to suit as such. The ultimate question is whether this suit lies against the United States.
In Wallingford Steel Co. v. Wire & Metal Specialties Corp., 347 F. Supp. 1310 (W.D.Pa. 1972), this court held that the United States was not subject to a writ of attachment execution naming as garnishees the United States and the Secretary of the Army to attach monies originally due on an original contract between the government and defendant Wire and Metal under which prime contract the plaintiff was a subcontractor even though the amount involved was less than $10,000 as specified in 28 U.S.C. § 1346. It was held that only a person holding a contract with the United States could sue under 28 U.S.C. § 1346 and that the concurrent jurisdiction of the District Court on claims less than $10,000 was no greater than the jurisdiction given the Court of Claims and it was clear that a subcontractor could not sue since the United States had not consented to be sued except by a prime contractor.
The only statute pointed out by the plaintiff as a basis for this suit is 26 U. S. C. § 7426(a).
This section is a part of the new Federal Tax Lien Act of 1966, Public Law 89-719, Act of November 2, 1966. The Senate report with respect to the enactment of this legislation is set forth in full at 1966 U.S. Code Congressional & Administrative News, Vol. 3, page 3722 et seq. This being a new statute, there is very little authority for the court to rely on in determining its meaning and its application to a specific set of facts such as we have here. The second paragraph of the general statement of the Senate Report states "The Federal Tax Lien bill of 1966 represents the first comprehensive revision and modernization of the provisions of the internal revenue laws concerned with the relationship of Federal tax liens to the interests of other creditors".
A close examination of Section 7426(a) (1) entitled "Wrongful Levies" shows that for it to apply there must be (1) a levy or (2) a sale and that a claim must be made by (3) one "who claims an interest in or lien on such property " and (4) that such property was wrongfully levied upon. In such case, an action lies against the United States in a district court. Here we have no allegation of a wrongful levy. Under subsection (2), we find that it applies only where the property has been sold pursuant to a levy (there is no allegation in this case that the property has been sold) and that a person other than the taxpayer who claims an interest in or a lien against the property junior to that of the United States and legally entitled to the surplus proceeds of the sale may bring a suit against the United States. Subsection (3) obviously has no application to this case since it applies only where property has been sold by agreement in which case a party claiming the amount realized may bring suit against the United States. There is no allegation in this case of any agreement whereby the property was sold.
As stated, there is a paucity of authority construing this section. In Crow v. Wyoming Timber Products Co., 424 F.2d 93 (10th Cir. 1970), it was stated that for this section to apply there must be a wrongful levy or sale. This was dictum but nevertheless appears a correct statement of the law. It will be noted in the complaint in the instant case there is no allegation whatsoever that there has been any wrongful levy upon or wrongful sale of the assets of the taxpayer in Contemporary Institute, Inc.
The only case which has fully discussed problems similar to those which we have here is Whittaker Corp. v. U. S., 71-1 U.S. Tax Cases No. 9123 (E.D. Mich. 1970). This case apparently did not involve a written opinion reported elsewhere but nevertheless we agree with what was stated with respect to 26 U.S.C. § 7426(a) by Judge Gubow. We will therefore quote at length from it.
"The government argues that under the provisions of Title 26, Section 7426(a) (1), in order for the plaintiff to maintain this action, plaintiff must show an interest in the property and a wrongful levy; and that there could not have been a wrongful levy here because this was the taxpayer's, Waldon Manufacturing Company's, property. A wrongful levy, the Government contends, can only occur where the property concerned is not the taxpayer's. The Government then argues that since the property is the taxpayer's and therefore the levy was not wrongful, the Court does not have jurisdiction. The Government concludes from this that the motion for a preliminary injunction should be dismissed on the grounds that the court does not have jurisdiction.
(Consideration of Jurisdiction)