                        T.C. Memo. 2001-316



                      UNITED STATES TAX COURT



                   FENNEL TRUST, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 10710-00.                   Filed December 20, 2001.


     Sam D. Scholar, for petitioner.

     Mary Ann Waters, for respondent.



                        MEMORANDUM OPINION


     DAWSON, Judge:   This case was assigned to Special Trial

Judge Robert N. Armen, Jr., pursuant to the provisions of section

7443A(b)(5) and Rules 180, 181, and 183.1     The Court agrees with

and adopts the opinion of the Special Trial Judge, which is set

forth below.


     1
        Unless otherwise indicated, all section references are to
the Internal Revenue Code, as amended, and all Rule references
are to the Tax Court Rules of Practice and Procedure.
                               - 2 -



               OPINION OF THE SPECIAL TRIAL JUDGE

     ARMEN, Special Trial Judge:   This matter is before the Court

on respondent’s Motion to Dismiss for Lack of Jurisdiction.

Respondent maintains that the petition was not filed by a person

with authority to represent Fennel Trust (Fennel or petitioner).2

Petitioner opposes respondent’s motion.   As discussed in detail

below, we shall grant respondent’s motion to dismiss.

Procedural Background

     Respondent issued a notice of deficiency to Fennel

determining deficiencies in its Federal income taxes and

additions to tax as follows:

                                    Additions to tax
   Year    Deficiency    Sec. 6651(a)(1)     Sec. 6651(a)(2)
   1995     $10,265          $2,567                ---
   1996       9,486           2,372          To be determined.


The Court subsequently received and filed a timely petition for

redetermination challenging the notice of deficiency.    The

petition was signed “Paul Jablonski, Mng Dir”.

     Respondent filed a Motion to Dismiss for Lack of

Jurisdiction on the ground that the petition was not filed by a

party authorized to represent petitioner in this matter.


     2
        Use of the terms “trust”, “trustee”, “trust instrument”,
and their derivatives is intended only for narrative convenience
to describe the form of the disputed transactions. By our use of
such terms, we do not mean to suggest any conclusion concerning
the actual substance or characterization of the transactions for
tax purposes.
                               - 3 -

Petitioner filed a response to respondent’s motion, asserting

that Paul Jablonski is its duly appointed trustee.

     The Court subsequently issued an Order directing petitioner

to file a supplemental response to respondent’s motion to dismiss

attaching thereto:   (1) A complete copy of the original trust

instrument; (2) a complete copy of all trust records relating to

the appointment, resignation, and/or acceptance of appointment by

trustee(s); and (3) a copy of all Forms 56, Notice of Fiduciary

Relationship, if any, filed with the Commissioner in the name of

the trust.   Thereafter, petitioner filed a supplemental response

to respondent’s motion, attaching several documents, including

the purported Fennel trust instrument and certain records

relating to the appointment of trustees.3

     This matter was called for an initial hearing and, later, an

evidentiary hearing at motions session in Washington, D.C.

Counsel for both parties appeared at the hearings and offered

argument and evidence with respect to respondent’s motion to

dismiss.

     At the evidentiary hearing, the parties lodged a stipulation

of facts with attached exhibits, which was received by the Court

and filed as evidence in respect of the jurisdictional issue

presented by respondent’s motion to dismiss.   At the conclusion

of the hearing, the Court directed the parties to file memorandum


     3
        The record shows that no Form 56 was filed with the
Commissioner for Fennel.
                               - 4 -

briefs in support of their respective positions.   Although

respondent complied with this order, counsel for petitioner filed

with the Court a notice stating that petitioner could not afford

the expense of preparing and filing a brief.

Factual Background

     Paul Jablonski and his brother David Jablonski were

shareholders of D.J. Enterprises, Inc., a company that operated a

residential/commercial security business known as Burtel and

American Home Security.   In 1994, Paul and David Jablonski

purchased a number of “trust packages” from a company known as

Cypress Management in Orem, Utah.

     The record includes a purported trust instrument for a

“business trust organization” identified as S&T Management Trust.

This document, which identifies D.J. Enterprises, Inc., as

“settlor/exchanger” and Cypress Management as “trustee”, is dated

April 19, 1994, and includes a signature page that was signed by

David Jablonski as president of D.J. Enterprises, Inc., and by an

individual identified as Zola Sheehan for Cypress Management.4




     4
        The purported trust instrument also states that its
“creator/drafter” is Zola Sheehan as “Trustee In Independent
Contractor status with Cypress Management”.
                               - 5 -

     The record also includes a purported trust instrument for

Fennel, which is likewise characterized as a “business trust

organization”.   This document, the typewritten cover sheet of

which identifies S&T Management Trust as “settlor/exchanger” and

Paul Jablonski as second trustee, is dated April 28, 1994, and

includes a signature page that was signed by S&T Management Trust

as “settlor/exchanger”, Zola Sheehan for Cypress Management as

“trustee”, and Paul Jablonski as “second trustee”.5   S&T

Management Trust, Zola Sheehan, and Paul Jablonski all

purportedly appeared before a notary public in the “Utah

Republic” and signed the signature page on July 19, 1994.

However, Paul Jablonski admits that he never met Zola Sheehan,

that he did not appear before the notary public in Utah, and that

he executed the signature page of the Fennel trust instrument in

Virginia.6   In fact, the signature page of the Fennel trust

instrument is an exact copy of the signature page of a purported




     5
        The typewritten cover sheet for the purported trust
instrument for Fennel contains a handwritten alteration deleting
Cypress Management as trustee and making Paul Jablonski “First
trustee”. However, in view of the manner in which S&T Management
Trust, Zola Sheehan, and Paul Jablonski signed the signature
page, we disregard these alterations to the cover sheet.
     6
        Paul Jablonski does not know Zola Sheehan’s address or
telephone number or how Zola Sheehan can be contacted; similarly,
he does not know Cypress Management’s address or how Cypress
Management can be contacted.
                               - 6 -

trust document for another trust known as Tarragon Trust.7

     Article Five “Power of Trustees”, section 5.5 of the Fennel

trust instrument states as follows:

          NOTWITHSTANDING any other provision in this Trust
     instrument, no power shall be exercised, nor any action
     taken, by the Trustees except upon the unanimous
     consent of all Trustees having authority as
     supplemented by the minutes and resolutions to exercise
     that power, and shall not be construed to contrivance
     [sic] of any constitutional state or federal law.

     “Schedule B” attached to the Fennel trust instrument lists

the property transferred to the trust as follows:

     Twenty-One (21) Silver Dollars (face value); Pre-1964
     Coinage of Account of the United States of America; One
     (1) Ten Dollar Bill; Love & Kindness[;] HEWLETT PACKARD
     PRINTER.

     “Attachment A” to the Fennel trust instrument is an undated

letter signed by Paul Jablonski and addressed to “The Settlor of

Fennel Trust”, stating: “I am in receipt of your letter dated 28

April 1994, appointing me Trustee of Fennel Trust, WHICH I HEREBY

ACCEPT IMMEDIATELY.”

     “Schedule C” attached to the Fennel trust instrument lists

the trust’s beneficiary as S&T Management Trust, which

“surrendered” its “beneficial” interest in favor of Rosaria

Jablonski.   Rosaria Jablonski is Paul Jablonski’s wife.




     7
        Tarragon Trust is a petitioner in a related docket in
which the Commissioner has also filed a Motion to Dismiss for
Lack of Jurisdiction. See docket No. 10709-00 and our Memorandum
Opinion at T.C. Memo. 2001-315.
                               - 7 -

     During the evidentiary hearing in this case, petitioner

offered to the Court a document purportedly reflecting Cypress

Management’s resignation as trustee for Fennel Trust, as well as

a document purportedly reflecting Cypress Management’s

resignation as trustee for Tarragon Trust.   Considering that

these documents were undated, as well as other discrepancies in

the record, the documents were not admitted into evidence.8

     On April 30, 1994, Fennel and S&T Management purportedly

executed a document entitled “INDEPENDENT COMMON-LAW CONTRACTOR

CONTRACT”, in which S&T Management and Fennel were identified as

contractor and client, respectively.

     Fennel did not file a U.S. Fiduciary Income Tax Return, Form

1041, for 1995 and 1996.9   However, for those years, Fennel

received a Schedule K-1, Beneficiary’s Share of Income,

Deductions, Credits, etc., from BHC Trust, another “business

trust organization” whose purported trust instrument was the work

of Zola Sheehan.   The Schedule K-1 for 1996 reflects a loss in

the amount of $2,180.   Paul and Rosaria Jablonski attached this

Schedule K-1 to their Federal income tax return for 1996 and used




     8
        The document offered with respect to Tarragon Trust
differed in material respects (including signatories and
typeface) from another document that Tarragon Trust had offered
to reflect Cypress Management’s resignation as trustee.
     9
        Indeed, Fennel did not file an income tax return from its
inception through 1999.
                               - 8 -

the loss on the Schedule K-1 to offset their other income.10

     The parties agree that the law of the Commonwealth of

Virginia controls with regard to the validity of the trusts

described herein.

Discussion

     According to respondent, petitioner failed to show that Paul

Jablonski was petitioner's duly appointed trustee or that he

otherwise had the capacity to unilaterally commence this action

on petitioner’s behalf.   Respondent asserts that, as a result, no

valid petition has been filed and we must dismiss the petition

for lack of jurisdiction.   We agree.

     It is well settled that the taxpayer has the burden of

proving the Court’s jurisdiction by establishing affirmatively

all facts giving rise to our jurisdiction.   See Patz Trust v.

Commissioner, 69 T.C. 497, 503 (1977); Fehrs v. Commissioner, 65

T.C. 346, 348 (1975); Wheeler's Peachtree Pharmacy, Inc. v.

Commissioner, 35 T.C. 177, 180 (1960); Natl. Comm. To Secure

Justice v. Commissioner, 27 T.C. 837, 838-839 (1957).   Moreover,

unless the petition is filed by the taxpayer, or by someone

lawfully authorized to act on the taxpayer's behalf, we are

without jurisdiction.   See Fehrs v. Commissioner, supra at 348.




     10
        The record does not include the Schedule K-1 for 1995 or
the Jablonskis’ return for that year.
                                 - 9 -

     Rule 60(a) requires that a case be brought "by and in the

name of the person against whom the Commissioner determined the

deficiency * * * or by and with the full descriptive name of the

fiduciary entitled to institute a case on behalf of such person."

Rule 60(c) states that the capacity of a fiduciary or other

representative to litigate in the Court shall be determined in

accordance with the law of the jurisdiction from which such

person's authority is derived.    As previously mentioned, the

parties agree that Virginia law is controlling in this case.

     Based upon our review of Virginia law, we conclude that a

trustee generally is a necessary party in an action brought on

behalf of a trust.   Accord Mendenhall v. Douglas L. Cooper, Inc.,

387 S.E.2d 468 (Va. 1990); Raney v. Four Thirty Seven Land Co.,

357 S.E.2d 733, 736 (Va. 1987); cf. Walt Robbins, Inc. v. Damon

Corp., 348 S.E.2d 223, 226 (Va. 1986) (the trustee of an

antecedent deed of trust is a necessary party in a suit to

enforce a mechanic’s lien).

     We begin by observing that the petition filed in this case

does not comply with Rule 60.    In particular, Paul Jablonski

signed the petition as managing director, and the caption that he

placed on the petition identified the "Petitioner" as "FENNEL

TRUST".   However, neither the caption nor the body of the

petition identified petitioner's trustee(s).
                              - 10 -

     The record presented by petitioner to support its contention

that Paul Jablonski was vested with the authority to institute

this action on its behalf is inadequate.   Considering the lack of

formality observed in the execution of the Fennel trust

instrument and related documents, we have serious doubts that the

trust was validly formed.   Nevertheless, assuming arguendo that

it was, petitioner failed to prove that Paul Jablonski possessed

the capacity to institute this action unilaterally.

     Where a private trust is administered by two or more

trustees, the general rule is that unanimity among the trustees

is required for actions taken on behalf of the trust, except

where this requirement is modified by the terms of the trust

instrument or by statute.   Scott, The Law of Trusts, sec. 194, at

161 (4th ed. 1988), and cases cited therein. Consistent with this

principle, the Fennel trust instrument states in pertinent part

that “no power shall be exercised, nor any action taken, by the

Trustees except upon the unanimous consent of all Trustees having

authority”.

     In the absence of any credible evidence that Cypress

Management resigned as Fennel’s trustee, we conclude that Paul

Jablonski and Cypress Management were cotrustees of Fennel at the

time that the petition was filed.   The record indicates that Paul

Jablonski commenced this action without informing, or obtaining

the consent of, his cotrustee.   Moreover, we are not aware of any
                               - 11 -

provision in the Fennel trust instrument, or under Virginia law,

providing an exception to the principle that, as cotrustees, Paul

Jablonski and Cypress Management were obliged to act jointly in

filing the petition herein.    It necessarily follows that Paul

Jablonski lacked the capacity, acting alone, to commence this

action on Fennel’s behalf.    Consequently, we shall grant

respondent’s motion to dismiss.

     To reflect the foregoing,



                                      An order will be entered

                                 granting respondent’s motion and

                                 dismissing this case for lack of

                                 jurisdiction.
