Aquilino v. U.S.
| Decision Date | 05 December 1957 |
| Docket Number | No. 2,No. 1,1,2 |
| Parties | , 146 N.E.2d 774, 1 A.F.T.R.2d 761, 58-1 USTC P Robert AQUILINO et al., Copartners Doing Business under the Name of Home Maintenance Co., Respondents, v. UNITED STATES of America, Appellant, et al., Defendant, and Colonial Sand and Stone Co., Inc., Respondent. (Action) COLONIAL SAND & STONE CO., Inc., Respondent, v. UNITED STATES of America, Appellant, et al., Defendants, and Home Maintenance Company, Respondent. (Action) |
| Court | New York Court of Appeals Court of Appeals |
Paul W. Williams, U. S. Atty. for the Southern Dist. of New York, New York City (Daniel F. McMahon and Harold J. Raby, New York City, of counsel), for appellant.
Harold M. Edwards and Charles S. Friedman, Mount Vernon, for Robert Aquilino and another, respondents in the first above-entitled action.
Isidore Zamore and Jacob I. Goodstein, New York City, for Colonial Sand and Stone Co., Inc., respondent in the second above-entitled action.
This appeal, here by our permission, involves the relative priority between a mechanic's lien and a federal tax lien.
Fleetwood Paving Corporation owes the United States Government a sum of money representing unpaid withholding and social security In December, 1951 and March, 1952, the local collector received assessment lists including assessments against the taxpayer. Some short time later, Fleetwood, as general contractor, entered into an agreement with one Ada Bottone to remodel a restaurant which she owned in the Town of Eastchester. Thereafter, in August and September of that same year, 1952, Fleetwood arranged for Home Maintenance Company and Colonial Sand and Stone Company to furnish labor and materials for the remodeling job.
On October 31, 1952, the United States filed a lien against Fleetwood for its unpaid taxes (amounting on that date, with penalties and interest, to over $5,000) in the office of the clerk of the City of Mt. Vernon, where Fleetwood maintained its place of business. Some days later, having been paid only a part of what was due them, Home Maintenance and Colonial Sand filed mechanic's liens in the county clerk's office against the Bottone property for the balance owing, the former for $1,400, the latter for $896.25. In January, 1953, Colonial Sand obtained a judgment for $2,109.43 for materials sold on a number of Fleetwood jobs.
In June, 1953, separate suits were started by Home Maintenance and Colonial Sand to foreclose their respective liens and Bottone deposited $2,200, the amount still owing by her to Fleetwood, with the county clerk to the credit of both actions. On Bottone's motion, the government, which had levied against her indebtedness to Fleetwood, was interpleaded and substituted as defendant in her place.
Each of the three parties, the two plaintiffs and the government, moved for summary judgment under rule 113 of the Rules of Civil Practice. The court at Special Term granted plaintiffs' motions on the ground that the government's tax lien was ineffective since it had not been filed in the county clerk's office, the place designated by statute for the recording of liens against real property. Although the Appellate Division affirmed the judgment, it disagreed with Special Term's rationale. It was the Appellate Division's view that no debt was due from Bottone to Fleetwood to which the government's lien could attach: the fund deposited by Bottone was a substitute for her real property and, since the United States had no lien against such property, it had no lien (2 A.D.2d 747, 153 N.Y.S.2d 270) 'upon the funds deposited in substitution therefor.'
We cannot agree. On the basis of the controlling federal statute (Internal Revenue Code of 1939, U.S.Code, tit. 26, §§ 3670, 3672, 26 U.S.C.A. §§ 3670, 3672), as well as the federal decisions construing it, the government tax lien attached to the debt owing to Fleetwood and that lien is entitled to priority.
The Internal Revenue Code of 1939 provided, as does the present code, a lien of exceedingly broad scope in favor of the United States for unpaid taxes. The amount of the tax was to be 'a lien * * * upon all property and rights to property' belonging to the taxpayer and the lien 'shall arise at the time the assessment list was received by the collector and shall continue until the liability for such amount is satisfied' ( §§ 3670-3671).
However, the statute went on to declare, 'Such lien shall not be valid as against any mortgagee, pledgee, purchaser, or judgment creditor until notice thereof has been field by the collector * * * in the office * * * authorized by the law of the State * * * in which the property subject to the lien is situated' ( § 3672, subd. (a), par. (1)). By this state's law, the place provided for filing differs depending on whether the lien is asserted against real or personal property. In the case of a lien upon real property, the notice is to be filed in 'the office of the clerk of the county in which real property subject to any such lien is situated' (Lien Law, Consol.Laws, c. 33, § 240, subd. 1), in the case of a lien upon personal property, 'in the town or city where the owner * * * resides at the time the lien arises' § 240, subd. 2.
The 'relative priority of the lien of the United States for unpaid taxes is,' the Supreme Court has said, 'always a federal question to be determined finally by the federal courts.' United States v. Acri, 348 U.S. 211, 213, 75 S.Ct. 239, 241, 99 L.Ed. 264; United States v. Security Trust & Sav. Bank, 340 U.S. 47, 49, 71 S.Ct. 111, 112, 95 L.Ed. 53; People of State of Illinois ex rel. Gordon v. Campbell, 329 U.S. 362, 371, 67 S.Ct. 340, 345, 91 L.Ed. 348; United States v. Waddill, Holland & Flinn, 323 U.S. 353, 356-357, 65 S.Ct. 304, 306, 89 L.Ed. 294. Turning, therefore, to the federal decisions, we find the rule firmly established that, once a government tax lien is properly filed, no subsequently recorded lien or claim may prevail against it. See United States v. Colotta, 350 U.S. 808, 76 S.Ct. 82, 100 L.Ed. 725, reversing 224 Miss. 33, 79 So.2d 474; United States v. Acri, supra, 348 U.S. 211, 214, 75 S.Ct. 239, 241; United States v. Liverpool & London & Globe Ins. Co., 348 U.S. 215, 217, 75 S.Ct. 247, 248, 99 L.Ed. 268; United States v. Scovil, 348 U.S. 218, 220, 75 S.Ct. 244, 246, 99 L.Ed. 271; United States v. City of New Britain, 347 U.S. 81, 84-87, 74 S.Ct. 367, 98 L.Ed. 520; United States v. Gilbert Associates, 345 U.S. 361, 365, 73 S.Ct. 701, 97 L.Ed. 1071; United States v. Security Trust & Sav. Bank, supra, 340 U.S. 47, 50-51, 71 S.Ct. 111; United States v. Kings County Iron Works, 2 Cir., 224 F.2d 232, 234-235, 237.
In the case before us, the government concededly filed notice of its lien, in the office of the clerk of the city where the taxpayer resided, before the plaintiffs filed their notices and, since such notice of lien is indisputably effective against all personal property and rights thereto belonging to the taxpayer (Lien Law, § 240, subd. 2), decision herein depends solely on whether the indebtedness due to Fleetwood from Bottone constituted property of Fleetwood.
The lien filed by the government in October, 1852, before any mechanic's lien had been recorded, was manifestly not asserted against Bottone's real property or any realty possible owned by the taxpayer. It was asserted against the contractual obligation of Bottone to Fleetwood, against Bottone's indebtedness to the latter, and, quite obviously, within the statutory terms personal 'property and rights to (such) property' belonging to the taxpayer (U. S. Code, tit. 26, § 3670, 26 U.S.C.A. § 3670; see United States v. Kings County Iron Works, supra, 224 F.2d 232, 234-235, 237; cf. Fidelity & Deposit Co. of Md. v. New York City Housing Authority, 2 Cir., 241 F.2d 142, 144-145). Since the government did all that the applicable law demanded when it recorded its notice in the city clerk's office (Lien Law, § 240, subd. 2), its tax lien is superior to any other lien subsequently filed.
It is, by now, exceedingly well settled that no state-created rule may defeat the paramount right of the United States to levy and collect taxes uniformly throughout the land. See United States v....
To continue reading
Request your trial
-
Wolverine Insurance Company v. Phillips
...States, D.C.1956, 142 F.Supp. 306; United States v. Kings County Iron Works, 2 Cir., 1955, 224 F.2d 232; Aquilino v. United States, 1957, 3 N.Y.2d 511, 169 N.Y.S.2d 9, 146 N.E.2d 774, petition for certiorari filed June 27, Between 1950 and 1958 all of the United States Supreme Court cases i......
-
Aquilino v. United States
... ... By holding that they both turn on whether the taxpayer had 'property' under state law to which the Government's lien could attach, the Court has sanctioned a result consistently prohibited by us in a line of cases dealing with the priority of federal tax liens.1 ... In both cases, the delinquent taxpayer is a defaulting general contractor whose subcontractors remain unpaid. The Government's lien is asserted against the chose in action which the general contractor ... ...
-
Washington Square Slum Clearance, Borough of Manhattan, City of New York, In re
...Conn., 347 U.S. 81, 74 S.Ct. 367, 98 L.Ed. 520; United States v. Kings County Iron Works, 2 Cir., 224 F.2d 232; Aquilino v. United States, 3 N.Y.2d 511, 169 N.Y.S.2d 9). A Government tax lien, however, is not always paramount. By Federal statute, is 'shall not be valid as against any mortga......
-
Davis & Warshow, Inc. v. S. Iser, Inc.
...contractor was entitled to prevail over unpaid subcontractors who had improved such property (Aquilino v. United States, 3 N.Y.2d 511, 169 N.Y.S.2d 9, 146 N.E.2d 774). The United States Supreme Court, however, remanded by Aquilino case to the Court of Appeals for the purpose of having that ......