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L. B. SMITH, INC. v. FOLEY

January 19, 1972

L. B. Smith, Inc., Plaintiff
v.
John E. Foley, District Director of Internal Revenue, and Schwab Bros. Trucking, Inc., Defendants


Henderson, District Judge.


The opinion of the court was delivered by: HENDERSON

The instant action was commenced by plaintiff to enjoin the sale of and gain repossession of two "Coastal Trailers" previously seized and tagged by the defendant Internal Revenue Service pursuant to Notices of Levy filed with respect to certain tax assessments against the defendant Schwab Bros. Trucking, Inc.

These two "Coastal Trailers" were originally delivered by plaintiff to defendant Schwab Bros. Trucking, Inc. pursuant to a written document, which has since been categorized by all disputing parties herein as a "conditional sales contract," for its use in the construction of the Kensington Expressway Arterial Highway Project in Buffalo, New York.

 Subsequent to the initiation of this action, the parties entered into a stipulation providing for the sale of the two "Coastal Trailers" by the District Director of the Internal Revenue Service and the placing of the proceeds realized therefrom in the Registry of this court pending the outcome of the instant action.

 After motions for summary judgment had been heard and denied by this court, trial was held, without a jury, resulting in the following findings of fact.

 1. On October 9, 1964, a contract was executed by and between the plaintiff and defendant Schwab Bros. Trucking, Inc. providing for the "rental" of two Coastal Trailers at a "rental rate" of $318.00 per month for a 24-month period, "ownership to pass to customer on receipt of the 24th payment."

 Although the term "rental" is used in the contract, the parties now agree that the contract was one of conditional sale for the purchase of the trailers.

 2. Delivery of the two trailers was made by plaintiff to defendant Schwab Bros. Trucking, Inc. at the construction site for the Kensington Expressway Highway Project in the City of Buffalo on October 12th and 16th of 1964. Plaintiff also delivered to defendant Schwab Bros. Trucking, Inc., pursuant to lease agreements, certain other items of construction equipment for use on the instant construction job.

 3. Plaintiff failed to file a financing statement with respect to these two Coastal Trailers as provided for by section 9-302 of the New York Uniform Commercial Code.

 4. Defendant Schwab Bros. Trucking, Inc. was the prime contractor on Contract Nos. FAC 64-6 and FAC 64-19 which involved separate but contiguous portions of the Kensington Expressway Highway Project site.

 5. On February 16, 1965, the government filed, with the Clerk of the County of Erie and State of New York, a notice of federal tax lien which included assessments against the defendant Schwab Bros. Trucking, Inc. covering a period from January 15, 1965 to February 16, 1965, in the aggregate amount of $200,672.65 for which an amount in excess of the $5500.00 realized from the sale of the two trailers remains unsatisfied.

 6. Subsequent to the filing of the instant lien, defendant Schwab Bros. Trucking, Inc. defaulted on the two construction contracts without having made a single payment to plaintiff for the purchase of the two trailers.

 7. On February 15th and 16th of 1965, employees of plaintiff went to the job site supervised by plaintiff's Branch Manager to help locate and repossess certain of its equipment then in the hands of defendant Schwab Bros. Trucking, Inc.

 8. Although a great majority of these repossession efforts were conducted on February 15 and 16 of 1965, the evidence indicates otherwise with respect to repossession of the trailers.

 9. Plaintiff offered testimony of an alleged conversation between its Branch Manager and State Engineers occurring either on February 15th or 16th of 1965, wherein plaintiff advised that they were repossessing their equipment and would require that records and equipment be removed from the trailers. This testimony also asserted that State Engineers proposed ...


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