employer's contributions to insurance company for employees constituted a trust despite absence of specific words of trust
How later courts described this case
- employer's contributions to insurance company for employees constituted a trust despite absence of specific words of trust
Written by the judges who cited it.
Distinguished
Distinguished by Tionesta Sand & Gravel, Inc. v. Commissioner, 73 T.C. 758 (1980)
In our view, Time Oil Co. v. Commissioner, supra, and Community Services, Inc. v. United States, supra, are distinguishable from the instant case.
The opinion
LARAMORE, Judge
(dissenting):
I respectfully dissent.
The pertinent Code section and Treasury Regulation sections already have been set out, with appropriate emphasis, in the court’s opinion above. I am of the view that neither the letter, nor the spirit, of the rules contained in these sections approves an arrangement, such as the one now under consideration, which exhibits the following type of language:
* * * [O]n the Plaintiff’s election, it could receive 97.44% of the premium deposit fund. If the Plaintiff made this election, the Insurance Company was under no obligation to question the Plaintiff’s authority to receive the funds, nor the application of the amounts paid to Plaintiff, nor to determine which employee reserve accounts were being withdrawn.
It has been pointed out that plaintiff never exercised this option. This fact, when contrasted with the apposite tax standard, has, or should have, little bearing on the question before us. It has been further pointed out that, had plaintiff exercised its option, the employee-beneficiaries through court action could have enjoined plaintiff’s free use of the funds. Perhaps, they could have. But, it is difficult to believe that an arrangement so lacking in certainty, and so remote in its potential enforcement, is of the kind intended to qualify under the emphasized cautionary wording of section 401(a) (2) and the regulations thereunder.