Andrello v. Nationwide Mut. Fire Ins. Co.

Decision Date04 April 1968
Citation289 N.Y.S.2d 293,29 A.D.2d 489
Parties, 68-1 USTC P 9332 Anthony ANDRELLO, Plaintiff, v. NATIONWIDE MUTUAL FIRE INSURANCE COMPANY, Defendant. The UNITED STATES of America, Appellant, v. Miles HOERLE and Melvin Kowalsky, Respondents. Miles HOERLE and Melvin Kowalsky, Respondents, v. NATIONWIDE MUTUAL FIRE INSURANCE COMPANY, Defendant. NATIONWIDE MUTUAL FIRE INSURANCE COMPANY, Plaintiff, v. The UNITED STATES of America, Appellant.
CourtNew York Supreme Court — Appellate Division

Justin A. Mahoney, Syracuse, for appellant (David English Carmack, of the Maryland and District of Columbia Bars admitted on motion pro hac vice, of counsel).

Howard D. Seld, Utica, for respondents.

Before BASTOW, J.P., and GOLDMAN, DEL VECCHIO, MARSH and HENRY, JJ.

BASTOW, Justice Presiding.

This appeal presents the issue of priority rights between interpleaded defendants--the appellant, United States of America (Government) and respondents, Hoerle and Kowalsky,--to the proceeds of a fund ($8500) on deposit in court.

On March 15, 1962 plaintiff (Andrello) in the basic action resided in Oneida County and owned realty in Herkimer County. On that date Andrello executed and delivered to respondents a second mortgage on the realty to secure payment of a stated sum. The instrument contained the statutory language (Real Property Law, § 254, subd. 4) that the owner covenanted to keep the buildings insured against loss by fire for the benefit of respondents and would assign and deliver the policies to the mortgagees.

At various dates between February 26, 1964 and March 2, 1965 the Government filed in the offices of the clerks of Oneida, Herkimer and Madison Counties liens against Andrello for unpaid federal taxes. The Government concedes that such liens were not filed in the office of the clerk of the town in Madison County where Andrello then resided.

On April 7, 1964 Nationwide Mutual Fire Insurance Company (Nationwide) issued to Andrello a policy in the amount of $10,000 insuring the buildings on the mortgaged property against loss or damage by fire. The policy contained no provision making loss payable, in whole or in part, to respondents. On August 11, 1964 a dwelling situate on the mortgaged premises was destroyed by fire. The day following the fire an endorsement was added to the policy making loss payable to the respondents and thereafter Andrello assigned his interest in the proceeds of the policy (to the extent of the amount due on the mortgage) to respondents.

After the owner and respondents had commenced separate actions to recover the amount due on the policy, Nationwide brought an interpleader action against them and other defendants whose interests are here irrelevant. Subsequently an order was made on stipulation of all parties that Nationwide should be discharged from further liability upon payment into court of $8500.

Thereafter the trial court proceeded to decide the respective claims of the remaining interpleaded parties. There was no trial and unfortunately the record contains no agreed statement of facts. The foregoing factual recital is taken from documents made a part of the record on appeal or from the facts set forth in the decision of the trial court. In the absence of objection from any party to this appeal it is assumed that the facts as recited by the trial court are correct.

We discuss at the outset what appears to have been an error of the trial court in deciding the issues presented upon an inapplicable section of the United States Code. This error has been embraced by the parties to the appeal and makes necessary a reconsideration of the basic issues.

Prior to November 2, 1966 the statute (U.S.Code, tit. 26, § 6323) in substance provided that Federal tax liens should not be valid 'as against any mortgagee, pledgee, purchaser, or judgment creditor' until notice thereof had been filed. The section further provided that such liens should be filed in the office designated by State law if such designation had been made. Section 240 of the New York Lien Law (prior to its amendment by chapter 608 of Laws of 1966, eff. July 3, 1966) provided, so far as here material, that outside of the city of New York such filing should be in the town or city where the taxpayer resides. The Government, as stated, concedes that notices of its liens against Andrello were not so filed.

Section 6323 of Title 26 of the Code was extensively amended, effective November 2, 1966, by Public Law 89--719, Title I, § 101(a), 80 Stat. 1125. It now provides that until notice shall have been filed a lien is not valid as against 'any purchaser, holder of a security interest, mechanic's lienor, or judgment lien creditor.' The enactment also made substantial changes in the requirements for the places of filing notices of lien. As to both real and personal property it is provided that such filing shall be in the one office within the State as designated by State law in which the property subject to the lien is situated. These filing requirements were further refined by the mandate that real property shall be deemed to be situated at its physical location and in the case of personal property at the residence of the taxpayer 'at the time the notice of lien is filed.'

In the same year our Legislature (L.1966, ch. 608, effective July 3, 1966) amended section 240 of the Lien Law to provide that outside of New York City such notices should be filed in the office of the County Clerk where real estate is situated and as to personal property, if the owner is an individual, in the office of the County Clerk where the owner resides.

The trial court based its decision upon an interpretation of the statute (U.S.Code, tit. 26, § 6323) as so amended in 1966. It in substance held that respondents were 'the holder(s) of a security interest' within the meaning of that section. Prior to November 2, 1966 the section, of course, contained no such language. The court went on to hold that inasmuch as the notices of lien had been improperly filed (because of the failure to file in the office of the town clerk where the taxpayer resided) respondents' 'security interest' had priority over the Government's tax liens.

The tax liens with which we are concerned, however, as heretofore stated, were filed in 1964 and 1965 and the propriety of the filings--and the resulting priorities--must be determined in the light of the then applicable statutory provisions. 'Statutes are not to be given retroactive effect or construed to change the status of claims fixed in accordance with earlier provisions unless the legislative purpose so to do plainly appears' (United States v. Magnolia Petroleum Co., 276 U.S. 160, 162--163, 48 S.Ct. 236, 237, 72 L.Ed. 509; Brewster v. Gage, 280 U.S. 327, 337, 50 S.Ct. 115, 74 L.Ed. 457). See generally 2 Sutherland, Statutory Construction, §§ 3101, 3102.

It follows that one of the issues to be decided (which the trial court did not pass upon) is whether or not respondents' claim had priority over the liens of the Government in view of the conceded fact that the notices of liens were improperly filed. To so conclude it is necessary to find that...

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    ...585 (1933); Reinhardt v. Security Ins. Co. of New Haven, Conn., 312 Ill.App. 1, 38 N.E.2d 310 (1941); Andrello v. Nationwide Mutual Fire Ins. Co., 29 A.D.2d 489, 289 N.Y.S.2d 293 (1968); 45 C.J.S. Insurance § 427(b)(1), at p. 50; see Sun Fire Office v. Fraser, 5 Kan.App. 63, 47 P. 327 (1897......
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  • Chapter Twenty-Seven
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    • New York State Bar Association Insurance Law Practice (NY)
    • Invalid date
    ...Ct., Franklin Co. 1985), aff’d, 120 A.D.2d 834, 501 N.Y.S.2d 944 (3d Dep’t 1986).[3721] . Andrello v. Nationwide Mut. Fire Ins. Co., 29 A.D.2d 489, 289 N.Y.S.2d 293 (4th Dep’t 1968).[3722] . See, e.g., Dyer v. Great E. Ins. Co., 41 A.D.2d 581, 340 N.Y.S.2d 3 (3d Dep’t 1973).[3723] . Fowler ......

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