The opinion of the court was delivered by: BRYAN
The United States, claiming deficiency income tax assessments of some $ 139,000 against one Odie R. Seagraves, sues under 26 U.S.C. § 7403 to enforce a federal lien for such taxes against a special account of the New York law firm of Collins & Gordon with the Lexington Avenue and 42nd Street Branch of the First National City Bank. On deposit in the special account is the sum of $ 125,000 which is the proceeds of the settlement of a lawsuit brought by Emanuel Lester against the estate of the late Serge Rubinstein in the Supreme Court, New York County. Messrs. Collins & Gordon represented the plaintiff Lester in this litigation.
Defendant Lester, on whose behalf this settlement was obtained, defendants Collins & Gordon, who assert that, out of the fund, they are entitled to be paid their fees for professional services in the Rubinstein litigation and for obtaining the settlement, and defendant Tracy, who asserts a claim for services as investigator in that litigation, have now moved for judgment on the pleadings pursuant to Rule 12(c), F.R.Civ.P., and for summary judgment pursuant to Rule 56.
The Government has made an oral cross-motion for summary judgment.
The first step in the long and tortuous chain of events which led to the institution of this action occurred in the period from 1942 to 1946 when Seagraves, a Texan, the taxpayer against whose property the tax here was levied, engaged in a joint venture with Rubinstein. Seagraves' interest in this joint venture eventually formed the basis for the suit in the New York State courts by Lester against Rubinstein which was subsequently settled for the $ 125,000 on deposit in the Collins & Gordon Special Account in the First National City Bank. It is the process by which this claim passed from the hands of Seagraves into the hands of Lester which has created the controversies involved in the case at bar.
The undisputed chronology of relevant events is as follows:
1. November 3, 1950: By a written instrument executed in Dallas, Texas, Seagraves assigned to Harold M. Oster, his attorney, and Donald U. Emmert, his accountant and office manager, his claims against Rubinstein arising out of the joint venture.
2. June 10, 1954: By a written instrument executed in Dallas, Texas, Oster and Emmert reassigned to Seagraves the claims against Rubinstein. In this instrument a lien of $ 25,000 'for unpaid consideration' was reserved by Oster and Emmert.
3. June 10, 1954: By a written instrument executed in the State of Texas, Seagraves assigned to Emanuel Lester the claims against Rubinstein. This assignment was absolute on its face and recited a consideration of 'the sum of ten (10) dollars and other good and valuable considerations, including the release of certain debts receipt of which is hereby acknowledged.'
4. June 17, 1954: By a written instrument executed in Dallas, Texas, Lester 'acknowledged' that Seagraves had an option to require reassignment to him of the claims against Rubinstein if Lester had been 'unable to effect collection' by September 15, 1954.
5. September 21, 1954: By a written instrument executed in Havana, Cuba, Seagraves and Lester 'abrogated and declared null, void and of no effect' Seagraves' option for reassignment of the claims against Rubinstein referred to in the instrument of June 17, 1954. The Havana instrument contained a recital of consideration and the additional statement 'that the aforesaid assignment from SEAGRAVES to LESTER (that of June 10, 1954) is in full force and effect and is absolute, unconditional and without restrictions of any kind, other than may appear in the body of said document.' The instrument was acknowledged by Seagraves before a notary public in Hexar County, Texas, on September 30, 1954.
6. September 21, 1954: By a joint writing signed in Havana, Cuba, Seagraves and Lester stated that the consideration for the assignment of June 10, 1964 was the release of a pre-existing indebtedness and other valuable considerations including additional cash advances for oil and gas leases. The statement was acknowledged by Seagraves before a notary public in Bexar County, Texas, on September 30, 1954.
7. March 24, 1955: Oster and Emmert, then plaintiffs or record in an action in this court against Rubinstein based on the Seagraves joint venture claim, signed and acknowledged in Dallas, Texas, a letter to a New York attorney, to be filed in court. In this letter they reaffirmed their reassignment of the claims against Rubinstein to Seagraves before June 10, 1954, and disclaimed any interest in such claims. It appears that the action in this court was dismissed for want of jurisdiction.
8. April 15, 1955: The United States assessed a deficiency of $ 101,530.81 plus interest against Seagraves on his 1951 income tax.
9. October 7, 1955: The United States filed a notice of tax lien for this deficiency under 26 U.S.C. § 6323 in Dallas, Texas.
10. December 12, 1955: Lester instituted suit in the Supreme Court, New York County, to enforce claims against Rubinstein arising out of the joint venture with Seagraves.
11. October 1959: Collins and Gordon were substituted as attorneys for Lester in the Rubinstein suit and Lester executed a written agreement of retainer with them the terms of which do not appear.
12. August 5, 1963: Lester and Messrs. Collins & Gordon received $ 125,000 from Rubinstein's estate in settlement of Lester's suit on the joint venture claims. This sum was deposited in a Special Account of ...