Spagnuolo v. Bonnet
| Decision Date | 29 November 1954 |
| Docket Number | No. A--41,A--41 |
| Citation | 109 A.2d 623,16 N.J. 546 |
| Parties | , 55-1 USTC P 9192, 46 A.F.T.R. 1335 Margaret B. SPAGNUOLO, Plaintiff-Appellant, v. Joseph A. BONNET, formerly Sheriff of Essex County, Neil G. Duffy, Sheriff of Essex County, John E. Cash, Treasurer of the County of Essex, and County of Essex, Defendants-Respondents, and United States of America, Intervenor-Appellant. |
| Court | New Jersey Supreme Court |
Walter D. Van Riper, Newark, argued the cause for the plaintiff-appellant (Van Riper & Belmont, Newark, attorneys).
Fred E. Youngman, of the Dist. of Columbia Bar, Sp. Asst. Atty. Gen. of the United States, argued the cause for the intervenor-appellant (Raymond Del Tufo, Jr., U.S. Atty., Newark, H. Brian Holland, Asst. Atty. Gen., Andrew D. Sharpe and F. A. Michels, Sp. Assts. to the Atty. Gen., George J. Rossi, Asst. U.S. Atty., Jersey City, on the brief).
Marshall Crowley, Newark, argued the cause for the respondents.
The opinion of the court was delivered by
This case concerns the title to money seized by police in a raid on the headquarters of a lottery operation.
As the result of incriminating information obtained police officers on March 2, 1951 raided the home of one A. Edward Spagnuolo at 536 South 20th Street in Newark. After being admitted to the house by Mrs. Spagnuolo the officers were led to the bedroom occupied by herself and husband. In a dresser drawer were found lists of numbers sold, result slips, a list of agents, names of players and bill wrappers. In a small iron safe, in a corner of the bedroom, were found a list of some agents, a list of numbers sold and result slips. There was a small locked compartment in the safe for which Mrs. Spagnuolo produced the key. Upon it being opened $50,000 in cash was found, removed and taken to the office of the Sheriff of Essex County.
Upon being arrested Spagnuolo admitted that he, with others, had for some time conducted a lottery. He was indicted on two counts for violation of R.S. 2:135--3 to which he pleaded Non-vult, and on June 20, 1951 was sentenced to the State Prison for a term of one to two years.
On March 19, 1951 the Commissioner of Internal Revenue made a jeopardy assessment against. A. Edward Spagnuolo of additional income taxes in the amount of $85,664.04 with interest and penalty. On March 21, 1951 he gave notice of the assessment to Spagnuolo, filed a notice of lien in the Essex County Register of Deed's Office and served a notice of levy together with a warrant of distraint and notice of tax lien on the Sheriff of Essex County who had possession of the seized $50,000. 26 U.S.C.A., §§ 3670, 3671, 3672.
Because of the levy and distraint by the Collector the sheriff was compelled to retain the $50,000 in his possession although the usual procedure would have been to deposit the money with the county treasurer subject to the supervision of the prosecutor. R.S. 2:178--7.2, now N.J.S. 2A:152--8, N.J.S.A.
On January 28, 1952 the plaintiff here, who is the mother of A. Edward Spagnuolo, instituted suit against the Sheriff of Essex County claiming the $50,000 as her property. The sheriff, not claiming the money in his own right, filed a counterclaim for interpleader and obtained an order adding as additional defendants the United States of America, the Collector of Internal Revenue, A. Edward Spagnuolo, Lillian Spagnuolo, his wife, John E. Cash, Treasurer of Essex County, and the County of Essex. Upon motion there was a dismissal as to the United States and the Collector, and by the same order the United States was granted leave to intervene to assert its alleged lien, and thereupon it filed a petition in intervention by which it sought a judgment that the $50,000 was the property of A. Edward Spagnuolo on and after March 21, 1951, the date of its alleged lien for income taxes, and subject thereto.
Spagnuolo and his wife Lillian failed to answer the counterclaim for interpleader and at the time of the pretrial conference judgment by default was entered against them.
Under the pretrial order the factual issues to be tried were limited to the following: (1) Was the plaintiff the owner of the currency in question; (2) whether or not plaintiff is the owner of the currency, was it earmarked and segregated and being held as part of a gambling operation, namely, the lottery at 536 South 20th Street, Newark; (3) whether the found of $50,000 was the property of A. Edward Spagnuolo against whom the United States asserts a claim for unpaid income taxes; and the determination of the question of priority between the United States and the County of Essex, if it be determined that the money was the property of A. Edward Spagnuolo.
By consent of counsel the case was tried before the court without a jury and Judge Daniel A. Brennan, after hearing the testimony, adjudged that the $50,000 was not the property of the plaintiff but that of A. Edward Spagnuolo and that that money was employed by him in his gambling operations and was as such contraband of the law; that the money was received and held by Spagnuolo in those gambling operations, earmarked and segregated for gambling purposes; that it was contraband when seized and still remained contraband at the precise time it was seized and its legal status never changed. The judgment provided that the money be forfeited to the County of Essex and be paid over to the treasurer of that county. The judgment further sets forth that as of March 2, 1951, the date of the seizure of the money, the United States had no lien thereon and the relief sought by the United States was therefore denied.
The plaintiff and the United States of America appealed from the judgment entered in the Essex County Court to the Appellate Division of the Superior Court, and before the case was heard there we certified it on our own motion. R.R. 1:10--1(a).
We deal first with the appeal of the plaintiff Margaret B. Spagnuolo.
The pertinent statutory provisions relating to money seized in connection with an arrest for violation of a gambling law of this state are found in N.J.S. 2A:152--6 to 11, inclusive, N.J.S.A.
The trial court found that the $50,000 was not the property of the plaintiff but that of her son Edward, and with that finding of fact we are in entire accord. She had the burden of proof of overcoming the presumption of ownership in Edward by reason of his possession of the money. The possessor of personal property is Prima facie the owner of it. Bordine v. Combs, 15 N.J.L. 412 (Sup.Ct.1836); City Bank of Bayonne v. O'Mara, 88 N.J.L. 499, 97 A. 149 (Sup.Ct.1916); Redmond v. New Jersey Historical Society, 132 N.J.Eq. 464, 28 A.2d 189 (E. & A.1942).
We need not make a complete analysis of the testimony adduced on behalf of the plaintiff but content ourselves with the observation that the story relating to the hoarding of this large sum of money by the plaintiff and its transfer by her to her daughter-in-law in a paper bag without the amount of it being stated and without it being even counted by either Edward or his wife was wholly improbable, unbelievable and as stated below 'implausible to the point of fantasy.'
The evidence in the case comes largely from the mouths of the Spagnuolos but In re Perrone's Estate, 5 N.J. 514, 521, 76 A.2d 518, 521 (1950). When a finding of fact is amply supported by the evidence it will not be disturbed on appeal.
If the plaintiff was not the owner of the $50,000, as we hold, then she has no standing to complain that there was error below because it was not proven that the money in question was 'earmarked and segregated as part of a gambling operation.' Edward, who was found to be the owner, alone could raise this issue and judgment by his own default had been entered against him. The question is therefore now moot. This likewise qpplies to the contention of the plaintiff that it was 'the duty of the defendants to establish by a preponderance of the believable evidence that the money was segregated as an integral part of the gambling operation'. Both of these questions were only material if the plaintiff was the owner of the money.
This brings us, then, to the problem of priority as between the County of Essex and the United States of America.
Title 26, U.S.Code, § 3670 (26 U.S.C.A. § 3670) reads as follows:
'If any person liable to pay any tax neglects or refuses to pay the same after demand, the amount (including any interest, penalty, additional amount, or addition to such tax, together with any costs that may accrue in addition thereto) shall be a lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to such person.'
and section 3671 provides:
'Unless another date is specifically fixed by law, the lien shall arise at the time the assessment list was received by the collector and shall continue until the liability for such amount is satisfied or becomes unenforceable by reason of lapse of time'.
Accordingly, the lien of the Federal Government became effective March 20, 1951, the date on which the assessment list was received by the Collector of Internal Revenue.
The money was seized by the Sheriff on March 2, 1951, 18 days prior to the effective date of the Government's lien.
The contention of the Government is that the County of Essex had nothing more than an inchoate lien or potential contingent property right in the money until the order of forfeiture which was dated May 5, 1954; that at most any right of the county to the money was purely contingent at least until June 20, 1951, the date of Spagnuolo's conviction.
The position of the county is that the money was contraband at the time of its seizure, prior to the effective...
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