Sherwood v. United States

• Citation: 5 F.2d 991
• Parties: SHERWOOD et al. v. UNITED STATES.
• Decision Date: 17 April 1925
• Court: U.S. District Court — Eastern District of New York

5 F.2d 991 (1925)

SHERWOOD et al. v. UNITED STATES.

District Court, E. D. New York.

April 17, 1925.

Cullen & Dykman, of Brooklyn, N. Y. (Francis L. Durk, of Brooklyn, N. Y., of counsel), for plaintiffs.

Ralph C. Greene, U. S. Atty., of Brooklyn, N. Y., and Guy O. Walser, Asst. U. S. Atty., of New York City.

CAMPBELL, District Judge.

This is an action in equity brought by permission of this court, after notice, under the provisions of section 3207 of the Revised Statutes of the United States, as amended by section 1030 of the Revenue Act of 1924 (43 Stat. 350), which reads as follows:

"Sec. 3207. (a) In any case where there has been a refusal or neglect to pay any tax, and it has become necessary to seize and sell real estate to satisfy the same, the Commissioner of Internal Revenue may direct a bill in chancery to be filed, in a District Court of the United States, to enforce the lien of the United States for tax upon any real estate, or to subject any real estate owned by the delinquent, or in which he has any right, title, or interest, to the payment of such tax. All persons having liens upon or claiming any interest in the real estate sought to be subjected as aforesaid, shall be made parties to such proceedings, and be brought into court as provided in other suits in chancery therein. And the said court shall, at the term next after the parties have been duly notified of the proceedings, unless otherwise ordered by the court, proceed to adjudicate all matters involved therein, and finally determine the merits of all claims to and liens upon the real estate in question, and, in all cases where a claim or interest of the United States therein is established, shall decree a sale of such real estate, by the proper officer of the court, and a distribution of the proceeds of such sale according to the findings of the court in respect to the interests of the parties and of the United States.

"(b) Any person having a lien upon or any interest in such real estate, notice of which has been duly filed of record in the jurisdiction in which the real estate is located, prior to the filing of notice of the lien of the United States as provided by section 3186 of the Revised Statutes as amended, or any person purchasing the real estate at a sale to satisfy such prior lien or interest, may make written request to the Commissioner of Internal Revenue to direct the filing of a bill in chancery as provided in subdivision (a), and if the Commissioner fails to direct the filing of such bill within six months after receipt of such written request, such person or purchaser may, after giving notice to the Commissioner, file a petition in the District Court of the United States for the district in which the real estate is located, praying leave to file a bill for a final determination of all claims to or liens upon the real estate in question. After a full hearing in open court, the District Court may in its discretion enter an order granting leave to file such bill, in which the United States and all persons having liens upon or claiming any interest in the real estate shall be made parties. Service on the United States shall be had in the manner provided by sections 5 and 6 of the Act of March 3, 1887, entitled `An act to provide for the bringing of suits against the government of the United States.' Upon the filing of such bill the District Court shall proceed to adjudicate the matters involved therein, in the same manner as in the case of bills filed under subdivision (a) of this section. For the purpose of such adjudication, the assessment of the tax upon which the lien of the United States is based shall be conclusively presumed to be valid, and all costs of the proceedings on the petition and the bill shall be borne by the person filing the bill."

There does not seem to be any dispute as to the facts.

The Atlantic Dock Company was the owner of the premises in question, and on the 20th day of May, 1920, the then trustees, in pursuance of an order of the New York Supreme Court, conveyed the said premises to Rodney T. Martinsen for $625,000, the said conveyance was duly recorded, and on the same day the said Rodney T. Martinsen paid $225,000 in cash to the then trustees and executed and delivered to them his bond for the balance of $400,000, with interest thereon at the rate of 6 per cent. per annum, payable semiannually, the principal of said bond to be paid in sums of $50,000 each, on the 20th day of May, 1919, and the 20th day of May, 1920, and the balance on the 20th day of May, 1923; and also a purchase-money mortgage, which was duly recorded in said register's office, covering the premises in question, and to secure the said sum with interest as provided in said bond, the said trustees being empowered to sell said premises in case of default in the payment of said principal sum or interest as therein provided.

Thereupon the said Rodney T. Martinsen conveyed said premises to the Ramberg Iron Works, the same being subject to said mortgage.

Default was made in the payment of the installment of principal which became due on May 1, 1920, and on or...