Annotations-Prior
Law
6332 Annotations: Prior
Law- Levy
Penalty
for Failure to Surrender Property: Prior law
[48-1 USTC ¶9178]
United States of America
, Plaintiff v. Ocean Accident and Guarantee Corporation, Limited,
Defendant
In
the United States District Court, Southern District of New York, Civ.
44-252, 76 FSupp 277, February 5, 1948
Lien for taxes: Property subject to lien: Third party.--An award
granted to taxpayer under the New York State Compensation Law, which is
in the hands of a third party, is not exempt from the Government's claim
for 1943 and 1944 income taxes, although exempt from claims of
creditors.
John F. X.
McGohey, U. S. Attorney, for the plaintiff. Herbert F. Hastings, Jr.,
1 Park Ave.
,
New York
16, N. Y., for the defendant.
BRIGHT,
District Judge:
Defendant's
motion to dismiss is denied. Taking the facts alleged in the complaint
as true it appears that George Colvell and Marie Colvell are indebted to
plaintiff in the sum of $268.59 for unpaid income taxes for 1943 and
1944, with interest. That liability is joint and several. 26 U. S. C. §51(b).
Acting pursuant to §3690, §3692 and §3710 of the same law levy was
made on defendant on property and rights to property belonging to George
Colvell then in defendant's possession, demand was made that the latter
surrender the amount mentioned which defendant has refused to do, which
makes it liable under §3710(b) for the amount mentioned with costs and
interest. At the time of the levy defendant had in its possession the
proceeds of an award granted to George Colvell under the New York State
Compensation Law having a value of not less than $268.59. That was money
payable to said taxpayer (N. Y. Workmen's Compensation Law, §2, subd.
6); and for its payment defendant was directly liable. (id. §54-1; Matter
of Aioss v. Sardo, 249 N. Y. 270, 272, Matter of Cheesman,
236 N. Y. 47, 50; 26 U. S. C. §3692; United States v. Long Island
Drug Co., 115 Fed. (2d) 983, 986 [41-1 USTC ¶9140]) and [sic]
payment by it would bar a recovery against either it or the employer.
(id. §54-1;
United States
v. Marine Midland Trust Co. 46 Fed. Supp. 38, 39 [42-2 USTC ¶9590],
§3710 supra). In any event, any other possibility is not a bar
to this action.
United States
v. Aetna Life Ins. Co. 46 Fed. Supp. 30, 33 [42-1 USTC ¶9266].
[Conclusion]
While
compensation benefits are, by §33 of the Compensation Law, declared
exempt from all claims of creditors and from levy for recovery of a
debt, such exemption cannot be availed of against the Government, which
has not by statute or otherwise provided for such exemption. (Matter
of
Rosenberg
, 269 N. Y. 247, 251 [35-2 USTC ¶9650], cert. denied 298
U. S.
669; Burnet v. Harmel, 287
U. S.
103, 110 [3 USTC ¶990]; Mercantile Trust Co. v. Hofferbert, 58
Fed. Supp. 701 [45-1 USTC ¶9124].
Settle order
on notice.
