Fact-Finding
Page5

Richard A.
Kaye, Kaye & Fialkow, 18 Tremont,
Boston
,
Mass.
, for defendants-appellants.
Rob
ert I. Waxman, Richard M.
Rob
erts, Acting Assistant Attorney General, Lee A. Jackson, Joseph Kovner,
Department of Justice, Washington, D. C. 20530, W. Arthur Garrity, Jr.,
United States Attorney, William B. Duffy, Jr., Assistant United States
Attorney, Boston, Mass., for plaintiff-appellee.
Before
ALDRICH, Chief Judge, and MCENTEE and COFFIN, Circuit Judges.
Opinion
of the Court
MCENTEE,
Circuit Judge:
This is an
appeal from the granting of the government's motion for summary judgment
in an action to foreclose a federal tax lien. The basic issue is whether
the district court was right in concluding as a matter of law that a
fund in the possession of the defendant, Parlane Sportswear Co., Inc.,
(Parlane) was the property of the defendant taxpayer, Del Ray
Sportswear, Inc., (Del Ray) to which the tax lien would attach.
The essential
facts are these. Parlane and a company known as Sherry Hill Sportswear,
Inc., (Sherry Hill) not a party to this action, are manufacturers of
ladies sportswear. Del Ray does contract work for both companies. Del
Ray had tax troubles and on
October 2, 1962
the Internal Revenue Service made an assessment against it for an unpaid
withholding tax deficiency. On the same day the government also gave
notice and made a demand for payment of the assessment. Payment not
having been received, a notice of federal tax lien was filed with the
Town Clerk of Whitman, Massachusetts, on November 2, 1962, 1
and a Notice of Levy was served on Parlane or November 8. 2
On said date Del Ray had work in process for Parlane and Sherry Hill.
The next day it completed the work it was doing for Sherry Hill but was
unable to deliver it because of insufficient funds to pay its employees
for the work done. Thereupon an arrangement was made between Del Ray and
Parlane whereby the latter advanced the necessary payroll funds to Del
Ray 3
with the understanding that the money to be received from Sherry Hill
would be turned over to Parlane. At the same time Parlane took an
assignment of all funds due
Del
Ray from Sherry Hill for this work. Del Ray's employees having been
paid, the goods were delivered to Sherry Hill and later that day
(November 9) Sherry Hill's checks for $1,747.27, payable to Del Ray,
were delivered to Parlane's attorney who deposited them in his account
and made remittance to his client. The record does not show that Parlane
had any dealings with Sherry Hill in regard to this matter prior to
November 9 when Sherry Hill delivered the checks. Subsequently, the
government brought suit against Del Ray, Parlane and its attorney and
obtained a default judgment against Del Ray for $12,180.61. It then
moved for summary judgment against Parlane and its attorney to foreclose
its tax lien against the fund of $1,747.27 held by Parlane.
In granting
summary judgment the district court ruled that the government acquired a
valid lien against the personal property of Del Ray on November 2, 1962;
that the fund in the possession of Parlane is the property or right to
property of Del Ray and that the lien of the United States having been
duly recorded takes priority over the rights of Parlane. Accordingly,
the court ordered that the tax lien be foreclosed against the fund of
$1,747.27 and that Parlane turn over this fund to the government in
partial satisfaction of its judgment against Del Ray. The defendants
Parlane and its attorney appeal from this judgment.
Under Rule
56(c) of the Federal Rules of Civil Procedure summary judgment shall be
rendered "if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits,
if any, show there is no genuine issue as to any material fact and that
the moving party is entitled to a judgment as a matter of law."
In considering
the correctness of a summary judgment as we do here, this court must
view the case in a light most favorable to the party against whom the
motion has been granted. Poller v.
Columbia
Broadcasting, 368
U. S.
464 (1962); Manganaro v. Delaval Separator Co., 309 F. 2d 389,
391 (1st Cir. 1962). The government based its motion upon the complaint
and answer, a deposition of the president of Parlane, affidavits of the
District Director of Internal Revenue and an Assistant United States
Attorney and a certified copy of the recorded notice of federal tax
lien. The defendants filed a counter affidavit made by the president of
Parlane, This counter affidavit set forth, amongst other things, that
Sherry Hill, Parlane and Del Ray are all members of the new New England
Sportswear Manufacturers' Association and as such are parties to an
agreement between the association and the union, Section 33 of which
reads as follows:
"MANUFACTURER
RESPONSIBLE FOR WAGE PAYMENTS: Each Employer member of the Association
who employs contractors shall be responsible to the members of the Union
for the payment or underpayment of their total wages for work done by
them on garments made for the Employer, providing such liability shall
be limited to wages or underpayment for one full week and provided
further that notice of default is given to the Association or the
Employer within ten (10) days after such default."
Defendants
maintain that under the above section of the agreement, 4
Sherry Hill had an obligation to meet Del Ray's payroll because Del Ray
was doing work for Sherry Hill and that this coupled with the events
that followed, raised a genuine issue of material fact as to whether the
money owed by Sherry Hill was the property or right to property of Del
Ray. Thus, they argue, the district court erred in granting summary
judgment. In support of its position the defendants advance two
alternative contentions under either of which they claim Parlane is
entitled to the fund in question. First, they say that since Sherry Hill
was obligated to pay Del Ray's employees under Section 33 of the union
agreement, when Parlane paid these employees on November 9, it in effect
made a loan to Sherry Hill and when Sherry Hill delivered its checks to
Parlane's attorney later that day it was actually making payment of this
loan. Their second contention rests on the theory of equitable
assignment and constructive trust. They argue that since Parlane assumed
Sherry Hill's obligation in paying Del Ray's employees, the payment of
Sherry Hill to which the government lays claim was due not to Del Ray
but to its employees; that Del Ray's only interest in it was as trustee
for its employees; that when Parlane paid the employees an equitable
assignment was effected in favor of Parlane and the fulfillment of this
trust could only occur by delivering the fund to Parlane. Thus, they
conclude the government is not entitled to the fund since it acquired no
greater interest in it than Del Ray had.
It is
difficult to see how defendants can prevail on either of these theories.
To begin with, there is nothing in the record to support their
underlying contention that an obligation had arisen under Section 33 of
the union agreement whereby Sherry Hill was required to pay Del Ray's
employees for the work performed. There is no showing that Sherry Hill
knew the wages on its work were unpaid or that any notice of default was
given to the association or to Sherry Hill as provided in Section 33. It
seems to us that such a showing must be made before any such obligation
arises under the union contract. Certainly Sherry Hill never requested
any such loan from Parlane nor under the facts of this case can any be
implied. Furthermore there is no indication that Sherry Hill needed
money. On the contrary, Sherry Hill paid what it owned upon receipt of
the goods from Del Ray. It is clear that any payment by Sherry Hill here
was for goods delivered to it by Del Ray and not for unpaid wages. It is
equally clear from the record that the reason for Parlane's advance of
payroll funds to Del Ray or to its employees was that Del Ray was doing
work for Parlane and not because of Del Ray's work for Sherry Hill. 5
On these facts there is no basis for finding that either a loan or a
trust in favor of Parlane came into existence as claimed here.
The defendants
cite Commissioner v. Court Holding Co. [45-1 USTC ¶9215], 324
U. S.
331 (1954), for the proposition that in tax matters the substance of a
transaction will prevail over the form used by the parties. From our
examination of the record the substance of the transaction in question
here is that Parlane advanced certain funds so that Del Ray could meet
its payroll upon the understanding that the money Del Ray received from
Sherry Hill would be turned over to Parlane. Pursuant thereto it then
took a simple assignment 6
of Sherry Hill's debt to Del Ray. This was done after the government's
lien had been recorded and notice of levy had been given to Parlane.
We find that
as a matter of law the government is entitled to the fund in question
and that the district court did not err in granting summary judgment.
Affirmed.
1
Del Ray, a
Massachusetts
corporation, had a place of business in Whitman.
2
This notice apprised Parlane of Del Ray's tax liability and notified it
that all property and rights to property in its possession belonging to
Del Ray were being levied upon and seized for satisfaction of this tax
liability.
3
In his counter affidavit, the president of Parlane stated that his
company advanced these payroll funds by delivering individual checks to
the Del Ray employees.
4
It is undisputed that Parlane and Sherry Hill are employers and Del Ray
is a contractor under this section of the agreement.
5
As stated by its president in his deposition, Parlane advanced money to
Del Ray for payroll "when Del Ray notified us . . . that they were
unable to make their payroll and the work was going to be stopped unless
payroll would be paid . . .." When asked what Parlane's interest
was in advancing money to Del Ray to meet its payroll, he replied
"They had my work in process. I had given them . . . substantial
amounts of garments . . .. And once work has begun in a contract shop
and it's in process it's practically impossible to take it from that
shop and give it to some other shop to finish . . .."
6
The president in his deposition and also in his counter affidavit
referred to this as an assignment.
[76-2 USTC
¶9674]
United States of America
, Plaintiff v. Berchal Wendell Denny, et al., Defendants
U.
S. District Court, So.
Dist.
Ill.
, No. Div., No. P-CIV-75-58,
9/7/76
[Code Secs. 6323 and 7403]
Tax lien: Enforcement: Foreclosure: Notice requirement.--The
District Court held that the government could not foreclose on a tax
lien against real estate unless all persons (not just the taxpayer)
having liens or claiming interest are made parties to the proceedings.
Therefore, the Government's motion for summary judgment was allowed as
to the taxpayer's liability, since it was clearly established that
taxpayer was responsible for collecting and paying over withholding and
F. I. C. A. taxes.
Rob
ert J. Kauffman, Assistant United States Attorney, Peoria, Ill., John
Tjaden, Department of Justice, Washington, D. C. 20530, for plaintiff.
Elmo E. Koos, 1122 Jefferson Bldg.,
Peoria
,
Ill.
, for defendants.
Decision
and Order
MORGAN,
District Judge:
The United
States of America seeks to reduce an alleged tax assessment to judgment
and foreclose a tax lien against certain described real estate, pursuant
to Sections 7402 and 7403 of the Internal Revenue Code of 1954, as
amended, 26 U. S. C. §§ 7402, 7403. The complaint alleges that the
action is authorized by the Secretary of the Treasury and is directed by
the Attorney General, as is required by Section 7401. Named as
defendants are Berchal W. Denny, as the taxpayer, Milburn and Inez
Riddle, as the alleged record owners of the real estate, Joe Wayne
Denny, Gerald Lee Denny, and Mackinaw Savings and Loan, as possible
claimants to some interest in the real estate. All individual defendants
appeared through the same counsel and moved to dismiss. The motion was
denied on
September 9, 1975
, and those defendants thereafter answered on
September 19, 1975
. Both the Government and the individual defendants have now moved for
summary judgment pursuant to Rule 56 of the Federal Rules of Civil
Procedure.
The Government
claims right to summary judgment on the issues of liability, amounts
due, and foreclosure of the lien; and the defendants claim right to
judgment on the ground that the action is barred by the applicable
statute of limitations. The Government argues that the taxpayer, Berchal
Denny, has admitted facts in interrogatories propounded to him that
would support a judgment of liability, and that the amount of the
assessment is supported by affidavit. Defendants argue that the action
is barred for the reason that the assessments were made more than six
years ago. The Government responds that the defendants waived this
defense, and even if there was not a waiver, the running of the period
of limitations was tolled by the offers in compromise.
Defendants
have raised the defense of limitations for the first time in their
motion for summary judgment. A plea of limitations is an affirmative
defense required to be raised in the responsive pleading. Rule 8(c), F.
R. Civ. P. Failure to do so amounts to waiver of the defense. Roe v.
Sears, Roebuck & Co., 132 F. 2d 829 (7th Cir. 1943); Baker v.
Chicago
, Fire and Burglary Detection, Inc., 489 F. 2d 953 (7th Cir. 1973).
The default might possibly have been cured by amendment under Rule 15,
F. R. Civ. P., but there has been no request for leave to amend.
Even if the
court could now consider the statute of limitations as a defense, the
running of the period was clearly tolled as to Berchal Denny by the
offers in compromise made and signed by him. Section 6502 of the
Internal Revenue Code provides that a proceeding to collect an
assessment must be brought within six years, but the period may be
extended by agreement. Attached to the Government's brief in opposition
to defendants' motion are three offers in compromise. One of the offers
is dated as accepting a waiver of the statute of limitations on
November 14, 1966
. Berchal Denny agreed to suspend the running of the statute for the
pendency of the offer and one year thereafter. The offer was withdrawn
on
April 28, 1971
. The statute was therefore tolled from
November 14, 1966
to
April 28, 1972
. The assessments were made for the last quarter of 1964 and the first
quarter of 1965 on
May 21, 1965
, and for the second quarter of 1965 on
July 14, 1965
. This action was brought on
July 1, 1975
, and is therefore within the six-year period.
Upon
consideration of the pleadings, answers to interrogatories, and
affidavits on file, the court finds that there is no genuine issue of
material fact as to the liability and amount owed by Berchal Denny to
the Government. Denny has admitted sufficient facts to make him
responsible for amounts of withholding taxes and taxes imposed against
him under the Federal Insurance Contributions Act. Denny admitted that
he operated a business as a sole proprietor, kept and maintained all
records, prepared the payroll and tax returns, and was aware that taxes
were not being paid over to the Government. The Government has submitted
the affidavit of Ira S. Loeb, District Director of Internal Revenue, to
support the submitted amount. Berchal Denny has not submitted any
opposing affidavit and only states in his answers to interrogatories
that he does not know the unpaid balance. Loeb's affidavit purports to
list all payments made by Denny and a resulting unpaid balance of taxes,
interest, and penalties as of
April 30, 1976
, of $84,727.63, with a daily accrual of interest thereafter of $10.98,
for a total of $86,034.25 as of
August 27, 1976
.
The Government
asks that the court enter judgment of foreclosure and order a sale of
the property described in the complaint and a distribution of Berchal
Denny's one-half interest, to satisfy the lines of the United States and
the liability of Denny. Notices of the tax liens on the assessments of
the last quarter of 1964 and the first quarter of 1965 were filed on
June 22, 1965
, and refiled
July 9, 1970
in
Tazewell
County
, where the property is located. The notice of the tax lien for the
second quarter of 1965 was filed
July 21, 1965
, and refiled
October 20, 1970
. Milburn and Inez Riddle obtained an interest in the subject property
by a deed dated
July 3, 1965
, and recorded
July 6, 1965
in
Tazewell
County
. The Riddles have paid the real estate taxes and mortgage payments
since that time. They took title subject to the tax liens filed on
June 22, 1965
, and free from the lien filed
July 21, 1965
. 26 U. S. C. §6323(a). Though the Riddles claimed an interest in their
answers to interrogatories, the final pretrial memorandum submitted on
behalf of the individual defendants states that the Riddles have
conveyed the property to their grandchildren, Joe Wayne Denny and Gerald
Lee Denny.
What interest
Mackinaw Savings and Loan may claim has not been shown. While served
with summons and copy of the complaint, they have not answered. They
may, of course, hold a sound first mortgage lien.
Defendants
oppose the prayers for judgment of foreclosure and order for sale of the
subject property on the ground that Berchal Denny's wife, Doris, had an
individual one-half interest in the property, which is not subject to
sale. Section 7403(a) of the Internal Revenue Code authorizes suits
"to enforce the lien of the
United States
. . . or to subject any property of whatever nature, of the delinquent,
or in which he has any right, title or interest, to the payment of such
tax or liability." This provision has been interpreted to allow
sale of not only the interest of the taxpayer but also the property
itself in which others may have an interest. See
United States
v. Trilling [64-1 USTC ¶9292], 328 F. 2d 699 (7th Cir. 1964), where
the sale of joint tenancy property was upheld, rather than merely the
taxpayer's interest.
The court
interprets the Government prayer for an order for sale as directed to
the entire property and not just the taxpayer's or his grantee's
interest. Section 7403 requires, however, that all persons having liens
or claiming an interest in the property be made parties. 26 U. S. C. §7403(b).
The issue of whether Doris Denny does have an interest in the property
now raised by defendants in their memorandum in opposition to the
Government's motion, may not be ignored. No sworn material or documents
having been presented on this issue, or on the true interests, if any,
of Joe Wayne Denny and Gerald Lee Denny and Mackinaw Savings and Loan,
summary judgment to foreclose the tax liens and order a sale of the
property simply cannot be granted. If the government does seek to sell
the property itself, which would seem the only practical course, Doris
Denny must be made a party. Only then can the court make findings as to
the true present interests in the property and order distribution of the
proceeds of a sale pursuant to Section 7403(c) of the Internal Revenue
Code.
Accordingly,
IT IS ORDERED that defendants' motion for summary judgment is DENIED,
the Government's motion for summary judgment is ALLOWED as to the
defendant Berchal Denny's liability and the amount thereof, and judgment
is entered for the Government and against the defendant Berchall Denny
in the amount of $86,034.63.
IT IS FURTHER
ORDERED that genuine issues of material fact exist as to the interests
in the subject property, and the Government's motion for summary
judgment to foreclose the tax lien and to order a sale of the property
is DENIED.
[64-1 USTC
¶9365]
United States of America
, Plaintiff v. Lyle E. Stewart, et al., Defendants
U.
S. District Court, No. Dist.
Ill.
, West. Div., Civil No. 62 C 53, 12/12/63
Tax liens: Priority: Judgment creditors: Sellers.--Federal tax
liens filed on September 2, 1955 against real estate of a delinquent
taxpayer were subordinate to the claims of the sellers of the real
estate in an agreement for deed originally recorded April 13, 1953, but
were superior to a judgment lien arising July 18, 1956. Federal tax
liens filed August 30, 1956 were subordinate to the judgment lien
arising July 18, 1956, but were superior to a judgment lien arising
November 24, 1958.
J. Crawford,
Assistant U. S. Attorney, U. S. Court House,
Chicago
,
Ill.
, for plaintiff. R. Canfield, Rockford, Ill., for L. & M. Stewart;
J. C. Saladino, South Beloit, Ill., for H. & D. Raehl; Reno, Zahn,
Folgate & Skolrood, Rockford, Ill., for P. Latham; P. Appel,
Assistant Attorney General, Chicago, Ill., for Dir. of Labor, State of
Ill.; R. Yalden, Rockford, Ill., for Acme Redi-Mix Concrete Co.;
Pedderson, Menzimer & Conde, Rockford, Ill., for City Lumber &
Supply, defendants.
Findings
of Fact and Conclusions of Law
DECKER,
District Judge:
This cause
having been tried before this Court on October 29, 1963, on the issues
raised by the Complaint of the United States of America and the answers
of defendants Harley and Della Raehl, City Lumber and Supply Company and
Acme Ready Mix Concrete Company, all of which parties were represented
at trial by counsel; the other defendants filing answers in this action
and having claimed liens against the real estate described in the
Complaint of the United States not having appeared at trial and the
Court having considered the evidence and the stipulation entered into by
and between the United States and defendant-taxpayer Lyle Stewart and
his wife, defendant Maxine Stewart, makes the following findings of fact
and conclusions of law:
1. The real
estate described in paragraph VIII of the Complaint of the
United States
was purchased by defendants Lyle E. and Maxine M. Stewart from
defendants Harley and Della Raehl on April 13, 1953, pursuant to an
agreement for deed duly filed with the Recorder of Winnebago County,
Illinois, on April 13, 1953.
2. A second
agreement for deed between Harley and Della Raehl, as vendors, and
Maxine M. Stewart, as purchaser was entered into on October 26, 1955, in
the amount of the balance due under the agreement for deed dated April
13, 1953, and was duly filed with the Recorder of Winnebago County,
Illinois, on November 30, 1955.
3. The amount
due Harley and Della Raehl under the agreement for deed dated October
26, 1955, is $8,096.16.
4. Maxine M.
Stewart has entered into a stipulation in this cause stating that she
makes no claim to and has no interest in the real estate described in
paragraph VIII of the Complaint.
5. Lyle E.
Stewart has been assessed by the
United States
for unpaid withheld F. I. C. A. and withheld income taxes plus interest
for which notice of tax liens were filed with the Recorder of Winnebago
County, Illinois, as follows:
Notice Notice of
Date of and Tax Lien
Tax Period Amount Assessment Demand Filed
6-30-53 ....... $ 768.71 5-28-54 6-2-54 9-2-55
9-30-53 ....... 2,829.28 5-28-54 6-2-54 9-2-55
12-31-53 ...... 874.13 5-28-54 6-2-54 9-2-55
9-30-54
....... 2,923.48
12-23-54
1-11-55
9-2-55
12-31-54
...... 1,773.01
4-29-55
5-11-55
9-2-55
12-31-54
...... 328.23
9-23-55
9-26-55
8-30-56
3-31-55
....... 3,716.32
9-29-55
10-13-55
8-30-56
$13,213.16
plus statutory
interest
6. On
July 18, 1956
, Judgment for the plaintiff in the amount of $3,415.41 was entered by
the Circuit Court of Winnebago County, Illinois, in a case entitled Acme
Ready Mix Concrete Co., plaintiff v. Lyle E. Stewart and Maxine M.
Stewart, defendants.
7. On
July 18, 1963
, execution was issued on the Judgment described above.
8. On June 18,
1963, a Judgment reviving the Judgment of July 18, 1956, was entered in
favor of Acme Ready Mix Concrete Co., plaintiff, and against Lyle E.
Stewart and Maxine M. Stewart, defendants, in the amount of $3,599.33
which amount reflects payments made and interest accrued on the original
judgment.
9. On
October 9, 1963
, execution was issued on the revived judgment entered in favor of Acme
Ready Mix Concrete Co.
10. On
November 24, 1958, judgment for the plaintiff in the amount of $2,016.20
was entered by the Circuit Court of Winnebago County, Illinois, in a
case entitled City Lumber & Supply Co., plaintiff v. Lyle E.
Stewart, defendant.
11. On
February 20, 1959
, execution was issued on the judgment entered in favor of City Lumber
& Supply Co.
12. Defendants
Harley and Della Raehl, legal titleholders to the real estate described
in the Complaint, have consented, by their attorney in open Court, to
the judicial sale of the real estate free and clear of their lien.
Conclusions
of Law
1. This Court
has jurisdiction of the subject matter of the action brought by the
United States
and the parties named therein.
2. Each
defendant named in the Complaint of the
United States
other than Lyle E. and Maxine M. Stewart, Harley and Della Raehl, Acme
Ready Mix Concrete Co., and City Lumber & Supply Co., are defaulted
for failure to appear and offer evidence in support of their respective
positions and a judgment order will issue accordingly.
3. Lyle
Stewart is indebted to the
United States
in the amount of $13,213.16 plus interest allowed by law.
4. The
purchaser's interest in the real estate described in the Complaint,
acquired in the name of Lyle Stewart and Maxine Stewart on
April 13, 1953
, through the agreement for deed, is the property of Lyle Stewart only.
5. Following
are the valid and subsisting liens against the real estate described in
the Complaint in the order of priority:
(a)
First, the claim of defendants Harley and Della Raehl in the agreement
for deed originally recorded on
April 13, 1953
, and due thereon the amount of $8,096.16 as of
October 29, 1963
.
(b)
Second, the federal tax lien of the
United States
filed on
September 2, 1955
, in the amount of $9,168.61 plus 6% per annum statutory interest from
September 2, 1955
.
(c)
Third, the judgment lien arising July 18, 1956, in favor of Acme Ready
Mix Concrete Co., in the amount of $3,599.33 plus 5% per annum statutory
interest from June 18, 1963.
(d)
Fourth, the federal tax lien of the
United States
filed on
August 30, 1956
, in the amount of $4,044.55 plus 6% per annum statutory interest from
August 30, 1956
.
(e)
Fifth, the judgment lien arising November 24, 1958, in favor of City
Lumber & Supply Co., in the amount of $2,016.20 plus 5% per annum
statutory interest from November 24, 1958.
6. The Court
concludes that the real property described in the Complaint should be
sold and the proceeds distributed in accordance with the priorities
stated above.
[61-2 USTC
¶9600]Dean Morgensen and D. J. Morgensen, dba Morgensen Lumber Company,
Plaintiffs v. Ralph Wright, dba W & L Construction Company, et al.,
Defendants
District
Court,
Oklahoma County
,
Okla.
, No. 144,800,
4/12/61
[1954 Code Sec. 6323]
Collection of taxes: Priority of liens: Accounts receivable: Fact
finding.--A default judgment was entered against the taxpayer who
failed to appear after being summoned. On the basis of evidence
presented by the Government and creditors of the taxpayer, the court
determined the order of priority which existed on a sum of money paid
into the court by the defendant, a debtor of the taxpayer. The court
then ordered disbursement of the money in the order of priority, and
awarded judgments to the Government and a creditor against the taxpayer.
James E. Work,
Withington, Shirk, Nichols & Work, Colcord Bldg., Oklahoma City,
Okla., for plaintiffs. Leonard L. Ralston, Federal Bldg.,
Oklahoma City
,
Okla.
, for intervenor plaintiff. David C. Johnston, Lytle, Johnston &
Soule, Commerce Exchange Bldg., Oklahoma City, Okla., for defendant.
Journal
Entry of Judgment
MILLS,
District Judge:
The above
entitled action comes on regularly for trial on the 6th day of April,
1961, plaintiffs appearing by their attorneys, Withington, Shirk,
Nichols & Work; intervenor plaintiff, United States of America,
appearing by Leonard L. Ralston, Assistant United States Attorney;
intervenor, International Paper Company, appearing by its attorneys,
Lytle. Johnston & Soule; and defendant, Merl Tufford, Jr., although
being three times called in open court, failing to appear in person or
by counsel.
All parties
present announce ready for trial and having waived a trial by jury,
present the matter to the court for determination.
The court
finds that the defendant, Merl Tufford, Jr., was personally served with
summons on August 12, 1958, and that said defendant has failed to plead,
demur or answer to the petition of plaintiff or the petition in
intervention of the United States of America and International Paper
Company, and is hereby adjudged to be in default and all allegations
therein against him taken as confessed.
[Fact
Finding]
The parties
present introduce their evidence and rest, and the court having heard
the evidence and argument of counsel, having examined the pleadings and
files and being fully advised in the premises, finds:
1. That as of
the date of commencement of this action the defendant, Ralph Wright, dba
W & L Construction Company, was indebted to defendant, Merl Tufford,
Jr., doing business as Tufford Drywall Company, in the sum of Five
Thousand Eight Hundred Ninety-nine and 51/100 Dollars ($5,899.51); that
pursuant to an order entered herein on the 24th day of February, 1961,
said defendant, Ralph Wright, dba W & L Construction Company,
deposited with the Clerk of this Court the sum of Five Thousand Five
Hundred Forty-nine and 51/100 Dollars ($5,549.51), representing the
amount due defendant, Merl Tufford, Jr., less the sum of Three Hundred
Fifty Dollars ($350.00) allowed by this court to defendant, Ralph
Wright, dba W & L Construction Company, as and for reasonable and
necessary attorneys' fees incurred by said defendant in this cause, and
that said defendant was absolved from any and all liability arising out
of the transactions involved in this action.
2. That the
deposit of Five Thousand Five Hundred Forty-nine and 51/100 Dollars
($5,549.51) made with the Clerk of this Court by defendant, Ralph
Wright, dba W & L Construction Company, shall be applied in
satisfaction of the costs of this action and to the extent possible in
satisfaction of the claims of the parties herein in accordance with the
priorities herein established, and that the parties not receiving
payment in full shall have judgment against defendant, Merl Tufford,
Jr., for the balance remaining due.
3. Defendant,
Merl Tufford, Jr., is indebted to the United States of America in the
sum of Two Thousand Three Hundred Twenty-eight and 74/100 Dollars
($2,328.74), as evidenced by a tax lien filed December, 1957, and that
the claim of the United States of America for said amount shall be given
priority No. 1; that defendant, Merl Tufford, Jr., is indebted to
International Paper Company in the amount of Three Thousand Forty-two
and 10/100 Dollars ($3,042.10), and that said claim of International
Paper Company in said amount shall be given priority No. 2; that
defendant, Merl Tufford, Jr., is indebted to the United States of
America in the amount of Three Thousand Three Hundred Eleven and 45/100
Dollars ($3,311.45), as evidenced by a tax lien filed June, 1958, and
that the claim of the United States of America for said amount shall be
given priority No. 3; that defendant, Merl Tufford, Jr., is indebted to
Dean Morgensen and D. J. Morgensen, dba Morgensen Lumber Company, in the
amount of Seven Thousand Four Hundred Seventy-seven and 55/100 Dollars
($7,477.55), together with interest at eight percent (8%) per annum from
June 1, 1958, and that the claim of said Dean Morgensen and D. J.
Morgensen, dba Morgensen Lumber Company, for said amount shall be given
priority No. 4.
[Determination
of Priorities]
IT IS
THEREFORE ORDERED, ADJUDGED AND DECREED as follows:
1. The Clerk
of this Court shall disburse the deposit of Five Thousand Five Hundred
Forty-nine and 51/100 Dollars ($5,549.51) made by Ralph Wright, dba W
& L Construction Company, as follows:
a.
In payment of all costs of this action, accrued and accruing.
b.
To the United States of America Two Thousand Three Hundred Twenty-eight
and 74/100 Dollars ($2,328.74).
c.
To International Paper Company, a corporation, Three Thousand Forty-two
and 10/100 Dollars ($3,042.10).
d.
To the United States of
America
the balance remaining for application as a credit on the tax lien in the
amount of Three Thousand Three Hundred Eleven and 45/100 Dollars
($3,311.45).
2. Defendant,
the United States of America, shall have and recover a judgment against
defendant, Merl Tufford, Jr., for the sum of Three Thousand Three
Hundred Eleven and 45/100 Dollars ($3,311.45), together with interest
thereon as by law provided, less such amount as shall be paid to the
United States of America by virtue of paragraph d above.
3. Plaintiffs,
Dean Morgensen and D. J. Morgensen, dba Morgensen Lumber Company, shall
have and recover a judgment against defendant, Merl Tufford, Jr., in the
amount of Seven Thousand Four Hundred Seventy-seven and 55/100 Dollars
($7,477.55), together with interest at eight percent (8%) per annum from
June 1, 1958, until paid.
4. Ralph
Wright, dba W & L Construction Company, be and he is hereby
discharged without cost from any further liability herein.
[65-1 USTC
¶9344]
United States of America
v. Emzy T. Barker et al.
U.
S. District Court, West.
Dist.
Tex.
, Austin Div., Civil No. 1419,
2/5/65
[1954 Code Sec. 6323]
Tax liens: Priorities.--Two tracts of land owned by delinquent
taxpayers were found not to constitute their homestead. The court,
therefore, assigned the order of priority of liens, including liens for
federal income, withholding and unemployment taxes, against such
property on the basis of the dates such liens were perfected.
Ernest Morgan,
United States Attorney, Federal Bldg., San Antonio, Tex., for plaintiff.
C. W. Trueheart, Trueheart, McMillan & Russell, Bank of Commerce
Bldg., San Antonio, Tex., James L. Cutcher, Barkley & Cutcher, Box
751, Taylor, Tex., Thomas M. Bullion, Melasky & Bullion, 121 E.
Second, Box 1068, Taylor, Tex., J. R. Owen, County Attorney, P. O. Box
46, Georgetown, Tex., for defendants.
Findings
of Fact and Conclusions of Law
A. Findings of Fact
FISHER,
District Judge:
The facts
established by pleadings, exhibits, stipulations, admissions and
evidence are:
(1) This suit
is commenced at the direction of the Attorney General of the
United States
, with the authorization of and at the request of the Commissioner of
Internal Revenue, a delegate of the Secretary of the Treasury of the
United States
, and is brought by virtue of Sections 7401, 7402 and 7403 of the
Internal Revenue Code. This Court has jurisdiction under 28
United States
Code, 1345.
(2) James L.
Cutcher, Dudley Barker, Emzy Barker, Ruth Barker and Mahon B. Garry
reside in
Williamson County
,
Texas
.
[Vendors'
Liens]
(3) On or
about June 16, 1955, Emzy T. Barker, defendant herein, acquired by
warranty deed from John O. Tarr, approximately 103.07 acres of land in
Williamson County, Texas. The land so conveyed is fully described in the
warranty deed from Mr. Tarr to Mr. Barker, a copy of which is attached
to the complaint as "Exhibit A", and incorporated therein by
reference as if fully set out herein. Said deed having been recorded in
Volume 406, Page 176 of the Deed Records of Williamson County, Texas. A
vendor's lien in favor of Mahon B. Garry, Guardian, defendant herein,
was retained in said deed, which said vendor's lien is the first and
superior lien on said 103.07 acre tract. That as alleged in paragraph
III of this defendant's cross-action, notes 5-10 of said series in the
sum of $2,000 each are due, owing and unpaid. That the total principal
and interest due and owing on said notes as of June 24, 1964, amount to
$12,289.45; that interest on the principal accrues at the rate of $1.64
per day and that said notes provide for attorneys' fees in the amount of
10% of the principal and interest due and owing on the same.
(4) On or
about September 1, 1956, Emzy T. Barker, defendant herein, acquired by
warranty deed from C. M. Partain and wife, Dora Partain, and T. J.
Partain, two tracts of land totaling approximately 95.59 acres in
Williamson County, Texas. The land so conveyed is fully described in the
warranty deed from C. M. Partain and wife, Dora Partain, and T. J.
Partain, to Emzy T. Barker, a copy of which is attached to the complaint
as "Exhibit B." Said deed was recorded in Volume 419, Page
172, Deed Records of Williamson County, Texas. A vendor's lien was
retained in said deed and is further evidenced by Deed of Trust filed
for record and recorded in Volume 110, Page 581 of the Deed of Trust
Records of Williamson County, Texas. A copy of said Deed of Trust is
attached to the complaint as "Exhibit C." W. W. Barker
subsequently acquired the vendor's lien evidenced by "Exhibit
B" and "Exhibit C" and Emzy Barker and wife, Ruth Barker,
on or about May 18, 1961, executed their Deed of Trust evidencing this
transaction, said deed of trust being recorded in Volume 117, Page 344
of the Deed of Trust Records of Williamson County, Texas. A copy of said
Deed of Trust being attached to the complaint as "Exhibit D",
which indebtedness and lien was in renewal and extension of the original
vendor's lien and is the first and superior lien on said property. On or
about
October 5, 1963
, W. W. Barker transferred the vendor's lien on the property evidenced
by "Exhibit B" attached to the complaint, to Dudley Barker.
That the total balance due to Dudley Barker under said lien is $7,048.24
principal and interest as of
June 24, 1964
. The note provides for 10% attorneys' fees, and interest on the said
principal accrues at the rate of $1.96 per day, all of which said
defendant and cross-plaintiff is entitled to recover from defendant Emzy
T. Barker.
[Government's
Liens]
(5) Defendants
Emzy T. Barker and Ruth Barker are indebted to the
United States of America
for Federal Income and Withholding and Unemployment Taxes in the
following amounts and the assessments were made and recorded all as
follows:
Date Tax Liens
filed in
Date of Williamson
Period Amount Assessment County
Income .... 1955 $ 6,325.98
4-3-59
4-9-59
Income .... 1956 4,856.83
4-3-59
4-29-59
Income .... 1957 1,940.46
8-1-58
9-3-58
WFT ....... 4Q1961 704.43
3-16-62
6-19-62
WFT ....... 1Q1962 779.50
5-11-62
6-19-62
WFT ....... 3Q1962 311.86
4-12-63
5-7-63
WFT ....... 1962 601.72
4-19-63
5-28-63
FUT ....... 1961 1,643.53
3-23-62
5-2-62
FUT ....... 1962 92.72
1-25-63
3-15-63
$17,257.03
[Judgment Lien]
(6) Ferguson
Truck and Trailer Leasing, Inc., obtained a judgment in the 45th
District Court of Bexar County
,
Texas
, on
September 15, 1958
, in Cause No. F-115,745, styled Ferguson Truck and Trailer Leasing,
Inc., v. Emzy Barker and Emzy Barker Truck Lines in the amount
alleged in paragraph II of Ferguson Truck and Trailer Leasing, Inc.'s
cross-action. On
October 17, 1958
, abstract of said judgment was duly filed and duly recorded in the
office of the
County
Clerk
of
Williamson County
,
Texas
. Said judgment has never been satisfied, and Ferguson Truck and Trailer
Leasing, Inc. is still the owner and holder of said claim and lien. The
amount of the judgment recovered by cross-acting plaintiff, Ferguson
Truck and Leasing, Inc., against the defendant Emzy T. Barker and Emzy
Barker Truck Lines, Inc., jointly and severally, on
September 15th, 1958
, was $61,880.22, with $10,000 attorneys' fees, and interest on both of
said amounts from that date at the rate of 6% per annum.
[Property
Tax Liens]
(7) Defendant
and cross-plaintiff Jack Gillum and the taxing units represented by him
as alleged in his cross-action have a valid and subsisting lien for
taxes for the years 1961, 1962 and 1963 against the 95.59 acre tract
with the total sum due of $423.00 and against the 103.07 acre tract
$704.59 due and such liens became effective and affixed on January 1 of
each of said years.
[
Homestead
Not Involved]
(8) The
property in question (being the 95.59 acre tract to the west of the
1101/2 acre tract on which the defendants Emzy T. Barker and wife, Ruth
Barker, have lived continuously since 1951, and the 103.07 acre tract to
the south of said 95.59 acre tract) have not at any time since the
filing and recording of Ferguson Truck & Leasing, Inc.'s abstract of
judgment lien in Williamson County on October 17, 1958, constituted the
homestead of said defendants on account of these things:
(a) The
Barkers (husband and wife and younger unmarried son, B. B. Barker), have
lived in the house, so marked on the deposition plat, located on the
1101/2 acre tract, ever since December, 1951, and this younger son (B.
B. Barker) has farmed the south 55 acres of this 1101/2 acre tract, the
Barkers having, since their deed of July 28, 1958, to Emzy's brother,
Dudley Barker, occupied and used this 1101/2 acre tract under a verbal
arrangement with the latter that they would pay the taxes and pay him
$1,000 a year;
(b) Though
neither one of the two tracts involved (the 103.07 acre and the 95.59
acre tract) was bought for the purpose at the time of making them a home
place yet later he decided to build on the south 3 acres of the 103.07
acre tract and worked a bulldozer there for two days, clearing it in
1958, but has never done anything since then for want of financing, and
the photographs show no signs of a home, and the tax collector's
certificate shows no claim of homestead through 1962 on these tracts and
sworn exemption claim on the 1101/2 acre tract in 1956 and 1958;
(c) The
Barkers have never lived on the 103.07 acre or the 95.59 acre tracts,
nor used them (except as shown in (b) above) and the last time he did
any farming on these tracts was about 1960, and they did not construct
any improvements on these tracts and did not even have a garden there,
and these two tracts are farmed by their son, E. T. Barker, III, who is
married, has a family, and lives at Dell Valley, and he does not do this
on a cropper or sharing basis, though Emzy Barker sometimes works for
his son and is paid like any other hand;
(d) The
Barkers, for some undefined time, kept nine cows on the pasture
indicated on the 95.59 acre tract, and later, for some undefined time,
kept some nine cows for neighbors there, but these two tracts were all
fields with the exception of right around the house, and there was never
any fence between the two tracts, and the only fence between the 95.59
acre tract and the 1101/2 acre tract was way up on the pasture and only
down to where the hen brake is, and the 95.59 acre tract was conveyed to
the Barkers on September 1, 1956, subject to a life estate in the
grantors, G. M., Dora and T. J. Partain, "in the home [on that
tract], chicken yard and chicken house, and the right of ingress and
egress for as long as either one of them shall live."
(e)
Plaintiff's complaint in paragraph VIII alleges that the defendant
Capitol Feed & Milling Co., Inc., claims title to both of the two
tracts involved under an unrecorded conveyance dated February 11, 1963,
and Emzy Barker, on inquiry about this, testified that he gave this deed
as collateral, just for security, on account of the money this concern
furnished him the last year he farmed, and said deed was given only to
secure that concern in an indebtedness, and was not intended to actually
convey title to the land, this matter being handled by his attorney, Mr.
Cutcher.
(9) At no time
has Emzy Barker or his wife ever filed or made any statutory form of
declaration of any property as their homestead and the records of the
tax assessor and collector of Williamson County reflect a sworn claim of
homestead tax exemption by Emzy Barket on the 1101/2 acre tract in 1956
and 1958, and no such claim was made by either of them with respect to
the two tracts of 103.07 acres and 95.59 acres until 1963.
B.
Conclusions of Law
[Order of Priority of Liens]
(1) As a
matter of law, the property in question, being two tracts of 95.59 acres
(Tract A), and 103.07 (Tract B), has not at any time in question since
October 17, 1958 (the date of the filing and recording of cross-acting
defendant Ferguson Truck and Leasing, Inc.'s judgment) constituted the
homestead of Emzy T. Barker and Ruth Barker.
(2) The
holders of the vendor's lien notes (cross-acting plaintiffs Mahon B.
Garry, Guardian, and Dudley Barker) take priority over all parties with
respect to such lien indebtedness, including 10% attorneys' fees, since
such attorneys' fees are specified in amount. The claim of plaintiff for
income tax indebtedness on the part of the defendants Emzy T. Barker and
wife, Ruth Barker, for the year 1957 in the sum of $1,940.46, assessed
on August 1, 1958, on which the tax lien was duly filed on September 3,
1958, takes priority over the judgment lien debt of cross-acting
plaintiff Ferguson Truck and Trailer Leasing, Inc., which was duly
recorded on October 17, 1958, as well as priority over the tax lien
indebtedness due cross-acting plaintiff, Gillum, and otherwise the claim
of cross-acting plaintiff Ferguson Truck and Leasing, Inc. takes
priority over the balance of the claim on the part of plaintiff United
States of America, though subsequent to the tax lien indebtedness due
cross-acting plaintiff Gillum.
[66-2 USTC
¶9721]United States of America to the use of James R. Undlin, doing
business as Pioneer Fixture Company, Plaintiff v. Roscoe-Ajax
Construction Co., Inc., etc., et al., Defendants Murray Mill &
Manufacturing Co., Inc., Third Party Plaintiff v. R. L. Stephenson
Factors, et al., Third Party Defendants.
United States of America
, Intervenor
U.
S. District Court, No. Dist.
Calif.
, So. Div., Civil No. 42792, 10/30/66
[1954 Code Sec. 6323]
Lien for taxes: Agreement among creditors: Distribution of proceeds:
Interpleader.--A stipulation between the U. S. and a factor that the
U. S. was entitled to $2,014.69, the amount of tax liens against
property of a creditor from whom the factor purchased invoices, and that
the factor was entitled to the remaining $5,739.86 out of the total fund
held by the debtor of $7,754.55 was confirmed. Each of the parties was
entitled to the stipulated amounts. Further held, that the debtor owed
the creditor nothing from the fund of $7,754.55 which he originally owed
the creditor.
Arguello,
Giometti & McCarthy, Keil Bldg.,
244 Kearny St.
,
San Francisco
,
Calif.
, for plaintiff. Attorney General, 6000 State Bldg., San Francisco,
Calif., for lien claimant; Oakes & Horton, 935 Bank of America Bldg.
San Diego, Calif., for Murray Mill & Mfg. Co., Inc.; Thelen, Marrin,
Johnson & Bridges, 19th Floor, 111 Sutter St., San Francisco,
Calif.; J. W. Ehrlich, 333 Montgomery, San Francisco, Calif.; Surrey,
Karaski, Gould & Greene, Woodward Bldg., Washington, D. C.; Oakes
& Horton, 935 Bank of America Bldg., San Diego, Calif., for St. Paul
Fire & Marine Ins. Co.; for third party defendants. Cecil F. Poole,
United States
Attorney,
San Francisco
,
Calif.
, for U. S.
Findings
of Fact and Conclusions of Law
MATHER,
District Judge:
This cause
having come before the Court upon the motions of third party defendant
R. L. Stephenson Factors, filed May 25, 1966, and of intervenor United
States of America, filed July 6, 1966, for summary judgment upon the
Counterclaim for Interpleader of defendant and third party plaintiff
Murray Mill & Manufacturing, Inc., filed January 25, 1965; and the
motions having been ordered submitted for decision upon the papers and
memorandums of file, the Court makes its Findings of Fact as follows:
Findings
of Fact