*1282 Petitioner's husband, while in prison, assigned his equity in certain real property to her to dispose of for his benefit. The property was sold and a promissory note, secured by real and chattel mortgages, was taken in her name. The note and mortgages were first assigned by petitioner to secure the payment of the husband's state income tax liability, and thereafter to secure other obligations. Subsequently respondent made jeopardy assessments of 1935 and 1936 income taxes against the husband and against petitioner as transferee. Petitioner was at no time the beneficial owner of the note and mortgages. Held, petitioner is not liable as the transferee within the meaning of section 311, Revenue Acts of 1934 and 1936.
*730 This proceeding involves petitioner's tax liability as a transferee of the assets of her former husband, Albert E. Rosser. On or about December 21, 1938, respondent made jeopardy assessments of deficiencies and penalties against Albert E. Rosser and against Mrs. Paulyn E. Rosser, as transferee. *1283 The deficiency letter notified petitioner of her transferee liability for deficiencies and penalties, plus interest, in the amounts and for the years following:
| Deficiency in tax | 50% penalties | 6% interest | |
| 1935 | $1,296.63 | $648.32 | $215.22 |
| 1936 | 4,441.23 | 2,220.62 | 470.71 |
| Total | 5,737.86 | 2,868.94 | 685.93 |
The caption of the instant proceeding was changed upon a showing made that Mrs. Paulyn E. Rosser had secured an absolute divorce from Albert E. Rosser, and, by permission of the court, had resumed the use of her maiden name, Paulyn E. Tomfohr.
FINDINGS OF FACT.
The income tax returns of the transferor, Albert E. Rosser, for the taxable years were filed with the collector of internal revenue for the *731 district of Oregon. In a companion case hereto, Docket No. 98036, Albert E. Rosser stipulated and agreed that the deficiencies and penalties asserted for 1935 and 1936, supra, were due and owing, and the Board, on November 2, 1940, entered its decision accordingly.
In 1936, prior to the marriage of petitioner and Albert E. Rosser on April 20, 1937, the latter contracted with one William Heilman of Marion County, Oregon, for the purchase*1284 of a farm near Tigard, Washington County, Oregon. The agreed purchase price was $9,500 and the contract provided that the balance over and above the down payment of $3,000 should be payable at $100 per month, the vendor to execute a deed as soon as the purchase price was paid. A month or so after entering into the contract Rosser paid an additional $1,000 of the purchase price and thereafter $100 a month.
On or about February 9, 1938, Albert E. Rosser was arrested, was charged with the crime of arson, and was subsequently indicted, tried, and convicted. Since his arrest Rosser has been in prison. Prior to and at the time of his arrest Albert E. Rosser was a member and an official of the Teamsters' Union at Portland, Oregon. Union officials and the attorney for the Teamsters' Union actively participated in the defense of Rosser, as hereinafter more fully related.
Following the incarceration of Rosser petitioner attempted to meet the monthly payments on the farm but was unable to do so. She was notified that unless payments were maintained foreclosure would follow. A sale of the property was arranged to prevent the threatened foreclosure. In order to facilitate the sale*1285 Rosser, then being in jail, assigned his equity in the farm property to petitioner during July 1938, without consideration. Shortly thereafter, and on or about July 21, 1938, sale of the property for $14,750 was consummated to C. Henry Thode and others, who paid $4,000 down and gave a purchase money note for $10,750, secured by separate mortgages on the realty and the personalty. The note and mortgages were executed in the name of Paulyn E. Rosser.
Prior to July 21, 1938, the Oregon State Tax Commission had asserted a lien against the farm property because of Rosser's liability for state income taxes. A representative of the Oregon State Tax Commission attended the sale and accepted an assignment from Paulyn E. Rosser of the two mortgages "as security solely for the payment of such sum of money as may be found due to the assignees [State Tax Commissioners] above named in accordance with the terms of a certain agreement entered into by and between the assignees, the undersigned Paulyn E. Rosser and A. E. Rosser on July 21st, 1938, which agreement is hereby referred to and made a part hereof." The mortgages aforesaid and the assignment thereof were duly recorded on July 22, 1938.
*1286 *732 The down payment made by C. Henry Thode on July 21, 1938, was paid directly to Heilman, and Heilman, upon instructions from Rosser, deeded the property directly to Thode by a deed dated July 20, 1938, which was acknowledged July 21, 1938, and was filed for record July 22, 1938.
On September 27, 1938, the Oregon State Tax Commission reassigned the note and mortgages to Paulyn E. Rosser, and acknowledged therein that payment of A. E. Rosser's liability for income taxes to the State of Oregon in the amount of $2,170 had been received. Delivery of the assignment was made by the State Tax Commission to Albert W. Gentner, the attorney who handled the settlement of the tax liability to the State of Oregon. Gentner notified petitioner of the receipt of the assignment from the State Tax Commission and drew up an assignment of the promissory note and mortgages for her to execute in favor of George F. Vanderveer, who was the attorney for the Teamsters' Union. Petitioner executed this assignment in Gentner's office on October 5, 1938. The assignment was filed for record December 28, 1938.
The aforesaid promissory note executed by C. Henry Thode, and others, was payable*1287 in annual installments of not less than $500 in one payment, the note to be paid in full 10 years after date. Interest at 5 percent was payable semiannually in addition to the principal. Since the execution of the note Thode has made payments in accordance with its terms. All such payments were made to George F. Vanderveer.
In matters relating to the trial of Albert E. Rosser petitioner relied upon and sought the advice of George F. Vanderveer, who represented Rosser, and Dave Beck, who was Rosser's superior officer and the principal officer of the Teamsters' Union in the northwestern states. Petitioner understood that they were the final authority in all matters pertaining to union affairs. They told her that everything would be taken care of by the Teamsters' Union and that the union would pay all expenses, including attorneys' fees, hospital bills, or anything else incurred as a result of Rosser's defense. Vanderveer, at the request of Beck, personally advanced $900 to petitioner to pay a hospital bill of Rosser's, and the Teamsters' Union advanced the $2,170 with which to satisfy Rosser's liability for state income taxes. After Vanderveer lost the Rosser case the Teamsters' *1288 Union put up another $2,000 to employ other counsel to perfect an appeal. Petitioner was requested to and did sign notes for the $2,170 and the $2,000 but was assured that it was merely a matter of form and that the notes would be canceled. When petitioner requested money from Vanderveer to repay money she had personally borrowed to provide funds for Rosser's appeal, Vanderveer informed her that the collections on the note had been exhausted by disbursements made in Rosser's behalf.
*733 Petitioner never had physical possession of the Thode note or the mortgages securing the same. She derived no personal benefit from the assignment of Rosser's equity in the farm. Although the note and the mortgages were executed in petitioner's favor, she was acting solely as a representative of and for the benefit of Albert E. Rosser, who was at all times the beneficial owner of said property.
The only other property that Rosser had was a promissory note for $1,000, executed by a party by the name of Steele. The date of execution, the date of maturity, and the rate of interest, if any, are undisclosed. Petitioner attempted to collect on the note, but her letter to Steele was returned*1289 with the endorsement "address unknown." Petitioner understood that the note was given for mining stocks, or something like that, but that the stock was never issued.
The jeopardy assessment made by respondent against petitioner was received by the collector's office for the district of Oregon on December 27, 1938, and the collector filed a lien for the taxes with the County Clerk of Washington County, Oregon, on December 30, 1938. Other liens were also filed by the collector. Notice and demand for payment were made upon the taxpayer, but no payment has been made and no property of the taxpayer was found except $76 representing the cash surrender value of a policy of life insurance issued on the life of the taxpayer. A deputy collector interviewed petitioner regarding her financial condition on January 4, 1939, and thereafter, on January 20, 1939, a notice of deficiency was mailed to petitioner as transferee of the assets of Albert E. Rosser.
The petitioner secured an absolute divorce from Albert E. Rosser on May 21, 1940. No property rights of the marital community were adjudicated by the divorce proceeding.
OPINION.
ARNOLD: The deficiencies and penalties herein were*1290 asserted against petitioner under the provisions of section 311 of the Revenue Acts of 1934 and 1936. That section imposed no new obligation upon a transferee. It merely permitted the Government to collect by summary proceeding against the transferee the liabilities that existed in law or equity. . The nature and extent of a transferee's liability must be determined by the settled principles of the common law or the Federal or local statutes. ; .
The Board has refused in a number of cases to impose a transferee liability where property has been transferred for a limited purpose, such as representing another stockholder at meetings of stockholders and directors of the taxpayer corporation and receiving assets on dissolution, *734 ; ; or voting stock where naked legal title was in one party but the equitable owner had the right and did direct how stock should be voted, *1291 ; or taking title as trustee but not for own benefit, ; or petitioner acted merely as agent in liquidation of taxpayer, ; or where valuable consideration was given, ; or where property is transferred in name only and the transferee acquires no property interest therein, .
Furthermore, the Board and the courts have refused to enforce transferee liability where the obligation discharged constituted valid prior liens, ; In the latter case the court stated, p. 401: "The following prerequisites must be present before a transferee liability becomes fixed. The transfer of assets must be made after the liability accrues and the transferor must have been liable for the debt and the transferee must have obtained the property under such circumstances as would make him liable either in*1292 law or equity."
Here the petitioner received title to Rosser's interest in name only, and this interest was converted by the sale into a purchase money note secured by mortgages. Although the latter instruments were executed in petitioner's name, the evidence is positive that she derived no benefit whatsoever, either from the original assignment, or from the sale. Neither has she derived any benefit from payments on the secured note, as the mortgagor testified that all payments on the note were made directly to George F. Vanderveer. The evidence shows that all transactions, the original assignment, the sale, and the subsequent assignments, have been for the sole benefit of Albert E. Rosser. Petitioner has been merely a conduit and has never acquired a beneficial ownership of the property involved. At the hearing petitioner specifically disclaimed any interest, legal or equitable, at any time in the property or the proceed from the sale. Certainly the things done subsequent to Rosser's assignment to her reveal no actions on her part contradictory to her testimony.
Moreover, we are not convinced that any personal liability could be asserted against the petitioner on the theory*1293 that she held the property as a fiduciary. All of the foregoing events, except the payments on the purchase money note, transpired before the respondent determined and assessed the additional taxes. The Government's lien for taxes "arises only if there has been an assessment plus notice and demand. It relates back from the time of notice and demand to the time when the assessment list was received by the collector, and it *735 attaches upon such property as the taxpayer has at the time the lien arises, that is at the time of notice and demand, , and, of course, to all the property that the tax debtor subsequently acquiesce." .
Under the facts herein the Federal Government's lien did not attach prior to the time the assessments were made on December 21, 1938. By that time petitioner had already assigned whatever interest she had in the note and mortgages to George F. Vanderveer. It does not appear from the respondent's evidence that any assignment was made to or by petitioner with knowledge of any claim by the Federal Government for additional taxes. *1294 In the absence of such knowledge it can not be said that petitioner took property, or assigned property impressed with a trust for the benefit of creditors. No interest in the property remained in petitioner after the assignment to Vanderveer, who may or may not have taken it with knowledge of the Government's claims. No reason appears why this petitioner should be held personally liable for the taxpayer's debts under the circumstances herein, or under the provisions of sections 3466 or 3467, Revised Statutes, ; . Cf. ; . In view of the foregoing it is our opinion that petitioner is not liable as a transferee within the meaning of section 311 of the Revenue Acts of 1934 and 1936.
Decision will be entered for the petitioner.