United States v. Bleasby

• Decision Date: 25 June 1958
• Docket Number: No. 12513.,12513.
• Citation: 257 F.2d 278
• Parties: UNITED STATES of America v. Charles B. BLEASBY, Nelson F. Stamler, County of Bergen and The Board of Chosen Freeholders of the County of Bergen, Charles B. Bleasby, County of Bergen and The Board of Chosen Freeholders of the County of Bergen, Appellants.
• Court: U.S. Court of Appeals — Third Circuit

257 F.2d 278 (1958)

UNITED STATES of America v. Charles B. BLEASBY, Nelson F. Stamler, County of Bergen and The Board of Chosen Freeholders of the County of Bergen Charles B. Bleasby, County of Bergen and The Board of Chosen Freeholders of the County of Bergen, Appellants.

No. 12513.

United States Court of Appeals Third Circuit.

Argued April 24, 1958.

Decided June 25, 1958.

Rehearing Denied July 28, 1958.

Milton T. Lasher, Hackensack, N. J., for appellants.

David O. Walter, Washington, D. C. (Charles K. Rice, Asst. Atty. Gen., Lee A. Jackson, A. F. Prescott, Attys., Dept. of Justice, Washington, D. C., Chester A. Weidenburner, U. S. Atty., Charles H. Hoens, Jr., Asst. U. S. Atty., Newark, N. J., on the brief), for appellee.

Before MARIS, KALODNER and HASTIE, Circuit Judges.

HASTIE, Circuit Judge.

This controversy grows out of opposing claims of the United States and the County of Bergen, New Jersey to a fund of $127,000. This large amount in currency was seized by police officers of New Jersey as contraband subject to forfeiture in a raid upon premises occupied by an alleged bookmaker in Bergen County.¹ A few days after this state seizure the United States undertook to perfect a lien for taxes upon all property of the bookmaker and, in so doing, levied upon the aforesaid fund in the possession of the officer holding it in the name and right of the state.

Thereafter the County of Bergen proceeded in normal course, as provided in New Jersey Statutes, Annotated, Section 2A:152-9, to seek and obtain in the Superior Court of New Jersey a formal decree declaring the fund forfeited to the county as property used in a criminal activity. The Supreme Court of New Jersey affirmed the order of forfeiture. State v. Link, 1954, 14 N.J. 446, 102 A.2d 609. Thereafter, the present action was instituted by the United States against Bergen County, its Treasurer, and the state officer who had originally seized the money to establish the priority of the tax lien which the United States had filed and asserted after the confiscatory state seizure, but before the statutory forfeiture proceeding was initiated in the New Jersey court. The District Court held that the claim of the United States prevailed over the claim of the county. D.C.D.N.J.1957, 153 F.Supp. 724. The county has appealed.

The Supreme Court has gone very far in sustaining the priority of United States tax liens over antecedent liens under state law, where it has been possible to view the state lien as still "inchoate" when the tax lien was perfected. United States v. Acri, 1955, 348 U.S. 211, 75 S.Ct. 239, 99 L.Ed. 264; United States v. Liverpool & London & Globe Ins. Co., 1955, 348 U.S. 215, 75 S.Ct. 247, 99 L.Ed. 268; United States v. White Bear Brewing Co., 1956, 350 U. S. 1010, 76 S.Ct. 646, 100 L.Ed. 871, reversing per curiam 7 Cir., 227 F.2d 359; United States v. Security Trust & Savings Bank, 1950, 340 U.S. 47, 71 S.Ct. 111, 95 L.Ed. 53. However, this case presents the special and unusual situation of the United States attempting to attach a tax lien to property actually in possession of the state after its seizure as contraband subject to forfeiture to the state. True, after seizure it still remained for the state to pursue the prescribed procedure for obtaining a formal decree of forfeiture. But this does not alter the fact that the United States has tried to impose a lien on property after it has passed into the actual possession of another government under sovereign claim of right to keep it in furtherance of the policy of its criminal laws. Thus, the United States is asserting an extraordinary power greater than and different from that involved in the cases above cited or any others upon which the United States relies. But we do not have to resolve the very real difficulties which this question presents, because this case can, and we think should, be decided on another ground.

In the circumstances here the judgment of forfeiture bars the United States from challenging the title of Bergen County. The controlling principle is that stated in the Restatement, Judgments, § 2, comment a:

"A valid judgment in rem cannot be collaterally attacked. It is in accordance with public policy that when the rights have once been finally determined, the question of the existence of the rights cannot be again litigated. It is in the interest of the successful party and of the public that the matter should be finally determined in the proceeding in which it is decided. It is immaterial that the decision was erroneous on the facts or on the law; and it is immaterial whether the persons whose rights in the thing were affected did or did not avail themselves of an opportunity to object to the judgment."

A more detailed examination of the forfeiture proceeding in the state court will demonstrate the applicability of this principle.

The Treasurer of Bergen County brought the forfeiture suit in accordance with state law in the Superior Court of Bergen County where the res was situated. Asserting his official custody of the $127,000 and the existence of adverse claims by the gambler from whom it had been taken, by the United States and by others, the Treasurer asked that the court decree the forfeiture of the money "to the sole use and gain of the County of Bergen." Notice and instruction to show cause why this forfeiture should not be ordered as prayed was served upon the several claimants, including the Director of Internal Revenue, as representative of the United States. The United States then contented itself with a filing denying the authority of the court to adjudicate its rights. It did not elect to participate in the trial of the merits of the claim, although it was not dismissed from the proceeding. After hearing the parties who elected to contest the county's claim, the court issued a final order, which is not part of the record in the present case, but which we judicially notice. That judgment recites, among other things, the service of a rule to show cause upon the Director of Internal Revenue and his refusal to recognize the jurisdiction of the court. It also recites the presence of an Assistant United States...