*1 259 upon allegedly liability, re- his tax considered cannot be and advice given Corp. by attorney employed Business to him view here. United by 809, Commissioner, B.T.A. the National 19 Labor America v. Relations Board 754, respect 1933, liability den. with F.2d cert. aff’d 2 to income Cir. 62 tax 635, 53, 552. not material 290 54 78 U.S. S.Ct. issue here and re- quire no consideration. Income Tax Re fa^t The decision by of the Tax preрared taxpayer Court will be turns are for a affirmed. upon public whom certified accountant con him the
he relies does not relieve
sequences report of error in failure to liability correctly.
the tax Hoboken Improvement
Land & Co. v. Commission
er, 1943, 138 Cir. F.2d 104. 3 communications Confidential between gen and an client accountant are recognized erally privileged. There privilege in
is no sanction for the com Evidence, Wigmore, mon law. See 8 WIRTZ, Secretary W. Willard Labor, (McNaughton 1961). And 2286 rev. United States Appellant, ap there is state or federal statute plicable such here which would confer privilege. Moreover, re where records COMPANY, PURE ICE lating liability tax are the Mrs. Wanda Appellees. inquiry, matter the Internal Revenue Code, 7602), (26 7602 No. 17204. negates any might privilege oth United States Appеals Court of erwise exist. Falsone See v. United Eighth Circuit. States, 1953, 734, Cir. F.2d cert. 4, Sept. 1963. den. 98 L.Ed. 346 U.S. Fahey, 375; the Matter of James E. D.C.Ky.1961, F.Supp. 492, aff'd
Cir. F.2d 383.
It conceded that the income years
tax returns filed for joint by taxpayer, returns Lustman, wife,
Jack his Ida Lust joint
man. Where a return is filed wife, liability by
husband and statute joint several. Section Revenue Code
Internal Accordingly, 51(b) (1)). is no there taxpayer’s merit contention that ex-wife, Lustman, prop his Ida is not Ridge, Judge, Circuit dissented. party to the assessment er of tax liabil ity.
Allegations relating Petitioner, approvаl of his financial records Corporation Finance
Reconstruction loan, granting a harassment the In- good Service, Revenue ternal faith attempting to effect a settlement of *2 Company, Concededly, Pure Ice the engaged Inc., production of the goods its so for interstate commerce
nonexempt employees were covеred un- provisions of the Act. It is the record-keep- wage disputed that the ing provisions vio- Sol., of Act had been the Powers, Deputy N. C., Washington, D. Pure Ice Dept. Labor, and that two lated of of Labor, Donahue, underpaid. of Solicitor Charles had been Solicitor, Margolin, Associate Bessie organized corpo as Pure Ice Cappello, Karro, At R. Isаbelle Jacob I. torneys, Thomp ration the defendant Washing Labor, of Franklin Lee in 1951 with son and one Regional Street, ton, C., and Earl D. owning the stock of 75% Tex., Dallas, Dept. Attorney, of Prior thereto Lee had worked Lee 25%. brief, appellant. on the employee Thompson’s Mc at as Ark., Wayne Boyce, Newport, M. Fred Crory North Little Rock. and later at Ark., Jr., Newpоrt, J. Pickens, and W. get wanted into the ice business Lee brief, Ark., Augusta, Dungan, on the accordingly Thomp himself and he and Thompson. appellee M. Vance pur corporation which the formed City of Bates- chased two ice VOGEL, OOSTERHOUT VAN Before manager ville, Arkansas. Lee became Judges. RIDGE, Circuit corporation. president and vice Thompson president. At out beсame the Judge. VOGEL, Circuit corporation the some set he advanced to $40,000 brought Secretary two of Labor The purchase the which was used to against Pure Ice defendants the actions plants. Subsequently, corporation’s ice Thompson, C.B. Inc., Vance M. Company, during life, the course its business based Lee and Wanda Huddleston money by corporation was loaned other Act, 29 U.S.C.A. Fair Labor Standards companies in seeking injunc- seq., first et In 1957 Franklin Lee an interest. against violations of further Lee, son, and his Edward assumed died wages to recover back the second Act and operation general ice alleged violations. due because change manager. The was unfortunate for trial. consolidated cаses were The corporation. for the profitable What had been grant- District Court case the In the first venture under the business Pure Ice Com- toas ed the management changed Franklin Lee Thompson only, Inc., and Vance M. pany, drastically son, Edward, after took entering judgment of dismissal as to the over. In October Edward Lee “left ap- There has been defendаnts. leaving country, plant in debt and disposition. In the second peal from such wife, where he no address was”. His ordered Pure Ice District Court case only “stepped Wanda into defendant wages dismissing due, pay kept books, Lee his shoes”. Mrs. remaining defendants. From the salary, hired fixed her own and fired other dismissing Thompson, the judgment employees, determined their salaries аnd appeals. Secretary “did what a hours. She only question period supposed For involved to do”. six sole failing two months the court erred weeks or defendant whether “employer” Thompson disappear was unaware of to be an find taking Lee and of the Fair Labor ance of Edward over management corporation held of by so Standards it, Lеe. When he did learn owed to the for back responsible acquiesced arrangement, stating Company, in Pure Ice Inc. 29 he employees thought could 216(b). she handle Although corporation. remain- Lee until it was sold. Mrs. the assets manager during period lost ed as through foreclosure, concerned. it- we here actually self had not been dissolved ownership in Purе addition to stock *3 time of trial. Thompson an in- Ice, held had held enterprises, in- Thompson terest several liquidation in testified that the Wynne cluding companies at corporation other ice precipitated by was Searcy, precarious and testi- Arkansas. position which financial in mony always the de- plant left all that he point was had found itself. At one including pertaining to those cisions, wages testimony, however, in his he made managers hours, following and to statement: excepting in Lee’s companies, that Wanda Investigator “Well, Krueger disappear- case, after he learned of complicated moves in and soit makes having taken her and her ance husband of operating was at a loss manager, her he about over as advised and so there was to do matters. Mrs. Lee’s testi- mechanical mony liquidate to it.” Thompson that of corroborated granting injunction against In was the of the effect that she Thompson refusing in the first case but only with plant and him consulted personally hold him liable for back op- problems of mechanical reference to wages case, in the second the District employees Other of eration. Court stated: Thompson they contacted that testified “However, say concerning it thing is one mechanical at the difficulties that an although say individual plant, officer or one of them did that stock- may subjected holder in- he had also consulted junction; quite thing cutting advisability it is another down frоm of say merely that because in- three shifts to two. The dividual .they corpora- connected however, never dis- with a agreed, that wages statutory fall Thomp- within the or hours with cussed ‘employer’ definition of an such in- deter- son and that these were matters dividual Lee, becomes liable them. Wanda who hired mined wages due under Krueger, November In 1960 Willard emphasized Act. And it should be investigator for the of in connection that whereas discovered that violations granting injunction of an in a case taking Fair Labor Standards sound, this kind rests within the place. He at that time talked both limited, albeit discretion of manager, pres- Court, liability and for corporation, Thompson, ident liquidated damages attorneys’ about the violations and the cоrrective 216(b), fees under section if it exists measures that should be taken. all, not, general, in a matter of testimony was that that son’s was discretion.” first occasion on he had concerned wage practices himself and hour at After that “there is no evidence plant. July Ice Pure June and that awas sham or a Krueger dummy returned and found that that it set for the had purpоse situation remedied. defrauding creditors, includ- ing unpaid employees”, the court stated: In June 1961 foreclosure suits were against Ice, commenced Pure one indicate, “The evidence does not bank in which certainly an interest and the Court pre- will not family corporation, and one sume, all of that Mr. will- has by fully stock deliberately owned caused although sоn’s children or grandchildren, operated his ice to be in viola- occupy president he law, did the officeof vice tion of the he has know- Ice willfully interest Pure ingly in addition his and abetted aided having ignorance violating kept himself in it. Rath- employees in his his grant- going justified Mr. what was on er, appears to the Court ing kept case. simply in the first has himself may, Be that as it the dеtermination Thompson ignorance has been as to what the first case going in which at the enjoined personally controlling cor- has as well as the interests owns ' poration us, per- has is not has no there before seemed to feel Accordingly, keep appeal responsibility been any therein. either sonal propriety scope of en- outside joining *4 compliance Thompson personally first in the bring to the Act or disregarded. may completely coverage be exists. case with the Act where only question for determination here man like Mr. “A business is is whether or not there substantial up privileged cor- to son not set is testimony support the in record to the engage poration activities to in Court’s conclusion that District bring may employeeswith- which its employer so hold not an was coverage in Act unpaid com- overtime him ignore questions completely pensation cor- to coveracy compliance (sic) which poration. 216(b). For 29 U.S.C.A. § day with the arise in connection purposes of day operations of the business. follows, 29 is as defined man, in Court’s Such business estimation, (d): duty affirmative has an “ operations are to know whether his ‘Employer’ person includes they are, Act, and if covered directly acting indirectly steps some affirmative to see to take employer in of an interest relation * * compliance there is with it that employee requirements. If there is the Act’s Thompson “employer” was an Whether part an in- on the of such a failure presented within the of the Act duties, perform those dividual to of fact to be issue determined along enjoined then he should be based on the trial court evidence in the corporation, although, as with his contention of case. It is the the Secre- said, does not follow has it been tary Thompson, that, “Vancе as the cor- he be from the fact that controlling porate defendant's stockhold- person- injunction that he is dominating figure, er ally wages. liable for assets, all its successor should have history “In view of Mr. judgment included for back Thompson’s ice at Batesville admittedly pay owed cor- insolvent Wynne, is of at the Court and opinion poration”. is little There from personal injunc- absent Thompson but what the record majority improbable that Mr. is it per- stockholder and dominant again Thompson’s will ice sonality Company, Inc., Pure Ice could in violations of the Act. involved supervised over and have taken the rela- Conversely, persuaded is the Court tionship between the and its enjoined indi- that if employees had he decided to do so. A vidually, no further will reading however, record, careful respect ice occur with that he indicates did not do so. He lived Hence, he controls. Mr. McCrory, Arkansas, not Batesville enjoined.” (Em- Thompson will be where was supplied.) phasis engaged in business. He had other busi- including appear interests, ownership It would that the trial court ness through clear pаrtnership opinion stock or in a in- number companies. enterprises He left the in various of ice matter of terest other ice view Fair Labor Stand- La- compliance with the Fair managers of bor Standards to the various ards Act (d)) respectfully in- I most from dissent had in which the businesses majority opinion. Judge Henley’s plant two It was Ice Pure visited the terest. He “(s)uch liability personal conclusion year or three times only imposed hiring in ordi- where do with nary litigation entity corporate civil fixing hours. When ignored personal liability would be fact became Lee —a corporate imposed in- on the for some debts was unaware change only dividual involved.” time after occurred —the con- was that in the situation specificаlly The District Court found diffi- mechanical sulted reference to appellee Thompson to be President and plant operation. culties of principal stockholder Pure Ice Com- corpora- was an investor pany, “kept ignorance who himself in enterprises. There no sub- tions (was) going what on at support a stantial evidence * * *” and that “has sеemed meaning “employer” he was an personal responsi- to feel that he has *5 might have taken That he of the Act. bility, keep either to out- “ * * * the interest and acted over scope (F. Act) side the L. or S. corporation] in relation an [the bring compliance with the Act point as employee” beside coverage where exists.” The Court found lоng If here we had did not do so. as he Thompson “always left that ownership, man- of stock a combination managers” corporations of the several right hire agement, direction of which he was the officer and dominant contrary employees, con- and fire controlling stockholder, and “never both- supported. itAs be well clusion would (himself) matter,” ered with suсh with- being is, of fact and one the issue making any out determination having refused to hold trial court duties an officer to the employer, and its conclusion an corporate entity responsibility or his for evidence, supported being substantial corporate Company. conduct of Pure Ice may not aside. Kalmon this court set it appellee All the record reveals is that Commissioner, Cir., Mfg. v. 8 Co. Shoe not a stockholder, officer or 189; 1963, F.2d Fitts’ v. 321 Estate formally appointed manager ap- ever Cir., 1956, 729, Commissioner, 237 8 F.2d pellee Company, without au- 733; Commissioner, Cir., v. 8 Coates thority anyone, merely “stepped into 1956, 234 F.2d 463. (her) ap- shoes who husband’s had been Affirmed. pointed manager” Company, of that after parts unknown, appellеe left for RIDGE, Judge (dissenting). Circuit Thompson, as President and appears me, from Since the memo- principal thereof, acquiesced stockholder Judge opinion Henley randum District doing. managerial in her so “Her func- (unreported), judg- that he did not enter * * were rather tions limited appellant, ment in favor of for and on “employer” An for as defined in behalf whom this Seсtion brought (29 unpaid of the Act 203(d)) action was U.S.C.A. “minimum § wages” specifically compensation” made “liable “overtime the em- ployee due them under the Fair affected in Labor Standards unpaid 201, etc., their amount of wages, 29 U.S.C.A. minimum because unpaid employ- compensation, overtime common law tests considered theory may be, case and in ment and the individual as the an immun- additional ity corporate equal damages” entity liquidated (29 amount as under the doctrine right 216(b)). applicable, and not because the evi- of action appellee thereby dence did establish created has to do with “employer” pur- piercing corporate son to the doctrine of 264 Rosenwasser, legislative 360, 65 purpоse 323 U.S. S.Ct. thereof was v. veil. The (1945); remedy 301 L.Ed. Kirschbaum v. for violations to create a civil Walling etc., “employers” 316 U.S. and to make F.L.S.A. (1941). supra, 203(d), liable defined Section theory This, therefor. on the same The District Court found: provi “willfully those who violate” November, 1960, inspection “In of the Act sions of plants (controlled by Thomp- of both 206, 207) U.S.C.A. §§ son) representative was made 216(a) (29 prosecution
criminal
under §
Many
Labor who
216(a)).
of a
officers
found violations of the
overtime
“employers”
corporation, considered to be
keeping provisions
record
of the Act.
203(d), supra, have
within the ambit of §
Those
violations
called
criminally
prosecuted
convicted
attention
both
Mrs. Wanda Lee
There is
of the Act.
holding
and Vance
M.
сivilly
and it was
liable
reason for not
them
explained to them
216(b) thereof, supra,
what was neces-
if
under Section
sary
bring
company
they
“employer”
into com-
with
are found to be
pliance
Nothing
with the law.
statute. Cf.
of that
remedy
situation,
done to
Construc
Mitchell v. Stewart Brothers
investigation (made
when a second
(D.C.
F.Supp.
Company,
24, 1961)
on October
Neb.1960);
Goldberg
disclоsed
Dix Box
v.
continuing,
the violations were
(D.C.S.D.Cal.1962),
these
al.
et
(Par. added.)
suits were filed.”
also,
Con
31.325. See
Chambers
L.C.
Mitchell,
Company
233 F.2d
struction
findings
From the record and
of fact as
*6
1956);
(8 Cir.
Hertz Drivurself
Sta
bar,
made in the case
absent
show-
tions,
States,
United
150 F.2d
v.
ing
powers
toas
restricted
1945); Mitchell
W.
Cir.
v. L.
Thompson, as President of Pure Ice Com-
al.,
Sportswear Company, Inc., et
Foster
legal
pany, Inc.,
presumption
should
F.Supp.
(D.C.E.D.Penn.1957).
power
be that he
vested with
to con-
provisions
203(d)
of Section
compel
Company’s
trol and
that
com-
light
Act,
read
Sections 206 and pliance with the mandates of the Fair
thereof,
“employers”,
are to make
Labor Standards Act.
acting
“any person
directly
i.
or in
e.
Court,
The conclusion of the District
directly
interest of an
part
that failure
perform
employee(’s)” wages
relation
imposed upon
duties
him the
civilly
damages
work,
hours
liable in
subject
enjoined
Act made him
along
to “be
provi
of the Act.
Such
”
* * *
with the
must
construed in the
sions
be
context of
history
gov
“it does not follow
absorption
from the fact
of federal
authority
“wages”
control
ernmental
right
of work” and the
wаges,”
and “hours
hire
liable
he is
and fire
not within the ambit of
those
is a conclusion
law that I consider to
misinterpretation
of the Fair
sections
supra.
Labor Standards
of Section
Corp.
Cf. Rutherford Food
v. of the
be corrected
McComb,331 U.S.
67 S.Ct.
I
Court. would
this
reverse and remand
Walling
(1947);
proceedings
further
Portland
case for
in ac-
concepts
Terminal
U.S.
with the
cordance
hereinabove
(1946);
expressed.