Stock

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[74-2 USTC ¶9638] United States of America , Plaintiff v. Douglas Carr, Amelia Carr, and East River Housing Corporation, Defendants

U. S. District Court, So. Dist. of N. Y., 70 Civ. 3280 CES, 5/16/74

[Code Sec. 6323]

Priority of lien: Sale of property: Distribution of proceeds.--The IRS had valid prior tax lien on Co-op stock held by taxpayer, as against the corporation that issued the stock. The Court ordered the stock be sold and the proceeds distributed first to the IRS and then to the corporation.

Whitney N. Seymour, Jr., United States Attorney, Foley Square , New York , N. Y., for plaintiff. Szold, Brandwen, Meyers & Altman, 30 Broad St. , New York , N. Y., for defendants.

Judgment of Foreclosure

STEWART, District Judge:

This action having been commenced on July 30, 1970 by the filing of a complaint and the issuance of a summons, and the defendants Douglas Carr and Amelia Carr having been served on October 20, 1970 with copies of the summons and complaint by substituted service pursuant to New York Civil Practice Law and Rules (C. P. L. R.) §308(4), and the Marshal having filed his return on the summons with the Clerk of the Court on November 10, 1970, and no answer, motion or appearance having been made by either of these two defendants with respect to the complaint, and an amended complaint having been filed and a supplemental summons having issued on April 25, 1972, and the defendants Douglas Carr and Amelia Carr having been served on November 10, 1972 with copies of the supplemental summons and amended complaint by substituted service pursuant to C. P. L. R. §308(4), and the Marshal having filed his return on the supplemental summons with the Clerk of the Court on December 6, 1972, and no answer, motion or appearance having been made by either of these two defendants with respect to the amended complaint and a Second Amended Complaint having been filed on December 11, 1973, naming the East River Housing Corporation as a party defendant for purposes of facilitating relief, and copies of the Second Supplemental Summons and Second Amended Complaint having been served by mail on defendants Douglas Carr and Amelia Carr on December 11, 1973, and the defendant East River Housing Corporation having been personally served with a copy of the Second Supplemental Summons and Second Amended Complaint on January 11, 1974, and the Marshal having filed his return on the Second Supplemental Summons with the Clerk of the Court on February 4, 1974, and the defendant East River Housing Corporation having filed its Answer on January 31, 1974, and no answer, motion or appearance with respect to the Second Amended Complaint having been made by defendants Amelia Carr or Douglas Carr, and the Clerk of the Court having noted the default of defendants Douglas Carr and Amelia Carr, and the subject of this foreclosure action being 311/4 shares of stock in the East River Housing Corporation, 570 Grand Street, New York, New York, registered in the name of defendant Douglas Carr (hereafter "the Co-op Stock"), and ownership of the Co-op Stock carrying with it the right of occupancy in Apartment L 2002, 475 FDR Drive, New York, New York, and the Co-op Stock having a par value of $3,125.00, and the plaintiff United States of America having valid liens against the property of defendant Douglas Carr including the Co-op Stock by virtue of its duly filed tax assessments, and there appearing to be no valid prior existing liens against the Co-op Stock other than the lien of the defendant East River Housing Corporation for all indebtedness owing by the holder to the Corporation prior to any transfer thereof, and the East River Housing Corporation or a person designated by it having the exclusive right pursuant to the corporation's By-Laws to repurchase its shares at par value within ninety days from notification thereof, and the Co-op Stock now being in the possession of the defendant Douglas Carr, and it appearing likely that defendant Douglas Carr may not voluntarily surrender possession of the Co-op Stock to the Marshal upon the entry of a judgment of foreclosure,

NOW, on motion of Paul J. Curran, United States Attorney for the Southern District of New York, attorney for plaintiff, it is

ORDERED AND ADJUDGED, that the United States of America, plaintiff, have judgment, jointly and severally, against Douglas Carr and Amelia Carr, defendants, residing at 475 FDR Drive, New York, New York, on its First Cause of Action in the amount of $945.83, together with interest thereon from the 31st day of July 1964 at the rate of $0.15 daily amounting to the sum of $533.70 as of April 30, 1974, and on its Second Cause of Action in the amount of $12,865.99, together with interest thereon from the 14th day of March 1969 at the rate of $2.05 daily amounting to the sum of $3,910.00 as of April 30, 1974, and for the costs of filing liens and the costs and disbursements incurred in this action in the amount of $73.28, the entire judgment amounting to the sum of $18,328.80; and it is further

[Valid Prior Tax Lien]

ORDERED AND ADJUDGED, that the United States of America, plaintiff, has valid and prior tax liens in the aforegoing amounts against all property and rights to property of the defendants, including the Co-op Stock, subject only to the prior lien of the defendant East River Housing Corporation on the Co-op Stock for all indebtedness owing by the holder thereof to the Corporation prior to any transfer; and it is further

ORDERED AND ADJUDGED, that the plaintiff's tax liens are hereby foreclosed on the Co-op Stock; and it is further

[ Sale of Stock]

ORDERED AND ADJUDGED, that the Co-op Stock shall be sold free and clear of all right, title and interest of each and all of the defendants in this action and all persons claiming under them or any of them but subject to the aforesaid prior lien of the East River Housing Corporation; and it is further

ORDERED AND ADJUDGED, that the United States Marshal for the Southern District of New York ("the Marshal"), or his representative, shall arrest the Co-op Stock now in the possession of defendant Douglas Carr, and upon ten (10) days written notice to the plaintiff and the defendants shall offer the Co-op Stock for sale at a time and place to be set by him first, to defendant Douglas Carr, and then to defendant East River Housing Corporation or a person designated by it, for the purchase price of $3,125.00 being the par value of the Co-op Stock, and it is further

ORDERED AND ADJUDGED, that upon the failure of the defendant Douglas Carr, after having received written notice of at least five (5) days, to surrender the Co-op Stock within ten (10) days from the entry of this judgment to the Marshal for sale, the Marshal shall so notify the United States Attorney for the Southern District of New York and the defendant East River Housing Corporation, and the defendant East River Housing Corporation shall be authorized and is hereby directed to immediately cancel the Co-op Stock on its records and re-issue in place of the Co-op Stock replacement certificates for 311/4 shares of stock, having a par value of $3,125.00 and conferring the right to occupancy of Apartment L 2002, 475 FDR Drive, New York, New York ("the Replacement Stock"), and the Marshal shall then proceed to offer the Replacement Stock for sale to defendant East River Housing Corporation or a person designated by it for the purchase price of $3,125.00, and it is further

ORDERED AND ADJUDGED, that in the event that defendant Douglas Carr or East River Housing Corporation or a person designated by it fails to purchase the Co-op Stock or the Replacement Stock within ninety (90) days from the entry of this judgment, the Marshal shall offer the Co-op Stock or the Replacement Stock for sale at public auction to the highest bidder, and it is further

ORDERED AND ADJUDGED, that the Marshal, or his representative, shall execute and deliver to the purchaser a bill of sale of the Co-op Stock or the Replacement Stock upon the purchaser having complied with the terms of the sale, and that the proceeds of such sale shall be paid out by the Marshal as follows:

(1) to the United States Marshal for the Southern District of New York, the costs and expenses incurred by him in connection with the sale of the Co-op Stock; and

(2) to the defendant, East River Housing Corporation, the amount of any indebtedness owing by defendant Douglas Carr to defendant East River Housing Corporation prior to the date of sale of the Co-op Stock; and

(3) to the plaintiff, United States of America , its costs and disbursements of this action; and

(4) to the plaintiff, United States of America , the balance of the proceeds of the sale; and it is further

ORDERED AND ADJUDGED, that the Marshal shall promptly file his report of the sale with the Clerk of this Court, but upon the failure of the Marshal to make the sale as ordered, he shall make application by and through the United States Attorney for the Southern District of New York for such further orders as are necessary and appropriate.