Glen Const. Co., Inc. v. Bank of Vienna
| Decision Date | 02 April 1976 |
| Docket Number | Civ. A. No. 75-662-A. |
| Citation | 410 F. Supp. 402 |
| Parties | GLEN CONSTRUCTION COMPANY, INC., Complainant, v. BANK OF VIENNA et al., Defendants. |
| Court | U.S. District Court — Eastern District of Virginia |
L. J. Miller, Arlington, Va., for complainant.
Douglas Bywater, Vienna, Va., for Bank of Vienna.
George P. Williams, Alexandria, Va., for U. S. Internal Revenue Service.
Frank D. Swart, Fairfax, Va., for Chantilly Crushed Stone and W. B. Clark.
John N. Beall, Jr., McLean, Va., for Fairfax Equipment Rental Corp.
Herbert L. Karp, Alexandria, Va., for Scott Kurt Construction Co.
This matter is before the Court on the motion of the plaintiff, Glen Construction Company, Inc., for summary judgment in its favor on its Complaint for Interpleader filed against the United States of America, Bank of Vienna, Scott Kurt Construction Company, Fairfax Equipment Rental Equipment Corporation, and W. B. Clark, and on the motion of the United States for summary judgment in its favor against all the defendants including Chantilly Crushed Stone, Inc. Glen Construction Company, Inc. does not seek summary judgment against Chantilly Crushed Stone, Inc. The action arose on a Complaint for Interpleader brought by the plaintiff, a general contractor, to resolve conflicting claims of its sub-contractor, Scott Kurt, and Scott Kurt's assignee, Bank of Vienna, several sub-sub-contractors and the United States. Jurisdiction is founded upon 28 U.S.C. §§ 1331, 1335, and 2410, the amount in controversy exceeding Ten Thousand Dollars ($10,000) (exclusive of interest and costs).
On February 12, 1975, Glen Construction Company, Inc. hereinafter referred to as Glen, a general contractor, and Scott Kurt Construction Company hereinafter referred to as Scott Kurt entered into a sub-contract in which Scott Kurt agreed to furnish labor and materials for a Glen project titled Sherwood Hall Medical Building in Alexandria, Virginia. Scott Kurt, in turn, entered into various sub-sub-contracts with Fairfax Equipment Rental Corporation hereinafter referred to as Fairfax, W. B. Clark hereinafter referred to as Clark, and Chantilly Crushed Stone, Inc. hereinafter referred to as Chantilly to furnish certain materials and/or services on the Sherwood Hall construction project.
In July and August, 1975, the United States levied on all sums due and owing to Scott Kurt from Glen for taxes due, owed and unpaid to the United States from Scott Kurt. On August 4, 1975, Scott Kurt allegedly assigned its receivables to the Bank of Vienna. On September 9, 1975, Glen filed an Interpleader on the Sherwood Hall project, paying the alleged contract balance into the registry of the Court. Prior to the filing of the Complaint, the defendant sub-sub-contractors had either made demand upon Glen for payment or had outstanding vouchers for work performed at the request of Scott Kurt.
The total amount of the funds paid by Glen into the registry of the Court is Twenty-One Thousand Nine Hundred Two and 78/100 Dollars ($21,902.78). The claims of the defendant sub-sub-contractors and the dates of the work performed or materials furnished as established by the admissions of the parties in the pleadings are set forth below:
Dates
Service/Material Amount
Claimant Furnished of Claim
Chantilly Crushed
Stone, Inc. 7-03-75 to 8-05-75 $9,653.23
W. B. Clark 7-22-75 to 7-31-75 1,037.00
Fairfax Equipment
Rental Corporation 7-24-75 to 8-28-75 2,030.00
The claim of the United States is based on the following schedule of tax liens. Notice of the tax liens was filed with the Clerk of the State Corporation Commission of the Commonwealth of Virginia in Richmond on the dates indicated.1
Date of Tax
Assessment Date Notice Filed Amount
April 14, 1975 June 9, 1975 $37,209.59
June 9, 1975 June 17, 1975 6,523.00
June 16, 1975 June 20, 1975 10,913.57
August 5, 1975 August 7, 1975 15,264.26
The Court also has for decision what claim, if any, the Bank of Vienna has to the fund held in the registry of the Court.
The single issue suitable for determination upon the motions of the United States and Glen for summary judgment is whether the tax liens asserted by the Government have priority over the claims of the defendant contractors and the bank to the interpleaded funds.
The United States asks that its tax liens acquired pursuant to 26 U.S.C. § 6321 be enforced against the interpleaded funds. Section 6321 of the Internal Revenue Code provides in pertinent part:
"If any person liable to pay any tax neglects or refuses to pay the same after demand, the amount . . . shall be a lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to such person."
The lien imposed by Section 6321 "shall continue until the liability for the amount so assessed . . . is satisfied or becomes unenforceable by reason of lapse of time." 26 U.S.C. § 6322. However, the tax lien is not valid against any judgment lien creditor or mechanic's lienor of the taxpayer "until notice thereof which meets the requirement of subsection (f) has been filed by the Secretary or his delegate" 26 U.S.C. § 6323(a). Subsection (f) of Section 6323 contains the following provision:
To comply with the provisions of 26 U.S.C. § 6323(f), the Government filed notice of its tax liens against Scott Kurt with the State Corporation Commission of the Commonwealth of Virginia in Richmond, Virginia, as provided for in Va.Code Ann. § 55-142.1(b) (1950 as amended):
It is the opinion of the Court, based upon the applicable law and the certified copies of the notices of tax lien submitted by the Government, that the United States has properly asserted its tax liens against Scott Kurt.
The Government argues that in contrast to its own position, the other claimants to the interpleaded funds are not mechanic's lienors; nor do they possess perfected liens under Virginia statutes. Acceptance of the Government's argument would require the Court to ignore the effect of two Orders entered in this case on September 12, 1975, and October 10, 1975, respectively. The September Order enjoined the defendants "from instituting or maintaining any proceeding in any Court of any state of the United States or any U. S. District Court, including the perfecting, recording, or maintaining of any lien on plaintiff's construction projects or property, real, personal or mixed, to enforce any debt arising from the claims now before the Court." The October Order added Clark and Fairfax as defendants, sustained the interpleader and continued the injunction embodied in the September Order as to all defendants, new and old, but modified its terms so as to exclude the United States Revenue Service from the operation of the injunction.
The September and October Orders precluded all the defendants from perfecting mechanic liens and the October Order was entered before the expiration of the time limit under Virginia statute for perfection of mechanic's liens. Va.Code Ann. § 43-4 (1950, as amended). Consequently, the defendant contractors were precluded by the operation of the injunction from asserting their claims in the normal fashion. Simple fairness would dictate that the entry of an injunction pursuant to 28 U.S.C. § 2361 barring filing of liens to which sub-sub-contractors are entitled for the purpose of maintaining the status quo pending a decision on the validity of the interpleader should not be a bar to a determination of the merits of the sub-sub-contractors' claims. The Court, therefore, concludes that the defendants by being required to participate in this action are entitled to avail themselves of the rights provided by Virginia statute to protect their claims for materials and services. The next step is an examination of whether the defendants, or any of them, would have been able to perfect mechanic's liens under Virginia law as of the date of the entry of the...
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