United States v. James W. Whitney, and Insurance Company of North America

This appeal involves the personal liability of James W. Whitney for unpaid federal employment taxes owed by Van Nuys Convalescent Hospital, Inc. Jurisdiction is conferred on this court by 28 U.S.C. § 1291 . The District Court found that Whitney had violated 31 U.S.C. § 191 by preferring claims of other creditors of the taxpayer, in derogation of the Government’s claim for back taxes, with knowledge of the claims of the Government at a time when the taxpayer was insolvent. Whitney was, thus, found personally liable under 31 U.S.C. § 192 for the unpaid FICA and FUTA taxes owed by Van Nuys Convalescent Hospital, Inc. Judgment was entered in favor of the United States in the sum of $12,069.07, plus interest and cost. The judgment of the District Court is affirmed for the following reasons.

The District Court found that in December 1973, Van Nuys Convalescent Hospital Corp. [taxpayer] sold its ownership interest in certain real property in Van Nuys, California, to Van Nuys Convalescent Investors, a limited partnership. At the same time, the taxpayer leased back the premises on which the Van Nuys Convalescent Hospital was located from Van Nuys Convalescent Investors. From December 1973…