PC Pfeiffer Company v. The Pacific Star
| Decision Date | 23 May 1960 |
| Docket Number | No. 8061.,8061. |
| Citation | 183 F. Supp. 932 |
| Court | U.S. District Court — Eastern District of Virginia |
| Parties | P. C. PFEIFFER COMPANY, Inc., Libellant, v. THE Steamship PACIFIC STAR, her engines, tackle, apparel, etc., and Compass Steamship Corporation and World Tramping Agencies, Inc., Respondents. |
Robert T. S. Colby, Asst. U. S. Atty., Washington, D. C., for Government, petitioner.
Baird, Crenshaw & Lanning, F. N. Crenshaw, Norfolk, Va., for P. C. Pfeiffer Co., Inc.
Devany & Redfern, W. L. Devany, Jr., Norfolk, Va., for crewmen.
Vandeventer, Black & Meredith, J. A. Gawrys, Norfolk, Va., for Marine Midland Trust Co., intervenor.
Howell, Anninos & Daugherty, Henry E. Howell, Jr., Norfolk, Va., for crewmen.
WALTER E. HOFFMAN, District Court.
Following the arrest of the SS Pacific Star at the instance of various maritime lienors, including the claims of crewmen serving aboard the vessel at the time of its attachment, the Pacific Star was sold pursuant to an order of Court. Thereafter, the Court distributed certain costs and entered an order directing the payment of net wages stipulated to be due and owing former crewmen as preferred lienors. Proctors for the crewmen requested, and now ask, that the amounts withheld from the wages of the crewmen for F.I.C.A. and withholding taxes be paid to the Internal Revenue Service in accordance with a petition filed by the United States.
It is conceded that, but for the F.I.C.A. and withholding taxes provided by law, the crewmen would have a preferred maritime lien for the entire amount of their wages in accordance with their contract of employment. The Court, in directing the payment of net wages to crewmen, reserved for further determination all matters relating to taxes on said wages.
It should be noted that the balance of the gross wages now on deposit is not the result of wages previously paid by the vessel, its master or owners. This controversy pertains to wages due and owing to the crewmen at the time the vessel was arrested, and not to any claim for funds withheld for taxes by the shipowner as a result of any past service. The balance of the gross wages aggregates $8,555.97.
Certain holders of maritime liens, admittedly inferior to any claims for wages, insist that the funds now in control of the Court should not be paid to the Internal Revenue Service, despite the fact that the crewmen desire the funds paid in this manner as such payment would relieve their tax liability for the wages paid pursuant to court order.
It would be an anomaly to decline the prayer for relief as stated in the Government's petition when the crewmen are requesting that the balance of their wages be paid in this manner. The effect would be a reduction in the amount of the maritime lien to which the crewmen would otherwise be entitled. Prior to the enactment of legislation providing for withholding and F.I.C.A. taxes, there could be no doubt as to the right of the crewmen to enforce their maritime lien to the full extent of their gross wages. As the other lienors would have the Court hold, the crewmen would be liable for taxes on the net wages paid to them under the court order. There is no distinction, in the Court's opinion, between paying the balance of the gross wages to the crewmen, thereby making them liable for the tax, and paying this balance to the Internal Revenue Service, with the consent and direction of the crewmen, to be applied against their tax liability.
Lienors insist that, in an action for unpaid wages, the crewmen would only be entitled to recover the net wages after appropriate tax deductions, citing United States v. Johnson, 9 Cir., 160 F.2d 789, 797, and The City of Avalon, 9 Cir., 156 F.2d 500, 501. These cases presuppose a solvent employer who is required by § 3102 and § 3402 of the Internal Revenue Code of 1954, 26 U.S.C.A. §§ 3102, 3402, to deduct from the wages paid the employee the taxes required by law. The logic of these cases is not in dispute. To hold otherwise would result in the...
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