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UNITED STATES v. LINZER CLEANING & DYEING CORP.

May 25, 1959

UNITED STATES of America, Plaintiff,
v.
LINZER CLEANING & DYEING CORP., Angela Parisi, as Chairman of the Workmen's Compensation Board of the State of New York, Sidney Schwamm, Joseph Apfel and David L. Frankel, Defendants



The opinion of the court was delivered by: LEVET

Plaintiff, United States of America, has moved for summary judgment. The issue involves interpretation of the words 'judgment creditor' in Title 26 U.S.C.A. § 6323. The U.S.A. and the Workmen's Compensation Board of the State of New York (hereinafter called the 'Board') each claims priority to a certain fund.

The facts are undisputed and in substance are as follows:

(1) On October 17, 1958, plaintiff filed a Notice of Federal Tax Lien in the amount of $ 5,634.66 with the Register of the City of New York, Bronx County, covering withholding, social security and unemployment taxes assessed against the defendant Linzer Cleaning & Dyeing Corp. (hereinafter called 'Linzer') for the months of July and August, 1958.

 (2) On October 17, 1958, notices of levy in the amount of $ 5,703.17, covering the above-mentioned taxes, plus statutory additions were served upon defendants Sidney Schwamm, Joseph Apfel and David L. Frankel. These defendants had the following interests, derived by reason of the sale on May 2, 1958 of Linzer's business to Frankel for the sum of $ 2,500:

 (a) Frankel had paid Linzer the sum of $ 750 prior to the closing of the sale. An additional $ 750 in cash was paid at the sale and 20 promissory notes, each in the sum of $ 50, payable monthly, amounting to a total of $ 1,000, were likewise delivered to complete the purchase price of $ 2,500. The notes were secured by a chattel mortgage.

 (b) Schwamm and Apfel, attorneys, hold in escrow the cash of $ 750, the notes of $ 1,000 and the chattel mortgage.

 (3) On October 17, 1958, the date on which the notice of levy above mentioned was served, Schwamm and Apfel held the sum of $ 635.75 in cash, together with 15 promissory notes and the mortgage securing the notes. Thus, at that date Frankel owed Linzer the sum of $ 750 on the notes. Both Frankel and Schwamm concededly are stakeholders and have agreed to turn over the above-mentioned monies, notes and mortgage to the party determined by this court to be entitled thereto.

 (4) The only adverse claimant to these assets as against the U.S.A. is Angela Parisi, Chairman of the Board. The Board claims to be a 'judgment creditor' of Linzer by virtue of the following facts:

 (a) On May 27, 1958, a Notice of Determination of Employer Liability Under the Disability Benefits Law was served upon defendant Linzer.

 (b) An order for payment dated August 8, 1958, was addressed to defendant Linzer.

 (c) An Affidavit of Regularity signed by Edith L. Hendon, Assistant Counsel to the Board, was filed reciting all of the foregoing and non-compliance by Linzer and directing the Clerk of Bronx County to enter judgment against Linzer.

 (d) An order signed by the County Clerk of Bronx County, dated September, 12, 1958, directed the entry of a judgment in the sum of $ 405.59 and the issuance of an execution therefor.

 This procedure apparently followed the provisions of Section 219 of the New York Workmen's Compensation Law, McKinney's ...


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