Alaska

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[56-2 USTC ¶9695]Boston Insurance Company, Northern Assurance Company, and National Fire Insurance Company, Plaintiffs v. H. Frank Stubbs; Arthur R. Knodel; Fritz Schadde, L. H. Rogers and L. E. Sticha; Jesse D. Lander and Paul K. Cook; and John T. McLaughlin, Director, Unemployment Insurance Division, Territory of Alaska, Defendants

U. S. District Court, West. Dist. Wash. , So. Div., No. 1846, 3/20/56

[1939 Code Sec. 3672(a)--similar to 1954 Code Sec. 6323(a)]

Collection: Lien for taxes: Validity against creditors: Fact-finding.--Federal tax liens on insurance proceeds were valid and prior to the following claims: an attorneys' lien for services in settling the fire insurance claim arising when a fire occurred at taxpayers' Club Cafe, writs of attachment and notices of garnishment by a bakery and another creditor, and a lien by the Employment Security Commission of Alaska based upon an assignment of the proceeds of the insurance claim.

[1939 Code Sec. 3672(a)--similar to 1954 Code Sec. 6323(a)]

Collection: Lien for taxes: Attorneys' fees of interpleading insurance company.--Insurance companies brought an interpleader action against the creditors of taxpayers to determine the disposition of the proceeds from taxpayers' insurance claim settlement. They were not entitled to attorneys' fees and costs in view of the fact that Federal tax liens were valid and prior to the claims of all other creditors. Liverpool & Globe Insurance Co., 55-1 USTC ¶9136, 348 U. S. 215, was followed.

Clarke, Clarke & Albertson, New World Life Building , Seattle , Wash. , for plaintiff. Charles P. Moriarty, United States Attorney, Guy A. B. Dovell, Assistant United States Attorney, for intervenor.

Complaint in Interpleader (Filed October 14, 1954 )

BOLDT, District Judge:

Come now the plaintiffs and, for cause of action in interpleader, state:

[Suit to Collect Fire Insurance]

I. That plaintiffs, and each of them, are insurance companies, duly authorized to write policies of insurance covering property in the Territory of Alaska and that each of said plaintiffs issued a policy of insurance naming Bert Adams and Mary Adams, d.b.a. Club Cafe, as insureds and covering their interest in said Club, or its contents, which was located in Fairbanks, Alaska, against the hazard of loss by fire in accordance with the terms and conditions of said policies.

II. That a fire occurred at said Club on or about the 28th day of December, 1950, as a result of which said insureds made claim against the plaintiff insurance companies under the aforementioned insurance policies as to which claim plaintiff companies denied liability, and that the insureds thereafter instituted suit against said insurance companies for the purpose of endeavoring to collect said claim, the suit being Cause No. 1745 in the records of the above-entitled Court.

III. That in said action the insurance companies, in addition to pleading defenses as to any liability, also pleaded affirmatively that various liens, attachments and garnishments had been filed against said insurance claim, as more specifically hereinafter referred to; that in said Cause No. 1745 a stipulation of settlement was entered into between the parties, a copy of which is hereto attached marked "Exhibit A" and by reference made a part hereof the same as if set forth in full herein, whereby settlement was agreed upon in the amount of $3,000.00, which said sum was to be paid into court in an interpleader action in order that the rights of the respective claimants to said fund could be therein adjudicated, and that this action is brought pursuant to said settlement stipulation.

[Claims of Creditors]

IV. That the defendants, H. Frank Stubbs and Arthur R. Knodel are citizens and residents of the State of Washington, residing in Pierce County, Washington; that they were attorneys of record for the insured in said Cause No. 1745 and are claiming an attorneys' lien on said fund for their services in the amount of $1,500.00, plus advanced costs and expenses.

V. That the defendants, Fritz Schadde, L. H. Rogers and L. E. Sticha, are citizens and residents of the Territory of Alaska, residing at Fairbanks, Alaska, and that they are, or were, doing business as the North Pole Bakery, and that in Cause No. 6698 in the District Court for the Territory of Alaska, Fourth Division, they caused a writ of attachment and notice of garnishment to be served upon the Insurance Commissioner of the Territory of Alaska as process agent for the insurance companies which are plaintiffs in this action, setting forth that Norbert Adams and wife were indebted to them in the sum of $1,997.73, together with interest and costs, and purporting to attach any indebtedness from said insurance companies to the said Norbert Adams and wife.

VI. That the defendants, Jesse D. Lander and Paul K. Cook, are citizens and residents of the Territory of Alaska, residing at Fairbanks, Alaska, and that in Cause No. 6672 in the District Court for the Territory of Alaska, Fourth Division, they caused a writ of attachment and notice of garnishment to be served upon the Insurance Commissioner of the Territory of Alaska as process agent for the insurance companies which are plaintiffs in this action, setting forth that Norbert Adams, Sr., is indebted to them in the sum of $4,870.35, together with interest and costs, and purporting to attach any indebtedness from said insurance companies to the said Norbert Adams.

VII. That John T. McLaughlin is Director of the Unemployment Insurance Division of the Territory of Alaska and that on April 3, 1951, the said N. J. Adams executed an assignment of the proceeds of his insurance claim in favor of the Employment Security Commission of Alaska in the amount of $850.11, and that said Employment Security Commission filed on June 7, 1951, lien No. 124609 in the amount of $901.46, which said lien purported to be against all property or funds of the said N. J. Adams.

[Claim of Government]

VIII. That the Internal Revenue Department of the United States filed in the Commissioner's office at Fairbanks, Alaska, and served on the Insurance Commissioner of Alaska as process agent for the insurance companies the following notices of lien and levies as against Norbert Adams:

"Lien No. 20074, dated May 28, 1951 , in the amount of $1,462.38;

"Lien No. 19628 dated March 9, 1951 , in the amount of $2,474.84;

"Notice of Levy dated November 10, 1951 , under Liens No. 20751 and No. 21075, in the amount of $1,479.39,"

and that the said Internal Revenue Department has, through its authorized counsel, signified its intention of intervening in the above-entitled action for the purpose of asserting its said liens and levies and claims of priority as to the fund paid into court in this action.

IX. That, as herein above set forth, adverse claimants of diverse citizenship are claiming an interest in the insurance proceeds herein before referred to and that, although ample time has been allowed, said claimants have been unable to agree among themselves as to their respective priorities on the division of said fund, and that plaintiffs, having no knowledge of the respective rights and priorities of said claimants and being desirious of avoiding the possibility of multiple liability, do hereby deposit into court the full amount due under the settlement stipulation in Cause No. 1745, to wit, the sum of $3,000.00, in order that there may be an adjudication as to the respective rights of the claimants and that plaintiffs may receive a full and complete release of liability to any party.

X. That an order should be entered by this Court prohibiting the defendants, and each of them, from instituting or continuing any suit, action, claim or process against the insurance companies relating to the funds herein paid into court except by filing their responsive pleadings and claims in this interpleader action.

XI. That there should be no proceedings in this action until sufficient time has elapsed for the Department of Internal Revenue of the United States to intervene and assert its claim under its aforesaid liens and levies.

[Claim by Insurance Companies for Attorneys' Fees]

XII. That $300.00 is a reasonable sum to be allowed plaintiffs in this interpleader action out of the funds paid into court for the services of their attorneys in connection with the institution and maintenance of this interpleader action.

WHEREFORE, plaintiffs pray that an order be entered discharging plaintiffs, and each of them, from any and all liability to all defendants arising out of the insurance policy and fire loss referred to in Cause No. 1745 of the records of the above-entitled court, and that appropriate orders be entered prohibiting the defendants, and each of them, from proceeding against the plaintiffs in relation to said fund or claims in any other cause and proceeding, and that plaintiffs be allowed the sum of $300.00 for the services of their attorneys and their costs and disbursements out of the funds paid into the court in this proceeding.

Order and Judgment (March 20, 1956)

[Conclusions]

This matter coming on regularly to be heard before the above-entitled Court, and upon due consideration of the Pre-trial Order entered this day, and briefs and arguments thereon, it is hereby

ORDERED, ADJUDGED and DECREED that the entire fund remaining to wit $2,000.00 on deposit in the registry of the court in this action belongs to the United States of America by virtue of the priority of its valid liens thereon for taxes due from Norbert J. and Mary J. Adams, and it is further

ORDERED, ADJUDGED and DECREED that the Clerk of the Court pay to the United States of America all of said funds, to wit $2,000.00 and it is further

ORDERED, ADJUDGED and DECREED that plaintiffs, Boston Insurance Company, Northern Assurance Company and National Fire Insurance Company, are hereby discharged from all further liability with respect to that fund, and the claims thereto of all parties other than the United States of America are hereby foreclosed, and it is further

ORDERED, ADJUDGED and DECREED that the request of the interpleading plaintiffs for their attorneys' fees and costs be denied on the authority of the decision of the Supreme Court of the United States in United States v. Liverpool & Globe Insurance Company, 348 U. S. 215 [55-1 USTC ¶9136].