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UNITED STATES v. FLEMING

August 13, 1979

United States of America, Plaintiff,
v.
Joseph G. Fleming, Elinor Fleming, Nancy A. Codello, as Executrix of the Estate of Bartholomew Ruggiero, Deceased, New York State Tax Commission, New York City Department of Finance and Royal Indemnity Company, Defendants.



The opinion of the court was delivered by: POLLACK

DECISION

The plaintiff, United States of America, moves for summary judgment in its favor under Fed.R.Civ.P. 56. The only defendants that oppose the motion are the State and the City of New York. For the reasons shown hereafter, the motion will be granted in part.

 This is an action under § 7403 of the Internal Revenue Code to enforce four Federal Tax Liens against the defendants Joseph and Elinor Fleming. Also lodged against the Flemings are three New York State tax warrants, one New York City tax warrant, one judgment, and one security interest in certain valuable coins owned by the Flemings.

 The United States now moves to foreclose upon the valuable coins and for a determination of the order of priority in which the competing claimants are to be paid from the proceeds of the sale of the coins.

 Judgment by default has been taken against the Flemings. Neither the defendant Codella, holder of the security interest in the coins, nor the defendant Royal Indemnity Company, holder of the judgment against Mr. Fleming, has contested the motion of the United States or asserted any right to the proceeds of the sale. Both the State and the City, however, do assert a right to be satisfied out of the proceeds.

 The parties agree on the following facts:

 1. On September 30, 1970, the State filed with the Westchester County Clerk a tax warrant against Mr. Fleming for $ 8,643.18.

 2. On January 6, 1971, the City issued a tax warrant against Mr. Fleming for $ 440.00, and on January 22, 1972, that warrant was filed with the Westchester County Clerk.

 3. On June 5, 1972, the Internal Revenue Service assessed a tax liability of $ 4,578.30 for 1971 against Mr. and Mrs. Fleming. A notice of a lien for this assessment was filed with the Westchester County Clerk on October 10, 1972. A payment of $ 3,095.00 was made against this assessment, leaving an assessed balance of $ 1,483.30.

 4. On August 4, 1972, the State filed with the Westchester County Clerk a tax warrant against Mr. Fleming for $ 3,474.94.

 5. On March 5, 1973, the IRS assessed a tax liability of $ 13,779.56 for certain quarters of 1966, 1967 and 1968 against Mr. Fleming. A notice of a lien for this assessment was filed with the Westchester County Clerk on May 8, 1973.

 6. On May 7, 1973, the IRS assessed a tax liability of $ 6,491.05 for 1972 against Mr. and Mrs. Fleming. A notice of a lien for this assessment was filed with the Westchester County Clerk on December 31, 1973.

 7. On December 6, 1973, a judgment for $ 3,068.78 was entered in court against Mr. Fleming in favor of the defendant Royal Indemnity Company as subrogee. On February 5, 1974, this judgment was filed with the Westchester County Clerk.

 8. Between January and May, 1974, the Flemings purchased valuable coins for $ 25,000. To do so they borrowed $ 25,000 from Bartholomew Ruggiero, now deceased, on March 1, and May 3, 1974, and pledged the coins to Ruggiero to secure the loan. ...


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