United States v. PEELLE COMPANY, 324

• Decision Date: 09 June 1955
• Docket Number: No. 324,Docket 23611.,324
• Citation: 224 F.2d 667
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. The PEELLE COMPANY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Second Circuit

224 F.2d 667 (1955)

UNITED STATES of America, Plaintiff-Appellee, v. The PEELLE COMPANY, Defendant-Appellant.

No. 324, Docket 23611.

United States Court of Appeals Second Circuit.

Argued May 5, 1955.

Decided June 9, 1955.

Leonard P. Moore, U. S. Atty., Eastern Dist. of New York, Brooklyn, N. Y., for appellee (Richard C. Packard, Brooklyn, N. Y., Robert J. Grimmig, E. Rockaway, N. Y., H. Elliot Wales, Asst. U. S. Attys., Brooklyn, N. Y., of counsel).

Blaisdell & Dunne, New York City, for defendant-appellant (Parker, Chapin & Flattau, Russell S. Knapp, Alvin McKinley Sylvester, Joseph Levy, New York City, of counsel).

Before CLARK, Chief Judge, MEDINA, Circuit Judge, and DIMOCK, District Judge.

DIMOCK, District Judge.

Appellant, The Peelle Company, is a corporate taxpayer alleged to be in default in the payment of well over $1,000,000 in taxes for the years 1945 to 1949. Jeopardy assessments made against appellant by the Commissioner of Internal Revenue and received by the District Director of Internal Revenue on January 21, 1955 were filed with the Clerk of the United States District Court for the Eastern District of New York on January 24, 1955 and on that day the District Director of Internal Revenue, Brooklyn, New York, gave defendant notice and made demand for payment of the taxes due. No payments on account of these taxes have been made by appellant to date.

On January 28, 1955 the Government began this action to foreclose tax liens pursuant to 28 U.S.C. §§ 1345, 1396; I.R.C. §§ 6321, 6322, 6325, 7403 (1954) and, on the ex parte motion of the Government, Judge Abruzzo entered an order appointing a temporary receiver. At the same time he signed an order to show cause why the appointment of the temporary receiver should not be made permanent, returnable on February 4, 1955. On February 4, 1955 appellant appeared through its counsel. During the period from February 4 to March 15, 1955 the parties were given opportunity to submit affidavits and answering affidavits and a large number thereof were submitted.

On February 25, 1955 this court, from the bench, denied a motion by appellant, made on February 24, 1955, for a stay of execution of the order appointing the temporary receiver pending an appeal from that order.

On March 3, 1955 appellant company moved in the District Court for an order striking and suppressing certain affidavits made in behalf of the Government by the temporary receiver and his accountant and for an order vacating the appointment of the temporary receiver. Orders denying both motions were entered by the District Court on March 30, 1955.

By order entered April 4, 1955 the court appointed the temporary receiver as permanent receiver.

On April 11, 1955 this court, from the bench, denied a motion by appellant, made on April 7, 1955, for a stay of execution of the order appointing the permanent receiver pending an appeal from that order.

The present appeal is from the order of January 28, 1955, appointing a temporary receiver of appellant company, from the order of March 30, 1955, denying appellant's motion to suppress affidavits made by the temporary receiver and his accountant, and, from the order of April 4, 1955, appointing a permanent receiver of appellant company. D.C., 131 F.Supp. 341.

The order of January 28, 1955: Appellant says that this order was invalid. Section 7403(d) of the Internal Revenue Act of 1954, 68A Stat. 874, provides, inter alia, that the court "upon certification by the Secretary of the Treasury or his delegate during the pendency of such proceedings to enforce a lien or to subject property to the payment of the tax that it is in the public interest, may appoint a receiver with all the powers of a receiver in equity." Appellant says that since the certification was filed after the order was entered the order was entered in violation of the provisions of the statute. This point is without merit. It appears, and appellant does not deny, that the Secretary executed the required certification on January 28, 1955, the day of the appointment of the temporary receiver. We find nothing in the statute that warrants a construction which would require that the Secretary's certification be filed in the court in which the proceeding is pending. Appellant does not contend that the court was not aware of the Secretary's certification when the temporary receiver was appointed and, what is more, it appears that Judge Abruzzo had before him on the ex parte motion the Government's verified complaint which alleged that it was entitled to the appointment of a receiver pursuant to section 7403.

But, says appellant, even if the statute's requirement of certification by the Secretary was satisfied it was improper, under the general equity...