NEW HAMPSHIRE FIRE INSURANCE COMPANY v. Scanlon

• Decision Date: 16 April 1959
• Citation: 172 F. Supp. 392
• Parties: NEW HAMPSHIRE FIRE INSURANCE COMPANY, Petitioner, v. Thomas E. SCANLON, District Director of Internal Revenue, City of New York, and Acme Cassa, Inc., Respondents.
• Court: U.S. District Court — Southern District of New York

172 F. Supp. 392

NEW HAMPSHIRE FIRE INSURANCE COMPANY, Petitioner, v. Thomas E. SCANLON, District Director of Internal Revenue, City of New York, and Acme Cassa, Inc., Respondents.

United States District Court S. D. New York.

April 16, 1959.

Engelman & Hart, New York City, for petitioner.

Arthur H. Christy, U. S. Atty., Sherman J. Saxl, Asst. U. S. Atty., New York City, for respondent, Thomas E. Scanlon.

CASHIN, District Judge.

This is a summary proceeding brought on by petition and order to show cause seeking to have quashed, at least in part, notices of levy served and filed upon respondent City of New York by respondent Thomas E. Scanlon, a District Director of Internal Revenue. The petitioner asserts a right prior to that of the Director to funds in the hands of the City of New York due and owing under a construction contract between respondent Acme Cassa, Inc. and the City. The petitioner alleges expenditures, under the payment and performance bonds, of $82,990.17 as of November 25, 1958. There is admittedly due and owing by the City under the contract at the present time the sum of $68,015.50, and there is soon to be due and owing the further sum of $35,936.80. Neither the City nor Acme Cassa, Inc. interpose any objection to the relief sought.

I am in agreement with the contention of the Government that the District Court has no jurisdiction to determine the respective rights of the petitioner and the Government to the funds in the hands of the City in a summary proceeding. Petitioner argues that the provisions of 28 U.S.C.A. § 2463 give the Court such jurisdiction. That Section reads as follows:

"All property taken or detained under any revenue law of the United States shall not be repleviable, but shall be deemed to be in the custody of the law and subject only to the orders and decrees of the courts of the United States having jurisdiction thereof."

The petitioner argues that the notices of levy filed with the City have the effect of "detaining" the funds. Since they are so detained, this argument goes on, the funds are "in the custody of the law" and thus subject to the order of the Court.

For the purposes of this motion I will assume that the funds have been detained within the meaning of Section 2463 (cf. Seattle Association of Credit Men v. United States, 9 Cir., 1957, 240 F.2d 906). Despite this assumption I feel that this summary proceeding does not lie in view of the authority of In re Behrens, 2 Cir., 1930, 39 F.2d 561 and Goldman v. American Dealers Service, 2 Cir., 1943, 135 F.2d 398. Both of ...