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February 9, 1973

UNITED STATES of America and Internal Revenue Service

Knox, District Judge.

The opinion of the court was delivered by: KNOX

Plaintiff has brought suit against the United States and the Internal Revenue Service by a complaint entitled "Civil Action In the Nature of a Garnishment". Paragraph 4 of the complaint states that it is "in the nature of a writ of garnishment . . . to attach the surplus proceeds of levies, attachments and monies obtained in a pending interpleader suit filed by Coventry Care, which sums are owing to Contemporary Institute, Inc. and one or more of its wholly-owned subsidiaries. The attachment is to apply to all proceeds and money which comes in the possession of the United States of America or the Internal Revenue Service up to the time of final judgment in this action even though no surplus proceeds of Contemporary Institute, Inc. or any of its wholly-owned subsidiaries was in the possession of the United States of America or the Internal Revenue Service at the time of service of this complaint".

 The complaint goes on to recite that Contemporary Institute, Inc. (the taxpayer against which Internal Revenue Service has levied) was indebted to the bank on certain notes which were defaulted and upon which judgment was entered apparently in the Court of Common Pleas of Allegheny County, Pennsylvania. The complaint further recites that Internal Revenue Service has made levies on certain funds owing by Coventry Care to the taxpayer and also recites that Internal Revenue Service has a number of levies on the funds of the taxpayer and subsidiaries throughout the United States.

 The interpleader suit referred to is an action pending in this court at Civil Action No. 72-762 wherein the corporation known as Coventry Care, Inc. has deposited in the registry of this court the sum of $57,750.00 in which the United States and others including the bank plaintiff herein have been interpleaded to determine their respective claims to the fund.

 The government has now moved to dismiss this action brought by the bank in 72-796 for the reason that the court does not have jurisdiction over the subject matter. The government also at argument and in its brief has raised the question of the applicability of the statute of limitations alleged to apply to claims of this kind in 26 U.S.C. § 6532 (c).

 The complaint as filed states that jurisdiction is based on 28 U.S.C. § 1346 and 26 U.S.C. § 7426. 28 U.S.C. § 1346 is merely the section of the judicial code which gives the district courts original jurisdiction concurrent with the court of claims of various types of actions against the United States including actions for recovery of any Internal Revenue tax alleged to have been erroneously or illegally assessed or collected or any sum alleged to have been excessive or in any manner wrongfully collected under the Internal Revenue laws.

 We start with the basic proposition that the United States as sovereign is not subject to suit except in cases where it has expressly consented to be sued. See United States v. Sherwood, 312 U.S. 584, 61 S. Ct. 767, 85 L. Ed. 1058 (1941); Malone v. Bowdoin, 369 U.S. 643, 82 S. Ct. 980, 8 L. Ed. 2d 168 (1962); Minnesota v. United States, 305 U.S. 382, 59 S. Ct. 292, 83 L. Ed. 235 (1938). The Internal Revenue Service of course not being a separate entity but a branch of the United States is of course not subject 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). *fn1" 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 ...

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