Nehf v. United States, No. 67 C 2092.

• Court: United States District Courts. 7th Circuit. United States District Court (Northern District of Illinois)
• Writing for the Court: MAROVITZ
• Citation: 302 F. Supp. 356
• Parties: Sol NEHF and Charles Brown, d/b/a Capitol Discount Company, Plaintiffs, v. UNITED STATES of America and E. C. Coyle, Jr., District Director of Internal Revenue, Defendants.
• Decision Date: 25 April 1969
• Docket Number: No. 67 C 2092.

302 F. Supp. 356

Sol NEHF and Charles Brown, d/b/a Capitol Discount Company, Plaintiffs,
v.
UNITED STATES of America and E. C. Coyle, Jr., District Director of Internal Revenue, Defendants.

No. 67 C 2092.

United States District Court N. D. Illinois, E. D.

April 25, 1969.

302 F. Supp. 357

Max A. Reinstein, Chicago, Ill., for plaintiffs.

Thomas A. Foran, U. S. Atty., for the Government.

MEMORANDUM OPINION

Cross-Motions for Summary Judgment

MAROVITZ, District Judge.

This is an action to recover $15,814.58 allegedly "illegally seized" by defendants and "there is here involved the question of priority of claims on these monies." Complaint, ¶¶ 7, 10. While the Complaint (¶ 6) alleges the money was held pursuant to a tax levy on the Chicago Land Clearance Commission, the parties have stipulated that no money was received by defendants pursuant to the levy. Stipulation of Facts, ¶ 18. To the extent plaintiffs have any valid claim, it must rest on grounds other than those alleged. Quite briefly, plaintiffs were assignees of proceeds to be received by the Atlas Wrecking Co. from a contract with the Chicago Land Clearance Commission. On May 29, 1961, the Commission issued a check of $25,510.50 to Atlas. Atlas deposited the money in an Atlas bank account, which contained a $1,014.43 balance, rather than paying the money to plaintiffs. On May 29, 1961, Atlas drew a check for $5,000 payable to the District Director of the Internal Revenue Service in partial payment of withholding tax then due and owing. On July 12, 1961, Atlas drew

302 F. Supp. 358

another check for $4,821.63 to the same party for the same reason. Neither the Commission nor the Revenue Service knew of the assignment

Relying on Ill.Rev.Stat. Ch. 121, § 221 (since repealed) as authority for their position, plaintiffs contend that where an assignor, e.g., Atlas Wrecking Co., assigns the proceeds of an executory contract to an assignee, e.g., the plaintiffs, the assignee can recover from a third party, e.g., the government, the proceeds which the assignor receives and then spends with the third party, notwithstanding the fact that the assignee failed to give notice of the assignment. Plaintiffs argue that their rights under this statute were superior to anyone claiming any of the monies paid to Atlas by the Chicago Land Clearance Commission after the assignment between Atlas and plaintiffs. Plaintiffs further argue that a fraud was perpetrated on them and that defendants cannot be even innocent beneficiaries of the fraud. The government, which seeks summary judgment, urges that the court lacks jurisdiction by virtue of the doctrine of sovereign immunity, that the applicable statute of limitations, 28 U.S.C. § 2401, bars this action, and that plaintiffs' theory of defendants' liability is without foundation in law.

Initially, we recall that on July 8, 1966, defendant filed an action to recover $15,814.58 claiming a breach of an agreement entered into between plaintiffs and the District Director of Internal Revenue. This court granted summary judgment for the defendants in that case, Nehf v. United States, 278 F. Supp. 444 (N.D.Ill.1967). In their arguments in that case, plaintiffs asserted that the action was not based on contract, but on an issue of lien superiority. However, in light of the language of the complaint, the court treated the action as one based on a contract which incidentally arose from a lien priority dispute between the plaintiffs and the government. Id. at 447. The instant action was filed on December 5, 1967, less than two months after the summary judgment was ordered. The parties, the transaction out of which both claims grew, and the prayers are essentially the same in both suits. However, as plaintiffs' theory is somewhat different now, the action is not barred.

We now reach the government contention that this court lacks jurisdiction in this suit by virtue of the doctrine of sovereign immunity. In their complaint, plaintiffs have asserted that jurisdiction lies by virtue of 28 U.S.C. §§ 1331, 1340, 1346(a)(2), 2410 and 2463. Complaint, ¶ 9. As we have said before, under the doctrine of sovereign immunity, suits against the United States may not be maintained without an express grant of statutory authority. Nehf v. United States, 278 F.Supp. 444, 446 (N.D.Ill.1967). The general federal question statute, 28 U.S.C. § 1331, does not confer such authority. Id. Similarly...