United States v. Rosenfield, 4080.

• Decision Date: 07 December 1938
• Docket Number: No. 4080.,4080.
• Parties: UNITED STATES v. ROSENFIELD et al.
• Court: U.S. District Court — Western District of Michigan

26 F. Supp. 433

UNITED STATES v. ROSENFIELD et al.

No. 4080.

District Court, E. D. Michigan, S. D.

December 7, 1938.

John C. Lehr, U. S. Dist. Atty., and J. Thomas Smith, Asst. U. S. Dist. Atty., both of Detroit, Mich., for plaintiff.

Bodman, Longley, Bogle, Middleton & Farley, and Henry I. Armstrong, Jr., all of Detroit, Mich., for defendant Packard Motor Car Co.

Bulkley, Ledyard, Dickinson & Wright and John M. Hudson, all of Detroit, Mich., for defendant Morrison & Townsend.

LEDERLE, District Judge.

This cause came on to be heard and it was agreed between the parties that it might be submitted on a written stipulation of facts plus the exhibits attached thereto and the pleadings filed therein. Both sides submitted excellent proposed findings of fact and conclusions of law at the date of the hearing of the oral arguments, and these proposed findings may be filed as part of the records. These proposed findings and conclusions were stated in great detail. As I view the case, however, the material facts and applicable law may be stated briefly as follows:

1. This is a bill in equity filed by the United States to enforce or foreclose a lien upon 500 shares of stock of the Packard Motor Car Company, registered in the name of defendant Carl Rosenfield, in accordance with the provisions of the Acts of Congress providing for the assessment and collection of Federal taxes.

2. On or prior to October 26, 1929, the defendant Carl Rosenfield became the owner of 500 shares of stock of the Packard Motor Car Company and this stock was duly registered in his name by the registrar agent of the said Packard Motor Car Company. On or about November 23, 1929, the Commissioner of Internal Revenue made a jeopardy assessment against the defendant Carl Rosenfield for additional income tax, together with interest and fraud penalties, for the calendar years 1927 and 1928, in the amount of $36,753.12. The assessment list containing this assessment was received by the Collector of Internal Revenue for the District of Michigan on November 25, 1929. Notices and demands on the said Rosenfield for payment of the additional taxes so assessed were served and made by the Collector of Internal Revenue on November 25 and December 16, 1929. The Collector of Internal Revenue on December 26, 1929, issued a warrant of distraint against the property of the said Carl Rosenfield and served notice thereof on the Packard Motor Car Company.

3. On November 26, 1929, the Collector of Internal Revenue for the District of Michigan, pursuant to the provisions of the statutes of the United States, filed a notice of tax lien under the Revenue Laws of the United States for the amount of the assessments with the Register of Deeds for Wayne County, Michigan, and also filed a notice of tax lien in the office of the Clerk of the District Court of the United States for the Eastern District of Michigan.

4. On January 7, 1930, the Commissioner of Internal Revenue notified defendant Carl Rosenfield by registered mail of such assessments and advised him of his privilege to petition the United States Board of Tax Appeals for a redetermination of his tax liability. On March 6, 1930, the defendant Carl Rosenfield filed with the United States Board of Tax Appeals his petition to re-determine these deficiencies. On May 20, 1938, the defendant Carl Rosenfield filed with the Board of Tax Appeals a stipulation that an order might be entered re-determining a deficiency in the aggregate amount of $2,000, plus the interest thereon, amounting, as of May 20, 1938, to $3,171.66.

5. The 500 shares of Packard Motor Car Company stock owned by Carl Rosenfield were represented by certificates numbered D-16365 to D-16369, both inclusive. On January 20, 1930, these certificates of stock, duly endorsed in blank by the defendant Carl Rosenfield were presented to the officers of the defendant partnership of Morrison & Townsend at the City of Detroit for sale by one David J. Harris, together with a letter signed by Carl Rosenfield authorizing the disposition of such stock or the proceeds thereof and any income therefrom in any manner which the said David J. Harris might direct, including the credit therefor to his personal account with said Morrison & Townsend. Morrison & Townsend thereupon in the regular course of business and without actual notice of the existence of any asserted income tax liability of said Carl Rosenfield or of any claimed lien against or on the property or rights to property of said Carl Rosenfield for unpaid income tax, bought said shares of stock, received the certificates therefor, and issued its check payable to said David J. Harris in the sum of $7,730 in payment therefor. This was the market value of the stock in question on that date.

6. February 21, 1930, Morrison & Townsend presented to the Packard Motor Car Company, or its transfer agent, for transfer to its name, the above-mentioned stock certificates for the 500 shares of stock so purchased by it. The Packard Motor Car Company refused to make the transfer due to the fact that the Collector of Internal Revenue at Detroit, Michigan, had notified said company that the Government of the United States claimed a lien and right of possession of said shares of stock for the payment of taxes assessed against the said Carl Rosenfield.

7. The defendants Morrison & Townsend had no notice of the existence of any asserted lien against the property of the said Carl Rosenfield prior to said February 21, 1930. On March 14, 1930, the Collector of Internal Revenue of Detroit, Michigan, issued and served upon the defendants Morrison and Townsend a notice of distraint upon all property and rights to property then in the possession of Morrison and Townsend and belonging to said Carl Rosenfield, with particular reference to the aforementioned Packard Motor Car Company stock.

Conclusions of Law.

1. This is a suit in equity by the United States under the provisions of Section 3207 of the Revised Statutes of the United States, as amended by Section 1127 of the Revenue Act of 1926, c. 27, 44 Stat. 123, and as further amended by Section 802 of the Revenue Act of 1936, c. 690, 49 Stat. 1648, 1743, 26 U.S.C.A. § 1568, to enforce a tax lien asserted by the plaintiff, United States of America, with respect to certain deficiency assessments of income taxes made by the Commissioner of Internal Revenue on November 23, 1929, against the defendant Carl...