                        T.C. Memo. 2001-315



                      UNITED STATES TAX COURT



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



     Docket No. 10709-00.                   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 Tarragon Trust (Tarragon 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 Tarragon

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     $65,975          $16,494                ---
   1996      61,390           15,347          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”.



     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.
     Further, throughout the evidentiary record in this case,
references to petitioner appear as both “Tarragon” and “Taragon”.
In this opinion, we utilize the former spelling. See Webster’s
Third New International Dictionary (1993).
                               - 3 -

     Respondent filed a Motion to Dismiss for Lack of

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

person authorized to represent petitioner in this matter.

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 Tarragon 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 sessions 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



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

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

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
                                                   (continued...)
                                 - 5 -

     The record also includes a purported trust instrument for

Tarragon, which is likewise characterized as a “business trust

organization”.     This document, the cover sheet of which

identifies S&T Management Trust as “settlor/exchanger”, Cypress

Management as “trustee”, 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”.     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 Tarragon trust

instrument in Virginia.5    In fact, the signature page of the

Tarragon trust instrument is an exact copy of the signature page

of a purported trust instrument for another trust known as Fennel

Trust.6


     4
      (...continued)
Contractor status with Cypress Management”.
     5
        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
        Fennel Trust is a petitioner in a related docket in which
the Commissioner has also filed a Motion to Dismiss for Lack of
                                                   (continued...)
                              - 6 -

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

Tarragon 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 Tarragon 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[;] 1 COMPUTER,
     KEYBOARD, MOUSE, & MONITOR.

     “Attachment A” to the Tarragon trust instrument is an

undated letter signed by Zola Sheehan for Cypress Management and

addressed to “The Settlor of Taragon Trust”, stating: “I am in

receipt of your letter dated 28 April 1994, appointing me Trustee

of Taragon Trust, WHICH I HEREBY ACCEPT IMMEDIATELY.”    A second

“Attachment A” to the Tarragon trust instrument is a similar

undated letter, this one signed by Paul Jablonski, again

addressed to “The Settlor of Taragon Trust” and stating: “I am in

receipt of your letter dated 28 April 1994, appointing me Trustee

of Tarragon Trust, WHICH I HEREBY ACCEPT IMMEDIATELY.”

     “Schedule C” attached to the Tarragon trust instrument lists



     6
      (...continued)
Jurisdiction. See docket No. 10710-00 and our Memorandum Opinion
at T.C. Memo. 2001-316.
                               - 7 -

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

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

Jablonski, Gaynor Paul Jablonski, and Dolan Richard Jablonski.

These three latter individuals are Paul Jablonski’s wife and two

sons, respectively.

     Attached to petitioner’s supplemental response, filed May

15, 2001, is a document, purportedly executed by Zola Sheehan on

July 24, 1994, reflecting Cypress Management’s resignation

as Tarragon’s trustee.   During the evidentiary hearing in this

case, petitioner offered to the Court another document

purportedly reflecting Cypress Management’s resignation as

Tarragon’s trustee.   This latter document, which differed in

material respects (including signatories and typeface) from the

former document, was not admitted into evidence.   Considering the

inconsistencies in the two documents, we give no weight to the

document attached to petitioner’s supplemental response, filed

May 15, 2001.

     On July 24, 1994, Paul Jablonski and Tarragon purportedly

executed a document entitled “INDEPENDENT COMMON-LAW CONTRACTOR

CONTRACT”, in which Paul Jablonski and Tarragon were identified

as contractor and client, respectively.
                                 - 8 -

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

Form 1041, for 1995 and 1996.7    However, for those years,

Tarragon 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 $13,078.    Paul and Rosaria Jablonski attached this

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

the loss on the Schedule K-1 to offset their other income.8

     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 commence this action unilaterally

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

valid petition was filed and that we must dismiss the petition

for lack of jurisdiction.    We agree.




     7
        Indeed, Tarragon did not file an income tax return from
its inception through 1999.
     8
        The record does not include the Schedule K-1 for 1995 or
the Jablonskis’ return for that year.
                                 - 9 -

     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.

     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 on 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
                                - 10 -

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 "TARRAGON

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

petition identified petitioner's trustee(s).

     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 Tarragon 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 commence this action unilaterally.

     When 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 when

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 Tarragon trust instrument states in pertinent part
                             - 11 -

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 Tarragon’s trustee, we conclude that Paul

Jablonski and Cypress Management were cotrustees of Tarragon 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 provision in the Tarragon trust instrument, or under

Virginia law, providing an exception to the principle that, as

co-trustees, 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 Tarragon’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.
