[00:00:00] Speaker 01:
States.

[00:00:01] Speaker 01:
Council for Appellant, please approach and proceed.

[00:00:03] Speaker 01:
Thank you, Your Honors, for the opportunity.

[00:00:09] Speaker 01:
I'd like to reserve five minutes of my time at the end for rebuttal.

[00:00:13] Speaker 01:
Council, please be reminded that the time shown on the clock is your total time remaining.

[00:00:19] Speaker 01:
Where do I see the clock?

[00:00:20] Speaker 01:
Right there.

[00:00:20] Speaker 01:
It's right in front of you.

[00:00:22] Speaker 01:
All right.

[00:00:23] Speaker 01:
And I'd like to introduce to you the Board of Elders

[00:00:26] Speaker 01:
And the members of the society, if they would stand up, please.

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And they have come here from Kansas, from Hawaii, from other parts of the country.

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They're very interested in this case, because this is their society.

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Bishop Elizabeth Gardner and her husband Rick are here also.

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But this case is the society as appellant.

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All right.

[00:00:49] Speaker 01:
Thank you, counsel.

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How did this case start?

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The IRS assigned

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a revenue officer, Jeanette Vega, Tucson, Arizona, 180 miles from the property in question here, to collect.

[00:01:05] Speaker 01:
She had an open docket for collection of Gardner's old tax liabilities.

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She never went to the property, knocked on the door, or entered the premises.

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She was untrained in church-related

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information, a non-profit organization.

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She's just a collector.

[00:01:31] Speaker 01:
What she saw, and she had never heard of a corporation sold, albeit most of us have never heard of a corporation sold, but it's been around since very old England, 1400, when churches could not own property.

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They created an archbishop to own the property so that, and 16 states have codified this.

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The common law carries it forward.

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It is.

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Is corporate soul then a religious term that's only applied in Arizona?

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In Arizona, you don't have to be a church in order to be a corporation soul.

[00:02:02] Speaker 01:
It's one of the few states that does that.

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This is a church organization.

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Most of the states are church organizations.

[00:02:08] Speaker 03:
One other technical question I have.

[00:02:10] Speaker 03:
Can you describe what the difference is between a corporate soul and a nominee?

[00:02:15] Speaker 01:
Yeah, and we're going to get to the toe factors.

[00:02:16] Speaker 01:
And we win every one of them when it's in the factors in light of

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the non-moving party, if you take our facts, the church, the predecessor to the corporation's sole, the Messiah.

[00:02:34] Speaker 03:
My issue is that it seems like a corporate sole looks like very much like what a nominee is, right?

[00:02:40] Speaker 01:
It could, and the controlling case, and thank you for the question, the County of San Luis Obispo

[00:02:48] Speaker 01:
hit this case on the head, very similar circumstances, and I cite this in the brief and I want to bring your attention to it, because the case there said is whether the assets of a corporation's sole

[00:03:01] Speaker 01:
are the personal assets of its titular head, in our case Elizabeth Gardner, and thus subject to execution for his or her debts.

[00:03:10] Speaker 01:
The answer on the basis of legal authorities defining the corporation's soul and its attributes must be, as the trial court concluded, an unequivocal no.

[00:03:20] Speaker 01:
That's the county of San Luis Obispo versus Amherst.

[00:03:24] Speaker 01:
Okay, huge case in our favor, and I beseech

[00:03:30] Speaker 01:
all of you to pay rapt attention to that because a corporation sole is not the same as an individual pastor or minister who may have a debt.

[00:03:39] Speaker 01:
And that's the case of San Luis Obispo.

[00:03:42] Speaker 01:
Thank you for the question.

[00:03:45] Speaker 00:
The... Well, Counsel, you know, we're here on summary judgment, correct?

[00:03:51] Speaker 00:
Well, here on summary judgment.

[00:03:53] Speaker 00:
And so one of the issues is whether any tribal issues of fact as to the nominee status.

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And, you know, and we've got the property and then we have, you know, the bank account as well.

[00:04:04] Speaker 01:
The bank account is going to be a no-brainer.

[00:04:07] Speaker 01:
They're wrong.

[00:04:08] Speaker 01:
We're right.

[00:04:08] Speaker 00:
And I'll get to the... Let me get to my question first.

[00:04:11] Speaker 01:
Certainly.

[00:04:12] Speaker 00:
At one point in the title chain, it was, the property was owned, Apache Knowles, I believe, it was owned in the name of

[00:04:21] Speaker 00:
Elizabeth and her husband Frederick, and not as corporate sole, but individually.

[00:04:26] Speaker 00:
Does that, does the fact that at one point in time in its ownership history that occurred, does that defeat your argument?

[00:04:32] Speaker 01:
I want to address that.

[00:04:33] Speaker 01:
Yeah, I want to address that emphatically, because what happened was 10 years after the property was built, it has always been titled in the name of a church, and then the roof started leaking.

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They needed a roof repair.

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They couldn't borrow money in the name of the society.

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And what they found was banks lend to individuals.

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And just like in my practice, I do estate planning.

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I do revocable living trust for people.

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But when they have to refinance, the bank says, put it in the individual's name.

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You can put it back in the trust name afterwards.

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Same thing happened here.

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They took the property out of

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the church name, Messiah's remnant, put it in the gardener's name.

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There was no federal tax lien at the time, at all.

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So it went out to the gardeners, got the loan, went back into the church name.

[00:05:24] Speaker 01:
That's historic.

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And just like my estate planning clients that take it out of the revocable trust, put it back in, it's to accommodate banking situations.

[00:05:35] Speaker 01:
It had nothing to do with anything other than how do you get a church that's not recognized, doesn't have a credit score, can't get money.

[00:05:45] Speaker 01:
It's very important.

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for it to be able to... So is there a distinction in your mind between a corporate soul and a nominee?

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This is following up on Judge Boumete's question.

[00:05:55] Speaker 01:
Absolutely, because a nominee implies that the gardeners, in this case, had something to give to the church.

[00:06:06] Speaker 01:
This property was acquired in the church name, Messiah's Remnant,

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with church funds that existed years ago.

[00:06:15] Speaker 01:
It stayed in that name until the refinancing of the roof in about 2013 or 16, which I don't remember.

[00:06:24] Speaker 01:
But anyway, then it went back in, and in 2019 it was titled in the Society of Apostolic Ministries, or Christian Church Ministries.

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And so it's very different because if we look at the toll factors and we realize that... So, Council, can you explain the other two transfers that are not to the gardeners?

[00:06:45] Speaker 03:
Why were those legitimate transfers?

[00:06:48] Speaker 01:
Certainly.

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Church has funds, donations.

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Those funds don't go to Mr. and Mrs. Gardner.

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They go to the church.

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And as such, they're there for ecclesiastical, ministerial, pastoral reasons.

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Okay?

[00:07:04] Speaker 01:
And so the fact that a revenue officer said, looks like Elizabeth Gardner's name's on here as the titular head of this corporation, so I'm going to blow right past that.

[00:07:14] Speaker 01:
That's what a revenue officer does, pressures people.

[00:07:17] Speaker 01:
Okay?

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That is what happens.

[00:07:20] Speaker 03:
So I believe it was bought by Bethel Amherst Ministries first, correct?

[00:07:24] Speaker 03:
And then it was transferred to Church Restoration Ministries.

[00:07:28] Speaker 01:
Those are just name changes of the same organization.

[00:07:32] Speaker 01:
And then,

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So essentially that transfer had no effect whatsoever?

[00:07:37] Speaker 01:
Right, right.

[00:07:37] Speaker 01:
It's just for one church.

[00:07:39] Speaker 01:
It's just a name change.

[00:07:40] Speaker 01:
But then when it went from that church over to the society, and the society is made up of over a hundred different members with a board of elders controlling, but by statute, it has a titular head, Elizabeth Gardner.

[00:07:58] Speaker 00:
Did the society pay any money for that transfer of the property to it?

[00:08:03] Speaker 01:
It did not have to, because it's again from one exempt organization.

[00:08:07] Speaker 00:
That's the first toe factor.

[00:08:12] Speaker 01:
So why don't you run through them?

[00:08:13] Speaker 01:
But it has to be in the gardeners first.

[00:08:15] Speaker 00:
Can you let me finish my question before you answer?

[00:08:18] Speaker 00:
Why don't you go through the toe factors?

[00:08:19] Speaker 00:
The first one is about no consideration, and the government presents undisputed evidence

[00:08:24] Speaker 00:
that there was no consideration paid for for the transfer of the property to the society.

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So tell me why you think the tow factor is siding in your favor.

[00:08:34] Speaker 01:
You have to take the facts in light of the facts most favorable to the non-moving party.

[00:08:41] Speaker 01:
That's the society.

[00:08:43] Speaker 01:
The society is repellent.

[00:08:45] Speaker 01:
The society received it from another church organization.

[00:08:48] Speaker 01:
Okay?

[00:08:49] Speaker 01:
When one church decides to roll into another church or give to another church, there is no reason for a transfer.

[00:08:57] Speaker 01:
As a matter of fact, when we look at non-tax-exempt organizations, they're obligated at the end of their days to leave their assets to another non-tax-exempt organization.

[00:09:10] Speaker 01:
So the transfer

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from the first church to the society need not have any consideration.

[00:09:25] Speaker 01:
pay wrapped attention to the county of San Luis Obispo, it guides us there.

[00:09:30] Speaker 01:
It tells us you cannot take the debts of the minister, the pastor, and throw them up against the wall.

[00:09:37] Speaker 01:
I've got 30 seconds more before my reserve time, but I'm going to tell you that nothing in the arguments that the district court did was in light favorable to the nonmoving party.

[00:09:51] Speaker 01:
If we look at the facts in favor of the nonmoving party,

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that gardeners, other than this roof repair, didn't ever have title.

[00:10:00] Speaker 01:
And it was only an accommodation because of banking.

[00:10:02] Speaker 01:
And in my practice, that's the reality.

[00:10:05] Speaker 01:
Okay?

[00:10:06] Speaker 00:
And the funds... Can I ask you about the society paying for the gardener's expenses?

[00:10:12] Speaker 00:
I think it's utilities and... Valued poverty.

[00:10:15] Speaker 00:
It seems like a lot.

[00:10:16] Speaker 00:
So, you know, I guess if you agree that there's a distinction between a nominee status and a corporate sole

[00:10:24] Speaker 00:
I guess the government's position is, well, they seem almost one and the same.

[00:10:29] Speaker 00:
You know, the society is paying for all the expenses of the gardeners.

[00:10:33] Speaker 00:
It owns title and the deed, but there's been no consideration paid for it.

[00:10:37] Speaker 00:
It's really that the ownership is actually the gardeners and not the societies.

[00:10:44] Speaker 01:
Nothing could be further from the truth.

[00:10:45] Speaker 01:
There's a $50,000 contribution from a pastor in Oregon, and they argue, oh, he gave that for services rendered because the gardeners were really nice to him.

[00:10:56] Speaker 01:
Well, ministers know one thing.

[00:10:58] Speaker 01:
When they make a donation to somebody else, they give it in the church name.

[00:11:01] Speaker 01:
It never came to the gardeners.

[00:11:02] Speaker 01:
It wasn't the gardener's money or property.

[00:11:04] Speaker 01:
That money should be sacrosanct.

[00:11:06] Speaker 01:
in the church, and I reserve the rest of the time.

[00:11:09] Speaker 01:
Thank you, Counsel.

[00:11:11] Speaker 01:
And I've got four minutes and four seconds.

[00:11:13] Speaker 01:
Exactly.

[00:11:33] Speaker 02:
Good morning, Your Honors.

[00:11:33] Speaker 02:
Douglas Renney for the United States.

[00:11:36] Speaker 02:
Your Honor, the question in this case is who this money and property really belongs to.

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Now, the society may be holding it, but if in reality it belongs to the gardeners, then their creditors, including the U.S.

[00:11:48] Speaker 02:
government, can get to it.

[00:11:51] Speaker 02:
Summary judgment was proper here on the society's claims for wrongful levy and dequired title because the undisputed facts show that the gardeners are exercising active or substantial control over this property.

[00:12:03] Speaker 02:
Some of those key facts.

[00:12:04] Speaker 02:
We just heard about Elizabeth Gardner supposedly being the titular head of the society.

[00:12:10] Speaker 03:
Council, before you get there, can you describe the government's position on what the difference is between corporate souls and nominees?

[00:12:17] Speaker 03:
Are they the same thing in government's view?

[00:12:19] Speaker 02:
No, Your Honor.

[00:12:20] Speaker 02:
A corporation soul is like any other form of entity.

[00:12:26] Speaker 02:
It's fine in theory.

[00:12:28] Speaker 02:
It can be abused in the nominee manner just like any other form can be.

[00:12:34] Speaker 02:
And in this case, we would submit that the facts show that it is in fact being used as the gardener's own, to hold the gardener's own money and property.

[00:12:46] Speaker 02:
And how do we know that?

[00:12:47] Speaker 02:
Look at what Elizabeth Gardner testified.

[00:12:50] Speaker 00:
And before you get into that, just for a moment, are there non-religious uses of the corporation's sole function as well?

[00:12:58] Speaker 02:
I'm not sure about that, Your Honor, and it may vary by state.

[00:13:01] Speaker 02:
But any person or entity could theoretically be a nominee.

[00:13:08] Speaker 02:
You know, my brother could be my nominee.

[00:13:10] Speaker 02:
If I'm in debt, I could give my money and property to him.

[00:13:13] Speaker 02:
It doesn't mean he's an illegitimate person, but it would necessarily mean that that specific money or property he's holding doesn't belong to him.

[00:13:23] Speaker 02:
I'm really the beneficial owner.

[00:13:25] Speaker 02:
So that could be the case with a closely held corporation.

[00:13:29] Speaker 02:
It could be the case with a partnership, a trust, just about any entity you can imagine.

[00:13:36] Speaker 00:
OK, you were going to talk about the facts.

[00:13:38] Speaker 02:
Sure.

[00:13:39] Speaker 02:
Elizabeth Gardner was asked, do you sit at the top of the organization?

[00:13:43] Speaker 02:
She said, yes.

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I am the head.

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I am the bishop.

[00:13:47] Speaker 02:
She mentioned that there's a board of elders, the counselor with her, but she has authority over everything.

[00:13:54] Speaker 03:
But that, I don't understand, how does that count against them?

[00:13:56] Speaker 03:
I mean, that happens in any religion.

[00:13:58] Speaker 02:
Not necessarily, Your Honor.

[00:14:00] Speaker 02:
She said the board of elders here

[00:14:03] Speaker 02:
counsel with her, but they do not advise her on financial matters, she specifically said.

[00:14:09] Speaker 03:
That happens in many religions.

[00:14:14] Speaker 02:
It may be the case, but

[00:14:16] Speaker 02:
Look, this is one of several factors that show they're really exercising active and substantial control over the property.

[00:14:23] Speaker 03:
I mean, I guess to me, bottom line is the government's argument is that it's not a legitimate religion.

[00:14:28] Speaker 03:
And then therefore all these facts that could be either that he's a nominee or that it's a religion should be construed in light of the fact that she's a nominee.

[00:14:38] Speaker 02:
No, it could still be a legitimate religion.

[00:14:41] Speaker 02:
That's not what this case is about.

[00:14:42] Speaker 02:
This case is just about who really owns the property.

[00:14:45] Speaker 03:
The fact that she's the head of her church and makes financial decisions, that seems unremarkable with many other religions.

[00:14:53] Speaker 03:
It's one of the factors.

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She's making all the decisions here.

[00:14:57] Speaker 02:
It goes to factor three, the tow factors of the fourth investment case.

[00:15:03] Speaker 02:
Other issues there.

[00:15:06] Speaker 02:
living in the property continuously for 25 years across different entities.

[00:15:10] Speaker 02:
When the church owns it, they own it personally.

[00:15:12] Speaker 03:
Again, that seems unremarkable for other religions.

[00:15:16] Speaker 03:
I mean, a pastor could live in a church-owned house while he's a pastor.

[00:15:21] Speaker 02:
That could happen, sure, but again, look at the situation here.

[00:15:26] Speaker 02:
Here we've got individuals who have existing debt who are showing that they're using this property

[00:15:36] Speaker 02:
for themselves, doing whatever they want with it.

[00:15:39] Speaker 03:
I guess there's a problem.

[00:15:41] Speaker 03:
In one light, you could look at it in the governor's view, and it makes them a nominee.

[00:15:47] Speaker 03:
In another respect, it's just a pastor living in the house of the church.

[00:15:53] Speaker 03:
So under the summary judgment standard, don't we have to credit that view?

[00:15:57] Speaker 03:
No, Your Honor.

[00:15:59] Speaker 03:
Look at the facts of the case.

[00:16:01] Speaker 03:
What's the fact that's going to prove that it's not a religious entity under a normal religious entity that provides a house to their pastor?

[00:16:10] Speaker 02:
It can still be a religious entity.

[00:16:11] Speaker 02:
In this discussion about whether they're allowed to provide parsonage, this is more relevant to if they owed taxes on that imputed income to them in the current taxable year.

[00:16:24] Speaker 02:
The question here

[00:16:25] Speaker 02:
is, is this property really theirs?

[00:16:29] Speaker 02:
Is the money, is the real property really theirs?

[00:16:33] Speaker 02:
How did they acquire this property?

[00:16:35] Speaker 02:
It was Bethlehem Ministries, which has subsequently been held to be their alter ego by the District of Arizona and this court, which was paid for with money that this court has already said were really money paid to them.

[00:16:50] Speaker 03:
Do we take those facts in this summary judgment posture?

[00:16:54] Speaker 03:
Of course.

[00:16:56] Speaker 03:
Is that right?

[00:16:56] Speaker 03:
Okay.

[00:16:58] Speaker 03:
Yeah, I mean, that was an appeal from a tax court judgment, right?

[00:17:02] Speaker 03:
The deficiency case was, yeah.

[00:17:07] Speaker 03:
And that standard is substantial evidence, so that's what the Ninth Circuit was upholding.

[00:17:13] Speaker 02:
I don't believe it's a substantial evidence standard, Your Honor.

[00:17:18] Speaker 02:
Deficiency case is... Okay.

[00:17:20] Speaker 03:
But I guess here it's in the light most favorable to the nonmoving party.

[00:17:25] Speaker 02:
So that's the summary judgment standard.

[00:17:27] Speaker 02:
Yes, your honor.

[00:17:30] Speaker 02:
Yeah.

[00:17:30] Speaker 02:
Some of the other factors.

[00:17:31] Speaker 02:
There's no evidence that anyone else has interfered with their use of the property that anyone else has benefited from the property.

[00:17:40] Speaker 02:
The money is going to pay all of their expenses.

[00:17:42] Speaker 03:
I thought there was some argument that used that property for like the zoom masses or congregation.

[00:17:49] Speaker 02:
Yeah, for yes for some.

[00:17:51] Speaker 02:
So that was on that property.

[00:17:53] Speaker 02:
I believe so, Your Honor.

[00:17:54] Speaker 02:
That's what they said.

[00:17:55] Speaker 03:
So that's some evidence of sure that they use it outside of them.

[00:17:58] Speaker 03:
That's personal use.

[00:17:59] Speaker 03:
A small benefit, but there's no money.

[00:18:02] Speaker 03:
Again, but then somebody judges it standard.

[00:18:04] Speaker 03:
Isn't that enough to like show that they're using it for the church?

[00:18:07] Speaker 02:
I don't think so, Your Honor, because again, all the money is going to them.

[00:18:11] Speaker 02:
They're the ones who live at the property or maintain it exactly as they choose.

[00:18:17] Speaker 02:
All of the expenses are being paid as they decide.

[00:18:22] Speaker 02:
So again, we would submit that the facts here strongly support summary judgment.

[00:18:27] Speaker 02:
And this is, you know, these are the facts that they testify to in their deposition.

[00:18:32] Speaker 02:
This is what they said in their affidavits on summary judgment.

[00:18:36] Speaker 02:
These aren't really contested facts.

[00:18:39] Speaker 03:
I agree, but it just seems like I don't see what the distinction between these facts and the facts of a small church that allows their pastor to live in the house while that pastor is the pastor.

[00:18:51] Speaker 02:
Maybe that pastor doesn't have to pay taxes on the whatever benefit he's getting from living in that house.

[00:18:58] Speaker 02:
And maybe they don't either, but that's not really relevant to whether the property really belongs to them and something their creditors can get to.

[00:19:06] Speaker 03:
So, like, if the Catholic pastor, you know, in a small church, lives in the house owned by the Catholic church, and he lives there the entire time he's the pastor, the IRS can then claim that that house is the pastor's and not the church's?

[00:19:21] Speaker 02:
Not just because of that, but it, I mean, it might be relevant as one fact going to that, but it, in and of itself, no, that's not going to be enough to make that

[00:19:33] Speaker 02:
What would make that?

[00:19:35] Speaker 02:
What other fact do you need then?

[00:19:37] Speaker 02:
You need the fact that they basically purchased the property with money that they earned from non-ministerial services, that they've been living there continuously, uninterrupted for 25 years, that they're using all the church's money to pay their own expenses as they decide in whatever capacity they want, that their

[00:20:00] Speaker 00:
One of the points in the record, I think, was that there was a payment made to a brother.

[00:20:06] Speaker 00:
Is that from the account?

[00:20:08] Speaker 00:
Did I get that correctly?

[00:20:10] Speaker 02:
There was a payment made, I believe it was from the church's account, although originally the money that they claim it came from went into the society's account.

[00:20:21] Speaker 02:
So I believe what Elizabeth Gardner has said is that the

[00:20:27] Speaker 02:
She inherited money from Frederick Gardner's family, about $15,000.

[00:20:34] Speaker 02:
Some time passed, and she decided to give, she put that money into the Society's account.

[00:20:41] Speaker 02:
Some time passed, and then she decided to give some $7,000 or so to Frederick Gardner's brother.

[00:20:49] Speaker 00:
And was that for church purposes or personal purposes?

[00:20:53] Speaker 02:
Personal purposes, personal purposes.

[00:20:55] Speaker 02:
And you can see that another factor here being the frequent conflation and use of the society's money for their property, depositing checks to the society into their personal accounts and vice versa, which they... So let me ask you this just to tag into Judge Bumate's questions.

[00:21:15] Speaker 00:
If a church is using this corporate form,

[00:21:20] Speaker 00:
and is not turning into a nominee status, does the corporate soul have to segregate their own personal expenses and other things from things related to the church activities?

[00:21:33] Speaker 00:
What would be, in the government's view, the way that this would play out without a problem about nominee status?

[00:21:41] Speaker 02:
That would certainly help, yes.

[00:21:43] Speaker 00:
Like no commingling?

[00:21:45] Speaker 02:
Correct, right.

[00:21:46] Speaker 02:
And if there were true procedures in terms of approving expenses and not simply Elizabeth Garner deciding... True procedures?

[00:21:55] Speaker 03:
What do you mean by that?

[00:21:58] Speaker 02:
Basically, she says she's making all the financial decisions.

[00:22:02] Speaker 03:
Well, doesn't that get into the church autonomy doctrine?

[00:22:04] Speaker 03:
You're then investigating how churches make decisions, right, within the church.

[00:22:10] Speaker 02:
Again, these are facts that go to the nominee's status and that is relevant to any entity.

[00:22:16] Speaker 03:
It seems like the IRS is then saying that this church procedure for deciding how money is spent is not good enough.

[00:22:24] Speaker 02:
Your Honor, it's just one of many facts that go into this.

[00:22:27] Speaker 03:
But you are using that fact, though, right?

[00:22:29] Speaker 03:
How the church decides how to spend its money doesn't comply with how the IRS believes religion should spend their money.

[00:22:37] Speaker 02:
No, that's not how we would say it, Your Honor.

[00:22:40] Speaker 02:
We would say that they're deciding to spend the money on themselves in whatever manner they choose.

[00:22:46] Speaker 03:
No, but you were just saying that because the church allows Elizabeth Garner to decide how to spend the money herself, that that's improper.

[00:22:54] Speaker 02:
I'm not saying it's inherently improper.

[00:22:56] Speaker 02:
None of these one single facts is inherently improper.

[00:22:59] Speaker 03:
The problem, though, is if you take every one of these single facts, there's a light most favorable to them, which shows that they're your true religion, or there's a light most favorable to the IRS in saying that this is a fraud.

[00:23:10] Speaker 02:
Go ahead.

[00:23:11] Speaker 02:
Your honor, it's not a light most favorable question because these are undisputed facts.

[00:23:16] Speaker 03:
Right.

[00:23:17] Speaker 03:
I mean, that's a problematic to me that the fact that how the church spends its money is fraudulent to the IRS.

[00:23:23] Speaker 03:
That really gets into the church autonomy doctrine and whether or not we could be, the governments can be deciding what's a proper way for church procedures to make decisions.

[00:23:32] Speaker 02:
It's not an allegation of fraud, your honor.

[00:23:34] Speaker 02:
This is simply a question of

[00:23:37] Speaker 02:
whether they really own the property, and this is evidence of that fact.

[00:23:44] Speaker 03:
But the only reason why it's evidence is because you're saying churches would normally have a board of elders group together and make a decision together, and the fact that they're doing it singularly means that it's not a legitimate church in some respect.

[00:23:57] Speaker 02:
Again, not necessarily.

[00:23:58] Speaker 02:
Nobody's saying it is necessarily illegitimate because of one specific procedure.

[00:24:06] Speaker 02:
This is just evidence of the fact that it's not really the society's money.

[00:24:12] Speaker 00:
Before your time runs out, can you address Council's reliance on the City of San Luis Obispo case?

[00:24:19] Speaker 00:
Can you speak about that case and why you don't think it helps their cause?

[00:24:27] Speaker 02:
Right.

[00:24:28] Speaker 02:
Again, inherently, it's correct.

[00:24:32] Speaker 02:
The church's money and the

[00:24:34] Speaker 02:
individual minister's money are going to be separate things.

[00:24:38] Speaker 02:
A church is not necessarily going to be on the hook for the minister's debts.

[00:24:45] Speaker 02:
The question we get here though is, is that money really the minister's?

[00:24:51] Speaker 02:
Is there evidence that this is really the minister's money?

[00:24:54] Speaker 02:
Is it going to the minister's benefit?

[00:24:57] Speaker 02:
And if that minister has pre-existing debts, then the creditors can reach it.

[00:25:02] Speaker 02:
Here

[00:25:03] Speaker 02:
That's the case in that San Luis Obispo case.

[00:25:08] Speaker 02:
My understanding is that there wasn't a nominee analysis.

[00:25:14] Speaker 02:
They were not proceeding under that theory, and we didn't get into all of these facts.

[00:25:18] Speaker 02:
We didn't have the evidence we have here.

[00:25:22] Speaker 03:
Can I ask one last question on the account?

[00:25:25] Speaker 03:
So that was a donation from Red Old Nelson, right?

[00:25:31] Speaker 03:
Is that correct?

[00:25:33] Speaker 03:
Some of it was.

[00:25:34] Speaker 03:
Presumably at some point.

[00:25:36] Speaker 03:
And are you saying that that was not a legitimate donation to the church?

[00:25:41] Speaker 02:
No, we're not saying it wasn't necessarily a legitimate donation.

[00:25:45] Speaker 02:
We're just saying it was, according to them, according to what they say, it was given to them

[00:25:52] Speaker 02:
to use for, to help someone in need or for themselves so they could use it however they wanted.

[00:25:59] Speaker 02:
It went into the society's account presumably and we know at some point they did use it for some purpose.

[00:26:06] Speaker 02:
We don't know to some degree because their account went down to about $38,000 as of I believe 2016.

[00:26:13] Speaker 03:
Well if we don't know then how under a summary judgment standard can we say that it's definitely theirs?

[00:26:19] Speaker 03:
Sorry Your Honor.

[00:26:20] Speaker 03:
If you don't know how it was spent, how can you say under summary judgment standards that it was definitely that they use it for themselves personally and that it could be that it's a nominee for them?

[00:26:29] Speaker 02:
Well, we know they used it.

[00:26:31] Speaker 02:
Yeah, but we don't know how, right?

[00:26:33] Speaker 02:
Fair enough.

[00:26:33] Speaker 02:
We don't know exactly what it was spent on.

[00:26:35] Speaker 02:
How can that meet the summary judgment standard?

[00:26:39] Speaker 02:
We look at all the facts, Your Honor.

[00:26:41] Speaker 03:
Yeah, that's all the facts for the account.

[00:26:43] Speaker 02:
What else is it the facts in the account?

[00:26:45] Speaker 02:
There is other money going into the account based on their corporation's sole services.

[00:26:49] Speaker 02:
These are non-mysterial services that they're providing tax preparation services.

[00:26:54] Speaker 03:
You've got to admit, though, that the $50,000 donation to the church that we don't know how it was used, and the light most favorable to them, we should say that that account, I mean, that should go to trial, whether or not that they're a nominee for that account.

[00:27:07] Speaker 02:
I don't think so, Your Honor.

[00:27:08] Speaker 02:
That was generally pooled with other money that society was taking in.

[00:27:14] Speaker 02:
that was mixed in with all this other money based on non-ministerial services.

[00:27:18] Speaker 02:
We don't know if it was spent or if it was not spent, and it was given to them to use as they wanted.

[00:27:22] Speaker 02:
We don't know.

[00:27:22] Speaker 03:
How can they say it?

[00:27:24] Speaker 02:
Okay.

[00:27:24] Speaker 02:
Fair enough.

[00:27:24] Speaker 03:
All right.

[00:27:24] Speaker 03:
Thank you, Counsel.

[00:27:25] Speaker 01:
Thank you, Your Honor.

[00:27:25] Speaker 03:
Rebuttal.

[00:27:29] Speaker 01:
Wow.

[00:27:29] Speaker 01:
You guys were on point, and thank you.

[00:27:31] Speaker 02:
We're not guys.

[00:27:32] Speaker 02:
We're not you guys.

[00:27:33] Speaker 02:
We're your Honors.

[00:27:35] Speaker 01:
I'm sorry.

[00:27:36] Speaker 01:
Your Honors, thank you for your kind attention.

[00:27:39] Speaker 01:
And this case screams out for the voices of those that will speak to the toe factors, to speak to the nominee, to speak to the church, and the light most favorable to the church.

[00:27:54] Speaker 01:
And the other arguments that he has made again and again go to a jury.

[00:28:00] Speaker 01:
They're not for a summary judgment.

[00:28:06] Speaker 01:
This case, and he said, or the opponent said three times, these are undisputed facts.

[00:28:14] Speaker 01:
Well, in light, most favorable to the taxpayer, I win the Toe case.

[00:28:20] Speaker 01:
I look at my facts better than the San Luis Obispo case because that minister transferred something from himself

[00:28:27] Speaker 01:
to his corporation.

[00:28:28] Speaker 01:
So we did not ever, in our facts, ever transfer anything to that other than this roof repair.

[00:28:36] Speaker 01:
And that is excusable because the banking required it.

[00:28:41] Speaker 00:
Counsel, can I ask, is there any evidence in the record of anyone else being in control of this bank account, of being able to direct its funds?

[00:28:50] Speaker 01:
The bank account that we're talking about was in the total control of the society.

[00:28:57] Speaker 01:
It was a credit union account.

[00:28:59] Speaker 01:
There were two accounts of savings and a regular account.

[00:29:03] Speaker 00:
No, I know it's in the Society's name.

[00:29:05] Speaker 01:
Elizabeth Gardner and then the Society's secretary, who's here today, Joyce Essman, were both signers on the account.

[00:29:15] Speaker 00:
And so does being a signer on the account allow someone other than the Gartner's to be able to transfer funds and make decisions about it?

[00:29:22] Speaker 00:
Absolutely.

[00:29:22] Speaker 01:
Absolutely.

[00:29:23] Speaker 00:
That's what... And where on the record is that?

[00:29:26] Speaker 01:
If you look at, if you focus on Joyce Essman, she's the administrator, the secretary.

[00:29:33] Speaker 01:
She's seated right over in the far left.

[00:29:35] Speaker 00:
Counsel, no one's testifying at an oral argument.

[00:29:38] Speaker 00:
You have to give me a record site for it.

[00:29:41] Speaker 01:
Yes.

[00:29:42] Speaker 01:
Yes.

[00:29:43] Speaker 01:
If you look up Joy Sessman, we've cited it, and she has authority also.

[00:29:50] Speaker 01:
This case, again, Yavapai County determined that this was a legitimate church, tax-exempt.

[00:29:57] Speaker 01:
They looked at it.

[00:29:57] Speaker 01:
They went inside.

[00:29:58] Speaker 00:
Is there anything in the record to indicate how this $50,000

[00:30:04] Speaker 00:
transfer was dispersed or acted upon?

[00:30:07] Speaker 01:
It's through the affidavits, Your Honor.

[00:30:10] Speaker 01:
We don't have documentary evidence because it was so long ago.

[00:30:15] Speaker 01:
I'd love to have documentary evidence, we don't, but believe me, this Board of Elders, everybody knew about this donation because it was paramount.

[00:30:24] Speaker 01:
It would have been used for one of these members whose house burnt down in Paradise, California and was in dire need.

[00:30:32] Speaker 01:
But that occurred about a year after Ms.

[00:30:36] Speaker 01:
Vega took the money.

[00:30:38] Speaker 01:
But that's the kind of thing that this would have been used for, Your Honor.

[00:30:42] Speaker 01:
And again, the questions from this honorable

[00:30:47] Speaker 01:
Ninth Circuit judges are right on point.

[00:30:52] Speaker 01:
The facts are disputed.

[00:30:54] Speaker 01:
They need to be read in the light favorable to the non-moving party.

[00:30:58] Speaker 01:
We have plenty in the record, and if you go to the affidavits, if you go to the documents, this court totally blew it at the district court level because they did not take the toe factors in light favorable to the non-moving party.

[00:31:12] Speaker 01:
They certainly did blow right past the church accounts

[00:31:17] Speaker 01:
that, again, our clients live on social security.

[00:31:22] Speaker 01:
They had a right to be supported under their bio-poverty.

[00:31:26] Speaker 01:
And so the little bit of money that came out, and again, we're talking tiny bits of money, could be used.

[00:31:34] Speaker 01:
And thank you for your time, and thank you very much.

[00:31:37] Speaker 03:
Thank you, counsel.

[00:31:38] Speaker 03:
Thank you to both counsel.

[00:31:39] Speaker 03:
The case just argued is submitted for decision by the court.