The opinion of the court was delivered by: DAWSON
On or about October 5, 1962, Russell Terns (hereinafter referred to as 'Terns'), a subcontractor, brought suit in the New York Supreme Court against Kenneth J. Whispell (hereinafter referred to as 'Whispell'), Terns' contractor, and Louise Selderbeck (hereinafter referred to as 'Selderbeck'), the property-owner for whom certain work had been done.
Thereafter, on or about November 21, 1962 the action was removed by the United States to the United States District Court for the Southern District of New York.
The action now comes before this Court on cross-motions seeking orders under Rule 56 of the Rules of Civil Procedure for summary judgment on the ground that there are no material issues of fact and that each party is, respectively, entitled to judgment as a matter of law. The competing claims of the subcontractor and of the United States are founded respectively on Section 36-a of the New York Lien Law and Section 6321 of the Internal Revenue Code of 1954.
The material facts are not in dispute. They are as follows:
1. In July 1957, Whispell entered into a contract under which he agreed to do certain work for Selderbeck.
2. Thereafter Terns was engaged by Whispell for the Selderbeck job.
3. Work was completed on the Selderbeck job in January 1958.
4. Somewhat over a month later, on March 4, 1958, federal withholding taxes were assessed against Whispell in the amount of $ 5,285.63. A further assessment of $ 250.53 was made on May 16, 1958. Notice of tax liens for each assessment was filed on March 7 and August 29, 1958, respectively.
5. On or about March 10, 1958, the Internal Revenue Service served a levy upon Selderbeck for the debt owed by her to Whispell.
6. On March 22, Whispell filed a voluntary petition in bankruptcy. During the course of that proceeding the Referee in his report recommended that the claim against Selderbeck be abandoned to the Director of Internal Revenue. The Referee's report was confirmed on August 1, 1962.
7. Terns' complaint, dated October 5, 1962, alleges that the sum of $ 2,120 is due Terns from Whispell.
8. In an affidavit submitted by her attorney it is admitted that Selderbeck 'owes someone the sum of $ 1,646.89.'
9. The United States intervened in this action and demanded, in its complaint, 'the sum of $ 1,517.82 plus interest and statutory thereon according to law.' (Sic).
Sections 6321 and 6322 of the Internal Revenue Code of 1954 create a lien for unpaid taxes which runs in favor of the United States upon all property and rights to property belonging to the taxpayer at the time an assessment for taxes due is made. The lien arises upon failure to pay taxes due after demand and relates back to the date of assessment. 26 U.S.C. §§ 6321, 6322.
The pertinent portions of the tax lien statute read as follows:
'If any person liable to pay any tax neglects or refuses to pay the same after demand, the amount * * * shall be a lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to such person.' '6322. Period of Lien.
'United another date is specifically fixed by law, the lien imposed by section 6321 shall arise at the time the assessment is made and shall continue until the liability for the amount so assessed is satisfied ...