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DIEBOLD v. COMMISSIONER, 2010-238 (T.C. 10-26-2010)
KLATT, J.
{¶ 1} Defendant-appellant, Henry D. Webb, appeals from a judgment of conviction and sentence entered by the Franklin County Court of Common Pleas. Because appellant's conviction is supported by sufficient evidence and is not against the manifest weight of the evidence, we affirm that judgment.
{¶ 2} On December 18, 2008, a Franklin County Grand Jury indicted appellant with one count of attempted murder in violation of R.C. 2923.02 and one count of felonious assault in violation of R.C. 2903.11. The charges arose out of an altercation between appellant and another man, LeQuentin Chaney. Chaney was stabbed during the altercation. Appellant entered a not guilty plea to the charges and proceeded to a jury trial. The jury heard conflicting evidence.
{¶ 3} Chaney testified that he and a friend, Brandon Jones, went to a bar in Columbus, Ohio. Towards the end of the night, Chaney was standing outside the bar in the parking lot when two men walked towards him. One of the men tried to grab a necklace from his neck. Chaney resisted and a fight ensued. One of the men ran away and Chaney got into a wrestling match with the other man, later identified as appellant. During the fight, Chaney fell. Jones came to his defense and punched appellant. Chaney then realized that he had been stabbed in the abdomen. He also saw a knife in appellant's hands. Jones picked Chaney off the ground and took him to a hospital.
{¶ 4} Appellant described a different version of events. Appellant testified that Chaney started the fight. He testified that a number of men, including Chaney, approached him in the bar's parking lot. After Chaney asked appellant a question, appellant noticed that Chaney tried to stab him with a knife. The two men began wrestling, and appellant took the knife from Chaney and "poked" him with it in order to protect himself from Chaney and the other men, who appellant thought were coming to help Chaney.
{¶ 5} The jury found appellant guilty of felonious assault but not guilty of attempted murder. The trial court sentenced appellant accordingly.
{¶ 6} Appellant appeals and assigns the following error:
APPELLANT'S CONVICTION WAS NOT SUPPORTED BY THE SUFFICIENCY OF THE EVIDENCE IN VIOLATION OF THE DUE PROCESS CLAUSE OF THE FOURTEENTH AMENDMENT TO THE U.S. CONSTITUTION AND ARTICLE I, SECTIONS 1 16 OF THE OHIO CONSTITUTION AND THE CONVICTION WAS ALSO AGAINST THE MANIFEST WEIGHT OF THE EVIDENCE.{¶ 7} Appellant contends in this assignment of error that his conviction is not supported by sufficient evidence and is against the manifest weight of the evidence. We disagree.
{¶ 8} The legal concepts of sufficiency of the evidence and weight of the evidence are both quantitatively and qualitatively different. State v. Thompkins (1997), 78 Ohio St.3d 380, paragraph two of the syllabus. Therefore, we will separately discuss appellant's sufficiency of the evidence and weight of the evidence arguments.
{¶ 9} The Supreme Court of Ohio delineated the role of an appellate court presented with a sufficiency of the evidence argument in State v. Jenks (1991), 61 Ohio St.3d 259, paragraph two of the syllabus:
An appellate court's function when reviewing the sufficiency of the evidence to support a criminal conviction is to examine the evidence admitted at trial to determine whether such evidence, if believed, would convince the average mind of the defendant's guilt beyond a reasonable doubt. The relevant inquiry is whether, after viewing the evidence in a light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime proven beyond a reasonable doubt. * * *{¶ 10} Whether the evidence is legally sufficient is a question of law, not fact. Thompkins at 386. Indeed, in determining the sufficiency of the evidence, an appellate court must give "full play to the responsibility of the trier of fact fairly to resolve conflicts in the testimony, to weigh the evidence, and to draw reasonable inferences from basic facts to ultimate facts." Jackson v. Virginia (1979), 443 U.S. 307, 319, 99 S.Ct. 2781, 2789. Consequently, the weight of the evidence and the credibility of the witnesses are issues primarily determined by the trier of fact. State v. Yarbrough, 95 Ohio St.3d 227, 2002-Ohio-2126, ¶ 79; State v. Thomas (1982), 70 Ohio St.2d 79, 80. A verdict will not be disturbed unless, after viewing the evidence in the light most favorable to the prosecution, it is apparent that reasonable minds could not reach the conclusion reached by the trier of fact. State v. Treesh, 90 Ohio St.3d 460, 484, 2001-Ohio-4; Jenks at 273.
{¶ 11} In order to convict appellant of felonious assault, the state had to prove beyond reasonable doubt that appellant knowingly caused Chaney serious physical harm or knowingly caused or attempted to cause Chaney physical harm by means of a deadly weapon. R.C. 2903.11(A).
{¶ 12} Appellant first argues that the evidence failed to prove that he was the person that stabbed Chaney. We disagree. Chaney testified that appellant stabbed him in the lower abdomen as the two men wrestled in the parking lot. Chaney saw a knife in appellant's hands after he was stabbed. He did not see anyone else with a knife. Additionally, appellant admitted that he stabbed Chaney, although allegedly in self-defense. This testimony is sufficient to allow reasonable minds to conclude that appellant stabbed Chaney.
{¶ 13} Appellant next argues that even if he did stab Chaney, the evidence failed to prove that he acted knowingly. Again, we disagree. Appellant appears to argue that he accidentally stabbed Chaney. However, appellant never claimed at trial that the stabbing was an accident; he testified that he stabbed Chaney in self-defense. (Tr. 537.) Self-defense is necessarily a purposeful act. State v. Powell, 176 Ohio App.3d 28, 2008-Ohio-1316, ¶ 24. Purposeful conduct satisfies a requirement that a defendant acted knowingly. State v. Terrell, 2d Dist. No. 22108, 2008-Ohio-1863, ¶ 22 (citing R.C. 2901.22(E)); State v. Philpot, 10th Dist. No. 03AP-758, 2004-Ohio-5063, ¶ 33. Thus, appellant's claim of self-defense is an admission that he acted purposefully and, therefore, knowingly. Moreover, Chaney's testimony indicates that appellant was the aggressor and that appellant brought the knife into the fight. This evidence is sufficient to allow reasonable minds to conclude that appellant acted knowingly when he stabbed Chaney.
{¶ 14} Viewing the totality of the evidence in a light most favorable to the state, the evidence is sufficient for reasonable minds to conclude that appellant knowingly caused Chaney physical harm by stabbing him with a knife. Accordingly, appellant's conviction is supported by sufficient evidence.
{¶ 15} Appellant's manifest weight of the evidence claim requires a different review. The weight of the evidence concerns the inclination of the greater amount of credible evidence offered to support one side of the issue rather than the other. State v. Brindley, 10th Dist. No. 01AP-926, 2002-Ohio-2425, ¶ 16. When presented with a challenge to the manifest weight of the evidence, an appellate court, after "`reviewing the entire record, weighs the evidence and all reasonable inferences, considers the credibility of witnesses and determines whether in resolving conflicts in the evidence, the [trier of fact] clearly lost its way and created such a manifest miscarriage of justice that the conviction must be reversed and a new trial ordered.'" Thompkins at 387 (quoting State v. Martin (1983), 20 Ohio App.3d 172, 175). An appellate court should reserve reversal of a conviction as being against the manifest weight of the evidence for only the most "`exceptional case in which the evidence weighs heavily against the conviction.'" Id. {¶ 16} A defendant is not entitled to a reversal on manifest weight grounds merely because inconsistent evidence was presented at trial. State v. Raver, 10th Dist. No. 02AP-604, 2003-Ohio-958, ¶ 21. Neither is a conviction against the manifest weight of the evidence because the trier of fact believed the state's version of events over the appellant's version. State v. Gale, 10th Dist. No. 05AP-708, 2006-Ohio-1523, ¶ 19; State v. Williams, 10th Dist. No. 08AP-719, 2009-Ohio-3237, ¶ 17. The trier of fact is free to believe or disbelieve all or any of the testimony. State v. Jackson (Mar. 19, 2002), 10th Dist. No. 01AP-973; State v. Sheppard (Oct. 12, 2001), 1st Dist. No. C-000553. The trier of fact is in the best position to take into account inconsistencies, along with the witnesses' manner and demeanor, and determine whether the witnesses' testimony is credible. State v. Williams, 10th Dist. No. 02AP-35, 2002-Ohio-4503, ¶ 58; State v. Clarke (Sept. 25, 2001), 10th Dist. No. 01AP-194. Consequently, an appellate court must ordinarily give great deference to the fact finder's determination of the witnesses' credibility. State v. Covington, 10th Dist. No. 02AP-245, 2002-Ohio-7037, ¶ 28; State v. Hairston, 10th Dist. No. 01AP-1393, 2002-Ohio-4491, ¶ 74.
{¶ 17} Appellant does not present additional arguments in support of his manifest weight claim. As already noted, credible evidence supports the jury's determination that appellant knowingly stabbed Chaney with a knife. Although appellant testified that he stabbed Chaney in self-defense, Chaney testified that appellant was the aggressor. The jury was free to disbelieve appellant's version of events and believe Chaney's version of events. That decision was within the province of the jury. State v. Williams, 10th Dist. No. 08AP-719, 2009-Ohio-3237, ¶ 18-19 (jury's decision to reject claim of self-defense and believe prosecution's version of events not against manifest weight of the evidence); State v. Morris, 10th Dist. No. 05AP-1139, 2009-Ohio-2396, ¶ 33-34 (same). Given the conflicting evidence presented at trial, this is not the exceptional case in which the evidence weighs heavily against the conviction. Accordingly, appellant's conviction is not against the manifest weight of the evidence.
{¶ 18} In conclusion, appellant's conviction is supported by sufficient evidence and is not against the manifest weight of the evidence. Accordingly, we overrule appellant's assignment of error, and we affirm the judgment of the Franklin County Court of Common Pleas.
Judgment affirmed.
BRYANT and McGRATH, JJ., concur.
We must determine whether respondent has shown that petitioner was liable as a transferee.
I. Notice of Transferee Liability
On August 2, 2007, respondent issued a notice of liability to petitioner asserting transferee liability of $97,344,077, plus interest, for the tax liability of Double-D Ranch. We note that the proceeds of the stock sale went to the marital trust and the Diebold Foundation, not to petitioner.
Under New York State law, properly created trusts are independent legal entities with separate juridical status. See Pinckney v. City Bank Farmers Trust Co., 292 N.Y.S. 835, 838 (App. Div. 1937) (trust created under New York law is a legal entity and continues as such to the end fixed by its own terms). Thus, the separate legal existence of a marital trust must be respected for purposes of determining any transferee liability unless it can be shown that the marital trust should be disregarded under New York law.
The New York Court of Appeals has held that courts may disregard the form of a trust when the trust was formed for an illegal purpose or if there is not the requisite separation between beneficiary and trustee. Natl. Union Fire Ins. Co. of Pittsburgh, Pa. v. Eagle Equip. Trust, 633 N.Y.S.2d 308, 309 (App. Div. 1995).
A. Respondent's Position
Respondent argues that the marital trust acted as a mere conduit for the transfer of the proceeds from the sale of the assets of Double-D Ranch to petitioner. To support this argument, respondent points to the 1999 fiduciary tax returns filed by the marital trust reporting that petitioner was the "grantor/owner" of the marital trust. Respondent then concludes that petitioner should be treated as the owner of the marital trust assets for Federal tax purposes and that therefore petitioner should also be treated as the owner of the marital trust assets for transferee liability purposes.
Respondent also argues that regardless of the marital trust's status under New York law, the marital trust constituted a mere conduit for the transfers between Double-D Ranch and petitioner. More specifically, respondent contends that petitioner acted as the beneficial owner of the marital trust, dealing with the marital trust assets as if she owned and controlled them. Additionally, respondent argues that Double-D Ranch sold all of its assets and then distributed all of the proceeds to petitioner through the marital trust and the Diebold Foundation in de facto liquidation, without retaining any funds to pay the corporate-level tax generated by the sale of its assets.
B. Petitioner's Position
Petitioner contends that the marital trust was a separate entity and must be respected for Federal income tax purposes. Petitioner claims that although the marital trust identified itself as a "grantor trust" on its income tax returns, the marital trust did not constitute a grantor trust in 1999 or at any time after Mr. Diebold's death on June 18, 1996.
II. Discussion
Respondent asserts that regardless of the marital trust's status under New York State law, the marital trust constituted a mere conduit for the transfers between Double-D Ranch and petitioner. Respondent believes that the marital trust should be disregarded. We disagree.
We can find no caselaw in New York or elsewhere to the effect that a trust's being a grantor trust plays a role in determining the transferee liability of the grantor. As stated above, we look to New York State law to determine transferee liability. However, even if a trust's status as a grantor trust were relevant to transferee liability of the grantor, we do not find that the marital trust was a grantor trust.
A grantor trust is created when a person contributes cash or property to a trust but continues to be treated as owner of the cash or property, at least in part. See secs. 671-679. A reading of the marital trust agreement makes it clear that this was not a grantor trust. Mr. Diebold, not petitioner, was responsible for creating the marital trust, and during his life he retained the right to withdraw and take possession of any property held by the marital trust or to revoke the marital trust agreement entirely. Petitioner held no such powers.
The trust agreement which created the marital trust read in part:
The Trustees shall pay or apply to the Settlor's said wife all or such sums of principal of this trust as the Trustees (other than Settlor's said wife should she then be acting as a Co-trustee of such trust) in their absolute discretion may deem necessary or advisable from time to time for her proper medical. care, support and comfortable maintenance, or for any other purpose or purposes, without limitation, of the Settlor's said wife deemed prudent and advisable to the trustees, giving primary consideration to her needs or desires, without regard to any other income or property available to her for such purposes from any other sources, it being intended that this power shall be liberally construed in favor of the Settlor's said wife so that she shall have sufficient income and principal available from all sources to enable her to maintain the standard of living to which she was accustomed during the Settlor's lifetime.
Thus, since petitioner did not create the marital trust, she can be treated as its owner under the grantor trust rules only if she had a power exercisable solely by herself to vest the corpus or the income of any portion of the trust in herself or to apply the corpus or income for the satisfaction of her legal obligations. See secs. 1.678(a)-1 and 1.678(b)-1, Income Tax Regs. Petitioner did not have any such right under the marital trust agreement and therefore should not be treated as owner of the marital trust for Federal income tax purposes. Petitioner had only the rights or fiduciary duties relating to the marital trust that were granted to her by Mr. Diebold through the terms of the marital trust agreement. Petitioner's rights and powers under the marital trust agreement were limited and did not vest in her ownership or control of the assets of the marital trust. The marital trust agreement required the trustees to exercise their discretion over any distribution of the marital trust income or principal to petitioner, to provide for her medical care, support, and maintenance, and to ensure that she had sufficient resources to maintain the standard of living to which she was accustomed.
Respondent also argues that the duty of consistency should be applied and thus the marital trust should be deemed a grantor trust since it was identified as such for the years 1999-2004. Respondent incorrectly applies the duty of consistency. Under the duty of consistency, petitioner is bound by the facts asserted in her returns for Federal income tax purposes. See Blonien v. Commissioner, 118 T.C. 541 (2002). Respondent did not present any tax benefit that petitioner received from the marital trust characterization.
Next, respondent asserts that petitioner was the beneficial owner of the assets of the marital trust, exercising dominion and control over those assets, and that any discretionary approval by her cotrustees was a mere formality. As evidence for this beneficial ownership, respondent points to several requests that petitioner made through the trustees for various sums to be distributed to either herself or the Diebold Foundation. Respondent claims that when petitioner approached the trustees, she used the word "directed" rather than "requested", which indicated that petitioner controlled the assets of the marital trust. The use of "directed" rather than "requested" does not change the terms of the marital trust agreement. Every step that petitioner took in requesting transfers was taken through the trustees as the marital trust agreement required. The trustees were notified in writing of petitioner's requests and agreed to have the requested funds placed into her account or into that of the Diebold Foundation. Respondent believes that petitioner had control over all the assets of the marital trust, but we have not seen any evidence of such power. The marital trust was established by Mr. Diebold for petitioner's care and support, but she was not given ownership of the assets. None of petitioner's requests were unreasonable or contrary to the marital trust agreement. Under New York State law, the trustees were at all relevant times required to act reasonably and in good faith in complying with the terms of the marital trust agreement. Estate of Stillman, 433 N.Y.S.2d 701, 707-708 (Sur. Ct. 1980) (court will interfere with exercise of discretion by trustee who acts in bad faith or "beyond the bounds of a reasonable judgment").
Additionally, respondent claims that the marital trust should be disregarded because petitioner participated in a fraudulent transfer of the assets of Double-D Ranch. Respondent asserts that there was a de facto liquidation plan in place from the start of the transactions and that without a liquidation, petitioner would not have been able to give her children any distributions.
As of June 30, 1999, the marital trust owned assets worth $138 million, in addition to the shares of Double-D Ranch common stock. Presuming the sale of the stock is treated as a plan of liquidation, respondent has failed to prove that petitioner participated in a fraudulent conveyance as a result of a plan of liquidation of Double-D Ranch.
Respondent has not directly raised the issue of whether petitioner is a transferee of a transferee with the marital trust being the initial transferee. Because we reject the position that the marital trust may be disregarded, respondent must prove that petitioner is liable as a transferee from the marital trust. However, we first note that respondent has not raised this argument in the pleadings or the notice of liability which asserted transferee liability against petitioner. Because respondent's argument on brief might be construed to raise the issue, we will address it.
It is well settled that transferee liability may be asserted against a transferee of a transferee. Berliant v. Commissioner, 729 F.2d 496 (7th Cir. 1984), affg. Magill v. Commissioner, T.C. Memo. 1982-148. The Commissioner may collect unpaid income taxes of a transferor of assets from a transferee or a successor transferee of those assets. Sec. 6901(a), (c)(2);Commissioner v. Stern, 357 U.S. at 42; Stansbury v. Commissioner, 104 T.C. 486, 489 (1995). State law generally determines the extent of the transferee's liability.Commissioner v. Stern, supra at 45; Gumm v. Commissioner, 93 T.C. 475, 479 (1989), affd. without published opinion 933 F.2d 1014 (9th Cir. 1991). Therefore, we apply New York law in deciding whether petitioner is liable as a transferee under section 6901. The Commissioner bears the burden of proving that the taxpayer is liable as a transferee under State law or in equity. Sec. 6902(a); Rule 142(d); Gumm v. Commissioner, supra at 479-480.
The New York Uniform Fraudulent Conveyance Act includes provisions imposing transferee liability on grounds of both actual and constructive fraud. See N.Y. Debt. Cred. Law secs. 273, 276 (McKinney 2001). With regard to constructive fraud, New York law provides that "Every conveyance made and every obligation incurred by a person who is or will be thereby rendered insolvent is fraudulent as to creditors without regard to is his actual intent if the conveyance is made or the obligation incurred without a fair consideration." N.Y. Debt. Cred. Law sec. 273. N.Y. Debt. Cred. Law sec. 273 been interpreted as requiring the satisfaction of three elements to establish transferee liability: (1) A conveyance; (2) made without fair consideration; and (3) by a person who was or will be rendered insolvent by the conveyance. See United States v. McCombs, 30 F.3d 310, 323 (2d Cir. 1994).
For respondent to establish that petitioner is liable as a transferee from the marital trust requires more than simply the assertion that distributions were made from the marital trust. Respondent must prove that the distributions caused the marital trust to be insolvent at the time they were made and that the distributions from the marital trust should be treated as fraudulent conveyances under New York law. There is no such evidence in the record. Respondent has simply failed to carry the burden of proving that petitioner is liable as a transferee from the marital trust, and we will not assume such liability on the basis of conjecture.
III. ConclusionIn summary, we find that the marital trust should not be disregarded and that respondent has not met the burden of showing petitioner is liable as a transferee from the marital trust. As a result, we hold that petitioner is not liable as a transferee.
To reflect the foregoing,
Decision will be entered for petitioner.
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