ROY CRACCHIOLO V DEPARTMENT OF TREASURY
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STATE OF MICHIGAN
COURT OF APPEALS
ROY CRACCHIOLO,
UNPUBLISHED
August 6, 1999
Petitioner-Appellant,
v
No. 208042
Michigan Tax Tribunal,
LC No. 215668
DEPARTMENT OF TREASURY,
Respondent-Appellee.
Before: Markey, P.J., and McDonald and Fitzgerald, JJ.
PER CURIAM.
Petitioner appeals by right from a judgment assessing him, inclusive of penalties, $97,798.90 for
sales, use, and withholding taxes accrued by his nephew’s grocery business, East Detroit Foods, Inc.
We reverse.
Petitioner argues that the Tax Tribunal erred in determining that respondent met its burden of
proof to show that petitioner was a corporate officer of East Detroit Foods, Inc., and had control over,
supervision of, or responsibility for the preparation or payment of the corporation’s taxes, so as to
render petitioner liable for the corporation’s unpaid taxes. See MCL 205.27a(5); MSA 7.657(27a)(5).
This Court reviews the decision of the Tax Tribunal “to determine whether it is authorized by law and
whether it is supported by competent, material, and substantial evidence on the whole record.”
Peterson v Treasury Dep’t, 145 Mich App 445, 449; 377 NW2d 887 (1985), citing Const 1963, art
6, § 28; MCI Telecommunications Corp v Dep’t’ of Treasury, 136 Mich App 28, 30; 355 NW2d
627 (1984).
As an initial matter, contrary to respondent’s arguments, the burden of proof lay with
respondent. See Peterson, supra, 145 Mich App 450 (“In order to hold a person personally liable for
a corporation’s tax liability under this statute, the Department of Treasury must first show . . .” that the
party is a corporate officer with the requisite control over tax payments or returns).
To establish that petitioner was liable for the taxes of East Detroit Foods, respondent was
required to show that petitioner was an officer of East Detroit Foods, and either (1) that he had control
over the making of corporation’s tax returns or payments of taxes, or (2) that he supervised the making
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of the tax returns or payments of taxes, or (3) that he was charged with responsibility for making the
corporation’s returns or payments. MCL 205.27a; MSA 7.657(27a).
With regard to petitioner’s status as a corporate officer, respondent submitted the May 24,
1988 articles of incorporation; a May 24, 1988 certificate of assumed name; a 1988 application for
sales, use, and withholding (SUW) tax registration; a May 5, 1991 power of attorney authorization; and
an undated June 1988 SUW tax return. All these documents bore the petitioner’s purported signature.
Additionally, the certificate of assumed name bore the signature above the typed word “Chairman,” the
1988 SUW tax application included the typed word “president” next to the signature, the 1991 power
of attorney was signed under the statement “signed by a corporate officer . . .” and the June 1988 tax
return bore a hand-printed “Pres.” under the signature. Although petitioner testified that he never signed
any of the above documents, the tribunal found that the documents contained petitioner’s original
signature. The tribunal also found that, “Petitioner’s signature is again found . . . on the SUW Tax
Return for the periods of May 1990 to September 1990 and November 1990 to February 1991,
where Petitioner hand-wrote ‘Pres.’ under his signature.”
To the extent that the tribunal found petitioner’s original signature present on the 1990 to 1991
tax returns, the finding is not supported by competent, material, or substantial evidence. Petitioner
testified that there existed a rubber stamp bearing a likeness of his signature, the creation or use of which
he had never authorized; this rubber stamp was admitted into evidence at the Tax Tribunal hearing.
Petitioner’s nephew averred that he used the stamp, without petitioner’s knowledge, on corporate
documents and tax returns. Further, on their face, the 1990 to 1991 tax returns bear obviously stamped
signatures. Indeed, respondent never argued that the 1990 to 1991 tax returns bore anything other than
a stamped signature.
With regard to the remaining documents relied on by the Tax Tribunal, petitioner testified that he
signed several documents at a 1988 meeting without knowledge of their contents. Because several of
the above documents are closely related in time to the 1988 meeting, it may be inferred that they are
documents that petitioner signed without knowledge of their content. The tribunal’s conclusion that
these documents bore petitioner’s original signature is therefore supported by the evidence.
Nevertheless, while these documents may have borne petitioner’s original signature, a genuine
signature procured by fraud is a forgery and the subsequent holder of the forged document has no rights
against the party whose name was forged. Horvath v National Mortgage Co, 238 Mich 354,358
360; 213 NW2d 202 (1927). Petitioner testified that he had no idea what he was signing at the 1988
meeting and that he had specifically expressed to his nephew that he did not wish to be involved with the
corporation in any way. Other than the documents bearing his signature, petitioner in no way
participated in any aspect of operating the corporation, and petitioner’s hearing testimony evidences his
difficulty with the English language. Respondent presented no evidence, other than the signed
documents themselves, to counter the proofs that these signatures were fraudulently induced. So, while
the signatures on the documents may genuinely have been petitioner’s, because these signatures were
obtained by fraud, they are deemed forgeries and were ineffective to bind petitioner as a corporate
officer of East Detroit Foods. See Horvath, supra at 355. The tribunal’s finding that petitioner was a
corporate officer was therefore not supported by competent, material, and substantial evidence.
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A similar analysis applies to the tribunal’s finding on the requisite control element. Peterson,
supra, 145 Mich App 450. The tribunal found that petitioner possessed the requisite control over the
corporation’s taxes based on the 1988 articles of incorporation, the 1988 certificate of assumed name,
the 1988 SUW tax return application, the 1988 tax return, and the 1991 power of attorney
authorization. Again, however, while petitioner apparently signed these documents, there was no
evidence contradicting petitioner’s testimony that he had no idea that he was signing documents that
represented him either as a corporate officer of East Detroit Foods or as a party with control over the
corporation’s taxes.
Moreover, even if this Court considers petitioner’s signature on the documents as prima facie
evidence that petitioner possessed the requisite control over the corporation’s taxes, petitioner, his
nephew, and the corporation’s accountant all testified that petitioner had no dealings whatsoever with
the corporation. The accountant further testified that, on preparing the corporation’s tax documents, he
only sent them to the nephew for signature. This evidence effectively rebutted respondent’s prima facie
evidence that petitioner possessed the necessary control of the corporation’s taxes.
Lastly, although the tribunal stated that it only considered the 1990 to 1991 tax returns in
concluding that petitioner was a corporate officer, these documents would also fail to support the finding
that petitioner controlled the corporation’s taxes. The uncontroverted evidence was that petitioner did
not authorize the stamped signatures on these documents. Consequently, the signatures on these tax
returns were also forgeries, so they cannot serve to establish petitioner’s responsibility for the
corporation’s tax returns or payments.
We reverse.
/s/ Jane E. Markey
/s/ E. Thomas Fitzgerald
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