United States v. Robert M. Cole, Defendant-Counterclaimant-Appellant, Group II Commercial Real Estate, Inc., a California Corporation, on Counterclaim

Robert M. Cole appeals the district court’s order granting summary judgment to the United States in this action seeking satisfaction of a federal tax debt owed by Concord Smorgy Boys (“Concord Smorgy”). Cole, acting as escrow agent, held and disbursed funds he received as a result of the sale of Concord Smorgy’s business. The summary judgment awarded the United States the funds remaining in escrow and held Cole personally liable under 31 U.S.C. § 3713 for Concord Smorgy’s unpaid tax liability to the extent Cole paid other creditors out of the escrow fund ahead of the United States. We affirm in part and reverse in part.

FACTS

Concord Smorgy was a corporation that operated a restaurant in Concord, California. The assets used in the business were owned in part by Concord Smorgy and in part by Robert A. Daggs Enterprises (“Daggs Enterprises”), another corporation. Robert Daggs was the sole shareholder of both Concord Smorgy and Daggs Enterprises.

On May 1, 1975, Daggs, acting on behalf of the two corporations owned by him, sold the assets of both corporations to Fairfield Smorgabob, Inc. (“Fairfield”). In addition, Daggs signed an agreement not to compete. At the time of the sale,…