Laura J. McMullin, and 

foreclose a federal 

1987, the United States brought the present 

States District Court for the Northern 

against Clinton o. McMullin and his wife, 

the McMullin Family Trust, seeking to 

tax lien against improved real property 

located in Mayes County, Oklahoma, for the income tax liabilities 

of Clinton and Laura McMullin. In its complaint, the United 

States alleged that it had a valid lien against the subject 

property which Clinton McMullin had purported to convey to the 

McMullin Family Trust, and that the trust was only his alter ego. 

The relief sought by the United States was an order that the 

subject property be sold, either by administrative process or at 

judicial sale, and that the proceeds thereof be applied towards 

the tax liabilities of Clinton and Laura McMullin. 

The McMullins filed a prose motion to dismiss for lack of 

jurisdiction. This motion included a demand for a jury trial. 

The district court denied the motion to dismiss and in so doing 

struck the taxpayers' demand for a jury trial, stating that 

because the action, as then filed, was purely equitable in nature, 

the taxpayers accordingly had no right to a jury trial. See 

United States v. Annis, 634 F.2d 1270, 1272 (10th Cir. 1980). 

On April 4, 1988, the United States filed a motion for 

summary judgment in its favor on the question of whether the 

.taxpayers were in fact indebted to the United States for unpaid 

federal income taxes and whether the government's tax liens could 

reach the property held by the family trust in order to collect 

taxes owed by the trust's granters. This motion was supported by 

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Appellate Case: 90-5077 Document: 010110096927 Date Filed: 11/13/1991 Page: 2 
numerous exhibits. On the same day, the taxpayers filed an answer 

wherein they challenged the correctness of the tax assessment. 

On September 21, 1988, the district court granted partial 

summary judgment in favor of the United States "on the issue of 

fraudulent transfer." However, the district court also stated 

that "the validity of the assessment as to the amounts assessed, 

remains an issue for trial." 

On January 18, 1989, taxpayers filed another motion for jury 

trial. The government opposed this motion on the ground that the 

action was still essentially an action to foreclose tax liens on 

certain realty, and therefore, being equitable in nature, did not 

give rise to a right to a jury trial. The district court agreed 

with the government and denied the motion. The taxpayers filed an 

objection to the district court's denial of their request for a 

jury trial, which objection was denied. 

A bench trial of this case occurred on January 2 and 3, 1990, 

at which time the taxpayers appeared pro .§_g. The government 

called two witnesses who testified in some detail and identified 

numerous documents which were received into evidence. The 

government called Clinton McMullin as a witness, but he asserted 

his Fifth Amendment rights and declined to testify. Neither of 

the McMullins testified by way of defense nor did they call any 

other witness. Based on the evidence before it, the district 

court held that the taxpayers were liable to the United States for 

the amount of unpaid taxes, penalties, and interest assessed 

against them. Clinton McMullin filed a notice of appeal, and he 

will hereinafter be referred to as the "taxpayer." 

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Appellate Case: 90-5077 Document: 010110096927 Date Filed: 11/13/1991 Page: 3 
( 

An opening brief was filed in this court by the taxpayer, 

appearing prose. 

brief in this 

However, it would appear that in preparing his 

court, taxpayer had some legal assistance. 

Notwithstanding, or perhaps because of, taxpayer's brief is, in 

the main, difficult to follow. The government also filed a brief 

urging this court to affirm the judgment of the district court. 

Both briefs made only passing reference to the district court's 

denial of taxpayer's request for a jury trial. 

Another panel of this court was of the view that the denial 

of taxpayer's request for a jury trial merited closer examination 

and ordered supplemental briefing on that one issue. In 

connection therewith, this court also appointed 

represent the taxpayer, both in connection with 

briefing and oral argument before this panel. 

counsel to 

supplemental 

As we understand it, counsel for the 

government both agree that when the· government 

taxpayer 

only 

and the 

seeks to 

enforce its tax lien against a taxpayer's property, the taxpayer 

has no right to a jury trial since the action sounds in equity. 

United States v. Annis, 634 F.2d 1270, 1272 (10th Cir. 1980). 

Further, we understand that counsel also agree that where the 

government seeks to reduce a tax assessment to judgment and obtain 

a personal money judgment against the taxpayer, the taxpayer then 

has a Seventh Amendment right to a jury trial. See United States 

v. Anderson, 584 F.2d 369, 373 (10th Cir. 1978). It is our 

further understanding that counsel now agree that in a proceeding 

such as the present one, where the government seeks both equitable 

and legal relief, i.e., foreclosure of a tax lien and a money 

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Appellate Case: 90-5077 Document: 010110096927 Date Filed: 11/13/1991 Page: 4 
judgment, the taxpayer under the Seventh Amendment is entitled to 

a jury trial on the legal issues, i.e., the claim for a money 

judgment. Ross v. Bernhard, 396 U.S. 531, 538 (1969); Dairy 

Queen, Inc. v. Wood, 369 U.S. 469, 473, n.4 (1962); Skinner v. 

Total Petroleum, Inc., 859 F.2d 1439, 1443 (10th Cir. 1988); 

United States v. State of New Mexico, 642 F.2d 397, 399-400 (10th 

Cir. 1981); and United States v. McMahan, 569 F.2d 889 (5th Cir. 

1978). 

In this court, the government argues that even though the 

taxpayer had a right to jury trial on the legal issue raised in 

the motion for summary judgment, the taxpayer never made a timely 

demand for a jury trial. In response to the complaint, the 

taxpayer did make a timely demand for a jury trial. However, the 

government points out, and correctly so, that the complaint 

requested equitable relief only, and accordingly that particular 

request for a jury trial was properly· denied. Although we find no 

amended complaint in the record before us, the government contends 

that in its motion for summary judgment it expanded its action to 

include a claim for legal relief, to which taxpayer made no timely 

demand for a jury trial. It does appear, however, that taxpayer 

made two subsequent requests for jury trial, perhaps untimely, 

both of which were denied. However, the district court did not 

deny taxpayer's request for jury trial because such was untimely. 1 

1 There is some suggestion that all motions for a jury trial 

were denied because both the government and district court were of 

the mistaken view that even though in its motion for summary 

judgment the government sought legal relief, the action was still 

one for equitable relief only. The government has since changed 

its position and now concedes that both legal and equitable relief 

was ultimately sought. 

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Appellate Case: 90-5077 Document: 010110096927 Date Filed: 11/13/1991 Page: 5 
And of course the taxpayer, a rancher and part-time self-employed 

carnival concessionaire, and his wife appeared prose. Under such 

circumstances, we are not inclined to sidestep this very important 

constitutional right on the ground that the request for jury trial 

was untimely. 

The government's final argument is that under the 

circumstances any error was only harmless error. As indicated, 

there was a bench trial in this case. The government contends 

that if there had been a jury impaneled to hear the case, the 

district court, on the basis of the testimony before it, would 

have been required to direct the jury to return a verdict in favor 

of the government, ergo, harmless error. And at oral argument, 

counsel for taxpayer agreed that if the state of the record before 

the district court was such as to have required a directed verdict 

in favor of the United States, then the denial of taxpayer's right 

to a jury trial would be harmless error.

2 Accordingly, we must 

examine the evidentiary matter before the district court at the 

bench trial below. 

As indicated, at trial the government called two witnesses, 

Kenneth Sallee, a CPA and former employee of the Internal Revenue 

Service in Tulsa, Oklahoma, and James Gunter, an employee of the 

Internal Revenue Service in Oklahoma City, Oklahoma. Both 

participated in the audit of taxpayer's income tax returns for the 

2 For Tenth Circuit cases indicating that, depending on the 

evidence, a directed verdict in a tax proceeding is proper, see 

Ralston Development Corp. v. United States, 937 F.2d 510, 515, n.9 

(10th Cir. 1991); United States v. State of New Mexico, 642 F.2d 

397, 402 (10th Cir. 1981); and Dakil v. United States, 496 F.2d 

431, 432 (10th Cir. 1974). 

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Appellate Case: 90-5077 Document: 010110096927 Date Filed: 11/13/1991 Page: 6 
three years here in question, and each testified as to what his 

investigation disclosed. Through these witnesses numerous 

documents were identified and received in evidence. This being a 

civil proceeding, the government called the taxpayer as an adverse 

witness. He, however, objected to being questioned, and the 

district court, believing that his answers might tend to 

incriminate him in future proceedings of a criminal nature, 

sustained the objection. 

At this juncture the government rested its case. After some 

colloquy between the court and the taxpayer, wherein the court 

advised him of the risk involved if he put on no evidence, 

taxpayer stated that he and his wife would call no witnesses, 

whereupon the government moved for a "directed verdict." 

Thereafter the court, in effect, granted that motion, making 

findings and conclusions and then entering judgment in favor of 

the government. The final judgment decreed that the taxpayer was 

indebted to the United States for unpaid income taxes, penalties, 

and interest for the years 1977 through 1979, in a total sum of 

$19,160.96. The final judgment also incorporated therein matters 

previously determined on motion for partial summary judgment and 

in that regard decreed that the transfers made by the taxpayer to 

the McMullin Family Trust were invalid and attached federal tax 

liens to the described property and ordered them foreclosed with 

the taxpayer to be liable for any tax liability unsatisfied from 

such foreclosure. 3 

3 The McMullins had neither records nor receipts for the time 

period in question. The McMullins advised the investigating 

agents that the records and receipts were destroyed when, pursuant 

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Appellate Case: 90-5077 Document: 010110096927 Date Filed: 11/13/1991 Page: 7 
Under the circumstances described above, we conclude that the 

district court's denial of taxpayer's request for jury trial, 

which would only attach to the government's claim for a money 

judgment against the taxpayer, was only harmless error. Had there 

been a jury the result would have been the same, i.e., a directed 

verdict for the government. 

As mentioned, this court appointed counsel to represent the 

taxpayer in this court with directions that both appointed counsel 

and government counsel file simultaneous briefs addressing the 

question of whether a defendant has a right to a jury trial in an 

action where the government seeks not only enforcement of its tax 

lien but also seeks a determination of the validity of the amount 

assessed and reduction of that assessment to judgment. At oral 

argument appointed counsel argued that one matter. However, as 

mentioned, the taxpayer filed a prose brief in this court in 

which he argues that the entire judgment should be reversed, i.e., 

the final judgment reflecting both the partial summary judgment 

and the bench trial. Our study of the record convinces us that 

the judgment should be affirmed in its entirety. 

to an argument, their grandchildren threw the documents into the 

fireplace. For this reason the IRS agent reconstructed their 

income by using statistical abstracts printed by the United States 

Department of Commerce, Bureau of Census. This was done by 

determining what a couple in the lower budget range in a nonmetropolitan area would have to spend for basic necessities. To 

this base-line amount, which was greater than the taxable income 

that taxpayer had reported on their returns, the agent added 

certain of taxpayers' personal expenditures. These expenditures 

were shown by check disbursements, which did not fall under the 

categories of food, housing, transportation, clothing, personal 

and medical care already accounted for by the statistical 

abstract. The agent also added to taxpayers' income purchases of 

stock because these expenditures also indicated additional income. 

As a result of the audit it was determined that the McMullins' 

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Appellate Case: 90-5077 Document: 010110096927 Date Filed: 11/13/1991 Page: 8 
In a suit brought by the government to collect taxes 

resulting from unreported income, the government generally 

establishes a prima facie case when it shows a timely assessment 

of the tax due, supported by a minimal evidentiary foundation, at 

which point a presumption of correctness arises. United States 

v. Stonehill, 702 F.2d 1288, 1293 (9th Cir. 1983); Koscove v. 

Commissioner of Internal Revenue, 225 F.2d 85, 87 (10th Cir. 

1955). A presumption of correctness attaches to the 

Commissioner's assessment, once some substantive evidence is 

introduced demonstrating that the taxpayer received unreported 

income. See Doyal v. Commissioner of Internal Revenue, 616 F.2d 

1191, 1192 (10th Cir. 1980); Weimerskirch v. Commissioner, 596 

F.2d 358, 360 (9th Cir. 1979); and Wallis v. C.I.R., 357 F.2d 313, 

314 (10th Cir. 1966). This presumption will permit judgment in 

the Commissioner's favor unless the opposing party produces 

substantial evidence overcoming it. •Long v. Commissioner, 757 

F.2d 957, 959 (8th Cir. 1985); Edwards v. Commissioner, 680 F.2d 

1268, 1270-71 (9th Cir. 1982). 

The government's evidence met the foregoing test. Taxpayer 

produced no evidence. We reject any suggestion that the 

taxpayer's pro se cross-examination of the two government 

witnesses created issues of fact requiring submission to a jury. 

Judgment affirmed. 

income was approximately 25% greater than reported. 

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