author: PER CURIAM.

text:
    James W. WILSON, Petitioner-Appellant, v. UNITED STATES of America, Respondent-Appellee.
    No. 74-1079.
    United States Court of Appeals, Sixth Circuit.
    Oct. 10, 1974.

      James W. Wilson, pro se.
    George J. Long, U. S. Atty., James H. Barr, Asst. U. S. Atty., Louisville, Ky., for respondent-appellee.
    Before PHILLIPS, Chief Judge, PECK, Circuit Judge, and CECIL, Senior Circuit Judge.
   PER CURIAM.

Petitioner-appellant perfected this appeal from an order of the district court denying relief under a motion filed pursuant to 28 U.S.C. § 2255. Petitioner-appellant alleges that four previous convictions considered by the district court in the determination of the 1967 sentence imposed following a plea of guilty and presently under attack were constitutionally invalid under Gideon v. Wainwright, 372 U.S. 335, 83 S.Ct. 792, 9 L.Ed.2d 799 (1963), because they were imposed in proceedings in which he was not represented by counsel, and argues that the present sentence therefore is invalid under United States v. Tucker, 404 U.S. 443, 92 S.Ct. 589, 30 L.Ed.2d 592 (1973). The district court, in denying the present motion, held Tucker to be without application because therein there had been a prior adjudication as to the constitutionality of the prior convictions, while herein no such adjudication has been made.

Two of the previous convictions which appellant contends were unconstitutional under Gideon, supra, were for Dyer Act violations and were entered in the United States District Court for the Eastern District of North Carolina in 1952 and in the United States District Court for the Northern District of Mississippi in 1960. However, in both instances the record clearly establishes that he made a knowing and intelligent waiver of the right to counsel, and a collateral attack on those convictions on that ground will not be entertained on the sole basis of an attempted refutation of the record by bare allegation. In reaching this conclusion we are not unmindful of such decisions as those in the Fifth Circuit in Craig v. Beto, 458 F.2d 1131 (1972), and Mitchell v. United States, 482 F.2d 289 (1973), holding that when a habeas corpus or Section 2255 petitioner challenges the constitutionality of a previous conviction, evidence of which has been received for impeachment or enhancement of sentence purposes, on Gideon v. Wainwright grounds, a burden of proving the participation of defense counsel or of intelligent waiver is imposed upon the prosecution. Instead, we prefer the logic of an' earlier Fifth Circuit opinion which stated:

“The convictions mentioned have been of record for a number of years, yet the record before us does not disclose that any attack has ever been made upon those convictions. Except for the assertions of Loper the record fails to furnish any conclusive information as to the facts and circumstances surrounding his former convictions. So far as the record before us reveals, there are outstanding, unchallenged, state court convictions of felonies in the States of Mississippi and Tennessee. . . . [I]f the convictions possessed the infirmities which Loper claims, he has failed to make any effort to set them aside for over 30 years. No one else could have done so. Surely such an attack was available to him in view of the retroactive application of the Gideon decision which was decided over six years prior to the hearing under review.” Loper v. Beto, 440 F.2d 934, 937 (3 Cir. 1971).

The other two convictions which appellant contends were unconstitutional involved misdemeanor charges in Iowa four years prior to the imposition of the sentence here under attack. These convictions were for uttering worthless checks, and two 30-day jail sentences were imposed. We conclude that appellant’s allegations with reference to these two convictions did not require the conducting of an evidentiary hearing in the district court and do not now require a modification of its judgment for two reasons. First, no such judicial determination establishing the invalidity of these convictions as had occurred in Tucker, supra, had been made, and appellant’s contention that the burden of establishing the constitutionality of the convictions attempted to be attacked collaterally rests upon the appellee is specifically rejected. Second, speaking for the Court in Tucker, Mr. Justice Stewart observed, “The record in the present ease makes evident that the sentencing judge gave specific consideration to the respondent’s previous convictions before imposing sentence upon him,” after commenting that the court of appeals had found “that there was ‘a reasonable probability that the defective prior convictions may have led the trial court to impose a heavier prison sentence than it otherwise would have imposed.’ ” 404 U.S. at 445 and at 447, 92 S.Ct. at pp. 591-592. Not only does the record before us present no indication that the sentencing judge gave specific consideration to the misdemeanor convictions claimed to be invalid, it cannot be said that there is a “reasonable probability” that they may have caused the imposition of an increased sentence. Indeed, without relying thereon, we offer the observation that in imposing a sentence for bank robbery it seems unlikely that a sentencing judge would give serious consideration to two four-year old convictions for misdemeanors and uttering worthless checks.

The judgment of the district court is affirmed.

       This quotation appears in footnote 6 to Justice Stewart’s reversing opinion in Loper v. Beto, 405 U.S. 473, 479, 92 S.Ct. 1014, 1017, 31 L.Ed.2d 374 (1972), followed by this statement: “But despite these observations, the Court of Appeals . . . did not rest its decision on a finding that the petitioner had failed to meet his burden of proving the invalidity of the prior convictions. It reached the merits of the legal question involved, and we granted certiorari to review that decision. There is thus no basis in the record upon which we may either dismiss this case or affirm the decision below on the ground that the petitioner did not meet his burden of proving that the prior convictions were invalid.”


source: Caselaw Access Project

author: BREITENSTEIN, Circuit Judge.

license: Public Domain

text:
    Edgar C. TUTTLE, Plaintiff-Appellant, v. SECRETARY OF HEALTH, EDUCATION AND WELFARE, Defendant-Appellee.
    No. 74-1042.
    United States Court of Appeals, Tenth Circuit.
    Argued Sept. 11, 1974.
    Decided Oct. 16, 1974.

      Galen Ross, Salt Lake City, Utah, for plaintiff-appellant.
    Michael Kimmel, Atty., Dept, of Justice (Carla A. Hills, Asst. Atty. Gen., C. Nelson Day, U. S. Atty., and William Kanter, Atty., Dept, of Justice, on the brief), for defendant-appellee.
    Before BREITENSTEIN, SETH and McWILLIAMS, Circuit Judges.
   BREITENSTEIN, Circuit Judge.

The issue is the constitutionality of the provisions of the Social Security Act requiring that a disability applicant have not less than 20 quarters of covered employment during the 40-quarter period preceding his disability. The district court upheld the Act. We affirm.

Plaintiff on November 5, 1970, applied for a period of disability under § 216 (i) of the Act, 42 U.S.C. § 416(i), and for disability insurance benefits under § 223, 42 U.S.C. § 423. The period of disability freezes rights of disabled workers to old age and survivors benefits during periods of disability. Disability insurance payments are payable to a disabled worker.

To be entitled to the period of disability, the worker must' have had “not less than twenty quarters of coverage during the forty-quarter period which ends” with the quarter in which the disability occurred. 42 U.S.C. § 416(i) (3)(B)(i). Disability insurance benefits are payable to a disabled worker beginning with any month in which he is under disability “if he had not less than twenty quarters of coverage during the forty-quarter period which ends with the quarter in which such month occurred.” 42 U.S.C. § 423(c)(l)(B)(i).

Plaintiff claims that he became disabled on March 13, 1954, at age 41. He had earned social security credits for only 19 calendar quarters of work in the 40-quarter period ending March 31, 1954. The Secretary denied allowance of the period of disability and payment of disability insurance benefits because plaintiff failed to meet the earnings requirements of the Act.

Plaintiff argues that the 20/40 requirement unconstitutionally denies him equal protection and due process. Whether a Social Security Act classification is attacked on equal protection grounds, see Richardson v. Belcher, 404 U.S. 78, 81, 92 S.Ct. 254, 30 L.Ed.2d 231, or on due process grounds, Flemming v. Nestor, 363 U.S. 603, 611, 80 S.Ct. 1367, 1373, 4 L.Ed.2d 1435, the test is whether “the statute manifests a patently arbitrary classification, utterly lacking in rational justification.”

The Secretary says that the 20/40 requirement promotes two legitimate objectives. The first is assurance of a self-supporting program. This is the intent of Congress. See S.Rep.No. 1987, 83rd Cong. 2d Sess., 3 U.S.Code Cong. & Admin.News, 1954, p. 3733; and H.Rep.No.92-231, 92d Cong. 2d Sess., 3 U.S.Code Cong. & Admin.News, 1972, p. 5111. The Supreme Court has recognized that a “State has a legitimate interest in maintaining the self-supporting nature of its insurance program.” Geduldig v. Aiello, 417 U.S. 484, 94 S.Ct. 2485, 41 L.Ed.2d 256. The stated principle applies also to the federal government. The 20/40 requirement tends to make the system self-supporting by assuring some substantial contribution to the system before the onset of disability.

The second objective is the provision of benefits to those who have depended on their employment income. Legislative history supports the government. S.Rep. No. 2388, 85th Cong. 2d Sess., 3 U.S. Code Cong. & Admin.News, 1958, p. 4229, in reference to the earning requirements, says that “it is reasonable and desirable that there be reliable means of limiting such protection to those persons who have had sufficiently long and sufficiently recent covered employment to indicate that they probably have been dependent upon their earnings.” See also S.Rep. No. 1987, 83rd Cong. 2d Sess., 3 U.S.Code Cong. & Admin.News, 1954, p. 3729. The 20/40 requirement rationally screens out those who have not established a substantial attachment to the labor force because they do not have a reasonably long, as well as recent, record of covered earnings.

Plaintiff contends that he is entitled to the benefits because he is dependent on his earnings. The argument is not persuasive. A classification does not offend the Constitution “because in practice it results in some inequality.” Lindsley v. Natural Carbonic Gas Co., 220 U.S. 61, 78, 31 S.Ct. 337, 340, 55 L.Ed.2d 369, cited in Dandridge v. Williams, 397 U.S. 471, 485, 90 S.Ct. 1153, 25 L.Ed.2d 491, a social security case.

Plaintiff says that once a worker is covered he cannot be denied benefits and, hence, any classification based on earnings is unconstitutional. Congress determines entitlement to benefits. The Supreme Court has rejected the notion that the Act creates either property or contract rights. Richardson v. Belcher, 404 U.S. 78, 80, 92 S.Ct. 254, 30 L.Ed.2d 231. Our concern is with the rationality of the 20/40 requirements. Because they have a rational base and are free from invidious discrimination, they do not violate the Constitution. See Stanton v. Weinberger, 10 Cir., 502 F.2d 315.

Affirmed.


text:
    Bobby Ray SHORT, Petitioner-Appellant, v. UNITED STATES of America, Respondent- Appellee.
    No. 74-1037.
    United States Court of Appeals, Sixth Circuit.
    Oct. 16, 1974.

      Bobby Ray Short in' pro per.
    William W. Milligan, U. S. Atty., Albert R. Ritcher, Columbus, Ohio,' for respondent-appellee.
    Before: PHILLIPS, Chief Judge, EDWARDS, Circuit Judge, and MC-ALLISTER, Senior Circuit Judge.
   PER CURIAM.

Bobby Ray Short pleaded guilty in the United States District Court for the Southern District of Ohio to two counts of interstate transportation of forged securities, in violation of Title 18 U.S.C., Section 2314. The Honorable Carl B. Rubin, Judge of (the United States District Court for the Southern District of Ohio, on February 1, 1973, sentenced Short to a term of five years of confinement in the custody of the Attorney General, on his plea of guilty.

It appears that prior to his conviction and sentence in the instant case, in the District Court for the Southern District of Ohio, appellant had previously been convicted of a felony in the United States District Court for the Southern District of Georgia, Brunswick Division.

On July 27, 1973, Short filed a motion to vacate the sentence, pursuant to Title 28 U.S.C., Section 2255, on the ground that the conviction and sentence were imposed in violation of appellant’s rights under the Fifth Amendment. In support of his motion to vacate, appellant states: “In the previous convictions considered by the District Judge, Carl B. Rubin, in imposing the aforementioned sentence of five years, the record failed to show that the Guilty Plea of the Defendant was voluntarily made under the standards set in Boykin v. Alabama, 395 U.S. 238 [89 S.Ct. 1709, 23 L.Ed.2d 274].” In Boykin, the Supreme Court listed several of the constitutional rights involved in signing a waiver when a plea of guilty is entered in a state criminal trial but, as appears hereafter, Boykin is inapplicable to this case.

All of the questions raised by appellant with regard to Judge Rubin’s sentence go to the alleged unlawful sentence of the District Court in Georgia; and the only way that Judge Rubin could ascertain that the sentence in Georgia was illegal and deprived appellant of his constitutional rights was for Judge Rubin to review the sentence of the Georgia court, and appellant’s claim of deprivation of his rights.

Appellant could easily have raised the same question before the District Court which sentenced him in Georgia, and should have raised it there if he had any grounds upon which to base a motion to vacate. There was no possible reason for Judge Rubin to review the Georgia sentence and appellant’s alleged claim of deprivation of his rights.

Appellant’s sentence for a term of five years, as imposed by Judge Rubin, was in conformity with his conviction and the penalty imposed in 18 U.S.C., Section 2314. There is no evidence that this sentence for transporting forged securities across state lines was excessive. There is no evidence that Judge Rubin, in imposing the sentence of five years, had done so because of any consideration of appellant’s former felony conviction in the United States District Court in Georgia; nor is there any showing that the guilty plea of defendant in Georgia was involuntarily made, or that his sentence was in' derogation of his constitutional rights.

Appellant is here attempting to use a Section 2255 motion in the District Court of Ohio in lieu of an appeal, or a 2255 motion to correct alleged errors in another trial in a different court in another federal district in which the alleged errors were not called to that court’s attention. Petitioner is unable to do this. Nor has the District Court jurisdiction, under 28 U.S.C., Section 2255, to test the legality of a sentence imposed by a court in another judicial district. See Gajewski v. Stevens, 346 F.2d 1000 (C.A.8, 1965). There is no showing that appellant has raised, by a Section 2255 proceeding in the sentencing court in Georgia, the issues he raises here, and absent such showing, this Court is without jurisdiction to consider the petition. “The very purpose of Section 2255 is to hold any required hearing in the sentencing court.” United States v. Hayman, 342 U.S. 205, 220, 72 S.Ct. 263, 273, 96 L.Ed. 232 (1951).

There is here no substantial allegation or new dispute of fact that would entitle appellant to a full evidentiary hearing, as petitioner’s claims are stated in the form of conclusions without any allegations of facts in support thereof, as well as being unsupported by proof or reference to such proof; and his motion is, thus, legally insufficient to sustain a review. See Sons v. United States, 295 F.Supp. 642 (W.D.Okla.1969).

Appellant submits that United States v. Tucker, 404 U.S. 443, 92 S.Ct. 589, 30 L.Ed.2d 592 (1972), is here controlling. In Tucker, the sentencing judge explicitly stated that he had relied on the previous convictions of the defendant in determining sentence, and the defendant had initiated the Section 2255 proceeding only after it had first been determined that his previous convictions were unconstitutional. Obviously, from what we have heretofore stated, the Tucker case is here inapplicable.

In accordance with the foregoing, the order of Judge Kinneary denying the motion to vacate the sentence, and dismissing the action, is affirmed.


author: SCHNACKE, District Judge: HUFSTEDLER, Circuit Judge

text:
    George FORRENS, Petitioner-Appellant, v. UNITED STATES of America, Respondent-Appellee.
    No. 74-1089.
    United States Court of Appeals, Ninth Circuit.
    Oct. 1, 1974.
    Hufstedler, Circuit Judge, dissented and filed opinion.

      Leo N. Sherwood, San Francisco, Cal., for petitioner-appellant.
    Thomas E. Kotoske, Asst. U. S. Atty., Los Angeles, Cal., for respondent-appel-lee.
   OPINION

Before CARTER and HUFSTEDLER, Circuit Judges, and SCHNACKE, District Judge.

SCHNACKE, District Judge:

Petitioner seeks to vacate his sentence pursuant to 28 U.S.C. § 2255, alleging that his plea of guilty to a charge of armed bank robbery was involuntary because he did not understand the English language at the time of his plea, and that he was given a 25-year sentence even though his lawyer promised him a maximum sentence of seven" years if he entered a plea of guilty.

The District Court after reviewing the records and files in the case denied the petition without an evidentiary hearing.

The record discloses that petitioner, who was represented throughout by counsel, at no time complained of his lack of understanding of the English language, nor did he ever request an interpreter.

At his arraignment he was able, in order to be supplied counsel at government expense, to advise the magistrate that he was 35 years old, not an American citizen; that he was married, living with his wife and four minor children; that he had been six years in California, and had no relatives here except in-laws; that he was an unemployed janitor last employed six months ago; that he owned no real property, and had lived nine or ten months at the same address; and that he had two years of college.

At the hearing at the time petitioner entered his plea of guilty, the following colloquy occurred:

“The Court: You understand what the maximum penalty is that you may receive ?
Defendant Forrens: Yes, Sir.
The Court: What is it?
Defendant Forrens: It is twenty-five years or $10,000 or both.
The Court: Or both, that’s right. Has any promise been made to you by anyone at all?
Defendant Forrens: No, Your Hon- or.
The Court: Your [sic] are not
pleading because of any promise by anyone at all?
Defendant Forrens: No, Your Hon- or.
The Court: You understand that a promise is not binding on this judge. The judge is the only one that can sentence you.
Defendant Forrens: I understand.
The Court: The only one in the world. You understand that I can give you the limit, the twenty-five years and the fine ?
Defendant Forrens: Yes, Sir.
The Court: Has anything hap-
pened prior to today to cause you to enter this plea other than the fact that you are guilty?
Defendant Forrens: No, Your Hon- or.
The Court: If you have any reason to claim that this guilty plea is not freely and voluntarily and understanding^ made, now is your time to speak out. Do you understand ?
Defendant Forrens: Yes, Your Honor.
The Court: By your guilty plea you are now saying to this Court that you are not pleading because of any promises or any threats or any mistreatment of any kind whatsoever but because you desire to admit that you are guilty, right?
Defendant Forrens: Yes, Sir.
The Court: Can you think of any reason at all why I should not accept this plea?
Defendant Forrens: No, Sir.”

The record clearly demonstrates that petitioner’s claim that he did not understand the proceedings conducted in English is patently frivolous.

Petitioner’s claim that he entered his plea on the promise and expectancy of a lighter sentence is also completely refuted by the record.

The colloquy quoted above occurred with the petitioner under oath. In some cases the solemn affirmation that the plea is not induced by a promise of leniency is not conclusive, because a petitioner might claim that “he thought that this was all part of the game, and that honest answers would destroy the deal.” United States v. Tweedy, 419 F.2d 192, 193 (9th Cir. 1969).

But no such claim is made here, nor, in the face of the record, could it have been. Petitioner entered his plea in February of 1971. Shortly thereafter, and before sentence, he wrote a long letter to the judge, making no mention of any promised leniency, but asking only that his place of confinement be in Southern California.

It was not until more than two years later, when this petition was filed in August 1973, that any mention was made of the promise of a lesser sentence. It is beyond belief that one who received a twenty-five year sentence instead of the seven years he had been promised would wait so long before complaining. Where the petitioner has sworn, under oath, that no deal has been made and that he has not been induced to plead guilty by any promises or threats, his subsequent claim that a promise had in fact been made must be supported by stronger contentions than those offered in the present case.

We agree with the District Court that the records and files in this case conclusively show that petitioner is not entitled to the relief which he seeks. Therefore, no hearing was required. United States v. Tweedy, supra.

The judgment is affirmed.

HUFSTEDLER, Circuit Judge

(dissenting) :

The possibility is minimal that petitioner could prove that he lacked sufficient proficiency in English to understand the nature and consequences of his plea. But I cannot agree with the majority that the record conclusively shows that his petition was frivolous. He should have been accorded an eviden-tiary hearing.

       Honorable Robert H. Schnacke, United States District Judge for the Northern District of California, sitting by designation.


text:
    UNITED STATES of America, Appellee, v. Patrick McDONOUGH, Appellant.
    No. 1222, Docket 74-1530.
    United States Court of Appeals, Second Circuit.
    Argued Aug. 12, 1974.
    Decided Oct. 3, 1974.

      Phylis Skloot Bamberger, New York City (William J. Gallagher, The Legal Aid Society, New York City, of counsel), for appellant.
    Ethan Levin-Epstein, Asst. U. S. Atty. (David G. Trager, U. S. Atty., for the E. D. of New York, Kenneth J. Kaplan, Asst. U. S. Atty., of counsel), for appel-lee.
    Before OAKES, Circuit Judge, and FRANKEL and KELLEHER, District Judges.

       Of the Southern District of New York and Central District of California, respectively, sitting by designation.

   PER CURIAM.

Before our recent United States v. Flores, 501 F.2d 1356 (2d Cir. 1974), at 1360 (per curiam), Judge Neaher without hearing denied a motion to dismiss for failure to comply with Rule 4 of the Plan for the United States District Court for the Eastern District of New York for Achieving Prompt Disposition of Criminal Cases (Plan). Here the Government did not file its notice of readiness until five days after the six month period had expired. The Government agrees that there should be a remand for an evidentiary hearing on whether any period of time was “excludable” under Rule 5 of the Plan. Thus, the result is easy enough: We remand.

We would add, however, a few words that may be helpful to Judge Neaher upon the remand. First, as we read Flores, at 1360, there is no de min-imis time period under the six months’ rule; the Government “must be ready for trial within six months . . .,” not six months and three days, four days, five days or nine days. This has to be the case since we are dealing with a clear line of time — much like a statute of limitations — marked for prophylactic purposes, not to be analogized to the equitable doctrine of laches. There are any number of “[ejxcluded periods” under Rule 5 of the Plan on which the Government may base a claim to toll the period, but the period itself is fixed, clearly, sharply and without qualification, at six months.

Nor by the appellant’s waiving his right to a preliminary hearing before the magistrate under Fed.R.Crim.P. 5 does the Government become entitled to any extra time under the Plan; the critical time for commencement of the readiness period is “the date of the arrest, service of summons, detention, or the filing of a complaint or of a formal charge upon which the defendant is to be tried (other than a sealed indictment), whichever is earliest.” (Emphasis added.) All that waiver of a preliminary hearing does is relieve the Government from establishing probable cause; it has no bearing'on the operation of the Plan.

All of this is not to say, of course, that the Government may not be able to find and prove at the hearing other operative facts entitling it to an “[e]xcluded period” under the Plan: a period during which appellant was cooperating with Government officials, United States v. Valot, 481 F.2d 22 (2d Cir. 1973); a period between the date of mailing the notice of arraignment (November 5, 1973) and the date of arraignment (November 14, 1973), unless “a period of delay” under Rule 5(d) to the prosecutors did not result from the defendant’s unavailability, United States v. Flores, supra, slip op. at 1360, or unless the defendant’s unavailability occurred through the fault of the Government ; or some other period as set forth in the Plan. Id. at 1360 n. 4.

Judgment reversed and remanded.

      . Rules 4 and 5 are reprinted in their entirety in Flores, at 1358 n. 1 and at 1359 n. 2. We incorporate those notes here by reference.

      . Judge Neaher apparently thought that the notice was filed on November 16, 1973, two days after the expiration, but the docket sheet and notice itself both show it was served on the Legal Aid Society on November 19, 1973.

      . The total time periods involved in Flores before the Government filed its notice of readiness were four months and 27 days (from arrest on September 28, 1972, until dismissal on February 23, 1973, at 1358) and 36 days (from reinstatement of indictment on June 19, 1973, until notice of readiness on July 25, 1973, at 1358) or a total of four months and 63 days, i. e., six months and three days. The case was remanded to determine whether the nine day period between reinstatement of indictment on June 19, 1973, and execution of the bench warrant for Flores’ rearrest on June 28, 1973, resulted in delay to the Government, at 1360, in the absence of which the indictment was to be dismissed with prejudice, slip op. 5152.


author: SEITZ, Chief Judge.

text:
    UNITED STATES of America v. Edward F. DIXON et al., Appellant.
    No. 74-1236.
    United States Court of Appeals, Third Circuit.
    Argued Aug. 8, 1974.
    Decided Oct. 3, 1974.
    Certiorari Denied March 3, 1975.
    See 95 S.Ct. 1353.

      Robert D. Peloquin, Peloquin, McKeon and Reilly, Washington, D.C., Paul D. Sulman, Philadelphia, Pa., Richard C. Fox, Markowitz, Kagen & Griffith, York, Pa., Robert M. Taylor, Philadelphia, Pa., for appellant.
    Scott P. Crampton, Asst. Atty. Gen., Meyer Rothwacks, John P. Burke, Charles E. Brookhart, Attys., Tax Div., Dept, of Justice, for appellee; Robert E. J. Curran, U.S. Atty., of counsel.
   OPINION OF THE COURT

SEITZ, Chief Judge.

This is an appeal from the judgment of the district court entered against the defendant, Edward F. Dixon, on February 19, 1974, and from an order of that court, entered on February 21, 1974, refusing to vacate the defendant’s sentence or to specifically enforce a plea bargain. The defendant was convicted of attempted evasion of corporate income taxes for the fiscal year ended September 30, 1969, in violation of Section 7206(1) of the Internal Revenue Code of 1954, 26 U.S.C. § 7206(1) (1967).

Both before and after the defendant’s indictment on September 26, 1973, negotiations had occurred between the defendant’s counsel and the government prosecutor as to a possible disposition of the case. At his arraignment on November 5, 1973, the defendant entered a plea of nolo contendere to the seventh count of an eight count indictment. At that time, the district court made the proper inquiry of the defendant under Rule 11 of the Federal Rules of Criminal Procedure, ascertaining that the plea had been made voluntarily and that the defendant understood the nature of the charges against him and the consequences of his plea.

The court also noted that plea bargaining had occurred between the defendant’s counsel and the government prosecutor, stated that the court would not be bound by any plea bargaining agreement arrived at by the parties, and asked that any such agreement be made part of the record of the case.

No such agreement was ever entered on the record either at the arraignment or thereafter. However, pursuant to the district judge’s request, the government submitted a letter dated November 7, 1973, and the defendant’s counsel submitted a letter dated November 12, 1973, to the court. Each letter outlined the respective parties’ understanding of the plea bargain. Taken together they demonstrated that a complete misunderstanding existed with respect to the role that the government prosecutor would assume in the sentencing proceedings. According to the defendant’s version, the prosecutor was to affirmatively recommend “No jail time.’’ According to the government’s version, the prosecutor was merely to stand mute when asked, by the district judge, for his recommendations.

The defendant maintains that he did not receive the government’s letter until November 23, 1973, and therefore was not informed of this disagreement over a term of the proposed plea bargain until after he had performed his part of what he understood to be the bargain by appearing before and disclosing documents to a grand jury, and by submitting to interrogation by the Internal Revenue Service.

On January 4, 1974, the defendant was sentenced. Because of the continuing controversy over the alleged plea bargain, the district judge conducted a hearing on January 29, 1974, to determine whether the government prosecutor had promised to recommend that the defendant not be imprisoned. In the course of this proceeding, the court offered to allow the defendant to withdraw his plea of nolo contendere and have his case tried before a different judge. The defendant indicated that he would not accept this offer but would instead seek specific performance of the alleged plea bargain.

On February 21, 1974, the district court entered an order denying the defendant’s motion to vacate his sentence and for specific performance of the alleged plea bargain. In a memorandum opinion dated March 11, 1974, the court explained this order by stating its conclusions, based on the evidentiary hearing, that the defendant had entered his plea of nolo contendere in the sincere belief that the government would recommend that no prison sentence would be imposed, but that specific performance was not possible since a completed plea bargain had never been effectuated.

In the first analysis, it should be noted that the misunderstanding which arose out of the attempt to arrive at a plea bargain in the instant case is exactly the kind of problem which this Court anticipated and attempted to prevent in Paradiso v. United States, 482 F.2d 409 (3rd Cir. 1973). There we were faced with the appellant’s contention that his guilty plea had been induced by the expectation that he would be given concurrent sentences. We noted that other jurisdictions had attempted to insure that such misunderstandings would not often occur by requiring plea bargains or any inducements to a plea to be made a matter of record. We stated:

We believe that it is appropriate at this time for the district courts of this circuit to take similar prophylactic measures to cope with this problem. In connection with their rule 11 inquiry on a plea of guilty, district judges should in essence inform the defendant that plea bargaining is specifically approved by the court and that he may truthfully inform the court of any plea negotiations ‘without the slightest fear of incurring disapproval of the court.’ Inquiry should also be made of counsel for the parties as to any plea negotiations. Should inquiry reveal the presence of plea negotiations, counsel for the parties should be required to state plainly the terms of record and the defendant should state of record whether he understands them and concurs. The court, of course, is not obligated to accept any recommendation or bargain reached by the parties, and it should so inform the defendant when any bargain is disclosed. Compliance with this procedure should avoid ostensible claims by defendants of unfairness in the guilty plea process and minimize the escalating number of cases complaining of aborted plea bargains, involuntary pleas, or frustrated plea expectations. Id. at 413.

We reaffirm our statement in Paradi-so. See also United States v. Simon Hawthorne, 502 F.2d 1183 (3rd Cir., 1974). Had the district court in the instant case complied with the procedure outlined in Paradiso, in short, had the court required that the alleged plea bargain between the parties be recited on the record at the arraignment on November 5, 1973, the present controversy would have been avoided. Under our supervisory powers we therefore instruct the district courts of this circuit that they are henceforth required to follow the Paradiso procedure, committing any plea bargain to the record at the time of arraignment in conjunction with the Rule 11 inquiry.

The fact that the alleged plea bargain was not placed on the record in the instant case is in no way determinative of the issue involved in this appeal. With respect to the defendant’s request for specific performance of the alleged plea bargain with the government, we are bound by the lower court’s determination, set forth in its memorandum opinion of March 11, 1974, that no agreement was ever reached between the parties, since this determination is adequately supported by the evidence. We therefore affirm the district court’s refusal to specifically enforce the alleged plea bargain.

Nevertheless, we deem it appropriate under the facts of this case to instruct the lower court to grant the defendant leave to withdraw his plea of nolo contendere and stand trial, if he so desires. We say this because at the time he was given this choice in the district court he was confronted with the possibility that he would lose the right to obtain appellate review of the district court’s determination that there was no plea bargaining agreement reached between the parties, and because at that time he was given no assurance that the information revealed by him to the Internal Revenue Service and the grand jury in performance of what he sincerely thought to be his obligation under a plea bargaining agreement would not be used against him in a trial on the merits.

We are not unmindful of the defendant’s allegation that the information which he disclosed is potentially incriminating and that he ordinarily would have been able to withhold it because of his Fifth Amendment right against self incrimination. We therefore instruct the lower court to issue, upon motion of the defendant, an appropriate order excluding from consideration by the jury all such information disclosed voluntarily by the defendant, and any additional evidence, derived from such information, for which the government cannot establish an independent source.

The judgment of the district court will be affirmed subject to the right of the defendant, on prompt application to the district court, to have his plea and sentence vacated.

      . The defendant was originally sentenced on January 4, 1974, to one year imprisonment and a $10,000 fine. On February 19, 1974, the court vacated this sentence and imposed a new sentence of nine months imprisonment and a $10,000 fine.


author: GRANT, Senior District Judge. WILLIAM, J., CAMPBELL, Senior District Judge

text:
    William W. ADAMS, Plaintiff-Appellee, v. UNITED STATES of America, Defendant and Third Party Plaintiff-Appellant, v. LAKESHORE COMMERCIAL FINANCE CORPORATION, Third Party Defendant-Appellee.
    No. 73-1378.
    United States Court of Appeals, Seventh Circuit.
    Argued Feb. 19, 1974.
    Decided Oct. 3, 1974.
    Rehearing Denied Nov. 7, 1974.
    Corporate officer brought suit for refund of amount paid on assessment against him for failure to pay employee withholding taxes and for determination adjudicating abatement of penalties assessed against him. Government filed counterclaim against officer and filed third-party complaint alleging that lender was liable for payment of taxes due “as a person who willfully failed to pay over federal income and employment taxes withheld.” The United States District Court for the Eastern District of Wisconsin, Myron L. Gordon, J., 353 F.Supp. 333, granted lender summary judgment, and Government appealed. The Court of Appeals, Grant, Senior District Judge, held that substantial issues of fact as to whether lender was such a “person” precluded summary judgment.
    William J. Campbell, District Judge, dissented and filed opinion.

      Richard M. Roberts, Acting Asst. Atty. Gen., Donald H. Olson, Atty., Tax Div., U. S. Dept, of Justice, Washington, D. C., William J. Mulligan, U. S. Atty., Milwaukee, Wis., for plaintiff-appellant.
    Robert K. Steuer, Milwaukee, Wis., for plaintiff-appellee.
    Before PELL, Circuit Judge, and CAMPBELL  and GRANT, Senior District Judges.

       Senior District Judge William J. Campbell of the Northern District of Illinois is sitting by designation.

         Senior District Judge Robert A. Grant of the Northern District of Indiana is sitting by designation.

   GRANT, Senior District Judge.

During the second and third quarters of 1970, The Skobis Company (hereinafter “Skobis”) withheld federal income and employment taxes from the wages of its employees. However, the amounts so collected by Skobis during that period were never paid over to the government as required by law. Accordingly, the Commissioner of Internal Revenue, under the authority of Title 26 U.S.C. § 6672 of the Internal Revenue Code of 1954, assessed the statutory penalty equal to 100% of the amount not paid over against William W. Adams, an officer of Skobis, and against Lakeshore Commercial Finance Corporation (hereinafter “Lakeshore”), a creditor of Sko-bis. The penalty was first assessed against Adams in the amount of $44,152.80. After he paid a portion thereof ($405.68), he filed a claim for refund, which was eventually disallowed. He then instituted the present action for a refund of the amount paid and for a determination adjudicating the abatement of the penalties assessed against him. The government, in turn, counterclaimed against Adams for the unpaid balance of the penalty and then filed a third party complaint against Lakeshore alleging that Lakeshore was liable for the payment of the taxes due under § 6672 “as a person who willfully failed to pay over federal income and employment taxes withheld from the wages of employees of the Skobis Company” in the amount of $43,747.12, the difference between the original amount assessed against Adams and the amount which Adams paid. The district court, however, granted Lakeshore’s motion for summary judgment and determined that Lakeshore was not a “person” within the meaning of § 6672. The court held, therefore, that as to Lakeshore there existed no substantial factual issues for trial. This is an appeal from that judgment.

The government (herein the appellant) contends, in essence, that the district court was in error when it concluded that there was no issue of triable fact as to whether Lakeshore (a lender) is a “person” who willfully failed to pay over taxes withheld from the employees of Skobis under § 6672. First of all, appellant contends that a lender (such as Lakeshore) can be a “person” responsible for the debtor’s failure to pay over withheld taxes under § 6672 if the lender exercises substantial control over the critical functions of the debtor corporation. In the present ease, appellant argues that Lakeshore did, in fact, become so involved in the business affairs of Skobis with respect to the disbursal of funds that it was responsible for the failure of Skobis to pay over withheld taxes. This contention is grounded upon the existence of a certain revolving loan agreement between Lakeshore and Sko-bis whereby Lakeshore, during a period of six months, made continuous advances of funds to Skobis (61 in all) which were secured by the latter’s accounts receivable and inventory and which funds were, at one time during the period, allegedly restricted by Lakeshore for payment to the Intex-nal Revenue Service in satisfaction of various amounts that Skobis owed for employee withholding taxes. In any event, appellant maintains that the conflicting affidavits of William Adams and Lawrence R. Appel, the president of Lakeshore, as to whether or not Lakeshore had any control over the disbursement of Skobis’ funds undoubtedly presents a substantial fact question as to Lakeshore’s responsibility for the failure of Skobis to pay over withheld taxes to the United States. It is appellant’s position, therefore, that the district court’s action granting summary judgment for Lakeshore should be reversed and remanded for trial since a genuine issue of material fact does exist with respect to Lakeshore’s liability under § 6672.

On the other hand, Lakeshore attacks the sufficiency of the Adams affidavit, calling it vague and conclusory, and contends that the affidavit of Lawrence Ap-pel establishes that Lakeshore was not an officer or employee of Skobis; that no one affiliated with Lakeshore was ever affiliated with Skobis; and that Lakeshore had no control over the financial affairs of Skobis beyond the making of loans pursuant to the agreement. Although Lakeshore admits that, during the period in question, it made 61 advances to Skobis in which certain cheeks were issued jointly to Skobis and the tax authorities, and that one cheek, as a matter of fact, was issued to another secured creditor, nevertheless appellee emphasizes that once it transferred funds to Skobis’ checking account, it had no further control over the disbursal of the funds. Its authority, it is maintained, included only the collection of accounts receivable pursuant to the loan agreement and the determination of the amounts of the advances to Skobis. Beyond this, says appellee, the funds were available for those persons managing the corporate affairs of Skobis to distribute by determining “which creditors were to be paid, and when.”

The thrust of Lakeshore’s position, then, is that since it lacked the necessary control over the funds of Skobis relative to the disbursal of those funds to creditors, the district court correctly held that it was not a person” under § 6672 liable for Skobis’ failure to pay over the taxes withheld from its employees. Therefore, it is argued that the government’s contention that a genuine issue of material fact exists with respect to whether Lakeshore actually controlled the affairs of Skobis is not supported by the record. Accordingly, ap-pellee urges this court to affirm the judgment of the district court granting its motion for summary judgment.

The sole issue presented for our consideration and determination in this appeal, therefore, is whether the district court erred in concluding that there is no issue of triable fact as to whether Lakeshore Commercial Finance Corporation, a lender, is a “person” who is required and who willfully failed to collect, account for, and pay over the withholding taxes of its debtor within the meaning of § 6672 of the Internal Revenue Code of 1954.

The “person” who is responsible for the payment of corporate taxes within the meaning of § 6672 is that individual who has the final word as to what bills should or should not be paid, and when. Turner v. United States, 423 F.2d 448, 449 (9th Cir. 1970). In this context, the word “final” means significant rather than exclusive control over the disbursal of funds. Dudley v. United States, 428 F.2d 1196, 1201 (9th Cir. 1970). Moreover, although the liability for failure to collect, account for, and pay over withheld taxes usually attaches to those high corporate officials who have the power and responsibility within the corporate structure for seeing that taxes withheld from various sources are remitted to the government, Monday v. United States, 421 F.2d 1210, 1214 (7th Cir. 1970), the party subject to the penalty for the corporation’s failure to pay the taxes due is not always or necessarily an official of the delinquent corporation. McCarty v. United States, 437 F.2d 961, 967, 194 Ct.Cl. 43 (1971). The fact of the matter is that the responsibility for nonpayment of the tax includes all those so connected with the business as to be responsible for the performance of the act in respect of which the violation occurs. Dudley, supra, 428 F.2d at 1201. Indeed, § 6672 is broad enough to reach an entity which assumes the function of determining whether or not the employer will pay over taxes withheld from its employees. Pacific National Insurance v. United States, 422 F.2d 26, 30 (9th Cir. 1970). It is generally accepted, therefore, that employment is not the test of liability under § 6672. Dunham v. United States, 301 F.Supp. 700, 702 (D.Conn.1969); Regan & Company v. United States, 290 F.Supp. 470, 481 (E.D.N.Y.1968).

In the instant case, appellee places heavy reliance on the case of United States v. Hill, 368 F.2d 617 (5th Cir. 1966), to support its argument of non-liability under § 6672. The appellant argues that this reliance is misplaced and, in any event, asserts that Hill should be interpreted narrowly in light of the later eases dealing with § 6672. In Hill the court held that a bank which loaned funds to a defaulting corporation was not an “employer” subject to the penalty for the non-payment of employee income and F.I.C.A. taxes under § 6672 where the bank did not manage the internal affairs of the corporation, where it was under no duty to file corporate income tax returns, and where it withheld no taxes from the corporation’s employees. Appellee maintains that since the facts of the instant case are clearly in line with those in Hill, the same disposition should result here regarding the question of Lakeshore’s liability for Skobis’ unpaid withholding taxes. The court below was in accord with this viewpoint.

This court is of the opinion, however, in accordance with appellant’s position, that Hill is not dispositive of the present ease. There are two significant reasons for our opinion. In the first place, we are able to distinguish Hill on the issue of the degree of control that the lender in that case had over the debtor corporation and the extent to which Lakeshore could arguably control the financial affairs of Skobis in the instant case. In Hill the court expressly found that the lending institution had no power at all regarding the management and regulation of the debtor corporation’s internal affairs. In the present case, however, the affidavit of William Adams, a former officer of Skobis, indicates that: (1) Lakeshore possessed “final authority” over the application of the earnings of Skobis; (2) this authority was exercised “on a day-to-day basis”; and (3) Lakeshore, at one point, actually “determined to discontinue” the payment of withholding taxes to the government on behalf of Skobis. Because the essential allegations in this affidavit are contested by the Appel affidavit, this court perceives that the issue of whether Lakeshore had control over the disbursal of Skobis’ funds, if any, is not as clearly defined as it was in Hill. Therefore, because this crucial issue is obfuscated in the present case, we deem that Hill is not applicable.

Secondly, in regard to Hill, we note that its rationale has become somewhat eroded as of late in that it has been challenged in other well-reasoned opinions of other courts. Dunham, supra, 301 F.Supp. at 703. Although on the facts before it, the court in Hill appeared to have sufficient reason to justify its finding that the lending institution there was not subject to the penalty under § 6672, we note that the more recent trend seems to favor an expanding view of “persons” liable or responsible for the nonpayment of withholding taxes. In Pacific National, supra, 422 F.2d at 30-31, for example, the court, in finding the surety liable under § 6672, stated that the liability imposed by that section is not restricted to the officers or employees of corporations and members or employees of partnerships. Rather, the court said that there is a “calculated indefiniteness” with respect to the scope of “persons” who may incur liability for the failure to pay over withheld taxes in order that liability might be imposed on those actually responsible for the employer’s failure to pay over the tax. In White v. United States, 372 F.2d 513, 516, 178 Ct.Cl. 765 (1967), the court articulated this concept in the following manner:

In reaching a determination with respect to the person or persons upon whom to impose responsibility and liability for the failure to pay taxes, the courts tend to disregard the mechanical functions of the various corporate officers and instead emphasize where the ultimate authority for the decision not to pay the tax lies.

Based on the evidence in the instant case, and in particular the conflicting affidavits, we hold that it is not completely clear where that “ultimate authority” to pay the tax is vested and therefore where the ultimate liability for the failure to pay the tax lies. Indeed, Lakeshore, by virtue of its business affiliation with Skobis, may come within the scope of “persons” liable as an entity which had significant control over the disbursal of Skobis’ funds during the period in question. Then again, it may not. In any event, and in keeping with the more recent trend in assessing § 6672 liability, we adhere to our position and decline to give Hill controlling effect in light of the evidence in the case before us.

Finally, and most importantly, we find it interesting to note that summary judgment has been deemed inappropriate in cases where, as here, questions arise concerning whether a lending institution has assumed such control over its debt- or’s business as to become a liable “person” and whether the particular institution has acted willfully in preferring other creditors over the government within the meaning of § 6672, since such questions present material and substantial issues of fact. Dunham, supra, 301 F.Supp. at 702. Since the conflicting affidavits in the present case involve such issues, we now hold that summary judgment was precluded in the court below.

In summary, then, we do not intend in this opinion to in any way indicate whether or not Lakeshore is, in fact, a “person” who is liable under § 6672 for the failure of Skobis to pay over the taxes withheld from its employees during the second and third quarters of 1970. Rather, we merely hold, based on the evidence, that the district court was in error when it determined, in effect, that the instant situation presented no substantial factual issues for trial. On the contrary, the opposing affidavits of William Adams and Lawrence Appel do, in our opinion, present triable issues of fact regarding Lakeshore’s possible liability under § 6672.

Accordingly, the judgment of the district court granting summary judgment in favor of Lakeshore Commercial Finance Corporation is hereby reversed, and the cause is remanded for trial.

WILLIAM, J., CAMPBELL, Senior District Judge

(dissenting).

I do not disagree with the proposition that a creditor, under appropriate circumstances, may properly be considered a “person required to collect, truthfully account for and pay over” taxes for which its debtor is liable, and that where such circumstances exist, the appropriate penalty may be assessed against such a “person” pursuant to § 6672 of the Internal Revenue Code (26 U.S.C.). Nor do I disagree with the well established rule that summary judgment may not be entered where an affidavit submitted in opposition to a motion for summary judgment raises a genuine issue as to any material fact. The majority and I part company, however, in our respective views regarding the circumstances under which a lender may be considered a “person” for the purposes of § 6672, and a fortiori with regard to the question of whether the affidavits in the instant case raise a genuine issue as to a material fact. Accordingly, I respectfully dissent.

The Internal Revenue Code of 1954 imposes upon employers the duty to collect withholding taxes by deducting the amount of the tax from the wages paid to employees [§§ 3102(a) and 3402(a)]. It also provides that any employer required to collect these taxes shall be .liable for the payment thereof [§§ 3102(b) and 3403]. But with respect to the imposition of penalties for failure to collect and pay withholding taxes, the Code does not limit potential liability to “employers”. Rather, § 6672 provides that:

“[a]ny person required to collect, truthfully account for, and pay over any tax . . . who willfully fails to collect such tax, ... or willfully attempts in any manner to evade or defeat any such tax or the payment thereof, shall, ... be liable to a penalty equal to the total amount of the tax evaded . . .”.

With respect to the collection of withholding taxes, § 6672 has been construed to apply to “persons” other than employers, and more specifically, to “impose liability upon those actually responsible for an employer’s failure to withhold and pay over the tax”. Pacific National Insurance Company v. United States, 422 F.2d 26, 31 (9th Cir. 1970). Whether a person other than the employer has assumed “the function of determining whether or not an employer will pay over taxes withheld from its employees” depends upon whether that person has the final word or at least significant control “as to what bills should or should not be paid, and when”. Pacific National Insurance Company v. United States, 422 F.2d 26, 30-31 (9th Cir. 1970); Wilson v. United States, 250 F.2d 312, 316 (9th Cir. 1958); Turner v. United States, 423 F.2d 448, 449 (9th Cir. 1970).

Thus, the basic issue in the instant ease is whether the affidavit in opposition to the motion for summary judgment raised a genuine issue as to whether Lakeshore maintained such control over the payment of Scobis Company’s bills and obligations as to qualify this creditor as a “person” within the meaning of § 6672.

According to the affidavit of Lawrence R. Appel, President of Lakeshore, at no time was Lakeshore or any of its officers, directors or employees, an officer, director or employee of Scobis or a signatory to any checking account maintained by Scobis. The Appel affidavit describes a creditor-debtor relationship between Lakeshore and Scobis which roughly approximates a revolving loan arrangement, under which Lakeshore agreed to advance various loans to Sco-bis “secured by a security interest under the Uniform Commercial Code in property of Scobis including accounts receivable and inventory (hereafter ‘collateral’). Said security agreements were perfected by filing financing statements.” (Appel affidavit, paragraph 4).

The Appel affidavit further avers that each of the continuous advances of funds by Lakeshore to Scobis was dependent upon the amount of collateral available. As collateral became liquidated through the collection of accounts receivable or the sale of inventory, the proceeds were applied against the balance due on previous advances. Except for a check in the amount of $629.63 made payable to one of Scobis’ creditors, and with the further exception of certain other checks issued prior to June 22, 1970 payable jointly to Scobis and various taxing authorities, each of the sixty-one advances made by Lakeshore to Scobis between April 1, 1970 and September 30, 1970 was made either by a cheek payable to Scobis or by the transfer of funds to Scobis’ checking account maintained at a local bank. These sixty-one advances totalled $377,792.46.

Most significantly, the Appel affidavit avers that once Lakeshore had issued its check or transferred funds to the checking account of Scobis, “neither Lake-shore nor any of its officers nor employees had any further control of the funds advanced to Scobis.” (Appel affidavit, paragraph 9).

The affidavit of William W. Adams, filed in opposition to the motion for summary judgment, states that the loan agreement between Lakeshore and Sco-bis contained provisions whereby:

“Lakeshore would receive all of the earnings and income taken in by The Scobis Company, which earnings and income would be in part applied by Lakeshore against the indebtedness owed it by The Scobis Company, and would in part be reimbursed to The Scobis Company for the payment of The Scobis Company operating expenses”.

This allegation is wholly consistent with the revolving loan arrangement described in the Appel affidavit. The “earnings and income” received by Lake-shore constitute the accounts receivable paid to Scobis and the proceeds from the sale of inventory, or in other words, the liquidated collateral which had secured previous advances. The partial reimbursement of earnings and income by Lakeshore to Scobis was the advancement of further funds secured by inventory and uncollected accounts receivable. Consistent with Appel’s statement that Lakeshore had no further control over funds advanced to Scobis, the Adams affidavit does not allege that these funds were earmarked for the payment of any particular operating expenses in preference to others.

Similarly, the Adams affidavit states that:

“final authority concerning the application of the earnings and income of The Scobis Company . . . was vested in Lakeshore . . . and . such authority was exercised on a day-to-day basis in conjunction with the advice, recommendations, requests and conferences with one Earl R. Lenger [chief operating officer of Scobis]”.

Again, since “earnings and income” represent liquidated collateral which had been used to secure previous advances, the “final authority” exercised by Lake-shore over the application thereof is consistent with the revolving loan arrangement which generated further funds for the payment of Scobis expenses. The fact that sixty-one such advances were made over a six month period explains the almost daily contact between Scobis’ chief operating officer and Lakeshore.

The only allegation made by Adams on the basis of personal knowledge pertaining to control by Lakeshore over funds lent to Scobis is the statement that sometime during 1970, “certain funds [were] restricted by Lakeshore for the payment to the Internal Revenue Service in satisfaction of various amounts owed for employee withholding taxes”, and that during the quarters ending June 30, 1970 and September 30, 1970, Lakeshore “determined to discontinue such payments from the assets that it held, such assets constituting the income and earnings of The Scobis Company . . . ”.

In my view, this allegation falls far short of raising a genuine issue as to whether Lakeshore exercised significant control over “what bills should or should not be paid, and when”. Turner v. United States, supra. While Lakeshore may have advanced some funds to Scobis for the payment of withholding taxes, Adams does not allege that Lakeshore, at any time, refused to issue funds for this purpose. The fact that earnings and income (liquidated collateral) was not used to pay taxes is quite beside the point. Operating expenses, including the payment of employees’ salaries and wages, were to be paid out of the funds advanced by Lakeshore to Scobis. The employer was obligated to withhold a portion of these wages and to pay said amount to the Internal Revenue Service. It is therefore the exercise of control over the funds advanced by Lakeshore to Scobis which determined liability for the purposes of § 6672.

The Appel affidavit alleged that Lake-shore exercised no control over funds lent, once they were advanced to Scobis. It was the respondent’s burden to establish a genuine issue as to whether Lake-shore exercised “significant control” over the use of these funds. The Adams affidavit establishes only that Lakeshore controlled the liquidated collateral, described by Adams as earnings and income. Under the revolving credit arrangement between Lakeshore and Sco-bis, control over the liquidated collateral is irrelevant to the issue of whether Lakeshore may be considered a “person” for the purposes of § 6672. Significant control over the funds used to pay the bills — i. e. the funds advanced by Lake-shore to Scobis — is the critical determinant under these circumstances. Since the respondent failed to raise a genuine issue as to whether Lakeshore exercised such control over these funds, I believe summary judgment was properly entered.