Bantam Domestic Trust v. Commissioner

2000 T.C. Memo. 63, 79 T.C.M. 1565, 2000 Tax Ct. Memo LEXIS 71

• Court: United States Tax Court
• Decided: February 29, 2000
• Docket: No. 16687-98
• Status: Unpublished

Opinion

BANTAM DOMESTIC TRUST, PRUDENT MAN TRUSTEE COMPANY, TRUSTEE, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent

Bantam Domestic Trust v. Commissioner

No. 16687-98

United States Tax Court

T.C. Memo 2000-63; 2000 Tax Ct. Memo LEXIS 71; 79 T.C.M. (CCH) 1565;

February 29, 2000, Filed

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An order denying petitioner's motion and an order of dismissal for lack of jurisdiction granting respondent's motion will be entered.

Jimmy C. Chisum, for petitioner.

Richard A. Rappazzo, for respondent.

Chiechi, Carolyn P.

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CHIECHI

MEMORANDUM OPINION

CHIECHI, JUDGE: This case is before the Court on respondent's motion to dismiss for lack of jurisdiction (respondent's motion) and petitioner's motion to substitute party and to change caption (petitioner's motion). We shall grant respondent's motion and deny petitioner's motion.

BACKGROUND

For purposes of respondent's motion and petitioner's motion, the parties do not dispute the following factual allegations that are part of the record. During its taxable year 1994, petitioner was a trust engaged in business in the State of Indiana. Petitioner filed a Federal income tax return for estates and trusts, Form 1041 (return), for that taxable year, which was signed by Jimmy C. Chisum as agent for the Prudent Man Trustee Co.

Upon commencement of the examination of the 1994 return filed by petitioner, respondent requested petitioner to provide respondent with complete copies of the trust documents relating to it. Petitioner refused to provide respondent with the trust documents or any other type of documentary evidence regarding who was the first appointed trustee of petitioner.

The notice of deficiency issued to petitioner was sent to the following two addresses:

   Bantam Domestic Trust        Bantam Domestic Trust

   aka Snyder Poultry Processing    aka Snyder Poultry Processing

   Prudent Man Trustee Company,     Prudent Man Trustee Company,

   Trustee               Trustee

   Post Office Box 138         Post Office Box 204

   Harlan, Indiana 46743-0138      Snyder, Nebraska 68664-0204

Petitioner filed a petition in this Court which was signed on its behalf by Jimmy C. Chisum, as "Agent for Trustee Prudent Man Trustee Company", the purported trustee for petitioner.

Respondent's motion contends in pertinent part:

     14. In summary, Mr. Chisum lacks the capacity to bring

   the instant suit directly on behalf of the trust because he

   is not the trustee. Additionally, Mr. Chisum lacks the

   capacity to represent the trustee or any other person in

   this proceeding because he is not an attorney and is not

   otherwise admitted to practice before this Court. * * *

     15. Since the petition in this case was not brought by

   a party with proper capacity as required by the Tax Court

   Rules of Practice and Procedure, this case should be dismissed

   for lack of jurisdiction.

Petitioner filed an objection to respondent's motion in which it asks the Court to deny that motion. Petitioner's objection to respondent's motion asserts in pertinent part:

     As there is a change in fiduciary simultaneous

   with this * * * Objection and the change in fiduciary

   answers the objection raised by the Respondent in the

   Motion to Dismiss, this Court cannot dismiss as set forth in

   Rule 60(a)(1), Rules of Practice and Procedure, United States

   Tax Court. Any further objections by the Respondent must be done

   either by an answer to the Petition or by other motions as set

   forth in Rule 36, Rules of Practice and Procedure, United States

   Tax Court.

The Court had the document submitted by petitioner that purported to be a change in fiduciary filed as petitioner's "Motion to Substitute Party and to Change Caption". Petitioner's motion alleges in pertinent part:

     Notice is hereby given that John P. Wilde has been

   appointed as Co-Trustee of Bantam Domestic Trust along

   with Jimmy C. Chisum * * * and Prudent Man Trustee Co.

   has resigned * * *. John P. Wilde will be proceeding

   in his capacity as a Co-Trustee of an Expressed [sic]

   Trust. * * *

Attached to petitioner's motion are two documents, one of which is entitled "APPOINTMENT OF SUCCESSOR TRUSTEE" and the second of which is entitled "MINUTE OF TRUSTEE RESIGNATION". The document entitled "APPOINTMENT OF SUCCESSOR TRUSTEE" states:

     THE PRUDENT MAN TRUSTEE CO., does hereby appoint J

   C Chisum & John Wilde, as the Successor Trustees for

   BANTAM TRUST.

     The appointment takes effect immediately and asks

   that the Successor waive all time and notice require-

   ments in the appointment and resignation.

     Executed this 21(st) day of January, in the year of

   Our Lord, 1999.

             THE PRUDENT MAN TRUSTEE CO.

               TRUSTEE

             by: ns

               Donna Chisum, F/A for Trustee

      ACCEPTANCE OF APPOINTMENT AS SUCCESSOR TRUSTEE

     THE PRUDENT MAN TRUSTEE CO., does hereby accept

   the appointment of Successor Trustees and the resignation of J C

   Chisum & John Wilde. The above resignation and waiver of time is

   accepted, and with the accepting of SUCCESSOR TRUSTEES, J C

   Chisum & John Wilde, assume the duties and responsibilities as

   TRUSTEE for BANTAM TRUST.

               J C Chisum

               J C Chisum, Trustee

               John Wilde

               John Wilde, Trustee

   The document entitled "MINUTE OF TRUSTEE RESIGNATION"

states:

     THE PRUDENT MAN TRUSTEE CO., does hereby resign

   the position as Trustee for BANTAM TRUST. By special

   arrangement with the Successors, J. C. CHISUM & JOHN

   WILDE, all the time clauses in this act are waived.

   The resignation is immediate, final and irrevocable.

     This resignation takes effect immediately upon the

   signing and endorsement by the Successor Trustee.

     This is intended to release THE PRUDENT MAN

   TRUSTEE CO., from all responsibility associated with

   the Trust.

             THE PRUDENT MAN TRUSTEE CO.

     Ratified, Accepted, Acknowledged this 21(st) day of

   January, in the year of Our Lord, 1999.

                J C Chisum, Trustee

   Respondent filed an objection to petitioner's motion

(respondent's objection). That objection asserts in pertinent part:

     4. In response to respondent's Motion to Dismiss

   for Lack of Jurisdiction, petitioner provided to this

   Court copies of documents alleging that Prudent Man

   Trustee Co. was removed as trustee and that Jimmy C.

   Chisum and John P. Wilde have been appointed successor

   trustees of the petitioner trust.

     5. There is absolutely no evidence from which the

   Court can adduce that the documents referred to in

   paragraph 4., above, create a legal assignment of either Mr.

   Chisum and/or Mr. Wilde as successor trustees. The documents

   petitioner submitted appear to be self-serving and created

   solely in response to respondent's original Motion to Dismiss

     6. Petitioner has provided no evidence that said

   assignments are valid or authorized under the terms of

   the trust indenture (assuming one exists).

     7. If the initial trustee or any successor trustees

   thereafter were, in fact, an entity called Prudent

   Man Trustee Co., petitioner should be required to

   produce credible evidence establishing the legal existence and

   validity of that entity.

     8. Without the evidence described above in paragraph 7.,

   petitioner has failed to demonstrate that either Mr. Chisum

   and/or Mr. Wilde were legally appointed as subsequent trustees

   authorized to act on behalf of the trusts [sic] and bring the

   instant case before this Court. See T.C. Rule 60(c).

     9. The capacity of Mr. Chisum and/or Mr. Wilde to

   bring the instant suit in this Court has not been

   established.

The Court held a hearing on respondent's motion and petitioner's motion (hearing), at which Mr. Chisum appeared on behalf of petitioner. ¹ At that hearing, respondent introduced into the record a document signed by the Secretary of State of Nebraska. ² That document stated in pertinent part:

   I, Scott Moore, Secretary of State of Nebraska do

   hereby certify that after a thorough search of all

   records, I do not find a record of a corporation by the

   name

            PRUDENT MAN TRUSTEE CO.

   ever having filed Articles of Incorporation or issued a

   Certificate of Authority to transact business as a

   foreign corporation in the state of Nebraska.

               DISCUSSION

  Rule 60³ provides in pertinent part:

     (a) Petitioner: (1) Deficiency or Liability

   Actions: A case shall be brought by and in the name of

   the person against whom the Commissioner determined the

   deficiency (in the case of a notice of deficiency)

   * * * or by and with the full descriptive name of the

   fiduciary entitled to institute a case on behalf of

   such person. See Rule 23(a)(1). A case timely brought

   shall not be dismissed on the ground that it is not

   properly brought on behalf of a party until a reasonable time

   has been allowed after objection for ratification by such party

   of the bringing of the case; and such ratification shall have

   the same effect as if the case had been properly brought by such

   party. * * *

             *  *  *  *  *  *  *

     (c) Capacity: * * * The capacity of a fiduciary

   or other representative to litigate in the Court shall

   be determined in accordance with the law of the jurisdiction

   from which such person's authority is derived.

The record is unclear as to whether petitioner was organized as a trust under the laws of Arizona or some other State, although the parties do not dispute that petitioner was carrying on business during its taxable year 1994 in the State of Arizona. At the hearing, Mr. Chisum asserted that the administration of the trust is governed by the laws of the State of Arizona and that the "sole jurisdiction or exclusive jurisdiction in determining the validity of the contract for trust and determining the validity of the trustee party, * * * [is] in Superior Court of State of Arizona."

Assuming arguendo, as petitioner claims, that it is a trust, the administration of which is subject to the laws of the State of Arizona, under Arizona law, see Rule 60(c), a trustee has the power to commence litigation on behalf of a trust. ⁴ See Ariz.Rev. Stat. Ann. sec. 14-7233.C.25. (West 1995). In the instant case, petitioner has the burden of proving that this Court has jurisdiction, see Fehrs v. Commissioner, 65 T.C. 346, 348 (1975); National Comm. to Secure Justice in the Rosenberg Case v. Commissioner, 27 T.C. 837, 839 (1957), by establishing affirmatively all facts giving rise to our jurisdiction, see Wheeler's Peachtree Pharmacy, Inc. v. Commissioner, 35 T.C. 177, 180 (1960); Consolidated Cos., Inc. v. Commissioner, 15 B.T.A. 645, 651 (1929). In order to meet that burden, petitioner must provide evidence establishing that Mr. Wilde and Mr. Chisum have authority to act on its behalf. ⁵ See National Comm. to Secure Justice in the Rosenberg Case v. Commissioner, supra 27 T.C. at 839-840; Coca-Cola Bottling Co. v. Commissioner, 22 B.T.A. 686, 700 (1931).We reject petitioner's position that the validity of the purported appointment of Mr. Wilde and Mr. Chisum as trustees of petitioner falls within the exclusive jurisdiction of the Superior Court of the State of Arizona.

We are not persuaded by the document relating to petitioner entitled "APPOINTMENT OF SUCCESSOR TRUSTEE" and "MINUTE OF TRUSTEE RESIGNATION" that Mr. Wilde and Mr. Chisum are duly appointed and authorized trustees of petitioner. On the record before us, we find that petitioner has failed to establish that Mr. Wilde and Mr. Chisum are authorized to act on its behalf. ⁶

To reflect the foregoing,

An order denying petitioner's motion and an order of dismissal for lack of jurisdiction granting respondent's motion will be entered.

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Footnotes

• 1. At the hearing, the Court informed Mr. Chisum that its allowing him to appear at the hearing as the alleged trustee of petitioner did not mean that the Court agreed that he in fact was a duly appointed and authorized trustee of petitioner.

• 2. Presumably, respondent proffered the document in question at the hearing on respondent's motion and petitioner's motion because one of the addresses to which respondent sent the notice issued to petitioner was in Nebraska.

• 3. All Rule references are to the Tax Court Rules of Practice and Procedure.

• 4. Assuming arguendo, as respondent claims upon information and belief, that petitioner is a trust, the administration of which is subject to the laws of the State of Indiana, under Indiana law, see Rule 60(c), a trustee has the power to commence litigation on behalf of a trust. See Ind. Code Ann. sec. 30-4-3-3(a)(11) (Michie 1989).

• 5. Petitioner no longer contends that Mr. Chisum is authorized to act on its behalf in this proceeding as the agent of Prudent Man Trustee Co., and we conclude that it has abandoned any such argument. Even if it had not abandoned such an argument, on the record before us, we find that petitioner has not shown that Mr. Chisum was properly employed by the trustee of petitioner in accordance with the laws of either the State of Arizona, see Ariz. Rev. Stat. Ann. sec. 14-7233.C.24. (West 1995), or the State of Indiana, see Ind. Code Ann. sec. 30-4-3-3(a)(16) (Michie 1989). We further find that, unless Mr. Chisum is a duly appointed and authorized trustee of petitioner, Mr. Chisum is not authorized to represent or act in this proceeding on behalf of either petitioner or the trustee of petitioner. See Rules 60, 200.

• 6. We have considered all of the contentions and arguments of petitioner that are not discussed herein, and we find them to be without merit and/or irrelevant.