quarters where the jury found the plaintiffs to be responsible persons and the record clearly showed that they subsequently preferred other creditors over the United States despite knowledge of the tax obligations. The fact that the tax obligations arose prior to the time plaintiff became a responsible person was deemed irrelevant. While the court believes the Stake and Walker decisions to be sound, we do not find them controlling in this case.
Implicit in the cases cited by the United States is the fact that the persons held liable had within their control substantial funds of the corporation which they paid to other creditors. Insofar as the cases indicate, those funds exceeded, in toto, the past tax liabilities. Liability under Section 6672 was predicated on knowledge of the tax and the willful failure to pay. Willfulness, in this context, would require the availability of corporate funds. These cases therefore actually involve misapplication of corporate funds to the payment of other creditors instead of first applying the funds to the preferred claims of the United States for withholding taxes.
We do not believe the law to be that a preference to one creditor, no matter how small, would make the responsible agent personally accountable for the entire tax obligation, no matter how great. Rather, Section 7501 creates a trust, and a trustee who wrongfully applies trust funds will be held liable. But that liability would not exceed the amount entrusted. Thus, if "C", the custodian of "A's" property, transfers it to "R", the recipient, and that transfer is fraudulent as to "A's" creditor "Cr", then both "C" and "R" might be liable to "Cr" for the amount transferred, but not for "A's" entire debt to "Cr".
Similarly, here, even though the jury found Rubin to be a responsible person who willfully failed to pay the taxes to the United States in the third quarter of 1969, it does not follow, ipso facto, that he is liable for the entire tax for all four quarters at issue. On the record in this case, the jury had sufficient evidence on which they might determine willfulness lacking as to these prior quarters.
In this regard, the present case is distinguishable from Stake, supra, and Walker, supra. Here, the jury faced a viable question as to whether plaintiff paid corporate creditors with corporate funds in deliberate and conscious preference over the government. In Stake and Walker the plaintiffs unquestionably used corporate funds to pay those debts, and the mere finding by the jury of responsibility and willfulness as of a later time was sufficient basis for the court to impose liability for taxes arising at an earlier time. To so rule here would be to take from the jury a question of fact which they have determined adversely to the government.
The court therefore concludes that the verdict of the jury is not inconsistent and is based on sufficient evidence. An appropriate order will be entered.