United States v. FIDELITY-PHILADELPHIA TRUST COMPANY
Decision Date | 02 November 1970 |
Docket Number | Civ. A. No. 42351. |
Citation | 321 F. Supp. 7 |
Parties | UNITED STATES of America v. FIDELITY-PHILADELPHIA TRUST COMPANY, a corporation, Frank F. Truscott, George D. Kline, and Samuel Kagle. |
Court | U.S. District Court — Eastern District of Pennsylvania |
Sidney R. Bixler, Tax Division, Department of Justice, Washington, D. C., for plaintiff.
George D. Kline, Samuel Kagle, Philadelphia, Pa., for defendant, attorneys.
Arthur R. Littleton, Philadelphia, Pa., for Fidelity Bank.
This is a civil action of the United States seeking to have this court determine the interest of all claimants in a fund held by the Fidelity-Philadelphia Trust Company (The Fidelity Bank).
In this non-jury case the following allegations of the Complaint may be taken as true:
In addition to the above uncontested facts, after trial the court finds the following facts:
1. On August 24, 1964, a delegate of the Secretary of the Treasury of the United States served three notices of levy upon the Fidelity-Philadelphia Trust Company for the purpose of administratively collecting the outstanding tax liabilities of O'Brian Buick, Inc., Carl H. O'Brian, and Carl H. and Miriam O'Brian.
2. On the date that federal notices of levy were served, the Fidelity-Philadelphia Trust Company was holding funds for the benefit of O'Brian Buick, Inc., Carl H. O'Brian and Carl H. and Miriam O'Brian on deposit in two accounts bearing the captions "Samuel Kagle and Frank F. Truscott, Attorney Account".
3. The Fidelity-Philadelphia Trust Company on that date refused to pay over the funds on deposit to the United States, and has at all times thereafter refused and failed to surrender any part of the aforementioned fund.
4. The funds on deposit in the above mentioned accounts were the proceeds of the sale in 1956 of all the assets of O'Brian Buick, Inc., a corporation owned by two equal shareholders, Carl H. O'Brian and Jules DeHaan. The sale was negotiated by Frank F. Truscott and George D. Kline representing O'Brian Buick, Inc. and Carl H. O'Brian and Myron Jacoby representing Jules DeHaan and O'Brian Buick, Inc.
5. The fund was set up because Carl H. O'Brian and Jules DeHaan were in disagreement over the proceeds of the sale. It was therefore stipulated that the fund was to be held by the attorneys for the respective parties until such time as the conflicts were resolved.
6. Subsequently, the name of Samuel Kagle was substituted as Trustee for Myron Jacoby on the above mentioned account when Samuel Kagle took over the representation of Jules DeHaan from Myron Jacoby.
7. Frank F. Truscott, George D. Kline and Samuel Kagle have an attorney's lien on the fund deposited in the Fidelity-Philadelphia Trust Company, based upon their efforts in (a) establishing and preserving the funds in question, (b) maintaining records with respect to the claims against the funds and (c) earning interest as a consequence of the establishment of the fund.
The legal question to be determined by this court is the priority of the liens asserted against the fund now held by the Fidelity Bank.
The lien asserted by the United States arose pursuant to section 6321 of the Internal Revenue Code, 26 U.S.C. § 6321. The priority of this federal tax lien, as against liens created under state law, is governed by the common law rule —"The first in time is the first in right." United States v. New Britain, 347 U.S. 81, 74 S.Ct. 367, 98 L.Ed. 520 (1954); United States v. First Nat. Bank & Trust Co. of Fargo, N. D., 386 F.2d 646 (8th Cir. 1967). It is critical, therefore, to determine when competing liens, whether federal or state created, come into existence or become valid for the purpose of the rule. It is a matter of federal law whether such lien has acquired sufficient substance and has become so perfected as to defeat a later arising or later filed federal tax lien. United States v. Pioneer American Ins. Co., 374 U.S. 84, 83 S.Ct. 1651, 10 L. Ed.2d 770 (1963). The federal rule is that liens are "perfected in the sense that there is nothing more to be done to have a choate lien—when the identity of the lienor, the property subject to the lien, and the amount of the lien are established." United States v. New Britain, supra, 347 U.S. at 84, 74 S.Ct. at 369.
The federal tax lien provided by section 6321 of the Internal Revenue Code, 26 U.S.C. § 6321, arises and is a perfected choate lien when assessed pursuant to section 6322, 26 U.S.C. § 6322, which attaches to the taxpayer's property upon demand and refusal...
To continue reading
Request your trial-
United States v. Fidelity-Philadelphia Trust Co., 71-1277.
...Circuit Judges. OPINION OF THE COURT ALDISERT, Circuit Judge. This appeal by the government from an order of the district court, 321 F. Supp. 7, awarding $5,000 to attorney claimants from an escrow fund requires us to decide whether the claimants had perfected an attorney's lien under Penns......