Kantor Bros., Inc., In re

• Decision Date: 28 April 1966
• Docket Number: No. A--27,A--27
• Citation: 91 N.J.Super. 121,219 A.2d 341
• Parties: , 17 A.F.T.R.2d 950, 66-1 USTC P 9433 In the Matter of the Voluntary Dissolution of KANTOR BROTHERS, INC., a corporation of the State of New Jersey. Andrew B. CRUMMY, Statutory Receiver, etc., Plaintiff-Appellant, v. DISTRICT DIRECTOR OF INTERNAL REVENUE, Defendant-Respondent.
• Court: New Jersey Superior Court — Appellate Division

Page 121

91 N.J.Super. 121

219 A.2d 341, 17 A.F.T.R.2d 950, 66-1

USTC P 9433

In the Matter of the Voluntary Dissolution of KANTOR BROTHERS, INC., a corporation of the State of New Jersey Andrew B. CRUMMY, Statutory Receiver, etc., Plaintiff-Appellant, v. DISTRICT DIRECTOR OF INTERNAL REVENUE, Defendant-Respondent.

No. A--27.

Superior Court of New Jersey, Appellate Division.

Argued April 4, 1966.

Decided April 28, 1966.

Andrew B. Crummy, Newark, for plaintiff-appellant (Crummy, Gibbons & O'Neill, Newark, attorneys).

Matthew J. Scola, Asst. U.S. Atty., for defendant-respondent (David M. Satz, Jr., U.S. Atty., Joseph F. Kelly, Jr., Asst. U.S. Atty., on the brief).

Before Judges CONFORD, KILKENNY and LEONARD.

PER CURIAM.

We conclude that the trial court was correct in denying the statutory receiver's motion to expunge the amended claim of the United States of America for federal income taxes of employees withheld but not paid during the period of September 9, 1960 to March 24, 1961.

The stipulated facts are as follows: On October 5, 1959 Terminal Construction Corporation (Terminal) contracted with the Government to construct a housing project at McGuire Air Force Base. As prime contractor it then entered into an agreement with a joint venture comprised of T & M Plumbing Co., which was to supply the labor; Kantor Bros., Inc., which was to supply the material; and the principals of T & M Plumbing Co. The joint venture was to be called T & M McGuire (McGuire). Financing for this joint venture was to be arranged through the National State Bank of Newark, New Jersey, now named First National State Bank (bank). On or about October 30, 1959 work on the site was commenced. As of September 1960 the bank had advanced the sum of $334,000 to McGuire. On September 7, 1960 Terminal advised the bank that it would not meet McGuire's payroll due two days later, and that unless the bank met the same Terminal would default McGuire's subcontracts and take over the work. For this reason, and further, because Terminal disputed the validity of an assignment held by the bank from McGuire as collateral for its loans, the bank decided to make payments to McGuire in a different manner to protect its existing investment.

Commencing on September 9, 1960 the bank, in order to satisfy payroll requirements at the site, received a worksheet prepared by McGuire indicating how much was due each worker. The bank would then prepare the payroll envelopes which were taken to the work site by one of its assistant vice-presidents. There the bank arranged to have every person on the payroll execute an assignment to it of the wages due him. The pay envelopes were released to the individuals as they returned these executed assignments. In the event a worker was not present on any payday, it was agreed that he would go to the bank in Newark to execute an assignment and receive his envelope. In return for the executed assignments, the bank gave each employee on the payroll his pay envelope containing his Net wages. This procedure continued from September 9, 1960 to March 24, 1961. Each week the bank received a certification that the payroll schedules presented to it represented a bona fide debt of McGuire for work performed by each person listed therein.

It was also stipulated that during this period of time McGuire had complete control over the performance of the work, including the hiring, firing and...